Property Tax Abatements

Exemption of Property for Economic Development Purposes
Industrial Revenue Bond Exemption
Property Exempt from Taxation

Exemption of Property for Economic Development Purposes

The board of county commissioners of any county or the governing body of any city may approve for economic development purposes a property tax exemption for up to 10 years per Article 11, Section 13 of the Kansas Constitution.

Qualifications

The property (real or personal) must be used exclusively for

manufacturing articles of commerce;
conducting research and development; or
storing goods which are sold or traded in interstate commerce.

The property must also be: (1) associated with a new business; or (2) associated with the expansion of an existing business that creates new employment. A new business may be a business that relocates within Kansas but is new to a county if the Secretary of Commerce determines that the exemption is necessary to prevent the business from moving outside the state of Kansas.

Poultry, rabbit confinement facilities or swine production facilities are not eligible for the economic development property tax exemption.

No ad valorem tax levied on behalf of a school district in a redevelopment district established pursuant to K.S.A. 74-8921 may be exempt (affecting exemptions granted July 1, 1998, and thereafter).

Procedures for Obtaining an Exemption

A city or county must adopt uniform policies and procedures, including a cost benefit analysis and a system for monitoring exemptions. A cost benefit analysis must be performed on each application for exemption.

The city or county must also provide public notice and conduct a public hearing on the granting of the exemption after providing notice. If approved, an ordinance (city) or resolution (county) authorizing exemption is issued. In it, the city or county must find that the property will be used exclusively for exempt purposes. If the business is relocating within Kansas, the document must further indicate that the Secretary of Commerce found the relocation necessary to prevent the business from moving outside the state.

The applicant must then submit an application for exemption of property to the county appraiser.

The county appraiser includes any comments and forwards the exemption package to the Kansas Board of Tax Appeals (BOTA).

BOTA will review an application for exemption to determine whether the property legally and factually qualifies for exemption. BOTA will not substitute its judgment for local officials as to whether the exemption is necessary to promote economic development. BOTA will issue an order granting or denying exemption for the specified period of years.

An application for exemption prepared in accordance with instructions and assistance from the Department of Commerce shall be deemed approved unless BOTA schedules it for hearing within 30 days after the date all required information and data relating to the request for exemption has been received. If BOTA schedules a hearing, it must be conducted within 90 days.

During the period of exemption, the applicant must file an "Annual Claim for Exemption" with the county appraiser on or before March 1 each year.

Industrial Revenue Bond Exemption

The board of county commissioners of any county or the governing body of any city may approve an exemption of property funded by industrial revenue bonds (IRB's). Some projects are only partially funded with IRB's. The property associated therewith would only qualify for exemption to the extent funded with IRB's.

Qualifications

A city or county may issue industrial revenue bonds for the purchase, construction, improvement or remodeling of a facility for agricultural, commercial, hospital, industrial, natural resources, recreational development or manufacturing purposes.

Certain property, even though funded by industrial revenue bonds, does not qualify for exemption:

an agreement between the city or county and the taxpayer that the taxpayer will not seek a property tax exemption as a condition for issuing the bonds;
property located in a redevelopment project area established under K.S.A. 12-1770 et seq. cannot be exempt from taxation;
a retail enterprise identified under the standard industrial classification codes 52 through 59, cannot qualify for exemption, unless the facility is used to house the headquarters or back office operations of the retail enterprise; and
property used for a poultry or rabbit confinement facility or swine production facility cannot be exempt from taxation.

Procedures for Obtaining an Exemption

Note: A statement must be filed with BOTA prior to issuing industrial revenue bonds, regardless of whether exemption will be sought. [K.S.A.. 12-1744a]. This process should not be confused with the application for exemption process.

A city or county prepares a cost benefit analysis for each application for exemption, including the effect of the exemption on state revenues. The city or county must also conduct a public hearing on the exemption after providing proper notice. (K.S.A. 12-1749d).

The applicant must then submit an application for exemption of property to the county appraiser. The county appraiser includes any comments and forwards the exemption package to the Kansas Board of Tax Appeals (BOTA).

An application for exemption prepared in accordance with instructions and assistance from the Kansas Department of Commerce shall be deemed approved unless BOTA schedules it for hearing within 30 days after the date all required information and data relating to the request for exemption has been received. If BOTA schedules a hearing, it must be conducted within 90 days.

During the period of exemption, the applicant must file an "Annual Claim for Exemption" with the county appraiser on or before March 1 each year.

Property Exempt from Taxation

Business Aircraft

A property tax exemption exists for aircraft used in business and industry.

Qualifications

Aircraft predominantly used to earn income for the owner in the conduct of the owner's business or industry is exempt from property tax. K.S.A. 79-201k

Procedures for Obtaining an Exemption

A property owner requesting an exemption must file an initial request for exemption on forms provided by the county appraiser.

The request is filed with the county appraiser who reviews the application and recommends the granting or denial of the exemption.

The county appraiser files the request for exemption and the recommendation with the Kansas Board of Tax Appeals (BOTA).

