(Rev. 12-8-17) Kansas 2017 Legislative Changes INCOME TAX RATES SB 30 NOTICE 17-02 EFFECTIVE TAX YEAR 2017 TY 2017 Income Tax Rates Married Filing Joint $0 - $30,000 (2016 2.7%) 2.90% $30,001 - $60,000 (2016 4.6%) 4.90% $60,001 and over 5.20% Single, Head of Household, or Married Filing Separate $0 - $15,000 (2016 2.7%) 2.90% $15,001 - $30,000 (2016 4.6%) 4.90% $30,001 and over 5.20% TY 2018 Income Tax Rates (and all tax years thereafter) Married Filing Joint $0 - $30,000 3.10% $30,001 - $60,000 5.25% $60,001 and over 5.70% Single, Head of Household, or Married Filing Separate $0 - $15,000 3.10% $15,001 - $30,000 5.25% $30,001 and over 5.70% No taxpayer shall be assessed penalties and interest from the underpayment of taxes due to changes in SB30 that became law on July 1, 2017 so long as such underpayment is rectified on or before April 17, 2018. SB 30 Sec. 4. K.S.A. 2016 Supp. 79-32,110 is hereby amended to read as follows: 79-32,110. (a)resident Individuals. Except as otherwise provided by K.S.A. 79-3220(a), and amendments thereto, a tax is hereby imposed upon the Kansas taxable income of every resident individual, which tax shall be computed in accordance with the following tax schedules: a(1) Married individuals filing joint returns. (E) For tax year 2017: If the taxable income is: The tax is: Not over $30,000 2.9% of Kansas taxable income Over $30,000 but not over $60,000 $870 plus 4.9% of excess over $30,000 Over $60,000 $2,340 plus 5.2% of excess over $60,000 (F) For tax year 2018, and all tax years thereafter: If the taxable income is: If the taxable income is: The tax is: Not over $30,000 3.1% of Kansas taxable income Over $30,000 but not over $60,000 $930 plus 5.25% of excess over $30,000 Over $60,000 $2,505 plus 5.7% of excess over $60,000 a(2) All other individuals (E) For tax year 2017, and all tax years thereafter 2017: If the taxable income is: The tax is: Not over $15,000 2.9% of Kansas taxable income Over $15,000 but not over $30,000 $435 plus 4.9% of excess over $15,000 Over $30,000 $1,170 plus 5.2% of excess over $30,000 (F) For tax year 2018, and all tax years thereafter: If the taxable income is: The tax is: Not over $15,000 3.1% of Kansas taxable income Over $15,000 but not over $30,000 $465 plus 5.25% of excess over $15,000 Over $30,000 $1,252.50 plus 5.7% of excess over $30,000 b(f) No taxpayer shall be assessed penalties and interest arising from the underpayment of taxes due to changes to the rates in subsection (a) that became law on July 1, 2017, so long as such underpayment is rectified on or before April 17, 2018. Page 1 of 43
LOW INCOME TAX EXCLUSION SB 30 NOTICE 17-04 EFFECTIVE TAX YEAR 2017 Tax Year 2017 No Tax Liability for low income individuals Married Filing Joint - Taxable Income - $0 - $12,500 All other Individuals - Taxable Income - $0 - $5,000 Tax Year 2018 (and all tax years thereafter) No Tax Liability for low income individuals Married Filing Joint - Taxable Income - $0 - $5,000 All other Individuals - Taxable Income - $0 - $2,500 *** (A Kansas Income Tax Return (K-40) must still be filed to claim exclusion) *** SB 30 (e) Notwithstanding the provisions of subsections (a) and (b),: (1) For tax year years 2016, and 2017, married individuals filing joint returns with taxable income of $12,500 or less, and all other individuals with taxable income of $5,000 or less, shall have a tax liability of zero; and (2) for tax year 2018, and all tax years thereafter, married individuals filing joint returns with taxable income of $5,000 or less, and all other individuals with taxable income of $2,500 or less, shall have a tax liability of zero. Income Tax Itemized Deductions 2017 SB 30 Notice 17-06 Effective Tax Year 2018 Tax Year Allowable Itemized Deductions 2017 2018 2019 2020 Qualified Charitable Contributions (as allowed in section 170 of the federal internal revenue code) Qualified Residence Interest (as provided in section 163(h) of the federal internal revenue code) Taxes on Real and Personal Property (as provided in section 164(a) of the federal internal revenue code) Expenses for Medical Care (as allowable as deductions in section 213 of the federal internal revenue code) 100% 100% 100% 100% 50% 50% 75% 100% 50% 50% 75% 100% 0% 50% 75% 100% If you did not itemize your deductions on your federal return, you must take the standard deduction on you r Kansas return. If you itemized on your federal return, you may either itemize or take the standard deduction on your Kansa s return, whichever is to your advantage. If you are married and file separate returns, you and your spouse must use the same method of claimin g deductions if one of you itemize, the other must also itemize. Page 2 of 43
SB 30 Sec. 6. K.S.A. 2016 Supp. 79-32,120 is hereby amended to read as follows: 79-32,120. (a) (1) If federal taxable income of an individual is determined by itemizing deductions from such individual s federal adjusted gross income, such individual may elect to deduct the Kansas itemized deduction in lieu of the Kansas standard deduction. (4) For the tax years commencing on and after January 1, 2015, and ending before January 1, 2018, the Kansas itemized deduction of an individual means the following deductions from federal adjusted gross income, other than federal deductions for personal exemptions, as provided in the federal internal revenue code with the modifications specified in this section: (A) 100% of charitable contributions that qualify as charitable contributions allowable as deductions in section 170 of the federal internal revenue code; (B) 50% of the amount of qualified residence interest as provided in section 163(h) of the federal internal revenue code; and (C) 50% of the amount of taxes on real and personal property as provided in section 164(a) of the federal internal revenue code. (5) For the tax year commencing on and after January 1, 2018, and ending before January 1, 2019, the Kansas itemized deduction of an individual means the following deductions from federal adjusted gross income, other than federal deductions for personal exemptions, as provided in the federal internal revenue code with the modifications specified in this section: (A) 100% of charitable contributions that qualify as charitable contributions allowable as deductions in section 170 of the federal internal revenue code; (B) 50% of expenses for medical care allowable as