Session of 1998
By Representative Tanner
            9             AN ACT relating to income taxation; concerning credits therefrom relat-
10             ing to equipment utilized in the manufacture of products from po-
11             stconsumer waste; amending K.S.A. 79-32,192 and repealing the ex-
12             isting section.
14       Be it enacted by the Legislature of the State of Kansas:
15           Section 1. K.S.A. 79-32,192 is hereby amended to read as follows:
16       79-32,192. (a) There shall be allowed as a credit against the tax liability
17       of a taxpayer imposed under the Kansas income tax act an amount equal
18       to 20% of the costs incurred by the taxpayer for purchases of qualified
19       equipment if the total capacity of qualified equipment owned by the tax-
20       payer on the last day of the taxable year in which such credit is claimed
21       exceeds the total capacity of qualified equipment owned by the taxpayer
22       on the last day of the base year. Such credit shall be claimed in the taxable
23       year in which at least 70% of the total production capacity of the qualified
24       equipment is used by the taxpayer to manufacture products. If the
25       amount of such tax credit exceeds the taxpayer's income tax liability for
26       such taxable year, the amount thereof which exceeds such tax liability may
27       be carried over for deduction from the taxpayer's income tax liability in
28       the next succeeding taxable year or years until the total amount of the tax
29       credit has been deducted from tax liability, except that no such tax credit
30       shall be carried over for deduction after the seventh taxable year suc-
31       ceeding the taxable year in which the tax credit is claimed. In no event
32       shall the aggregate of any such credit for a taxpayer exceed $100,000.
33           (b) If qualified equipment which is purchased by any taxpayer who
34       has claimed the credit allowable pursuant to this section is disposed of or
35       otherwise ceases to be qualified equipment within three years of the tax-
36       able year for which such credit is allowed, the taxpayer shall refund the
37       amount of the tax credit which was deducted from income tax liability
38       which exceeds the following amounts: (1) Within the first year, zero; (2)
39       within the second year, an amount equal to 33% of the amount of the
40       credit allowed; (3) within the third year, an amount equal to 67% of the
41       amount of the credit allowed. Any taxpayer who has refunded an amount
42       pursuant to this subsection shall no longer be eligible to carry forward
43       any amount of the credit which had not been used as of the date such

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  1       refund is made.
  2           (c) (1) The department of revenue shall prepare a report on the ef-
  3       fectiveness of the tax credit allowed pursuant to the provisions of this
  4       section. Such report shall include the following information based upon
  5       the most current information available at the time of preparation:
  6           (A) The number of taxpayers who were allowed the tax credit and
  7       the aggregate dollar amount of tax credits allowed;
  8           (B) the volume of postconsumer waste utilized by qualified equip-
  9       ment for which the tax credit was allowed which would have otherwise
10       been disposed of as waste and the percentage that the volume of postcon-
11       sumer waste constitutes of the total volume of materials utilized in the
12       manufacture of products;
13           (C) the number of new employees resulting from the use of qualified
14       equipment for which the tax credit was allowed;
15           (D) the amount of property tax revenues attributable to qualified
16       equipment for which the tax credit was allowed; and
17           (E) the types and quantity of products produced from qualified
18       equipment for which the tax credit was allowed.
19           (2) Any taxpayer who is allowed the credit pursuant to the provisions
20       of this section shall make available, upon request of the department of
21       revenue, such information as is necessary for the department to prepare
22       the report required by this subsection.
23           (3) The report shall be submitted to the legislature no later than Jan-
24       uary 1, 1994.
25           (d) As used in this section, unless the context otherwise requires:
26           (1) ``Base year'' means the income tax year immediately preceding
27       the income tax year for which the credit allowed pursuant to the provi-
28       sions of this section is claimed.
29           (2) ``Capacity'' means the volume of postconsumer waste which qual-
30       ified equipment is capable of processing or handling.
31           (3) ``Collection'' means:
32           (A) The acquisition of materials from businesses or the general public
33       through purchase or donation, including the organization of systems for
34       such acquisition;
35           (B) the preparation of materials for over-the-road transportation
36       through cleaning, densification by shredding, baling, or any other method,
37       or coalescence, including the organization of systems for such prepara-
38       tion; or
39           (C) the transportation of postconsumer waste between separate ge-
40       ographical locations.
41           (4) ``Cost'' means the amount of the purchase price or the amount of
42       the annual lease payment.
43           (5) ``Energy conversion'' means the use of postconsumer waste for

HB 2719


  1       the transformation of materials into heat to be converted into steam,
  2       electrical power, or other forms of energy which results in a correspond-
  3       ing decrease in the use of coal, natural gas, or other naturally occurring
  4       fuel for such purposes. Energy conversion includes, but is not limited to,
  5       methods by which gases generated by the decomposition of organic waste
  6       are captured in order to be sold in lieu of other energy-producing gas.
  7       Energy conversion does not include any incineration of solid waste for
  8       the primary purpose of reducing the quantity of such solid waste.
  9           (6) ``Postconsumer waste'' means only those products and materials
10       generated by businesses or consumers which have served their intended
11       end use or usefulness and either have been or would normally be disposed
12       of as solid waste except for the fact that they are separated from solid
13       waste for purposes of collection, recycling or reuse. Postconsumer waste
14       shall not include hazardous waste, as defined in K.S.A. 65-3430, and
15       amendments thereto.
16           (7) ``Product'' means any material resulting from a manufacturing
17       process and offered for sale to the private or public sector which is com-
18       posed of at least 25% postconsumer waste, including energy conversion
19       occurring in such manufacturing process, and which is used exclusively
20       for any purpose other than as virgin material in a separate manufacturing
21       process. Product does not include any shredded material unless such
22       shredded material is incorporated directly into the manufacturing proc-
23       ess, is to be used for energy conversion, or is to be used as compost.
24           (8) ``Purchase'' means:
25           (A) Any transaction under which title to qualified equipment is trans-
26       ferred for consideration; or
27           (B) any lease contract for qualified equipment for a period of at least
28       three years regardless of whether title to qualified equipment is trans-
29       ferred at the end of such period.
30           (9) (A) ``Qualified equipment'' means machinery or equipment lo-
31       cated within Kansas which has at least an estimated three-year useful life
32       and which at least 70% of the total production capacity thereof is used
33       by the taxpayer to manufacture products within three years of the date
34       of purchase.
35           (B) Qualified equipment shall not include any machinery or equip-
36       ment which is used for the collection of postconsumer waste.
37           (e) The provisions of this section shall be applicable to all taxable
38       years commencing after December 31, 1991, but prior to January 1, 1996
39       1997.
40           Sec. 2. K.S.A. 79-32,192 is hereby repealed.
41           Sec. 3. This act shall take effect and be in force from and after its
42       publication in the statute book.