SESSION OF 2023
SUPPLEMENTAL NOTE ON SENATE BILL NO. 37
As Amended by Senate Committee on Financial
Institutions and Insurance
Brief*
SB 37, as amended, would amend the Kansas Housing
Investor Tax Credit Act (Act) to expand the transferability of
tax credits issued under the Act.
Under the Act, for tax years 2022 and thereafter, a tax
credit could be claimed against Kansas income tax liability,
the privilege tax liability imposed upon certain financial
institutions, and the premium tax liability imposed upon
insurance companies. The tax credit could be claimed by
qualified investors and project builders or developers of a
qualified housing project.
The bill would amend the Act to permit, in addition to
those investors, builders, and developers, transferees the
ability to claim the tax credit. Regarding claiming of a tax
credit, the will would also specify:
●Any portion of the tax credit that is carried forward
could be transferred to another taxpayer;
●All or a portion of the tax credit could be transferred
by the qualified investor or any subsequent
transferees to one or more persons; and.
●There will be no limit on the number of times a
credit or any portion that can be transferred.
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*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 The bill would also remove a limitation that specified
only the full amount of the tax credit for any one investment
may be transferred and may only be transferred one time.
The bill would provide that the transferee would receive
all remaining rights and restrictions for the tax credit being
transferred on the date of the transfer.
The bill would also provide for the calculation of any tax
due under provisions in the Insurance Code pertaining to
retaliatory taxes (taxes imposed on out-of-state insurance
companies); the tax credit would be treated as a tax paid as
part of the insurance company’s premium tax owed.
The bill would be in effect upon publication in the
Kansas Register.
Background
The bill was introduced by the Senate Committee on
Federal and State Affairs at the request of Senator Olson.
The bill was referred to the Senate Committee on Financial
Institutions and Insurance.
Senate Committee on Financial Institutions and
Insurance
In the Senate Committee hearing, proponent testimony
was provided by Senator Olson and representatives of the
American Property Casualty Insurance Association (APCIA);
Heartland Housing Partners; and Kansas Farm Bureau,
Kansas Corn Growers Association, Sunflower Electric Power
Corporation, and the Northwest Kansas Economic Innovation
Center (termed “Coalition” in testimony). Proponents
indicated the bill would remove a restriction in the Act to allow
investors to sell more than one tax credit at a time. An
example provided indicated an investor would be permitted to
sell the tax credit to a banking trust department that could
2- 37 then, in turn, resell or transfer the benefits of the original tax
credit to a banking client or other beneficiary. The APCIA
representative requested consideration of an amendment
regarding premium tax credit treatment for out-of-state
insurance companies to provide retaliatory protections to
these companies.
Written-only proponent testimony was submitted by
representatives of the Kansas Department of Commerce,
Haag Development Company, the Kansas Association of
Realtors, Kansas Bankers Association, and Sugar Creek
Capital.
Neutral testimony provided by a representative of the
Kansas Housing Resources Corporation (KHRC) indicated
the allowance of unlimited transfers and transfers of only a
portion of the tax credits allocated to an investor would likely
lead to more administrative work for the KHRC. The
representative stated a limit to the number of transfers could
alleviate this administrative burden while supporting the goals
of the legislation.
Written-only opponent testimony was submitted by a
representative of Americans for Prosperity Kansas. The
testimony stated a concern for the limitation of the tax credit
to only those making investments in qualified housing
projects.
The Senate Committee amended the bill to address the
retaliatory tax consideration of taxes paid by certain
insurance companies.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Department of
Revenue indicates the bill would have fiscal effect on State
General Fund (SGF) revenue. The bill would allow the
Kansas Housing Investor Tax Credit to be transferred to
3- 37 multiple taxpayers; however, the total amount of these credits
would still be capped at $13.0 million per tax year.
The Department indicates the bill would require $42,780
from the SGF in FY 2024 to implement the bill and for
additional information technology expenditures. In addition, if
the combined effect of implementing this bill and other
enacted legislation exceeds the Department’s programming
resources, or if the time for implementing the changes is too
short, additional expenditures for outside cont ract
programmer services beyond the Department’s current
budget may be required.
A fiscal note was not immediately available regarding
the effect of the inclusion of certain premiums tax paid in
consideration of taxes owed by insurance companies.
Any fiscal effect associated with the bill is not reflected
in The FY 2024 Governor’s Budget Report.
Economic development; housing; Kansas Housing Investor Tax Credit Act;
transferability; retaliatory taxes
4- 37