deductions in section 213 of the federal internal revenue code; (C) 50% of the amount of qualified residence interest as provided in section 163(h) of the federal internal revenue code; and (D) 50% of the amount of taxes on real and personal property as provided in section 164(a) of the federal internal revenue code. (6) For the tax year commencing on and after January 1, 2019, and ending before January 1, 2020, the Kansas itemized deduction of an individual means the following deductions from federal adjusted gross income, other than federal deductions for personal exemptions, as provided in the federal internal revenue code with the modifications specified in this section: (A) 100% of charitable contributions that qualify as charitable contributions allowable as deductions in section 170 of the federal internal revenue code; (B) 75% of expenses for medical care allowable as deductions in section 213 of the federal internal revenue code; (C) 75% of the amount of qualified residence interest as provided in section 163(h) of the federal internal revenue code; and (D) 75% of the amount of taxes on real and personal property as provided in section 164(a) of the federal internal revenue code. (7) For the tax years commencing on and after January 1, 2020, the Kansas itemized deduction of an individual means the following deductions from federal adjusted gross income, other than federal deductions for personal exemptions, as provided in the federal internal revenue code with the modifications specified in this section: (A) 100% of charitable contributions that qualify as charitable contributions allowable as deductions in section 170 of the federal internal revenue code; (B) 100% of expenses for medical care allowable as deductions in section 213 of the federal internal revenue code; (C) 100% of the amount of qualified residence interest as provided in section 163(h) of the federal internal revenue code; and (D) 100% of the amount of taxes on real and personal property as provided in section 164(a) of the federal internal revenue code. (b) The total amount of deductions from federal adjusted gross income shall be reduced by the total amount of income taxes imposed by or paid to this state or any other taxing jurisdiction to the extent that the same are deducted in determining the federal itemized deductions and by the amount of all depreciation deductions claimed for any real or tangible personal property upon which the deduction allowed by K.S.A.2016 Supp. 79-32,221, 79-32,227, 79-32,232, 79-32,237, 79-32,249, 79-32,250, 79-32,255 or 79-32,256, and amendments thereto, is or has been claimed. Child and Dependent Care Credit Restored 2017 SB 30 Notice 17-07 Effective Tax Year 2018 Child and Dependent Care Tax Credit is restored for individual income filers effective tax year 2018. The credit is the following percentage of the Federal Child and Dependent Care Credit under 26 U.S.C. 21: Tax Year 2018-12.50% Tax Year 2019-18.75% Tax Year 2020-25.00% (and all tax years thereafter) SB30 New Section 1. (a) There shall be allowed as a credit against the tax liability of a resident individual imposed under the Kansas income tax act an amount equal to 12.5% for tax year 2018; an amount equal to 18.75% for tax year 2019; and an amount equal to 25% for tax year 2020, and all tax years thereafter, of the amount of the credit allowed against such taxpayer s federal income tax liability pursuant to 26 U.S.C. 21 for the taxable year in which such credit was claimed against the taxpayer s federal income tax liability. (b) The credit allowed by subsection (a) shall not exceed the amount of the tax imposed by K.S.A. 79-32,110, and amendments thereto, reduced by the sum of any other credits allowable pursuant to law. (c) No credit provided under this section shall be allowed to any individual who fails to provide a valid social security number issued by the social security administration, to such individual, the individual s spouse and every dependent of the individual. Page 3 of 43
Low Income Student Scholarship Act Tax Credit (K-70) 2017 SB 19 Notice 17-08 Effective Tax Year 2017 (Individuals accepted for tax credit on or after July 1, 2017) Limits: Education Scholarship not to exceed $8000 per student. Maximum contribution for the TCLISS for any taxpayer is $500,000 for any tax year. Total amount TCLISS credit allowed per tax year is $10 million. Credit: 70% of contributions for qualified scholarships. Available to: Individual Income tax (Individuals accepted for tax credit on or after July 1, 2017). New for 2017 Corporate income. Premium tax. Privilege tax. Nonrefundable - The credit will be claimed using the credit schedule K-70. Credit applies toward the taxpayer s tax liability during the tax year in which the contribution was made. Credit may be carried forward until used. Add-back modification to Federal Adjusted Gross Income for the amount of charitable contribution deduction claimed on the federal return for any contribution or gift made to a scholarship granting organization to the extent the same is claimed as the basis for the low income students scholarship program tax credit allowed. Definitions: Scholarship Granting Organizations (SGOs) - An organization that complies with the requirements of this program and provides educational scholarships to eligible students or to qualified schools in which parents have enrolled eligible students. School district or district means any unified school district organized and operating under the laws of this state. Eligible Student - A child who qualifies as an at-risk pupil. At-risk pupil Eligible for free lunch under the National School Lunch Act and is enrolled in a school district that maintains an approved at-risk student assistance program. At-risk student Must be enrolled and be in attendance full time. Cannot be over the age of 19 years of age. Must be attending a public school. Must reside in Kansas while receiving a scholarship and be enrolled in a public school in the year prior to receiving the scholarship or be eligible to be enrolled in a public school, if under the age of 6. Public School A school identified by KSBE as one of the lowest 100 performing schools with respect to student achievement. Qualified school - changed to require accreditation on and after July 1, 2020. Accreditation must be by KSBE or a KSBE- recognized national or