SESSION OF 2024
SUPPLEMENTAL NOTE ON HOUSE SUBSTITUTE FOR
SENATE BILL NO. 127
As Recommended by House Committee on
Taxation
Brief*
House Sub. for SB 127 would amend law related to
property tax filings and penalties for late remittance of
withholding taxes and would create a sales tax exemption
forcertain purchases related to telecommunications
infrastructure.
Personal Property Tax Filings
The bill would limit the instances in which a taxpayer
must file statements listing tangible personal property for tax
purposes, reduce penalties for late filings, and specify
circumstances in which extensions of time for filing such
statements and abatements of penalties would be provided.
Single Initial Filing
The bill would require, if an initial statement listing
tangible personal property for taxation has been filed with a
county appraiser, further filings only when there has been a
change to report that is related to the property previously
listed or to the initial statement.
____________________
*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 Reduced Penalties
The bill would reduce the penalty for late filing of
statements listing oil and gas leases and tangible personal
property for taxation from 5 percent to 2 percent per month
with the maximum penalty for late filing being reduced from
25 percent to 10 percent. The penalty for a failure to file
resulting in escaped taxation would be reduced from 50
percent to 12.5 percent.
Extensions of Time and Abated Penalties
The bill would require county appraisers, who currently
have discretionary authority to do so, to grant an extension of
a reasonable amount of time for taxpayers to file statements
of tangible personal property for taxation upon a showing of
good cause.
County appraisers and the State Board of Tax Appeals
would be required to abate late filing penalties under cases of
excusable neglect or in the event the property has been
repossessed by a creditor who paid the taxes on the property.
[Note: Current law provides only the State Board of Tax
Appeals with discretionary authority to abate such penalties.]
Beginning in tax year 2022, such good cause and
excusable neglect would be specified to include instances in
which tangible personal property had been previously
classified as real property or a fixture to real property and was
reclassified to be personal property. The bill would specify
such instances include machinery and equipment used in
industries of grain storage and processing and ethanol or
other biofuels processing.
Withholding Tax Remittance Penalties
The bill would replace the 15 percent penalty for
employers not timely remitting withholding taxes with a
graduated penalty system providing for penalties as follows:
2- 127 ●2 percent, if the remittance is 1 to 5 days late;
●5 percent, if the remittance is 6 to 15 days late;
●10 percent, if the remittance is more than 15 days
late; and
●15 percent, if the remittance is more than 15 days
late and the Department of Revenue notified the
taxpayer regarding the delinquency, but the tax
was not remitted within 10 days of the notification.
Telecommunications Infrastructure Sales Tax Exemption
The bill would create a sales tax exemption for the
purchase of equipment, machinery, or other infrastructure
purchased for use in the provision of internet access service,
telecommunications service, or video service and for repair,
maintenance, and installation services purchased by
providers in the provision of such internet access service,
telecommunications service, or video service.
The exemption would expire on July 1, 2029.
Background
The bill as introduced, which was introduced by the
Senate Committee on Assessment and Taxation at the
request of Senator Claeys, concerned sales tax authority for
Dickinson County. The contents of the original bill were
enacted into law in 2023 HB 2002.
On February 7, 2024, the House Committee on Taxation
removed the original contents of SB 127, inserted the
contents of SB 8, as amended by the House Committee on
Taxation in 2023, and HB 2106, as amended by the House
Committee of the Whole in 2023, and recommended a
substitute bill be created. Background information for those
two bills is provided below.
3- 127 SB 8 (Property Tax Filings and Withholding Penalties)
The bill was prefiled for introduction by Senator Steffen
on January 3, 2023.
Senate Committee on Assessment and Taxation
In the Senate Committee hearing, proponent testimony
was provided by Senator Steffen; representatives of Kansas
Grain and Feed Association, Kansas Manufactured Housing
Association, and Renew Kansas Biofuels Association; and a
private citizen. The proponents generally stated the bill would
alleviate excessive penalties and penalization of taxpayers for
simply forgetting to annually re-notify county appraisers of
property.
