KS Notice 12-05 Kansas Individual Income Tax 2012-07-01

Which Kansas income tax credits became C-corporation-only in 2013, and can individuals still carry forward old unused credits?

Short answer: Kansas Notice 12-05 explains that under 2012 House Bill 2117, beginning in tax year 2013 a long list of income tax credits is available only to corporations subject to the Kansas corporate income tax (C corporations) and not to individuals, partnerships, S corporations, limited liability companies, or other pass-through entities. The eighteen credits made C-corporation-only include the Temporary Assistance to Families Contribution credit (K-61), Small Employer Healthcare credit (K-57), Assistive Technology Contribution credit (K-42), Agritourism Liability Insurance credit (K-33), Individual Development Account credit (K-68), Venture and Local Seed Capital credit (K-55), Disabled Access credit (K-37), Research and Development credit (K-53), Child Day Care Assistance credit (K-56), Alternative-Fuel credit (K-62), Swine Facility Improvement credit (K-38), abandoned oil or gas well plugging credit (K-39), Telecommunications credit (K-36), Single City Port Authority credit (K-76), and Environmental Compliance credit (K-81). The Bill also repeals five other credits after tax year 2012 (household and dependent care, disabled access, adoption, National Guard health insurance, and Law Enforcement Training Center contributions). New Section 36 of HB 2117 provides that individuals may continue to carry forward unused nonrefundable credits earned before tax year 2013, subject to the limitations applicable when each credit was earned. The notice bears no printed issue date; it is dated to mid-2012 by its position in the 2012 notice sequence (after Notice 12-01, June 11, 2012, and before Notice 12-15, July 19, 2012).

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This page answers the general question as of 2012. Ezel answers yours, under current Kansas tax law, with citations.

Disclaimer: This is an official Kansas Department of Revenue Notice: public guidance the Department issues to explain Kansas tax law, most often a newly enacted statute. It states the Department's general interpretation and administration of the law; it does not have the force of law and is not a private ruling issued to any one taxpayer. It reflects the statutes, regulations, and rates in effect on its issue date and may since have been amended or superseded by a later notice or law change, so confirm it is still current before relying on it. Kansas state and local sales and use taxes are administered centrally by the Department, so there is no self-collected home-rule city tax outside its scope. This summary is informational only and is not legal or tax advice.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

Kansas Notice 12-05 explains that 2012 House Bill 2117 makes a large group of income tax credits C-corporation-only beginning in tax year 2013, repeals five more credits, and preserves carry-forward of already-earned credits.

Credits limited to C corporations (not available to individuals or pass-through entities) beginning in 2013 include, by schedule:

K-61 Temporary Assistance to Families Contribution (Section 1, amending K.S.A. 39-7,132; Section 22, amending K.S.A. 79-32,200)
K-57 Small Employer Healthcare (Section 2, K.S.A. 40-2246)
K-42 Assistive Technology Contribution (Section 3, K.S.A. 65-7107)
K-33 Agritourism Liability Insurance (Section 4, K.S.A. 74-50,173)
K-68 Individual Development Account (Section 5, K.S.A. 74-50,208)
K-55 Venture and Local Seed Capital (Sections 6-9)
K-37 Disabled Access (Section 19, amending K.S.A. 79-32,177)
K-53 Research and Development (Section 20, amending K.S.A. 79-32,182b)
K-56 Child Day Care Assistance (Section 21, amending K.S.A. 79-32,190)
K-62 Alternative-Fuel (Section 23, amending K.S.A. 79-32,201)
K-38 Swine Facility Improvement (Section 24), K-39 Plugging an Abandoned Oil or Gas Well (Section 25), K-36 Telecommunications (Section 26), K-76 Single City Port Authority (Section 27), K-81 Environmental Compliance (Section 28).

Credits fully repealed after tax year 2012 (Section 40): household and dependent care (K.S.A. 79-32,111a), disabled access (K.S.A. 79-32,176), adoption (K.S.A. 79-32,202), Kansas National Guard employer health insurance (K.S.A. 79-32,213), and Kansas Law Enforcement Training Center contributions (K.S.A. 79-32,242).

Carry over of unused credits. New Section 36 of HB 2117 provides that any nonrefundable credits on the Kansas income tax imposed on individuals that are no longer available starting in tax year 2013, but were earned in a year before 2013 and remain unused, may continue to be carried forward, subject to the limitations applicable to each credit at the time it was earned.