regional accrediting agency. SB19 Sec. 95. K.S.A. 2016 Supp. 72-99a02 is hereby amended to read as follows: 72-99a02. As used in the tax credit for low income students scholarship program act: (k) School year shall have the meaning ascribed thereto in section 4, and amendments thereto. Sec. 96. On and after July 1, 2018, K.S.A. 2016 Supp. 72-99a02, as amended by section 95 of this act, is hereby amended to read as follows: 72-99a02. As used in the tax credit for low income students scholarship program act: (d) Eligible student means a child who: (1) (A) Is an at-risk student, as defined in section 4, and amendments thereto, and who is attending a public school; or (B) has been eligible to receive an educational scholarship under this program and has not graduated from high school or reached 21 years of age; (g) Public school means a school that is operated by a school district, and identified by the state board as one of the lowest 100 performing schools with respect to student achievement among all schools operated by school districts for the current school year. (h) Qualified school means any nonpublic school that provides education to elementary or secondary students, has notified the state board of its intention to participate in the program and complies with the requirements of the program. On and after July 1, 2020, a qualified school shall be accredited by the state board or a national or regional accrediting agency that is recognized by the state board for the purpose of satisfying the teaching performance assessment for professional licensure. Sec. 97. K.S.A. 2016 Supp. 72-99a07 is hereby amended to read as follows: 72-99a07. (a) (1) there shall be allowed a credit against the corporate income tax liability imposed upon a taxpayer pursuant to the Kansas income tax act, the privilege tax liability imposed upon a taxpayer pursuant to the privilege tax imposed upon any national banking association, state bank, trust company or savings and loan association pursuant to article 11 of chapter 79 of the Page 4 of 43
SB19 Sec. 95. Cont.: Kansas Statutes Annotated, and amendments thereto, and the premium tax liability imposed upon a taxpayer pursuant to the premiums tax and privilege fees imposed upon an insurance company pursuant to K.S.A. 40-252, and amendments thereto, for tax years commencing after December 31, 2014, and ending before January 1, 2017, an amount equal to 70% of the amount contributed to a scholarship granting organization authorized pursuant to K.S.A. 2016 Supp. 72-99a01 et seq., and amendments thereto. (NEW) (2) There shall be allowed a credit against the tax liability imposed upon a taxpayer pursuant to the Kansas income tax act, the privilege tax liability imposed upon a taxpayer pursuant to the privilege tax imposed upon any national banking association, state bank, trust company or savings and loan association pursuant to article 11 of chapter 79 of the Kansas Statutes Annotated, and amendments thereto, and the premium tax liability imposed upon a taxpayer pursuant to the premiums tax and privilege fees imposed upon an insurance company pursuant to K.S.A. 40-252, and amendments thereto, for tax years commencing after December 31, 2016, an amount equal to 70% of the amount contributed to a scholarship granting organization authorized pursuant to K.S.A. 2016 Supp. 72-99a01 et seq., and amendments thereto. In no event shall the total amount of contributions for any taxpayer allowed under this subsection exceed $500,000 for any tax year. Repeal of Certain Non-Wage Business Income Exclusions 2017 SB 30 Notice 17-03 Effective Tax Year 2017 The legislature repealed the exemption for certain non-wage business income reported by pass-through entities and sole proprietorships on federal Schedules C, E, and F and lines 12, 17, and 18 of federal form 1040 by eliminating the add-back of certain business losses and subtraction modifications for specified business profits that the taxpayer reported for federal income tax purposes. The following Subtraction Modifications have been repealed: Net profit from business as reported on line 12 of form 1040 from federal schedule C. Net income from rental real estate, royalties, partnerships, S corps, estates, trusts, residual interest in real estate mortgage investment conduits and net farm rental, as reported on line 17 of Form 1040 from federal schedule E. Net farm profit as reported on line 18 of Form 1040 from federal schedule F. Net gain from the qualified sale of certain livestock held for draft, breeding, dairy or sporting purposes. Net gain from the sale from Christmas trees grown in Kansas. The following Addition Modifications have been repealed: Business loss from federal schedule C and included on line 12 of federal form 1040. Loss from rental real estate, royalties, partnerships, S Corps, estates, trusts, residual interest in real estate mortgage investment conduits and net farm rental from federal schedule E and included on line 17 of federal form 1040. Farm loss from federal schedule F and included on line 18 of the federal form 1040. Deduction for Self-employment taxes under IRC 164(f). Deductions for pension, profit sharing, & annuity plans of self-employed individuals under IRC 62(a)(6). Deductions for health insurance under IRC 162(l). Domestic production activities as defined under IRC 199. SB30 Sec. 5. K.S.A. 2016 Supp. 79-32,117 is hereby amended to read as follows: 79-32,117. (a) The Kansas adjusted gross income of an individual means such individual s federal adjusted gross income for the taxable year, with the modifications specified in this section. (b) There shall be added to federal adjusted gross income: (xix) For taxable years beginning after December 31, 2012, and ending before January 1, 2017, the amount of any: (1) Loss from business as determined under the federal internal revenue code and reported from schedule C and on line 12 of the taxpayer s form 1040 federal individual income tax return; (2) loss from rental real estate, royalties, partnerships, S corporations, except those with wholly owned subsidiaries subject to the Kansas privilege tax, estates, trusts, residual interest in real estate mortgage investment conduits and net farm rental as determined under the federal internal revenue code and reported from schedule E and on line 17 of the taxpayer s form 1040 federal individual income tax return; and (3) farm loss as determined under the federal internal revenue code and reported from schedule F and on line 18 of the taxpayer s form 1040 federal income tax return; all to the extent deducted or subtracted in determining the taxpayer s federal adjusted gross income. For purposes of this subsection, references to the federal form 1040 and federal schedule C, schedule E, and schedule F, shall be to such form and schedules as they existed for tax year 2011, and as revised thereafter by the internal revenue service. (xx) For taxable years beginning after SB30 Page 5 of 43
