How did 2009 House Bill 2365 reduce Kansas tax credits for tax years 2009 and 2010?

Plain-English summary

2009 House Bill 2365 reduced many Kansas tax credits by 10% for tax years 2009 and 2010. Listed nonrefundable credits could not exceed the lesser of 90% of the credit earned or carried forward and 90% of tax liability before credits. Listed refundable credits were limited to 90% of the current-year credit.

The notice lists affected business, investment, contribution, accessibility, energy, and development credits. It provides special 2011 carryforward treatment for reductions to certain previously earned Business and Job Development and High Performance Incentive Program credits.

The legislation also capped the Historic Preservation Tax Credit at $3.75 million for fiscal years 2010 and 2011. Film Production Credits were suspended for tax years 2009 and 2010; credits earned before 2009 could carry to 2011.

Citations and references

• 2009 House Bill 2365
• K.S.A. 40-252
• K.S.A. 79-32,211

Subject

Tax Credit Reductions Under 2009 House Bill 2365

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 09-09

Original ruling text

Kansas Department of Revenue
Office of Policy and Research

                                  Notice 09-09

                              2009 HB 2365
                          Reduction of Tax Credits

HB 2365 passed by the 2009 Kansas Legislature imposed a 10% reduction on various tax
credits. The credit reduction which enables the State of Kansas to meet its budgetary
needs is as follows:

Nonrefundable Tax Credits
Various tax credits allowed in tax years 2009 and 2010 (as specified below) against the
tax imposed by the Kansas income tax act, the premium tax or privilege fees imposed
pursuant to K.S.A. 40-252, and amendments thereto, or the privilege tax as measured by
net income of financial institutions imposed pursuant to chapter 79, article 11 of the
Kansas Statutes Annotated, shall not exceed the lesser of:
• 90% of the tax credit earned in the current year or claimed in a current year as a
carry forward from a prior tax year; OR
• 90% of the tax liability as computed prior to the allowance any such credits.

This credit reduction will occur on the applicable credit schedules when filed with the
appropriate tax return for tax years 2009 and 2010.

The credits affected by this credit reduction include:

Adoption Credit Schedule K-47 K.S.A. 79-32,200
Agritourism Liability Schedule K-33 K.S.A. 74-50,173
Insurance Credit
Alternative-Fueled Tax Schedule K-62 K.S.A. 79-32,202
Credit
Angel Investor Credit Schedule K-30 K.S.A. 74-8133
Agricultural Interest Schedule K-51 K.S.A. 79-32,181a
Reduction Loan Credit
Assistive Technology Schedule K-42 K.S.A. 65-7107
Contribution Credit
Biomass-To-Energy Plant Schedule K-79 K.S.A. 79-32,234
Credit
*Business and Job Schedule K-34 K.S.A. 79-32,153
Development Credit K.S.A. 79-32,160a
Center for Entrepreneurship Schedule K-31 K.S.A. 74-99c09
Credit
Declared Disaster Capital Schedule K-87 K.S.A. 79-32,262
Investment Credit

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Disabled Access Credit Schedule K-37 K.S.A. 79-1117
K.S.A. 79-32,176
K.S.A. 79-32,177
Electric Cogeneration Schedule K-83 K.S.A. 79-32,246
Facility Credit
Environmental Compliance Schedule K-81 K.S.A. 79-32,222
Credit
**High Performance Schedule K-59 K.S.A. 79-32,160a
Incentive Program-
Investment Credit
Higher Education Deferred K.S.A. 79-32,261
Maintenance Tax Credit-
Designated Universities
Integrated Coal Gasification Schedule K-80 K.S.A. 79-32,239
Credit
Law Enforcement Training Schedule K-72 K.S.A. 79-32,242
Center Credit
Mathematics and Science Schedule K-71 K.S.A. 79-32,215
Teacher Employment Credit
National Guard Employer Schedule K-54 K.S.A. 79-32,213
Health Insurance Credit
National Guard & Reserve Schedule K-74 K.S.A. 79-32,244
Employer Credit
Nitrogen Fertilizer Plant Schedule K-78 K.S.A. 79-32,229
Credit
Petroleum Refinery Credit Schedule K 73 K.S.A. 79-32,218
Plugging an Abandoned Oil Schedule K-39 K.S.A. 79-32,207
or Gas Well Credit
Qualifying Pipeline Credit Schedule K77 K.S.A. 79-32,224
Research and Development Schedule K-53 K.S.A. 79-32,182b
Credit
Single City Port Authority Schedule K-76 K.S.A. 79-32,212
Credit
Storage and Blending Schedule K-82 K.S.A. 79-32,252
Equipment Credit
Swine Facility Schedule K-38 K.S.A. 79-32,204
Improvement Credit
Temporary Assistance to Schedule K-61 K.S.A. 79-32,200
Families Contribution
Credit
Venture Capital Credit Schedule K-55 K.S.A. 74-8205

