SESSION OF 2024
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2685
As Amended by House Committee on Taxation
Brief*
HB 2685, as amended, would create a sales tax
exemption for purchases by any organization exempt from
federal income tax pursuant to 501(c)(3) of the federal
Internal Revenue Code.
Background
The bill was introduced by the House Committee on
Taxation at the request of Representative A. Smith on behalf
of the 2023 Special Committee on Taxation.
House Committee on Taxation
In the House Committee hearing, proponent testimony
was provided by representatives of the Friends of Cedar
Crest Association, Friends of Johnson County Developmental
Supports, InterHab, and Kansas Pet Advocates, and a private
citizen. Proponents generally stated the bill would create a
more fair and uniform system of sales tax exemptions for
charitable organizations and enable such organizations to
better utilize funds for providing services.
Written-only proponent testimony was provided by
representatives of Big Lakes Development Center; Cana
House of Hospitality; ICT SOS; Kansas Humane Society of
Wichita, Kansas; Kansas State Firefighters Association;
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org Music Theatre Wichita; Wichita Repertory Theater; Starkey,
Inc.; and Sleep in Heavenly Peace.
Written-only neutral testimony was provided by a
representative of the League of Kansas Municipalities, who
stated the organization is neutral on the question of state
sales tax exemptions, but decisions to exempt local sales
taxes should be made by voters and elected officials of the
respective communities.
No additional testimony was provided.
The House Committee amended the bill to remove a
requirement that an entity be in good standing with the
Secretary of State as a condition for the sales tax exemption.
Fiscal Information
The Department of Revenue estimated the bill, as
amended, would annually decrease state revenues by $34.4
million, with $28.6 million from the State General Fund and
the balance from the State Highway Fund. The Department
also indicated enactment of the bill would reduce local
government revenues. Any fiscal effect associated with the
bill is not reflected in The FY 2025 Governor’s Budget Report.
[Note: In the fiscal note prepared by the Division of the
Budget on the bill, as introduced, the Department of Revenue
was unable to provide an estimated fiscal effect due to
unclear language in the bill, which the Committee removed by
amendment.]
Taxation; sales tax exemptions; 501(c)(3) organizations
2- 2685