Sec. 5. cont.: December 31, 2012, and ending before January 1, 2017, the amount of any deduction for self-employment taxes under section 164(f) of the federal internal revenue code as in effect on January 1, 2012, and amendments thereto, in determining the federal adjusted gross income of an individual taxpayer, to the extent the deduction is attributable to income reported on schedule C, E or F and on line 12, 17 or 18 of the taxpayer s form 1040 federal income tax return. (xxi) For taxable years beginning after December 31, 2012, and ending before January 1, 2017, the amount of any deduction for pension, profit sharing, and annuity plans of self-employed individuals under section 62(a) (6) of the federal internal revenue code as in effect on January 1, 2012, and amendments thereto, in determining the federal adjusted gross income of an individual taxpayer. (xxii) For taxable years beginning after December 31, 2012, and ending before January 1, 2017, the amount of any deduction for health insurance under section 162(l) of the federal internal revenue code as in effect on January 1, 2012, and amendments thereto, in determining the federal adjusted gross income of an individual taxpayer. (xxiii) For all taxable years beginning after December 31, 2012, and ending before January 1, 2017, the amount of any deduction for domestic production activities under section 199 of the federal internal revenue code as in effect on January 1, 2012, and amendments thereto, in determining the federal adjusted gross income of an individual taxpayer. (xxiv) For taxable years commencing after December 31, 2013, that portion of the amount of any expenditure deduction claimed in determining federal adjusted gross income for expenses paid for medical care of the taxpayer or the taxpayer s spouse or dependents when such expenses were paid or incurred for an abortion, or for a health benefit plan, as defined in K.S.A. 2016 Supp. 65-6731, and amendments thereto, for the purchase of an optional rider for coverage of abortion in accordance with K.S.A. 2016 Supp. 40-2,190, and amendments thereto, to the extent that such taxes and assessments are claimed as an itemized deduction for federal income tax purposes. (xiv) For all taxable years commencing after December 31, 1996, that portion of any income of a bank organized under the laws of this state or any other state, a national banking association organized under the laws of the United States, an association organized under the savings and loan code of this state or any other state, or a federal savings association organized under the laws of the United States, for which an election as an S corporation under subchapter S of the federal internal revenue code is in effect, which accrues to the taxpayer who is a stockholder of such corporation and which is not distributed to the stockholders as dividends of the corporation. For taxable years beginning after December 31, 2012, and ending before January 1, 2017, the amount of modification under this subsection shall exclude the portion of income or loss reported on schedule E and included on line 17 of the taxpayer s form 1040 federal individual income tax return.(f) No taxpayer shall be assessed penalties and interest from the underpayment of taxes due to changes to this section that became law on July 1, 2017, so long as such underpayment is rectified on or before April 17, 2018. (c) There shall be subtracted from federal adjusted gross income:(xx) For taxable years beginning after December 31, 2012, and ending before January 1, 2017, the amount of any: (1) Net profit from business as determined under the federal internal revenue code and reported from schedule C and on line 12 of the taxpayer s form 1040 federal individual income tax return; (2) net income, not including guaranteed payments as defined in section 707(c) of the federal internal revenue code and as reported to the taxpayer from federal schedule K-1, (form 1065-B), in box 9, code F or as reported to the taxpayer from federal schedule K-1, (form 1065) in box 4, from rental real estate, royalties, partnerships, S corporations, e states, trusts, residual interest in real estate mortgage investment conduits and net farm rental as determined under the federal internal revenue code and reported from schedule E and on line 17 of the taxpayer s form 1040 federal individual income tax return; and (3) net farm profit as determined under the federal internal revenue code and reported from schedule F and on line 18 of the taxpayer s form 1040 federal income tax return; all to the extent included in the taxpayer s federal adjusted gross income. For purposes of this subsection, references to the federal form 1040 and federal schedule C, schedule E, and schedule F, shall be to such form and schedules as they existed for tax year 2011 and as revised thereafter by the internal revenue service. (c) There shall be subtracted from federal adjusted gross income: (xxii) For all taxable years beginning after December 31, 2012, and ending before January 1, 2017, the amount of net gain from the sale of: (1) Cattle and horses, regardless of age, held by the taxpayer for draft, breeding, dairy or sporting purposes, and held by such taxpayer for 24 months or more from the date of acquisition; and (2) other livestock, regardless of age, held by the taxpayer for draft, breeding, dairy or sporting purposes, and held by such taxpayer for 12 months or more from the date of acquisition. The subtraction from federal adjusted gross income shall be limited to the amount of the additions recognized under the provisions of subsection (b)(xix) attributable to the business in which the livestock sold had been used. As used in this paragraph, the term livestock shall not include poultry.