BOTA reviews all information when the application is filed and makes a decision to grant or deny the exemption. BOTA may set the matter for hearing, or any party (the applicant or the county) may request a hearing, if necessary. BOTA issues an order setting forth its decision.

Commercial and Industrial Machinery and Equipment

All commercial and industrial machinery and equipment acquired by qualified purchase or lease made or entered into after June 30, 2006 shall be exempt from property tax. All commercial and industrial machinery and equipment transported into this state after June 30, 2006, for the purpose of expanding an existing business or the creation of a new business shall be exempt from property tax.

Qualifications

A property tax exemption exists for all commercial and industrial machinery and equipment that is acquired or leased, or transported into the state of Kansas after June 30, 2006. Commercial and industrial machinery and equipment shall mean property classified for property tax purposes within subclass (5) of class 2 of section 1 of article 11 of the constitution of the state of Kansas. K.S.A. 79-223

Procedures for Obtaining an Exemption

An exemption from property tax is presumed. However, if the county appraiser is in doubt as to whether certain property qualifies for exemption, the county appraiser presumes in favor of taxation. The taxpayer may then file an application for exemption with the county appraiser pursuant to KSA 79-213, in order to have BOTA review the matter.

Construction Hand Tools

Hand tools used in the construction industry constitute an incentive to economic development within the state and improve the general economy of the state and are therefore exempt from property tax.

Qualifications

A property tax exemption exists for all hand tools and hand tool boxes regularly used exclusively by a mechanic or tradesperson in the construction industry. K.S.A. 79-201o (see also K.S.A. 79-223)

Procedures for Obtaining an Exemption

For those construction hand tools acquired prior to July 1, 2006, a property owner requesting an exemption must file an initial request for exemption on forms provided by the county appraiser.

For those construction hand tools acquired after June 30, 2006, an exemption from property tax is presumed. K.S.A. 79-223

The request is filed with the county appraiser who reviews the application and recommends the granting or denial of the exemption.

The county appraiser files the request for exemption and the recommendation with the Kansas Board of Tax Appeals (BOTA).

Doctors, Dentists, Podiatrists, Optometrists and Psychologists Leasing Real Property

A property tax exemption exists for real property that is leased by a municipality or political subdivision of Kansas in order to provide the office space necessary for certain medical services provided by a person licensed by state boards.

Qualifications

The office space must be leased by a municipality or political subdivision and actually and regularly used to provide certain medical services by a person licensed by state boards. That is: the practice of medicine and surgery or osteopathic medicine by a person licensed by the Kansas Board of Healing Arts; the performance of dentistry services by a person licensed by the Kansas Dental Board; the performance of podiatry services by a person licensed by the Kansas Board of Healing Arts; the performance of optometry services by a person licensed by the Kansas Board of Examiners in Optometry; or the practice of psychology by a person licensed by the Kansas Behavioral Sciences Regulatory Board.

Procedures for Obtaining an Exemption

A property owner requesting an exemption must file an initial request for exemption on forms provided by the county appraiser.

The request is filed with the county appraiser who reviews the application and recommends the granting or denial of the exemption.

The county appraiser files the request for exemption and the recommendation with the Kansas Board of Tax Appeals (BOTA).

Farm Machinery and Equipment

A property tax exemption exists for farm machinery and equipment.

Qualifications

The farm machinery and equipment must be actually and regularly used in a farming or ranching operation, feedlot operation, nursery operation, aquaculture operation, or Christmas tree operation. Farming and ranching operation includes the performing of farm or ranch work for hire. K.S.A. 79-201j

By law, farm machinery and equipment may include a greenhouse that is not permanently affixed to real estate. It may also include personal property associated with a natural gas distribution system owned by a nonprofit public utility described by K.S.A. 66-104c and operated predominantly for providing fuel for irrigation of land devoted to agricultural use.

Farm machinery and equipment does not include any passenger vehicle, truck, truck tractor, trailer, semitrailer or pole trailer, other than a farm trailer, as those terms are defined by K.S.A. 8-126.

Procedures for Obtaining an Exemption

Under this law, an exemption from property tax is presumed. However, if the county appraiser is in doubt as to whether certain property qualifies for exemption, the county appraiser presumes in favor of taxation. The taxpayer may then file an application for exemption with the county appraiser pursuant to KSA 79-213, in order to have BOTA review the matter.

Home Day Care Property

Household goods and personal effects are exempt in Kansas, unless used for the production of income. However, household goods and personal effects used in a home for day care purposes may still qualify for exemption if the home is registered or licensed with the Kansas Department of Health and Environment.

Qualifications

Household goods and personal effects include furniture, cooking utensils, refrigerators, deep freezers, washing and drying machines, dishwashers, stoves, ranges, ironers, vacuum cleaners, sewing machines, radios, record players, television sets, shop and hobby equipment used in or about the home, fishing equipment (not including boats), bicycles, yard and garden equipment, firearms, golf clubs, photographic equipment, jewelry, luggage, musical instruments and air conditioners if it is not a part of the central heating and air conditioning system.

