What tax credit does the Kansas Pregnancy Resource Act give for donations to pregnancy centers?
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This page answers the general question as of 2024. Ezel answers yours, under current Kansas tax law, with citations.
Plain-English summary
Kansas Notice 24-14 explains the Pregnancy Resource Act, created by 2024 House Bill 2465. The Act does two things: it creates a tax credit for donating to certain pregnancy-help charities, and it adds a sales tax exemption for those charities' own purchases.
The credit. For tax years beginning after December 31, 2023, a taxpayer may claim a credit equal to 70% of the amount contributed during the year to an "eligible charitable organization." The credit can be applied against Kansas income tax, the privilege tax imposed on banks, trust companies, and savings and loan associations (Article 11 of Chapter 79 of the Kansas Statutes), or the insurance premiums tax and privilege fees under K.S.A. 40-252. The contribution must be voluntary and not a payment for services. Any credit that exceeds the taxpayer's liability carries forward, but no later than the fifth tax year after the contribution year.
The caps. No more than $5 million in credits may be allowed for contributions to any single eligible organization per tax year, and no more than $10 million in credits may be claimed in the aggregate per tax year. The Department allocates credits on a calendar-year basis.
Eligible charitable organization. The organization must be exempt under Section 501(c)(3) of the Internal Revenue Code, be a Kansas nonprofit, and either belong to an organization of Kansas pregnancy centers/residential maternity facilities or be a pregnancy center or residential maternity facility that keeps a dedicated client phone line, maintains a Kansas office open to clients at least 20 hours a week, offers free services to help women carry a pregnancy to term, and uses trained healthcare providers. The organization must certify (under penalty of perjury) that it meets the criteria, including that it does not provide, pay for, refer for, or cover abortions, and that at least 50% of its clients claim Kansas residency.
The sales tax exemption. Section 11 amended K.S.A. 79-3606 to add a new subsection (labeled (rrrr), later redesignated (wwww)) exempting all sales of tangible personal property or services purchased by a qualified pregnancy resource center or residential maternity facility. The center must apply for and receive a tax-exempt entity exemption certificate.
The provisions are effective July 1, 2024.
What this means for you
Donors (individuals, banks, and insurers)
- You can claim a Kansas credit worth 70% of what you give to an approved pregnancy center or residential maternity facility, against your income, privilege, or premium tax.
- Apply for the credit before you claim it: complete Form K-96 (the contributor application), submit it to the eligible organization with your contribution, and the organization submits it to the Department through the web application. If you pledge rather than pay, the contribution must be made within 90 days of the pledge or by the end of the calendar year, whichever is earlier.
- Once the credit is confirmed, claim it on Schedule K-94 with your income, privilege, or premium tax return. The K-94 schedule was expected to be available in mid to late December 2024.
- If your credit is larger than your tax, carry the excess forward -- but not beyond the fifth tax year after the contribution year.
- Watch the caps: only $5 million per organization and $10 million total are available each tax year, and pledges count against those caps.
Pass-through entities
Credits earned by a partnership, LLC, S corporation, or similar pass-through entity are allocated among the partners, members, or shareholders in proportion to ownership or as they agree in an executed agreement.
Pregnancy centers and residential maternity facilities
- To receive credit-eligible contributions, apply to the Department to be certified as an eligible charitable organization and provide the required signed certification.
- To make your own purchases exempt from sales tax, apply for a tax-exempt entity exemption certificate.
Common questions
How big is the credit? 70% of the amount contributed during the year to an eligible charitable organization.
Which taxes can it offset? Kansas income tax, the privilege tax on banks and similar institutions, or the insurance premiums tax under K.S.A. 40-252.
Are there limits? Yes -- $5 million per eligible organization per year and $10 million in the aggregate per year.
Can I carry unused credit forward? Yes, up to the fifth tax year after the contribution year.
How do I claim it? Apply first (Form K-96 through the eligible organization), then claim the credit on Schedule K-94 with your return.
What about the sales tax exemption? A qualified pregnancy resource center or residential maternity facility can apply for a tax-exempt entity exemption certificate so its purchases are exempt.
Citations and references
- House Bill 2465 (2024) -- created the Pregnancy Resource Act (New Section 8) and the related sales tax exemption (Section 11).
- K.S.A. 40-252 -- the insurance premiums tax and privilege fees the credit may offset.
- K.S.A. 79-3606 -- Kansas sales tax exemptions; amended to exempt purchases by qualified pregnancy resource centers and residential maternity facilities.