(xxiiv) For taxable years beginning after December 31, 2013, and ending before January 1, 2017, the net gain from the sale from Christmas trees grown in Kansas and held by the taxpayer for six years or more. (xiv) For all taxable years commencing after December 31, 1996, that portion of any income of a bank organized under the laws of this state or any other state, a national banking association organized under the laws of the United States, an association organized under the savings and loan code of this state or any other state, or a federal savings association organized under the laws of the United States, for which an election as an S corporation under subchapter S of the federal internal revenue code is in effect, which accrues to the taxpayer who is a stockholder of such corporation and which is not distributed to the stockholders as dividends of the corporation. For all taxable years beginning after December 31, 2012, and ending before January 1, 2017, the amount of modification under this subsection shall exclude the portion of income or loss reported on schedule E and included on line 17 of the taxpayer s form 1040 federal individual income tax return. (f) No taxpayer shall be assessed penalties and interest from the underpayment of taxes due to changes to this section that became law on July 1, 2017, so long as such underpayment is rectified on or before April 17, 2018. Page 6 of 43
Elimination of NOL Addition Modification for Individual, Partnership, S-Corp, LLC, & Other Pass-Through Entities 2017 SB 30 Notice 17-05 Effective Tax Year 2017 NO CRF FORM!!!!! Individual income tax filers will no longer add back the federal net operating loss (NOL) deduction to their federal adjusted gross income (FAGI) beginning in tax year 2017. There is not a subtraction modification or calculation for a Kansas individual income tax filer s NOL. Start with FAGI. The manner in which prior year NOLs are treated has not changed. Only the requirement to addback the amount of NOL claimed on the federal return. Beginning after December 31, 2016, an individual may not carry a prior year net operating loss forward to tax year 2013 or later years, or back to any earlier tax year. SB30 Sec. 5. K.S.A. 2016 Supp. 79-32,117 is hereby amended to read as follows: 79-32,117. (a) The Kansas adjusted gross income of an individual means such individual s federal adjusted gross income for the taxable year, with the modifications specified in this section. (b) There shall be added to federal adjusted gross income: (iii) the federal net operating loss deduction, except that the federal net operating loss deduction shall not be added to an individual s federal adjusted gross income for tax years beginning after December 31, 2016. Estimated Tax 2017 SB 30 Notice 17-09 Individuals Who Have Been Receiving the Non-Wage Business Income Exclusion Are Strongly Recommended to Begin Making Estimated Payments Immediately! The new amendments to the non-wage business income is retroactive to January 1, 2017. It is recommended to start making estimated payments as soon as possible to avoid a significant amount of unplanned tax due in April of 2018. An Increase in the normal amount estimated payment(s) is recommended in order to catch-up with the amount of tax had payments been made for the first two quarters of the 2017 tax year. Failure to make these estimated payments could result in having to pay a significant amount of income tax being due in April of 2018 when filing the 2017 income tax return. Usually, failure to make estimated tax payments in a timely fashion will result in a penalty being imposed. However, this legislation specifically provides that a penalty will not be imposed if all of the tax that was underpaid as a result of changes made by the repeal of the non-wage business income and change in income tax rates for tax year 2017 are paid by April 17, 2018. This is the due date of the 2017 calendar year income tax returns. Section 4 of the Bill amends K.S.A. 79-32,117 by adding subsection (f) which states: - (f) No taxpayer shall be assessed penalties and interest arising from the underpayment of taxes due. To changes to the rates in subsection (a) that became law on July 1, 2017, so long as such underpayment is rectified on or before April 17, 2018. Page 7 of 43
Income Tax 2016 House Sub for SB 149 Effective Tax Year 2017 Local School District Contribution Program Effective for tax year 2017 new check-off donation on Kansas income tax return for Local School District Contribution Program $10, $25, $50, $, or entire refund to unified school district No.. The taxpayer may donate to the Local School District of their choice. 2016 House Sub for SB149 New Section 1. (a) For the tax years commencing after December 31, 2016, each Kansas state individual income tax return form shall contain a designation as follows: Local School District Contribution Program. Check if you wish to donate, in addition to your tax liability, or designate from your refund, $10, $25, $50, $, or entire refund to unified school district No.. (b) The director of taxation of the department of revenue shall determine annually the total amount designated for contribution to the local school district contribution program pursuant to subsection (a) and shall report such amount to the state treasurer who shall credit the entire amount thereof to the local school district contribution program checkoff fund which is hereby established in the state treasury. All moneys deposited in such fund shall be used for the purpose of financing education in the school district of the taxpayer s choice. In the case where donations are made pursuant to subsection (a), the director shall remit the entire amount thereof to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of such fund. All expenditures from such fund shall be made in accordance with appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the state board of education. Such moneys shall be treated as a donation by the school district in accordance with K.S.A. 72-8210, and amendments thereto, and shall be reported as gifts for the purposes of the Kansas uniform financial and reporting act. Withholding Due Date Change for KW-3, W-2, & 1099s 2017 HB 2212 Notice 17-10 Effective January 1, 2018 Due Date Change: During the 2017 legislative session House Bill 2217 section 7 was passed requiring every employer, payer, person or organization