Source: http://rvpolicy.kdor.ks.gov/Pilots/Ntrntpil/IPILv1x0.NSF/ae2ee39f7748055f8625655b004e9335/a5755f835de0c11086256ac7005fa774?OpenDocument
Timestamp: 2019-04-23 08:48:56+00:00

Document:
Brief Description: Industrial Revenue Bond (IRB) related.
The purpose of this letter is to respond to your letter dated August 13, 2001.
XXXXXXXXXXXX, a Kansas corporation (the "Company"), through XXXXXXXXXX President of the Company hereby requests a private letter ruling from the Kansas Department of Revenue pursuant to K.S.A. § 79-3646 and K.A.R. § 92-19-59. This request is with respect to whether there is any obligation by the Company to pay sales tax pursuant to the provisions of the Kansas Retailer Sales Tax Act in connection with the construction of a retail and distribution facility located in XXXXXXXX County, Kansas (the "Facility").
In preparing and submitting this private letter -ruling request, the Company has engaged XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX The Company requests that you address communications and correspondence during the course of your deliberation on this request directly to XXXXXXXXXXX. The Company, however, requests that your private letter ruling be issued directly to the Company, with a copy to XXXXXXXXXXXXX.
K.S.A. § 79-3606 sets forth the sales that are exempt from Kansas sales and use tax. Subsection (d) of this statute provides an exemption from sales tax for all sales of "tangible personal property or services purchased by a contractor for the purpose of constructing, equipping, reconstructing, maintaining, repairing, enlarging, furnishing or remodeling facilities for any political subdivision of the state, the total cost of which is paid from funds of such political subdivision and which would be exempt from taxation under the provisions of this Act if purchased directly by such political subdivision." K.S.A. § 79-3606(d) further provides that the term "funds of a political subdivision' shall mean general tax revenues, the proceeds of any bonds and gifts or grants in aid. K.S.A. § 79-3603(p) provides a sales tax exemption for labor and services used in the original construction of a facility in the State of Kansas.
In Revenue Ruling 19-1996-1 (June 6, 1996) the Kansas Department of Revenue ruled that if tangible personal property is purchased at retail whether by a company, a company's contractor, or a trustee in an IRB arrangement, entirely with the proceeds of a local government IRB issuance, the transaction is exempt from Kansas sales tax under K.S.A. § 79-3606(d). The ruling further stated that if property is purchased at retail in part with the proceeds of an IRB, the transaction is subject to sales tax, but that a refund for the fraction of the property purchased with IRB proceeds would be refunded under K.S.A. § 79-3640. The ruling held that the purchases at issue would be exempt from sales tax because the project would be financed entirely with IRB proceeds.
In the present situation, the construction of the Facility will be paid from the proceeds of XXXXXXXXXXXXXXXXX issued by XXXXXXXX. The Company will contract with XXXXXXXXXXX directly to build the Facility. The XXXXXXXX will not be a party to the construction contract. The XXXXXXXXwill own the facility while the bonds are outstanding, during which time the Company will lease the Facility from the XXXXXXXXXXXX.
Acquisition of property; eminent domain, procedure; sale or lease to developer; use of proceeds of sale of bonds. (a) Any city which has adopted a redevelopment plan in accordance with the provisions of this act may purchase or otherwise acquire real property. Upon a 2/3 vote of the members of the governing body thereof a city may acquire by condemnation any interest in real property, including a fee simple title thereto, which it deems necessary for or in connection with any redevelopment plan of an area located within the redevelopment district. Prior to the exercise of such eminent domain power, the city shall offer to the owner of any property which will be subject to condemnation with respect to any redevelopment project, other than one which includes an auto race track facility, compensation in amount equal to the highest appraised valuation amount determined for property tax purposes by the county appraiser for any of the three most recent years next preceding the year of condemnation, except that, if in the year next preceding the year of condemnation any such property had been damaged or destroyed by fire, flood, tornado, lightning, explosion or other catastrophic event, the amount offered should be equal to the appraised valuation of the property which would have been determined taking into account such damage or destruction unless such property has been restored, renovated or otherwise improved. However no city shall exercise such eminent domain power to acquire real property in a conservation area. Any such city may exercise the power of eminent domain in the manner provided by K.S.A. 26-501 et seq., and amendments thereto. In addition to the compensation or damage amount finally awarded thereunder with respect to any property subject to proceedings thereunder as a result of the construction of an auto race track facility, such city shall provide for the payment of an amount equal to 25% of such compensation or damage amount. In addition to any compensation or damages allowed under the eminent domain procedure act, such city shall also provide for the payment of relocation assistance as provided in K.S.A. 12-1777, and amendments thereto.
(15) all related expenses to redevelop and finance the redevelopment project.
None of the proceeds from the sale of such bonds shall be used for the construction of buildings or other structures to be owned by or to be leased to such developer, except for proceeds of such bonds as may be issued for a redevelopment project which includes an auto race track facility and except for proceeds of such bonds as may be issued for a redevelopment district including some or all of the land and buildings comprising a state mental institution closed pursuant to section 2 of chapter 219 of the 1995 Session Laws of Kansas.
[The following shall be subject to Kansas retailers’ sales tax], the gross receipts received for the service of installing or applying tangible personal property which when installed or applied is not being held for sale in the regular course of business, and whether or not such tangible personal property when installed or applied remains tangible personal property or becomes a part of real estate, except that no tax shall be imposed upon the service of installing or applying tangible personal property in connection with the original construction of a building or facility,[emphasis added] the original construction, reconstruction, restoration, remodeling, renovation, repair or replacement of a residence or the construction, reconstruction, restoration, replacement or repair of a bridge or highway.
The Department agrees with this statement. Funds that are proceeds from STAR bonds are deemed to be funds of the political subdivision. Purchases made with these funds are exempt pursuant to K.S.A. 79-3603(d).
The Department agrees with this statement. Funds that are proceeds from IRB’s are deemed to be funds of the political subdivision. Purchases made with these funds are exempt pursuant to K.S.A. 79-3603(d).
No sales tax will be due on the labor and services provided by Company's contractor on the construction of the Facility.
The Department agrees with this statement. The labor services to construct the facility and related improvements qualify as original construction labor services that exempt from Kansas retailers’ sales tax pursuant to K.S.A. 79-3603(p).

References: § 79
 § 92
 § 79
 § 79
 § 79
 § 79
 § 79