- Internal Revenue Code Section 501(c)(3) -- federal tax-exempt status an eligible charitable organization must hold.
Source
- Landing page: Kansas Department of Revenue Policy Information Library
- Original document: Notice 24-14
Original ruling text
Policy and Research
109 SW 9th Street Phone: 785-368-8222
PO Box 3506 Fax: 785-296-1279
Topeka KS 66601-3506 www.ksrevenue.gov
Mark A. Burghart, Secretary Laura Kelly, Governor
NOTICE 24-14
PREGNANCY RESOURCE ACT TAX CREDIT AND EXEMPTION
(JULY 1, 2024)
During the 2024 Legislative Session House Bill 2465 was passed and signed into law. The
Bill establishes the Pregnancy Resource Act, which provides an income, privilege, and premium
tax credit for certain contributions to eligible charitable organizations, as well as allowing a sales
tax exemption for pregnancy resource centers and residential maternity facilities.
New Section 8(a) establishes the Act.
Definitions
New Section 8(b) defines certain terms used in the act. It provides:
(1) "Eligible charitable organization" means an organization that is:
(A) Exempt from federal income taxation pursuant to section 501(c)(3) of the
federal internal revenue code of 1986;
(B) a nonprofit organization organized under the laws of this state; and
(C) (i) a member of an organization whose members are pregnancy centers or
residential maternity care facilities based in the state; or
(ii) a pregnancy center or residential maternity facility that:
(a) Maintains a dedicated phone number for clients;
(b) maintains in this state its primary physical office, clinic or residential home
that is open for clients for a minimum of 20 hours a week, excluding state holidays;
(c) offers services, at no cost to the client, for the express purpose of providing
assistance to women in order to carry their pregnancy to term, encourage parenting or
adoption, prevent abortion and promote healthy childbirth; and
(d) utilizes trained healthcare providers to perform any available medical
procedures.
(2) "Healthcare provider" means an individual licensed, registered or certified
by the:
(A) State board of healing arts;
(B) board of nursing; or
(C) behavioral sciences regulatory board.
Tax Credit
New Section 8(c)(1) creates the tax credit. It provides that, for taxable years commencing
after December 31, 2023, a credit shall be allowed against the income, privilege or premium tax
liability imposed upon a taxpayer pursuant to the Kansas income tax act, the privilege tax
imposed upon any national banking association, state bank, trust company or savings and loan
association pursuant to article 11 of chapter 79 of the Kansas Statutes Annotated, and
amendments thereto, or the premiums tax and privilege fees imposed upon an insurance
company pursuant to K.S.A. 40-252, and amendments thereto, in an amount equal to 70% of the
total amount contributed during the taxable year by a taxpayer to an eligible charitable
organization. Please not that for purposes of the new credit, the Department of Revenue will
allocate credits on the basis of a calendar tax year.
New Section 8(c)(2) provides a contribution for which a credit is claimed must be a
voluntary contribution and shall not be a payment for services rendered.
New Section 8(c)(3) provides that if the amount of the credit exceeds the taxpayer's tax
liability for such tax year, the taxpayer may carry over the amount that exceeds their current tax
liability for deduction from the taxpayer's liability in the next succeeding tax year or years until
the total amount of the tax credit has been deducted from tax liability. However, no credit can be
carried over for deduction after the fifth tax year succeeding the tax year in which the
contribution was made.
New Section 8(c)(4) provides that in no event shall the total amount of credits allowed
under this section for contributions to a single eligible charitable organization exceed $5,000,000
per tax year. Similarly, New Section 8(c)(5) provides the aggregate amount of credits claimed
shall not exceed $10,000,000 per tax year.
Reporting Requirements
New Section 8 also establishes several reporting requirements.
New Section 8(d) requires that taxpayers claiming a credit authorized by Section 8 provide
the name of the eligible charitable organization and the amount of the contribution to the
Department of revenue on forms provided by the Department.
New Section 8(e) requires that an eligible charitable organization provide the Department
with a written certification, pursuant to subsection (f), that it meets all criteria to be considered
an eligible charitable organization. The organization shall also notify the Department of any
changes that may affect eligibility under this section.
New Section 8(f) provides the eligible charitable organization's written certification must
be signed by an officer of the organization under penalty of perjury, and that the written
certification shall include the following:
(1) Verification of the organization's status under section 501(c)(3) of the federal internal
revenue code of 1986;
(2) a statement that the organization does not provide, pay for, refer for or provide
coverage of abortions and does not financially support, partner with or affiliate with
any other entity that provides, pays for, refers for or provides coverage of abortions,
including nonsurgical abortions and abortifacients;
(3) a statement that the organization maintains its principal office or presence in this state
and that at least 50% of its clients claim to be residents of this state; and
(4) any other information that the Department requires to administer this section.
