What is the Kansas COVID-19 Retail Storefront Property Tax Relief and who can claim it?

Plain-English summary

Kansas Notice 22-04 explains the COVID-19 Retail Storefront Property Tax Relief Act, created by 2022 House Bill 2136 (New Sections 1-13). It provides assistance -- based on a portion of the property taxes accrued on a retail storefront -- to certain businesses impacted by COVID-19 shutdowns and restrictions during tax years 2020 and 2021.

Who is eligible. The business must operate a "retail storefront" (real property where it conducts retail sales through customers' physical, on-site presence) and must have been operationally shut down or restricted by a COVID-19 order or action of the state, a local government, or a local health officer. It must also:

• be a for-profit business in operation as of July 1, 2019 and March 1, 2020, and still active;
• have filed a 2019 tax return with annual revenue of at least $10,000;
• have had less gross revenue in 2020 or 2021 than in 2019; and
• not have received more than $150,000 in prior COVID-19 local, state, or federal funding.

Delinquent pre-2020 property taxes on the storefront make the claimant ineligible for that storefront.

Who is not eligible. The Act excludes many business types, including grocery stores and pharmacies; hardware and home-improvement stores; retail liquor stores; manufacturers and food processors; schools; hospitals and health care providers; property management and real estate (including short-term rentals); professional services (accounting, legal, financial, IT, engineering, architecture); agriculture and aquaculture producers (except their retail storefronts); passive/investment businesses; lenders such as banks; utilities and telephone/cable companies; and energy production and distribution companies.

How much. Assistance equals 33% of the sum of a "shutdown days" rebate amount and a "restricted operations days" rebate amount. Each is based on the property taxes accrued (or 15% of gross rent paid) for the tax year, divided by a factor that depends on how many days the business was shut down or restricted. Only one claimant per storefront per year may receive assistance, which is capped at $5,000 per retail storefront per tax year, paid by paper check (no payment under $5) from federal American Rescue Plan funds.

How to claim. File an application with the Department; the deadline was April 15, 2023, though the Director of Taxation may extend it or accept a late application for good cause within four years. Because the program uses federal funds, each applicant must obtain a federal Unique Entity Identifier (UEI) from SAM.gov.

Offsets, fraud, and appeals. Assistance may first be applied to any outstanding Department liability or delinquent 2020/2021 property taxes (paid to the county treasurer). A fraudulent application is disallowed in full, is a class B misdemeanor, and any paid amount is recovered as income tax with 1% monthly interest; negligent excessive claims lose 10%. A denied or adjusted applicant may request an informal conference and appeal to the State Board of Tax Appeals.

What this means for you

Small retail businesses hit by COVID-19 orders

• If your on-site retail business was shut down or restricted by a COVID-19 order in 2020 or 2021 and meets the revenue and funding tests, you may claim up to $5,000 per storefront per year based on your property taxes (or 15% of rent).
• Check the long exclusion list first -- grocery, pharmacy, hardware, professional services, health care, and many others cannot claim.
• You must obtain a UEI from SAM.gov before applying, and the standard application deadline was April 15, 2023 (late filing possible for good cause within four years).

Tax professionals

• Confirm the client's operation dates, 2019 revenue floor, revenue decline, and prior COVID-19 funding under $150,000, and that pre-2020 property taxes on the storefront are not delinquent.
• Note that any assistance can be offset against Department liabilities or delinquent 2020/2021 property taxes, and that fraudulent claims are recovered as income tax.

Common questions

What does the program provide? Property-tax-based relief of up to $5,000 per retail storefront per tax year for businesses shut down or restricted by COVID-19 orders in 2020-2021.

How is the amount figured? 33% of the sum of shutdown-days and restricted-days rebate amounts, each based on property taxes accrued (or 15% of gross rent) divided by day-count factors.

Who cannot claim? Grocery stores, pharmacies, hardware stores, hospitals, professional services, real estate, utilities, lenders, and many others listed in the Act.

What was the deadline? April 15, 2023, extendable for good cause within four years; a UEI from SAM.gov is required.

Can a denial be appealed? Yes -- through an informal conference and then to the State Board of Tax Appeals.