Procedures for Obtaining an Exemption

Machinery, Equipment, Materials and Supplies

A property tax exemption exists for low-dollar items of machinery, equipment, materials and supplies used for business purposes, or in activities by an entity not subject to Kansas income tax.

Qualifications

For tax years 2007 and thereafter, a property tax exemption exists for machinery, equipment, materials and supplies used for business purposes, or in activities by an entity not subject to Kansas income tax with a retail cost when new of $1,500 or less. K.S.A. 79-201w. (See also K.S.A. 79-223 regarding property tax exemption for all commercial and industrial machinery and equipment acquired by qualified purchase or lease made or entered into after June 30, 2006.)

Procedures for Obtaining an Exemption

Under this law, an exemption from property tax is presumed. However, if the county appraiser is in doubt as to whether certain property qualifies for exemption, the county appraiser presumes in favor of taxation. The taxpayer may then file an application for exemption with the county appraiser pursuant to K.S.A 79-213, in order to have BOTA review the matter.

Merchants' and Manufacturers' Inventory

A property tax exemption exists for merchants' and manufacturers' inventory.

Qualifications

A merchant is a person, company or corporation who purchases tangible personal property for resale in the ordinary course of business without modification or change in form or substance.

A manufacturer is a person, company or corporation who is engaged in the business of transforming, refining, or combining materials and labor to change tangible personal property from one form to another, including packaging.

Inventory includes those items that:

are primarily held for sale in the ordinary course of business (finished goods);
are in process of production for sale (work in process); or
are to be consumed either directly or indirectly in the production of finished goods (raw materials and supplies).

K.S.A. 79-201m

Procedures for Obtaining an Exemption

Motor Vehicle Dealer's Inventory

All motor vehicles held as inventory for sale by any motor vehicle dealer are exempt from property tax.

Qualifications

Motor vehicle includes all motor vehicles required to be registered under Kansas law. A motor vehicle dealer includes new and used dealers as defined by K.S.A. 8-126.

Procedures for Obtaining an Exemption

Railroad Machinery and Equipment

All railroad machinery and equipment acquired by qualified purchase or lease made or entered into after June 30, 2006 shall be exempt from property tax. All railroad machinery and equipment transported into this state after June 30, 2006 for the purpose of expanding an existing business or the creation of a new business shall be exempt from property tax.

Qualifications

A property tax exemption exists for all railroad machinery and equipment that is acquired or leased, or transported into the state of Kansas after June 30, 2006. Railroad machinery and equipment shall mean property classified for property tax purposes within subclass (3) of class 2 of section 1 of article 11 of the constitution of the state of Kansas. K.S.A. 79-224

Procedures for Obtaining an Exemption

Telecommunications Machinery and Equipment

All telecommunications machinery and equipment acquired by qualified purchase or lease made or entered into after June 30, 2006 shall be exempt from property tax. All telecommunications machinery and equipment transported into this state after June 30, 2006 for the purpose of expanding an existing business or the creation of a new business shall be exempt from property tax.

Qualifications

A property tax exemption exists for all telecommunications machinery and equipment that is acquired or leased, or transported into the state of Kansas after June 30, 2006. Telecommunications machinery and equipment shall mean network administrative assets; central office equipment; information, station and customer equipment; and outside plant equipment of a telecommunication company. K.S.A. 79-224

Procedures for Obtaining an Exemption

Poultry Confinement Facility

K.S.A. 17-5903(p) provides, "'Poultry confinement facility' means the structures and related equipment used for housing, breeding, laying of eggs or feeding of poultry in a restricted environment. The term includes within its meaning only such agricultural land as is necessary for proper disposal of liquid and solid wastes and for isolation of the facility to reasonably protect the confined poultry from exposure to disease. As used in this subsection, 'poultry' means chickens, turkeys, ducks, geese or other fowl."

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Rabbit Confinement Facility

K.S.A. 17-5903(q) provides, "'Rabbit confinement facility' means the structures and related equipment used for housing, breeding, raising, feeding or processing of rabbits in a restricted environment. The term includes within its meaning only such agricultural land as is necessary for proper disposal of liquid and solid wastes and for isolation fo the facility to reasonably protect the confined rabbits from exposure to disease."

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Swine Production Facility

K.S.A. 17-5903(s) provides, "'Swine production facility' means the land, structures and related equipment owned or leased by a corporation or limited liability company and used for housing, breeding, farrowing or feeding of swine. The term includes within its meaning only such agricultural land as is necessary for proper disposal of liquid and solid wastes in environmentally sound amounts for crop production and to avoid nitrate buildup and for isolation of the facility to reasonably protect the confined animals from exposure to disease."

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Headquarter Operation

A facility where principal officers of the business are housed and from which direction, management or administrative support for transactions is provided for a business or a division of a business.

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Back Office Operation

Processing functions of a national or multi-national business which support, but are not directly engaged in the primary focus of the business.

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