To implement New Section 8(f), the Department has developed a web application that is
available through our Kansas Customer Service Center. An organization must apply to the
Kansas Department of Revenue to be considered as an eligible charitable organization for
purposes of the Pregnancy Resource Act by completing the application and submitting any
requested documentation.
New Section 8(g) requires that the Department review each written certification and
determine whether the organization meets all the criteria to be considered an eligible charitable
organization and notify the organization of its determination. Once certified, the eligible
charitable organization will be allowed to receive contributions through the Pregnancy Resource
Act. The Department may also periodically request recertification from the organization. The
Department is also required to compile and make available to the public a list of eligible
charitable organizations.
Pass-Through Entities
New Section 8(h) provides tax credits that are earned by a partnership, limited liability
company, S corporation or other similar pass-through entity are to be allocated among all
partners, members or shareholders, respectively, either in proportion to their ownership interest
in such entity or as the partners, members or shareholders mutually agree as provided in an
executed agreement.
Application for Credit
New Section 8(i) provides that, prior to claiming any credit on a return, a taxpayer must
apply for credits with the Department on forms prescribed by the Department. In the application
the taxpayer must certify to the Department the dollar amount of the contribution made or to be
made during the calendar year.
To implement New Section 8(i), the Department has developed a web application. Prior to
claiming a tax credit on the tax return, a taxpayer must apply for a tax credit by completing,
signing, and dating the application and submitting it to the eligible charitable organization with
their contribution. The eligible charitable organization will then sign, date, and submit the
completed application to the Kansas Department of Revenue through the web application
specifically designed for this tax credit program.
If the contributor is pledging a contribution at the time the application is submitted to the
eligible charitable organization rather than actually making a contribution, the contributor will
need to indicate by checking the box that provides the contribution will be made at a later date.
Contributions can be made by cash, check, credit card, money order, or cashier's check. A
contribution must be made by 90 days from the pledge date or the last day of the taxpayer's tax
year, whichever is earlier.
Allocation of Credit
New Section 8(c)(4) provides that in no event shall the total amount of credits allowed
under this section for contributions to a single eligible charitable organization exceed $5 million
per tax year. Similarly, New Section 8(c)(5) provides the aggregate amount of credits claimed
shall not exceed $10 million per tax year.
Should a contributor submit an application to an eligible charitable organization with a
promise or pledge to make a contribution, the applicable amount of credit associated with that
pledge shall reduce the amount of tax credits that may be issued within any one calendar year
and shall also go towards the limitation of $5 million per eligible charitable organization per tax
year for that particular eligible charitable organization to whom the pledge was made. A
contribution must be received by the eligible charitable organization within 90 days of the date
the contributor made the pledge or by the end of the calendar year, whichever is earlier. If the
contribution is not received within the 90 days, the credit amount that has been allocated based
on the contributor's pledge shall be canceled and returned to the Kansas Department of Revenue
for reallocation.
Confirmation of Credit
Upon receipt of form K-96, Pregnancy Resource Act Contributor Application and payment
of the contribution, and after allocation of the credit to the eligible charitable organization a Tax
Credit certificate for the contributor will be available for download by the eligible charitable
organization through the web application. The eligible charitable organization will be
responsible for ensuring the Tax Credit certificate is given (emailed, mailed or other) to the
contributor.
Claiming the Credit
To claim the credit a contributor should submit schedule K-94, Pregnancy Resource Act
Tax Credit with their income, privilege, or premium tax return. The credit schedule will not be
available until mid to late December of 2024, at which time it will be available through the
Department's website at: www.ksrevenue.gov.
Sales Tax Exemption
K.S.A. 79-3606 is part of the Kansas sales tax act. It delineates the numerous exemptions
from Kansas sales tax.
Section 11 amends K.S.A. 79-3606 to add subsection (rrrr), which later legislation
redesignated as subsection (wwww). The new subsection provides a sales tax exemption for all
sales of tangible personal property or services purchased by a pregnancy resource center or
residential maternity facility, as defined in the subsection. Each qualified pregnancy resource
center will need to apply, and be approved, for a tax-exempt entity exemption certificate for their
purchases to be exempt from sales tax. For information regarding the application process, see:
https://www.ksrevenue.gov/prpecwelcome.html
Effective Date
Unless otherwise noted, the provisions of the new Act are effective July 1, 2024.
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
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