Citations and references

• House Bill 2136 (2022), New Sections 1-13 -- created the COVID-19 Retail Storefront Property Tax Relief Act, providing up to $5,000 per storefront per tax year for eligible businesses impacted by COVID-19 shutdowns and restrictions in 2020 and 2021.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 22-04

Original ruling text

Policy and Research
109 SW 9th Street Phone: 785-368-8660
PO Box 3506 Fax: 785-296--8989
Topeka KS 66601-3506 www.ksrevenue.gov
Mark A. Burghart, Secretary Laura Kelly, Governor

                                        NOTICE 22-04

           COVID-19 RETAIL STOREFRONT PROPERTY TAX RELIEF ACT

                          (OCTOBER 3, 2022: UPDATED APRIL 15, 2023)

  During the 2022 Legislative Session House Bill 2136 was passed and signed into law. New

Sections 1-13 of the Bill create the COVID-19 Retail Storefront Property Tax Relief Act. The
purpose of the act is to provide assistance to certain claimants impacted by COVID-19 related
shutdowns and restrictions during tax years 2020 and 2021, based on a portion of property taxes
accrued on retail storefront property.

Eligibility

Generally Eligible

   To submit a claim, certain eligibility requirements must be met. To be eligible, the business

must operate in a "retail storefront." A "retail storefront" is defined as real property where the
claimant conducts retail sales through customers' physical, on-site presence. It can be part of a
multi-purpose or multi-retail storefront building. In addition, the business must have been
operationally shut down or restricted at their retail storefront by a COVID-19 related order or
action imposed by the state, a local unit of government, or a local health officer.

  Claimants must be for-profit businesses in operation as of July 1, 2019, March 1, 2020, and

must be currently in active operations. Claimants must have filed a 2019 tax return with annual
revenues of at least $10,000 in tax year 2019, and must have less gross revenue in tax year 2020
or 2021 than in tax year 2019. Businesses are not permitted to be claimants if they received more
than a total of $150,000 in prior COVID-19 related local, state, or federal funding, or any
combination thereof.

Not Eligible

   Certain businesses are not eligible to file a claim. The bill excludes businesses that are:

   •       grocery stores and pharmacies
   •       hardware stores or home improvement businesses
   •       retail liquor stores
   •       manufacturers and food processors
   •       schools such as pre-kindergarten, kindergarten through grade 12, post-secondary,
           higher education, technical education and training

 •     hospitals and health care providers including, but not limited to, physicians, surgeons,
       psychologists and psychoanalysts, but not including personal services providers such
       as massage therapists and chiropractors
 •     property management and real estate services, including owners and operators of short-
       term rental properties.
 •     professional services, including, but not limited to, accounting, insurance, legal,
       financial services and firms, information technology, engineering, and architecture
 •     agriculture and aquaculture producers, including farms, ranches, and fisheries, but not
       including their retail storefronts used to conduct retail sales to customers
 •     hosts or operators of vacation or short-term rental units
 •     passive businesses, investment companies, and investors who file a schedule E on their
       federal income tax returns
 •     financial businesses primarily engaged in the business of lending, such as banks,
       finance companies and factoring companies
 •     cable companies, telephone companies, utilities, and other similar businesses
 •     energy production, generation, and distribution companies.

  If there are delinquent property taxes for a tax year commencing prior to January 1, 2020, on

a retail storefront owned by the claimant, the claimant is not eligible for assistance for such retail
storefront.

Amount of Assistance

  The assistance is equal to 33.0 percent of the sum of the COVID-19 ordered shutdown days

gross rebate amount and the COVID-19 ordered restricted operations days gross rebate amount.

  The COVID-19 ordered shutdown days gross rebate amount is the amount of property taxes

accrued or 15.0 percent of gross rent actually paid in cash or its equivalent for the tax year, divided
by 3 for businesses shut down for 91 or more days, divided by 4 for businesses shut down for 61
to 90 days, divided by 6 for businesses shut down for 31 to 60 days, and divided by 12 for
businesses shut down for 1 to 30 days.

  The COVID-19 ordered restricted operations days gross rebate amount is the amount of

property taxes accrued or 15.0 percent of gross rent actually paid in cash or its equivalent for the
tax year, divided by 2 for businesses restricted for 211 or more days, divided by 2.289 for
businesses restricted for 181 to 210 days, divided by 2.667 for businesses restricted for 151 to 180
days, divided by 3.2 for businesses restricted for 121 to 150 days, divided by 4 for businesses
restricted for 91 to 120 days, divided by 5.333 for businesses restricted for 61 to 90 days, divided
by 8 for businesses restricted for 31 to 60 days, and divided by 16 for businesses restricted for 1
to 30 days.

