What tax changes did the 2013 Kansas abortion law (HB 2253) make?

Plain-English summary

Kansas Notice 13-03 collects the tax provisions of 2013 House Bill 2253, a broad abortion-law bill. Except where noted, the tax provisions are effective for tax years commencing after December 31, 2013.

Dependents. New Section 2 declares (effective July 1, 2013) that life begins at fertilization and gives the unborn child certain rights. This does not allow an unborn child to be claimed as a dependent on the Kansas return. Kansas follows federal law: only a child born alive is a dependent, the dependent must first be claimed federally, and a Social Security number is required for each dependent (this also affects the Kansas earned income tax credit).

Denied or narrowed benefits.

• Employer health-coverage credit (K.S.A. 40-2246): no credit for amounts paid for an optional rider covering abortion.
• Income-tax and corporate addition modifications (K.S.A. 79-32,117 and 79-32,138): add back deductions for medical care paid for an abortion, and for abortion-coverage riders / health-savings-account amounts for abortion-coverage riders.
• Research-and-development credit (K.S.A. 79-32,182b): qualifying R&D expenditures exclude any expenditures for performing an abortion.
• Community-services contribution credit (K.S.A. 79-32,195): "health care services" redefined to exclude any service involving an abortion.
• Community/technical college credit (K.S.A. 79-32,261): "deferred maintenance" redefined to exclude work on any building in which an abortion is performed (this credit does not apply to tax year 2013 or later).
• Sales tax exemptions (K.S.A. 79-3606(p), (ll), (rr), (ccc)): narrowed so they do not cover sales of abortion drugs, or purchases by nonprofits/clinics that perform abortions.

What this means for you

Individuals

• You cannot claim an unborn child as a dependent; dependents must be claimed federally and have a Social Security number.

Employers and corporations

• Add back deductions and lose credits to the extent they relate to abortion coverage or abortion services.

Nonprofits and clinics that perform abortions

• Certain sales-tax exemptions no longer apply to your purchases (or to abortion drugs).

Common questions

Can an unborn child be a dependent? No -- Kansas follows federal law, under which only a child born alive is a dependent.

When do the tax provisions apply? Tax years commencing after December 31, 2013.

Which taxes are affected? Individual and corporate income tax, several credits, and retailers' sales tax.

What is the common theme? Benefits and exemptions tied to abortion coverage, abortion drugs, or entities performing abortions are denied or narrowed.

Citations and references

• K.S.A. 79-32,117 and 79-32,138 -- income and corporate addition modifications for abortion-related deductions.
• K.S.A. 40-2246 -- employer health-coverage credit, no credit for abortion-rider amounts.
• K.S.A. 79-32,182b, 79-32,195, 79-32,261 -- R&D, community-services, and college credits narrowed to exclude abortion.
• K.S.A. 79-3606(p), (ll), (rr), (ccc) -- sales-tax exemptions narrowed.
• 2013 House Bill 2253 -- the enacting legislation.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 13-03

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 13-03

                             CHANGES TO KANSAS TAXES
                     DUE TO CHANGES RELATED TO ABORTION LAWS

  During the 2013 Legislative Session HB 2253 was passed and signed into law. The Bill

makes several changes to abortion laws in Kansas, including changes to various tax provisions.
This Notice addresses the changes to the various tax provisions, all of which are effective for tax
years commencing after December 31, 2013.

 New Section 2 of the Bill declares that life begins at fertilization and, effective July 1,

2013, gives the unborn child certain rights, privileges and immunities. This declaration does not
mean that an unborn child can be claimed as a "dependent" on the Kansas income tax return.

  In order for a Kansas income taxpayer to claim a dependent on the Kansas income tax

return, the taxpayer must also claim that person as a dependent on the taxpayer's federal income
tax return. Kansas looks to federal income tax law for the determination of who is or is not
considered to be a dependent. In order to make the claim of an exemption for a dependent on the
Kansas income tax return, a claim of exemption for a dependent must first be properly made on
the taxpayer's federal income tax return. The same rational would apply in claiming any other
Kansas tax benefit related to the federal determination of dependency status, such as the Kansas
earned income tax credit.

 Under federal income tax law an unborn child is not considered to be a dependent. Only

upon live birth can the child be considered as a dependent.

  In addition, Kansas law requires that the social security numbers for all dependents be

entered on the taxpayer's Kansas income tax return. Without a social security number, an
exemption claimed for a dependent will not be allowed.

  Section 11 of the Bill amends K.S.A. 2012 Supp. 40-2246. This statute provides a credit

against Kansas income tax to an employer for amounts paid during the taxable year on behalf of
an eligible employee to provide health insurance or care and amounts contributed to health
savings accounts of eligible covered employees. The amendment provides that no credit shall be
allowed for that portion of any amounts paid by an employer for healthcare expenditures, a
health benefit plan, or amounts contributed to health savings accounts for the purchase of an
option rider for coverage of abortion.

