Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor
Division of the Budget
January 25, 2023
The Honorable Caryn Tyson, Chairperson
Senate Committee on Assessment and Taxation
300 SW 10th Avenue, Room 548-S
Topeka, Kansas 66612
Dear Senator Tyson:
SUBJECT: Fiscal Note for SB 40 by Senate Committee on Assessment and Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning SB 40 is
respectfully submitted to your committee.
SB 40 would allow taxpayers who carried back federal net operating losses in tax years
2018, 2019, and 2020 on the federal income tax return to also do so on the state income tax return.
If the amount of net operating loss carryback exceeds the taxpayer’s Kansas adjusted gross income
for that taxable year, then the amount that exceeds the Kansas adjusted gross income could be
carried forward for up to 20 years. The bill would require the taxpayer to file a claim for refund
or amended return by April 15, 2025.
Estimated State Fiscal Effect
FY 2023
SGF
FY 2023
All Funds
FY 2024
SGF
FY 2024
All Funds
Revenue -- -- ($8,400,000) ($8,400,000)
Expenditure -- -- $93,226 $93,226
FTE Pos. -- -- -- --
The Department of Revenue indicates SB 40 would reduce State General Fund revenues
by $8.4 million in both FY 2024 and FY 2025. Data from the Internal Revenue Service indicate
that Kansas taxpayers filed $2.1 billion in negative business income losses for tax year 2018, tax
year 2019, and tax year 2020. Using an average tax rate of 4.0 percent, the potential amount of
tax liability that could be recaptured during a five-year carryback would be approximately $84.0
million. Assuming 20.0 percent of this amount would be recaptured by carrying back losses to The Honorable Caryn Tyson, Chairperson
Page 2—SB 40
profitable years, the fiscal effect of this bill would be $16.8 million, which would be divided
equally between FY 2024 and FY 2025.
The Department of Revenue indicates that it would require a total $93,226 from the State
General Fund in FY 2024 to implement the bill and to modify the automated tax system. The
required programming for this bill by itself would be performed by existing staff of the Department
of Revenue. 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 contract programmer services beyond the
Department’s current budget may be required. Any fiscal effect associated with SB 40 is not
reflected in The FY 2024 Governor’s Budget Report.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Lynn Robinson, Department of Revenue