  Only one claimant per retail storefront is permitted to receive assistance per tax year.

Assistance is limited to $5,000 per tax year per retail storefront. All assistance payments will be
in the form of paper checks. No assistance will be granted for less than $5. Assistance will be
paid out of the American Rescue Plan-State Fiscal Relief-Federal Fund.

Claiming Assistance

  Assistance through the COVID-19 Retail Storefront Property Tax Relief Act may be claimed

by filing and submitting an application provided by the Department of Revenue. The application
must be filed with the Department on or before April 15, 2023. However, the Director of Taxation
may extend the time for filing an application or may accept an application filed after the filing
deadline when good cause exists if the application is filed within four years of the deadline.

An on-line application may be submitted through the Department of Revenue's website at:
www.ksverenue.gov. The Department will begin accepting applications October 3, 2022.

                                   Updated Information

        As noted above, the deadline to submit applications under the COVID-19 Retail
 Storefront Property Tax Relief Act is April 15, 2023. However, the Director of Taxation
 may extend the time for filing an application or may accept an application filed after
 the filing deadline when good cause exists if the application is filed within four years
 of the deadline. An application filed after April 15, 2023, must be submitted using the
 paper form found at https://www.ksrevenue.gov/pdf/Cov-19RetPTRelief.pdf. Late
 applications will be processed only if good cause exists for the late filing of the
 application.

  Because this program is being funded with American Rescue Plan Act funds (federal funds),

each applicant must be qualified and receive a unique entity identifier (UEI) from the federal
government. The UEI is a unique 12-character identifier (a combination of letters and numbers)
assigned to all entities and is used as the primary means of entity identification for Federal awards
and for those doing business with the federal government. The UEI is issued at no cost through
the federal System for Award Management website (SAM.gov).

 Each applicant submitting an application through the COVID-19 Retail Storefront Property

Tax Relief program, must first obtain a UEI from the SAM.gov website. Applicants will need to
"Register Your Entity or Get a Unique Entity ID" (if not done so already) by selecting the green
box marked "Get Started." The data files required to get a UEI on the SAM.gov website include
your legal business name and physical address. The system may also ask for your entity's start
year and state or country of incorporation or establishment. If your entity is not found on
SAM.gov, you will be required to provide documents to prove your entity information.

Payment of Assistance

  Assistance will be paid directly to a claimant. However, the amount of any assistance

otherwise payable may first be applied against any liability to the Department of Revenue
outstanding against the claimant in the year to which the assistance relates. In addition, if there
are any delinquent property taxes for tax year 2020 or 2021 on a retail storefront owned by the
claimant, the assistance shall be paid to the county treasurer of the county in which such retail
storefront is located and applied to the delinquent property taxes.

Disallowance or Reduction of Assistance

  If it is determined an application is or was excessive and was filed with fraudulent intent, the

application will be disallowed in full and, if assistance has been paid, the amount of the assistance
will be recovered by assessment as an income tax. Preparing or filing a fraudulent application is
a class B misdemeanor, and any assistance paid for a fraudulent application bears interest at a rate
of 1% per month until the assistance is repaid or recovered (in addition to penalty and interest
normally imposed on income tax assessments).

  If it is determined assistance granted is or was excessive due to negligence, 10% of the

corrected assistance shall be disallowed and any overpayment will be recovered by assessment as
an income tax.

Appeals

 Any applicant whose application is adjusted or denied has the right to request an informal

conference and may appeal any position taken by the Department at the conclusion of that
conference to the State Board of Tax Appeals.

                                  TAXPAYER ASSISTANCE

 Additional copies of this notice, forms or publications are available from our web site,

www.ksrevenue.gov. If you have questions about this Notice, please contact:

                               Taxpayer Assistance Center
                              Kansas Department of Revenue
                              Scott Office Building, 1st Floor
                                     120 SE 10th Ave
                                      P. O. Box 3506
                                 Topeka, KS 66601-3506
                                   Phone: 785-368-8222
                                    Fax: 785-291-3614