Did 2012 House Bill 2117 change the Kansas corporate income tax rates or C-corporation modifications?

Plain-English summary

Kansas Notice 12-09 reassures C corporations that 2012 House Bill 2117 -- despite many changes, most effective for tax year 2013 -- did not change corporate income tax rates or the credits available to C corporations.

Rates unchanged. C corporation income continues to be taxed under K.S.A. 79-32,110(c) at the normal tax of 4% on the first $50,000 of taxable income plus a 3% surtax on Kansas taxable income over $50,000.

Modifications unchanged for corporations. A C corporation's Kansas taxable income is computed using the same modifications as individuals under K.S.A. 79-32,117(b) and (c). Section 12 of the Bill adds new addition modifications (b)(xix)-(xxiii) and a new subtraction modification (c)(xx) relating to business income and losses -- but Section 16 amends K.S.A. 79-32,138 to provide that these new modifications do not apply to corporations subject to the Kansas corporate income tax. As a result, the modifications used to compute the Kansas corporate income tax do not change.

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

C corporations

• Your Kansas corporate income tax rate structure is unchanged: 4% normal tax plus a 3% surtax on taxable income over $50,000.
• The new HB 2117 business-income addition and subtraction modifications do not apply to you.

Tax preparers

• Do not apply the new (b)(xix)-(xxiii) or (c)(xx) modifications when computing a C corporation's Kansas taxable income.

Common questions

Did HB 2117 change the corporate income tax rate? No -- it stays at 4% normal tax plus a 3% surtax on income over $50,000.

Do the new business-income modifications apply to C corporations? No -- Section 16 amends K.S.A. 79-32,138 so they do not apply to corporations subject to the corporate income tax.

Were C corporation credits changed? No -- the Bill did not change the credits available to C corporations.

Which statute sets the corporate rates? K.S.A. 79-32,110(c).

Citations and references

• K.S.A. 79-32,110(c) -- Kansas corporate income tax rates (4% normal tax; 3% surtax over $50,000).
• K.S.A. 79-32,117(b) and (c) -- addition and subtraction modifications used to compute taxable income.
• K.S.A. 79-32,138 -- amended by Section 16 so the new (b)(xix)-(xxiii) and (c)(xx) modifications do not apply to C corporations.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 12-09

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 12-09

             RECENT CHANGES DO NOT AFFECT CORPORATE INCOME TAX

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

Despite a multitude of changes, many of which are effective beginning with tax year 2013, the
Bill did not make any changes to the corporate income tax rates or credits available to C
corporations.

 The income of C corporations will continue to be taxed at the rates currently imposed by

K.S.A. 79-32,110(c), which are the normal tax of 4% on the first $50,000 of taxable income and
the 3% surtax on Kansas taxable income in excess of $50,000.

  Under current law the Kansas taxable income of a C corporation is determined by applying

the same modifications as those available to an individual under K.S.A. 79-32,117(b) and (c).
Section 12 of HB 2117 adds new addition modifications in subsections (b)(xix), (xx), (xxi),
(xxii) and (xxiii), and a new subtraction modification in subsection (c)(xx). These modifications
relate to business income and losses. However, Section 16 of the Bill amends K.S.A. 79-32,138
to specifically provide that these new addition and subtraction modifications do not apply to
corporations subject to the Kansas corporate income tax. As a result, the modifications used for
computing the Kansas corporate income tax will not change.

                                 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