• For a taxpayer that has earned an enhanced Business and Job Development Credit
  under K.S.A. 79-32,160a prior to tax year 2009, any reduction in that credit in tax years
  2009 and 2010 may be carried forward and claimed in tax year 2011.

Page 3

**Any reduction in the investment credit claimed in tax years 2009 and 2010 may be
carried forward and claimed in tax year 2011, for any taxpayer that has received a letter
from the Department of Commerce that is dated prior to June 1, 2009 certifying the
taxpayer as qualifying under the High Performance Incentive Program. If however the
letter certifying the taxpayer is dated on or after June 1, 2009 and the investment becomes
operational during tax year 2009 or tax year 2010, credits claimed in tax year 2009 or tax
year 2010 will be reduced, and the reduction cannot be carried forward.

Refundable Tax Credits
Any credit allowed in tax years 2009 and 2010 (as specified below) against the tax
imposed by the Kansas income tax act, the premium tax or privilege fees imposed
pursuant to K.S.A. 40-252, and amendments thereto, or the privilege tax as measured by
net income of financial institutions imposed pursuant to chapter 79, article 11 of the
Kansas Statutes Annotated, shall not exceed:
• 90% of the tax credit earned in the current year.

This credit reduction will occur on the applicable credit schedules when filed with the
appropriate tax return for tax years 2009 and 2010.

The following credits will be limited to 90% of the tax credit for tax years 2009 and
2010:

Business Machinery and Schedule K-64 K.S.A. 79-32,206
Equipment Credit
Child Day Care Assistance Schedule K-56 K.S.A. 79-32,190
Credit
Community Service Schedule K-60 K.S.A. 79-32,196
Contribution Credit K.S.A. 79-32,197
Declared Disaster Capital Schedule K-87 K.S.A. 79-32,262
Investment Credit
Disabled Access Credit Schedule K-37 K.S.A. 79-32,176
Higher Education Deferred K.S.A. 79-32,261
Maintenance Tax Credit-
Community Colleges and
Technical Colleges
Historic Site Contribution Schedule K-75 K.S.A. 79-32,211a
Credit
Individual Development Schedule K-68 K.S.A. 74-50,208
Account Credit
Regional Foundation Credit Schedule K-32 K.S.A. 74-50,154
Small Employer Health Schedule K-57 K.S.A. 40-2246
Care Credit
Telecommunications and Schedule K-36 K.S.A. 79-32,210
Railroad Credit K.S.A. 79-32,206

Historic Preservation Tax Credit

Page 4

In addition, this legislation imposes a $3.75M statutory cap on the Historic Preservation
Tax Credit for FY 2010 and FY 2011. The Kansas Department of Revenue and the
Kansas State Historical Society have established Guidelines for Implementation of
Section 6, 2009 House Bill 2365-Amendments to K.S.A. 79-32,211.

Film Production Credit
The film production credit will be suspended for a period of two years beginning with tax
years 2009 and 2010. Any film production credits that have been earned prior to tax year
2009 may be carried forward to tax year 2011. No film production credits will be
allowed against tax years 2009 and 2010 tax liabilities.

Taxpayer Assistance
Additional copies of this notice, forms or publications are available from our web site,
www.ksrevenue.org. If you have questions, please contact:

                          Taxpayer Assistance Center
                         Kansas Department of Revenue
                         915 SW Harrison St., 1st Floor
                           Topeka, KS 66612-1588
                             Phone: 785-368-8222
                              Fax: 785-291-3614