deducting and withholding tax to prepare a for each employee or payee reporting the amount of wages or payments and withholding if any to the division of taxation on or before January 31 of each year. When: On or before January 31st of each year. - This means tax year 2017 forms KW-3, W-2, and W-2G are due on or before January 31, 2018. Who: Every employer, payer, person or organization deducting and withholding tax. HB 2212 Sec. 7. K.S.A. 2016 Supp. 79-3299 is hereby amended to read as follows: 79-3299. (a) Every employer, payer, person or organization deducting and withholding tax, on or before January 31 of each year, shall prepare a statement for each employee or payee on a form prescribed by the director stating the amount of wages or payments other than wages subject to Kansas income tax paid during the preceding year, the total amount of tax withheld, if any, from such wages or payments other than wages by the employer, payer, person or organization pursuant to this act and such other information as may be prescribed by the director. One copy of such statement shall be filed by the employer, payer, person or organization with the division of taxation on or before January 31 of each year. Except as otherwise provided, if the employer, payer, person or organization files statements which report such withholding information for 51 or more employees or payees, the statements shall be filed by electronic means. If filing such statements by electronic means would be a hardship for any such employer, payer, person or organization, the secretary may permit such statements to be filed other than by electronic means. Two copies of such statement shall be given to the employee or payee concerned, one of which will be filed by the employee or payee with the tax return required by this chapter. Page 8 of 43
Withholding Tables 2017 SB 30 Notice 17-02 Effective January 1, 2018 New Withholding tables, effective January 1, 2017 are based on the new income tax rates for TY 2018 since the new higher rates are effective for all of TY 2017 and were not implemented until mid-year. The higher 2018 rates should help most taxpayers catch up on their 2017 withholding. Kansas Department of Revenue does not send out new tables. The new tax tables are available on the Kansas Department of Revenue website ksrevenue.org. Normally individuals who have a balance on their Kansas income tax return of more than $500 after all credits may be subject to an underpayment penalty. To avoid this, they may either make estimated tax payments, reduce the number of withholding allowances they are claiming on their Kansas K-4 withholding form, or request an additional amount of Kansas withholding on their Kansas K-4 withholding form. This legislation specifically provides that a penalty will not be imposed if all of the tax that was underpaid as a result of changes made by the repeal of the non-wage business income and change in income tax rates for tax year 2017 are paid by April 17, 2018. This is the due date of the 2017 calendar year income tax returns. Section 4 of the Bill amends K.S.A. 79-32,117 by adding subsection (f) which states: - (f) No taxpayer shall be assessed penalties and interest arising from the underpayment of taxes due to changes to the rates in subsection (a) that became law on July 1, 2017, so long as such underpayment is rectified on or before April 17, 2018. Page 9 of 43
Sales Tax, Filing Frequency Thresholds Changed 2017 HB 2212 Notice 17-11 Effective January 1, 2018 *** NEW for 2018 *** Annual Tax Due Filing Frequency $0 $400 (Until 2018) $0 - $80 $400.01 $4,000 (Until 2018) $80.01 - $3,200 $4,000.01 $40,000 (Until 2018) $3,200.01 - $32,000 $40,000.01 and over (Until 2018) $32,000.01 and over Annual Return Due Date On or before January 25th of the following year. On or before the 25th of the month following the Quarterly end of the calendar quarter April 25, July 25, October 25, January 25. Monthly On or before the 25th of the following month (Seasonal) 1 (a March return is due by April 25). Prepaid Monthly 2 First 15 days of the current month's liability and the remainder of the preceding month s liability is due on or before the 25th of the current month. 1. If your business is seasonal, you will file monthly during the period of business operation. 2. The prepaid monthly filing status must report sales using the ST-36 form. HB 2212 Sec. 9. On and after January 1, 2018, K.S.A. 2016 Supp. 79-3607 is hereby amended to read as follows: 79-3607. (a) Retailers shall make returns to the director at the times prescribed by this section in the manner prescribed by the director, including electronic filing, upon forms or format prescribed by the director stating: (1) The name and address of the retailer; (2) the total amount of gross sales of all tangible personal property and taxable services rendered by the retailer during the period for which the return is made; (3) the total amount received during the period for which the return is made on charge and time sales of tangible personal property made and taxable services rendered prior to the period for which the return is made; (4) deductions allowed by law from such total amount of gross sales and from total amount received during the period for which the return is made on such charge and time sales; (5) receipts during the period for which the return is made from the total amount of sales of tangible personal property and taxable services rendered during such period in the course of such business, after deductions allowed by law have been made; (6) receipts during the period for which the return is made from charge and time sales of tangible personal property made and taxable services rendered prior to such period in the course of such business, after deductions allowed by law have been made; (7) gross receipts during the period for which the return is made from sales of tangible personal property and taxable services rendered in the course of such business upon the basis of which the tax is imposed. The return shall include such other pertinent information as the director may require. In making such return, the retailer shall determine the market value of any consideration, other than money, received in connection with the sale of any tangible personal property in the course of the business and shall include such value in the return. Such