Date note. The notice bears no printed issue date; it is dated to mid-2012 by its position in the 2012 notice sequence (after Notice 12-01, June 11, 2012, and before Notice 12-15, July 19, 2012).

What this means for you

Individuals and pass-through owners

Beginning with tax year 2013, you cannot claim the listed credits (K-61, K-57, K-42, K-33, K-68, K-55, K-37, K-53, K-56, K-62, K-38, K-39, K-36, K-76, K-81); they are available only to C corporations.
You may still carry forward unused nonrefundable credits you earned before 2013, under the rules that applied when they were earned.

C corporations

These credits remain available to corporations subject to the Kansas corporate income tax.

Tax preparers

Distinguish credits merely limited to C corporations from the five credits repealed outright after 2012, and preserve pre-2013 carryforwards for individual clients.

Common questions

Are these credits gone entirely? Most are limited to C corporations, not repealed; five others (household/dependent care, disabled access, adoption, National Guard health insurance, Law Enforcement Training Center) are repealed after tax year 2012.

Can individuals still use old unused credits? Yes -- New Section 36 lets individuals carry forward unused nonrefundable credits earned before 2013, subject to the original limitations.

Who can still claim these credits in 2013? Corporations subject to the Kansas corporate income tax (C corporations).

Where are the fully repealed credits detailed? Also summarized in Notice 12-04.

Citations and references

K.S.A. 79-32,200 -- Temporary Assistance to Families Contribution credit (K-61), limited to C corporations (Section 22).
K.S.A. 79-32,177 -- Disabled Access credit (K-37), limited to C corporations (Section 19).
K.S.A. 79-32,182b -- Research and Development credit (K-53), limited to C corporations (Section 20).
K.S.A. 79-32,190 -- Child Day Care Assistance credit (K-56), limited to C corporations (Section 21).
K.S.A. 79-32,201 -- Alternative-Fuel credit (K-62), limited to C corporations (Section 23).
K.S.A. 79-32,111a, 79-32,176, 79-32,202, 79-32,213, 79-32,242 -- five credits repealed after tax year 2012 (Section 40).
New Section 36 of HB 2117 -- preserves carryforward of unused pre-2013 nonrefundable individual credits.

Source

Landing page: Kansas Department of Revenue Policy Information Library
Original document: Notice 12-05

Original ruling text

Policy & Research Phone: 785-296-3081
915 SW Harrison St FAX: 785-296-7928
Topeka KS 66612-1588 www.ksrevenue.org
Nick Jordan, Secretary Department of Revenue Sam Brownback, Governor
Richard Cram, Director

                                      NOTICE 12-05

 ELIMINATION OF CERTAIN INCOME TAX CREDITS FOR INDIVIDUALS, PARTNERSHIPS,
             S CORPORATIONS, AND LIMITED LIABILITY COMPANIES

                           CARRY OVER OF UNUSED CREDITS

           Elimination of Credits for Pass-Through Entities and Individuals

  During the 2012 Legislative Session House Bill 2117 was passed and signed into law.

Beginning in tax year 2013, certain credits will be available only to corporations that are subject
to the Kansas corporate income tax, i.e. C corporations. The credits listed below will not be
available to individuals, partnerships, S corporations, limited liability companies, or other pass-
through entities.

 1.     Credit for financial support provided to persons eligible to receive aid to
        families with dependent children under agreement with SRS. (Section 1,
        amending K.S.A. 39-7,132 and Section 22, amending K.S.A. 79-32,200)
        Claimed on Schedule K-61 / Temporary Assistance to Families Contribution
        Credit

 2.     Credit for employers providing health insurance or care, or contributions to
        health savings accounts. (Section 2, amending K.S.A. 40-2246) Claimed on
        Schedule K-57 / Small Employer Healthcare Credit

 3.     Credit for contributions to an individual development account to assist a person
        with disabilities. (Section 3, amending K.S.A. 65-7107) Claimed on Schedule
        K-42 / Assistive Technology Contribution Credit

 4.     Credit for purchase of liability insurance by an agritourism operator. (Section 4,
        amending K.S.A. 74-50,173) Claimed on Schedule K-33 / Agritourism
        Liability Insurance Credit

 5.     Credit for contributions to community-based organizations through an
        individual development account. (Section 5, amending K.S.A. 74-50,208)
        Claimed on Schedule K-68 / Individual Development Account Credit