Written-only proponent testimony was provided by
representatives of the Kansas Cooperative Council and
Kansas Livestock Association, and by an attorney whose
practice deals with property tax matters.
The Senate Committee amended the bill to insert the
provisions to require only a single filing and specifying
circumstances related to extensions of time and abatements
of penalties.
House Committee on Taxation
In the House Committee hearing, proponent testimony
was provided by Senator Steffen, a private citizen, and
representatives of the Kansas Grain and Feed Association
and Renew Kansas Biofuels Association and the Kansas
Manufactured Housing Association. The proponents generally
stated the bill would reduce excessively punitive late filing
penalties and make personal property tax compliance less
burdensome for taxpayers.
4- 127 Written-only proponent testimony was provided by
representatives of the Kansas Cooperative Council and the
League of Kansas Municipalities.
Written-only neutral testimony was provided by a
representative of the Kansas County Appraisers Association.
No other testimony was provided.
The House Committee amended the bill to clarify the
effective date of the provision requiring a single initial filing
and inserted the contents of HB 2411, regarding withholding
remittance penalties. Background information for HB 2411 is
provided below.
HB 2411 (Withholding Remittance Penalties)
The bill was introduced by the House Committee on
Taxation at the request of Representative Waggoner.
House Committee on Taxation
In the House Committee hearing, proponent testimony
was provided by Representative Waggoner and
representatives of the Kansas Chamber of Commerce and
National Federation of Independent Businesses. The
proponents generally stated the current penalties are
unnecessarily punitive, and the penalties proposed by the bill
mirror federal law.
Written-only proponent testimony was provided by a
representative of Americans for Prosperity-Kansas.
No other testimony was provided.
5- 127 HB 2106 (Telecommunications Infrastructure Sales Tax
Exemption)
The bill was introduced by the House Committee on
Taxation at the request of a representative of AT&T.
House Committee on Taxation
In the House Committee hearing, proponent testimony
was provided by representatives of AT&T, Brightspeed, and
the Kansas Cable Telecommunications Association.
Proponents generally stated the bill would enable them to
maximize the use of recent state and federal assistance for
broadband infrastructure. Written-only proponent testimony
was provided by representatives of the Kansas Chamber of
Commerce, T-Mobile, and WANRack.
Opponent testimony was provided by a representative
of the League of Kansas Municipalities, generally stating the
exemption would erode the local tax base and reduce the
amount of sales tax revenues to local governments.
No other testimony was provided.
House Committee of the Whole
The House Committee of the Whole amended the bill to
insert the July 1, 2028, expiration date of the exemption.
[Note: This date was revised to July 1, 2029 in House Sub.
for SB 127.]
Fiscal Information
The Department of Revenue estimates enactment of the
telecommunications infrastructure sales tax exemption would
reduce state receipts by $16.8 million in FY 2025, $17.0
million in FY 2026, and $17.1 million in FY 2027. Of those
amounts, $13.9 million, $14.0 million, and $14.0 million,
6- 127 respectively, would be reductions to State General Fund
(SGF) receipts, and the respective balances would be
reductions to State Highway Fund revenues. Additionally, the
provision would reduce local sales tax receipts.
The Department of Revenue indicates the reduction in
withholding remittance penalties has the potential to increase
SGF receipts by a negligible amount beginning in FY 2025,
due to the possibility that smaller penalties could result in
more late filings, resulting in higher net penalty collections.
The Department of Revenue indicates enactment of the
personal property tax filing provisions would reduce state
building fund receipts by $29,356 per year, state uniform
school levy receipts by $391,311 per year, and local property
taxes by $19.1 million per year.
Any fiscal effect associated with enactment of the bill is
not reflected in The FY 2025 Governor’s Budget Report.
Taxation; property tax; withholding; penalties; filing; sales tax; exemption;
telecommunications
7- 127