value shall be subject to review and revision by the director as hereinafter provided. Refunds made by the retailer during the period for which the return is made on account of tangible personal property returned to the retailer shall be allowed as a deduction under subdivision paragraph (4) of this section in case the retailer has theretofore included the receipts from such sale in a return made by such retailer and paid taxes therein imposed by this act. The retailer shall, at the time of making such return, pay to the director the amount of tax herein imposed, except as otherwise provided in this section. The director may extend the time for making returns and paying the tax required by this act for any period not to exceed 60 days under such rules and regulations as the secretary of revenue may prescribe. When the total tax for which any retailer is liable under this act, does not exceed the sum of $80 $400 in any calendar year, the retailer shall file an annual return on or before January 25 of the following year. When the total tax liability does not exceed $3,200 $4,000 in any calendar year, the retailer shall file returns quarterly on or before the 25th day of the month following the end of each calendar quarter. When the total tax liability exceeds $3,200 $4,000 in any calendar year, the retailer shall file a return for each month on or before the 25th day of the following month. When the total tax liability exceeds $32,000 $40,000 in any calendar year, the retailer shall be required to pay the sales tax liability for the first 15 days of each month to the director on or before the 25th day of that month. Any such payment shall accompany the return filed for the preceding month. A retailer will be considered to have complied with the requirements to pay the first 15 days liability for any month if, on or before the 25th day of that month, the retailer paid 90% of the liability for that fifteen-day period, or 50% of such retailer s liability in the immediate preceding calendar year for the same month as the month in which the fifteen-day period occurs computed at the rate applicable in the month in which the fifteen-day period occurs, and, in either case, paid any underpayment with the payment required on or before the 25th day of the following month. Such retailers shall pay their sales tax liabilities for the remainder of each such month at the time of filing the return for such month. Determinations of amounts of liability in a calendar year for purposes of determining filing requirements shall be made by the director upon the basis of amounts of liability by those retailers during the preceding calendar year or by estimates in cases of retailers having no previous sales tax histories. The director is hereby authorized to modify the filing schedule for any retailer when it is apparent that the original determination was inaccurate. Page 10 of 43
Wildfires Fencing Sales Tax Exemption 2017 HB 2387 Notice 17-01 Effective During Calendar Years 2017 and 2018 Sales Tax Exemption for Agricultural Fence Damaged or Destroyed During Wildfires of 2016 and 2017. (Agricultural Fencing Only) Exemption good for Calendar Years 2017 and 2018. Statutory exemption certificate: Anyone reconstructing, repairing or replacing agricultural fencing destroyed by the wildfires or who has contracted to do so, may obtain a statutory exemption certificate. With the certificate, shown at the time material is purchased, the holder will not have to pay sales tax on the purchase. The exemption applies to sales tax on fencing material and lease of machinery or equipment for the project. To apply for a statutory exemption certificate, complete application form PR-70FEN or call 785-296-3081 or email kathleen.smith@ks.gov. Sales Tax refund: Individuals who have purchased fencing material to be used in the reconstruction of fencing surrounding agricultural land on or after January 1, 2017 through December 31, 2018 may apply for a refund of sales taxes paid. Sales receipt or invoice(s) showing the amount of sales tax paid on the purchases of fencing materials and or fencing repair are required to complete refund form (ST-3). If you have questions about how to complete this refund form, contact the sales tax refund phone number at 785-296-7108, or email KDOR_Audit.Funds@ks.gov. HB 2387 AN ACT concerning sales and compensating use tax; exemption for repairing, rebuilding or replacing certain property destroyed by wildfires; amending K.S.A. 2016 Supp. 79-3606d and repealing the existing section. Be it enacted by the Legislature of the State of Kansas: Section 1. K.S.A. 2016 Supp. 79-3606d is hereby amended to read as follows: 79-3606d. (a) The following shall be exempt from the tax imposed by the Kansas retailers sales tax act: All sales of tangible personal property and services purchased during calendar years 2017 and 2018, necessary to reconstruct, repair or replace any fence that was damaged or destroyed by wildfires occurring during calendar years 2016 and 2017, and the purpose for which is to enclose land devoted to agricultural use. Sales tax paid on and after January 1, 2017, upon the gross receipts received from any such sale shall be refunded. Each claim for a sales tax refund shall be verified and submitted to the director of taxation upon forms furnished by the director and shall be accompanied by any additional documentation required by the director. The director shall review each claim and shall refund that amount of sales tax paid as determined under the provisions of this section. All refunds shall be paid from the sales tax refund fund upon warrants of the director of accounts and reports pursuant to vouchers approved by the director or the director s designee. Any person reconstructing, repairing or replacing such property, or any person who shall contract for the reconstruction, repair or replacement of any such property shall obtain from the state an exemption certificate for the project involved. The certificate shall be furnished to the person or contractor to purchase materials and lease machinery and equipment for such project. The person or contractor shall furnish the number of such certificate to all suppliers from whom such purchases are made, and such suppliers shall execute invoices covering the same bearing the number of such certificate. Upon completion of the project the contractor shall furnish to the person that obtained the exemption certificate, a sworn statement, on a form to be provided by the director of taxation, that all purchases so made were entitled to exemption under this subsection. (b) The provisions of this section shall be deemed to be supplemental to the Kansas retailers sales tax act. Sec. 2. K.S.A. 2016 Supp. 79-3606d is hereby repealed. Sec. 3. This act shall take effect and be in force from and after its publication in the Kansas register. Page 11 of 43