 6.     Credit for investment in Kansas Venture Capital, Inc. (Section 6, amending
        K.S.A. 74-8206) Claimed on Schedule K-55 / Venture and Local Seed Capital
        Credit

 7.     Credit for investment in certified Kansas venture capital companies. (Section 7,
        amending K.S.A. 74-8304) Claimed on Schedule K-55 / Venture and Local
        Seed Capital Credit

 8.    Credit for investment in a technology-based venture capital fund. (Section 8,
       amending K.S.A. 74-8316) Claimed on Schedule K-55 / Venture and Local
       Seed Capital Credit

 9.    Credit for investment in a certified local seed capital pool. (Section 9,
       amending K.S.A. 74-8401) Claimed on Schedule K-55 / Venture and Local
       Seed Capital Credit

 10.   Credit for expenditures to provide disabled access. (Section 19, amending
       K.S.A. 79-32,177) Claimed on Schedule K-37 / Disabled Access Credit

 11.   Credit for research and development expenditures. (Section 20, amending
       K.S.A. 79-32,182b) Claimed on Schedule K-53 / Research and Development
       Credit

 12.   Credit for provision of child care services or facilities. (Section 21, amending
       K.S.A. 79-32,190) Claimed on Schedule K-56 / Child Day Care Assistance
       Credit

 13.   Credit for expenditures for a qualified alternative-fueled motor vehicle or
       alternative-fuel fueling station. (Section 23, amending K.S.A. 79-32,201)
       Claimed on Schedule K-62 / Alternative-Fuel Tax Credit

 14.   Credit for required improvements to a qualified swine facility. (Section 24,
       amending K.S.A. 79-32,204) Claimed on Schedule K-38 / Swine Facility
       Improvement Credit

 15.   Credit for plugging an abandoned oil or gas well. (Section 25, amending K.S.A.
       79-32,207) Claimed on Schedule K-39 / Credit For Plugging An Abandoned
       Oil or Gas Well

 16.   Credit for certain property taxes imposed on telecommunications companies.
       (Section 26, amending K.S.A. 79-32,210) Claimed on Schedule K-36 /
       Telecommunications Credit

 17.   Credit for income attributable to the retirement of indebtedness authorized by a
       single city port authority. (Section 27, amending K.S.A. 79-32,212) Claimed
       on Schedule K-76 / Single City Port Authority Credit

 18.   Credit for expenditures to bring a refinery into compliance with environmental
       standards or requirements. (Section 28, amending K.S.A. 79-32,222) Claimed
       on Schedule K-81 / Environmental Compliance Credit

  In addition to the credits, listed above, which are only available to C corporations,

additional credits are repealed, beginning in tax year 2013. After tax year 2012 the credits listed
below will not be available.

 1.    Credit for household and dependent care expenses. (Section 40, repealing
       K.S.A. 79-32,111a) Claimed directly on Form K-40 / Credit for Child &
       Dependent Care Expenses.

 2.    Credit for expenditures to provided disabled access. (Section 40, repealing
       K.S.A. 79-32,176) Claimed on Schedule K-37 / Disabled Access Credit

 3.    Credit for adoption expenses. (Section 40, repealing K.S.A. 79-32,202)
       Claimed on Schedule K-47 / Adoption Credit

 4.    Credit for provision of health insurance for a member of the Kansas National
       Guard. (Section 40, repealing K.S.A. 79-32,213) Claimed on Schedule K-54 /
       National Guard Employer Health Insurance Credit

 5.    Credit for contributions to the Kansas Law Enforcement Training Center.
       (Section 40, repealing K.S.A. 79-32,242) Claimed on Schedule K-72 / Law
       Enforcement Training Center Credit

                            Carry Over of Unused Credits

 New Section 36 of HB 2117 addresses the question of what happens to the unused portion

of nonrefundable credits that carry over from years prior to 2013 and are held by individuals,
partnerships, S corporations, limited liability companies, or any other pass-through entity. This
Section specifically provides individual taxpayers may continue to carry these credits forward as
long as all statutory requirements contine to be met. The Section provides:

       Any nonrefundable credits applicable to the Kansas income tax imposed on
 individuals that are no longer available commencing in tax year 2013 pursuant to this
 act and earned in any tax year prior to 2013 which are unused may continue to be
 claimed, subject to the limitations applicable to any such credit pursuant to law at the
 time such credit was earned.

                                 Taxpayer Assistance

Additional copies of this notice, forms or publications are available from our web site,
www.ksrevenue.org. If you have questions about income tax, 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

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