  Section 17 of the Bill amends K.S.A. 2012 Supp. 79-32,117. This statute provides certain

addition and subtraction modifications in computing a taxpayer's Kansas adjusted gross income.
The amendments include two new addition modifications.

  One addition modification is for that portion of the amount of any expenditure deduction

claimed in determining federal adjusted gross income for expenses paid for medical care of the
taxpayer or the taxpayer's spouse or dependents when such expenses were paid or incurred for
an abortion, or for a health benefit plan for the purchase of an optional rider for coverage of an
abortion, to the extent that such taxes and assessments are claimed as an itemized deduction for
federal income tax purposes.

  The other addition modification is for that portion of the amount of any expenditure

deduction claimed in determining federal adjusted gross income for expenses paid by a taxpayer
for health care when such expenses were paid or incurred for abortion coverage, a health benefit
plan when such expenses were paid or incurred for abortion coverage, or amounts contributed to
health savings accounts for such taxpayer's employees for the purchase of an optional rider for
coverage of an abortion, to the extent that such taxes and assessments are claimed as a deduction
for federal income tax purposes.

  Section 18 of the Bill amends K.S.A. 2012 Supp. 79-32,138. This statute provides for the

imposition of the corporate income tax. The amendment provides that there shall be added to
federal adjusted gross income that portion of the amount of any expenditure deduction claimed in
determining federal adjusted gross income for expenses paid by a taxpayer for health care when
such expenses were paid or incurred for abortion coverage, a health benefit plan when such
expenses were paid or incurred for abortion coverage, or amounts contributed to health savings
accounts for such taxpayer's employees for the purchase of an optional rider for coverage of
abortion.

  Section 19 of the Bill amends K.S.A. 2012 Supp. 79-32,182b. This statute provides a

credit for certain research and development expenses. The amendment provides that
expenditures in research and development activities shall not include any expenditures for the
performance of any abortion.

  Section 20 of the Bill amends K.S.A. 2012 Supp. 79-32,195. This statute contains

definitions related to an income and privilege tax credit for community services contributions.
The amendment changes the definition of "health care services" to provide that health care
services shall not include any service involving the performance of any abortion.

  Section 21 of the Bill amends K.S.A. 2012 Supp. 79-32,261. This statute provides an

income tax, premium tax, or privilege tax credit for certain contributions to a community college
located in Kansas for capital improvements, to a technical college for deferred maintenance or
the purchase of technology or equipment, or to a postsecondary educational institution located in
Kansas for deferred maintenance. This credit does not apply to tax year 2013 or later years. The
amendment changes the definition of "deferred maintenance" to provide that deferred
maintenance shall not include any maintenance, repair, reconstruction or rehabilitation of any
building in which any abortion is performed.

 Section 22 of the Bill amends K.S.A. 79-3606. This statute provides for exemptions from

the Kansas retailers' sales tax. Four subsections are amended.

 The first amendment changes the exemption at K.S.A. 79-3606(p) for prescription drugs to

provide that the exemption shall not apply to any sales of drugs used in the performance or
induction of an abortion.

 The second amendment changes the exemption at K.S.A. 79-3606(ll) for sales of

educational materials purchased for distribution to the public at no charge by a nonprofit
corporation organized for the purpose of encouraging, fostering and conducting programs for the
improvement of public health to provide that the exemption shall not apply to any sales of such
materials purchased by a nonprofit corporation which performs any abortion.

  The third amendment changes the exemption at K.S.A. 79-3606(rr) for sales of tangible

personal property which will admit the purchaser to any annual event sponsored by a nonprofit
organization which is exempt from federal income tax pursuant to section 501(c)(3) of the
internal revenue code to provide that the exemption shall not apply to any sales of tangible
personal property purchased by a nonprofit organization which performs any abortion.

  The fourth amendment changes the exemption at K.S.A. 79-3606(ccc) for sales of tangible

personal property and services purchased by a primary care clinic or health center which is
exempt from federal income tax pursuant to section 501(c)(3) of the internal revenue code whose
primary purpose is to provide services to medically underserved individuals and families, and
sales of tangible personal property and services purchased by a contractor for the purpose of
constructing, equipping, reconstructing, maintaining, repairing, enlarging, furnishing or
remodeling facilities for any such clinic or center which would be exempt from taxation if
purchased directly by the clinic or center, to provide that the exemption shall not apply to any
sales of tangible personal property and services purchased by a primary health care clinic or
health center which performs any abortion.

                                 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 or sales 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