Corporate Tax - Public Benefit Corporation (PBC) 2017 HB 2153 Effective on and after January 1, 2018 New Business Entity: Public Benefit Corporation (PBC) A PBC is a for-profit corporation organized under and subject to the requirements of the General Corporation Code that is intended to produce a public benefit or benefits and to operate in a responsible and sustainable manner. A PBC would be managed in a manner balancing the stockholders financial interests (the best interests of those materially affected by the PBC s conduct) with the public benefit or benefits identified in its articles of incorporation. The PBC must identify specific public benefit or benefits and state it is a PBC within its articles of incorporation. These provisions would constitute public benefit provisions. The PBC gives directors the secured legal protection necessary to consider the interest of all stakeholders, rather than just the shareholders. Public benefit means a positive effect, or reduction of negative effects, on one or more categories of the following; Persons; entities; communities or interests, other than stockholders in their capacities as stockholders, including but not limited to effects of an; artistic, literary, charitable, medical, cultural, religious, economic, scientific or technological nature, educational. The approval of 2/3 of the outstanding stock is required to move, merge or consolidate with a corporation that is a non-pbc if it is presently a PBC or a PBC if it presently a non-pbc. These restrictions would not apply prior to the time the corporation has received payment for any of its capital stock. PBCs follow all tax laws of a traditional corporation. HOUSE BILL No. 2153 AN ACT concerning public benefit corporations; relating to the Kansas general corporation code; business entity standard treatment act; amending K.S.A. 2016 Supp. 17-0614, 17-6712, 17-7903 and 17-7919 and repealing the existing sections. Be it enacted by the Legislature of the State of Kansas: New Section 1. Sections 1 through 9, and amendments thereto, apply to all public benefit corporations, as defined in section 2, and amendments thereto. If a corporation elects to become a public benefit corporation under sections 1 through 9, and amendments thereto, in the manner prescribed in sections 1 through 9, and amendments thereto, it shall be subject in all respects to the provisions of the Kansas general corporation code, except to the extent sections 1 through 9, and amendments thereto, impose additional or different requirements, in which case such requirements shall apply. New Sec. 2. (a) A public benefit corporation is a for-profit corporation organized under and subject to the requirements of the Kansas general corporation code that is intended to produce a public benefit or public benefits and to operate in a responsible and sustainable manner. To that end, a public benefit corporation shall be managed in a manner that balances the stockholders pecuniary interests, the best interests of those materially affected by the corporation s conduct and the public benefit or public benefits identified in its articles of incorporation. In the articles of incorporation, a public benefit corporation shall: (1) Identify within its statement of business or purpose pursuant to K.S.A. 17-6002(a)(3), and amendments thereto, one or more specific public benefits to be promoted by the corporation; and (2) state within its heading the name of the corporation and that it is a public benefit corporation pursuant to K.S.A. 2016 Supp. 17-7919(b), and amendments thereto. (b) Public benefit means a positive effect, or reduction of negative effects, on one or more categories of persons, entities, communities or interests, other than stockholders in their capacities as stockholders, including, but not limited to, effects of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific or technological nature. Public benefit provisions means the provisions of the articles of incorporation contemplated by this section. (c) If the name of a public benefit corporation does not contain language stated in K.S.A. 2016 Supp. 17-7919(b)(1) through (4), and amendments thereto, the corporation shall, prior to issuing unissued shares of stock or disposing of treasury shares, provide notice to any person to whom such stock is issued or who acquires such treasury shares that it is a public benefit corporation; but such notice need not be provided if the issuance or disposal is pursuant to an offering registered under the securities act of 1933, 15 U.S.C. 77r et seq., or if, at the time of issuance or disposal, the corporation has a class of securities that is registered under the securities exchange act of 1934, 15 U.S.C. 78a et seq. New Sec. 3. (a)notwithstanding any other provisions of the Kansas general corporation code, a corporation that is not a public benefit corporation, may not, without the approval of 2 3 of the outstanding stock of the corporation entitled to vote thereon: (e), shall apply as nearly as practicable, with the word amendment substituted for the words merger or consolidation, and the word corporation substituted for the words constituent corporation or surviving or resulting corporation. Sec. 12. K.S.A. 2016 Supp. 17-7903 is hereby amended to read as follows: 17-7903. The following documents related to corporations shall be filed with the secretary of state: (4) public benefit corporation articles of incorporation as set forth in section 2, and amendments thereto; (b) The name of a public benefit corporation shall contain either or both of one of the words, abbreviations or designations in subsection (a) or: (1) The words public benefit corporation ; (2) the abbreviation P.B.C. ; (3) the designation PBC ; or (4) words or abbreviations of like import in other languages if they are written in Roman characters or letters. Page 12 of 43