State Incentives, Resources

The State of Kansas offers significant and comprehensive business incentives to encourage the construction and expansion of Kansas businesses and industries. The Job Expansion and Investment Tax Credit Program offers corporate income tax credits based on job creation and capital investment. The Kansas Enterprise Zone (E-Zone) program offers tax credits based on job creation and capital investment, as well as a sales tax exemption on facility construction and equipment purchases.

A third program, the High Performance Incentive Program (HPIP), also offers business incentives to companies that pay above average wages for their industry, make capital investments in their operations, and invest in workforce training. HPIP offers state income tax credits, sales tax exemptions, workforce training credits, and matching funds for consulting fees.

These credits can be used by corporations, as well as by other entities such as Subchapter S corporations and limited liability companies (LLCs).

Other Programs

Job Expansion and Investment Tax Credits

The Job Expansion and Investment Tax Credit Act of 1976 (K.S.A. 79-32, 153 et seq., as amended) provides business incentives for those businesses that may not qualify for the E-Zone incentives. Eligibility for these credits requires the creation of at least two net new jobs.

• Condition: Retail firms must create at least two net new jobs
• Job Creation Tax Credit: $100/Year per Net New Job
• Investment Tax Credit: $100 per $100,000 of Qualified Business Investment
• Credits may be taken against 50 percent of annual income tax liability. Credits may be deferred for up to three years.

This Act provides a job expansion credit of $100 per net new employee and an investment tax credit of $100 per $100,000 of qualified investment per year for ten years. These credits are earned in the year the capital investment is made and for each of nine successive years thereafter. Credits may be used to offset up to 50 percent of the business' Kansas income tax liability. Unused credits may not be carried forward. Companies can elect to delay the start of the credits by up to three years.

Qualifying for Job Expansion and Investment Tax Credits

In order to qualify for Job Expansion and Investment Tax Credits, the business must be a revenue-producing, taxpaying, and qualified Kansas business facility. Revenue producing includes the operation and/or management of enterprises which 1) assemble, fabricate, manufacture, or process agricultural, mineral, or manufactured products; 2) store, warehouse, distribute, or sell agricultural, aquacultural, mining, or manufactured products; 3) feed livestock at a feedlot; 4) operate laboratories or other facilities for scientific, agricultural, aquacultural, animal husbandry, or industrial research, development, or testing; 5) perform services of any type; or 6) feed aquatic plants and animals at an aquacultural operation (K.S.A. 79-32, 154 et seq.). Credits may be deferred for up to three years. Unused credits cannot be carried forward.

Enterprise Zone Incentives

Enterprise Zone (E-Zone) incentives are available to qualifying businesses throughout the state based on the location of the facility, the type of business operation, the capital investment, and the number of net new jobs created.

The Kansas E-Zone program applies to the entire state, unlike similar programs in other states that have limited geographic areas of eligibility. Basic E-Zone incentives are available to eligible businesses throughout the state. All counties, with the exception of Douglas, Johnson, Leavenworth, Sedgwick, Shawnee, and Wyandotte are eligible for approval as designated non-metropolitan regions. Businesses in designated non-metropolitan regions may be eligible for enhanced incentives.

Conditions for Incentives

One-time credits may be taken against 100 percent of income and premium tax liability; unused credits may be carried forward until exhausted. Firms may amend their income tax returns for up to three years to take advantage of the E-Zone credits if they failed to take advantage of allowable credits.

Definitions for Tables

Ancillary Support Facility: Includes a facility operated by a business that provides services in support of the business, but is not directly engaged in the business' primary function, regardless of the firm's classification as a retail business.

Business Headquarters: 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, division of a business, or regional division of a business.

Enhanced Incentives: Available only to designated non-metropolitan counties or regions as approved by the Secretary of Commerce

Manufacturing Firm: Includes all commercial enterprises identified under standard industrial classification codes 20 through 39.

Not New Job: For new companies, any job that is new to Kansas is a "net new job." Fan an expanding industry or one building a replacement facility, a "net new Job" refers to any job created over and above the employee base, which is determined by averaging the preceding year's annual employment.

Non-Manufacturing Firm: Includes any commerical enterprises other than a manufacturing or retail business.

Qualified Business Investment: Includes the value of all real and tangible personal business property except inventory or property intended for sale to customers. The value of such property is its original cost if owned by the company, or eight times the first year's rental rate if leased by the company. Equipment transferred to Kansas from out-of-state to a new or expanding facility is considered qualified investment. Such equipment is valued at its original purchase cost.

Retail: Includes the following:

1. Any business providing goods or services taxable under the Kansas Retailers' Sales Tax Act.
2. Any professional service provider set forth in K.S.A. 17-2707 and amendments thereto.
3. Any bank, S & L, or other lending institution.
4. Any commercial enterprise whose primary business activity includes the sale of insurance.
5. Any commercial enterprise deriving its revenues directly from non-commerical customers in exchange for personal services such as, but not limited to, barberships, photographic studios, and funeral services.

Sales Tax Exemption: Eligible purchases include the purchase and installation of machinery and equipment, as well as materials used in the construction, reconstruction, enlarging, or remodeling of a qualified business facility. The exemption includes any quality control or pollution control equipmnet installed as a part o the aforementioned activities. Any persona engaged in the building, remodeling, or enlargement of a facility that will be leased to a business for at least five years may receive the exemption as well. A business must file a Request for Project Exemption Certificated (Form PR-70b) with the Department of Revenue before starting the project.

Enterprise Zone Example

If the property is newly acquired, its value (for the purpose of calculating the credit) is the original cost or eight times the first full year's lease payments if leased by the taxpayer. The business may opt to transfer or retain the credits if the facility is acquired by or leased to a related taxpayer as defined in K.S.A.79-32, 154. Under the E-Zone program, earned credits may be used to offset up to 100 percent of the business' annual state income tax liability, starting in the year the jobs are created and the investment is made. Unused credits may be carried forward indefinitely and applied in subsequent tax years until the credits are exhausted.

E-Zone incentives include a state and local sales tax exemption for expenditures made on the materials, equipment, and services purchased when building, expanding, or renovating a business facility. The sales tax exemption is also available for facilities constructed and leased to a qualified firm. The amount of the exemption is dependent on the portion of the building leased and the costs of renovating or developing the facility. Partial exemptions for leases where only a portion of the building is leased are also available. Such exemptions may be calculated using a percent-of-total-square-feet-leased method or a cost-per-square-foot method for the leased space. Eligible purchases include the purchase and installation of machinery, equipment, labor, and materials used in the construction, reconstruction, enlarging or remodeling of a qualified business facility. The exemption includes any telecommunications systems, quality control equipment, or pollution control equipment installed as a part of the aforementioned activities. Any person engaged in the building, remodeling, or enlargement of a facility that will be leased to a business for at least five years may receive the exemption as well. A business must file a Request for Project Exemption Certificate (form PR-70b) with the Department of Revenue before starting the project.

Manufacturing and non-manufacturing businesses are eligible for all E-Zone incentives. The sole E-Zone incentive for retail businesses is the sales tax exemption and is only available in communities with a population of less than 2,500 or counties with less than 10,000 population.

E-Zone Incentives and Job Expansion and Investment Tax Credits for Expanding/Renovating an Existing Business

Certain facility expansions and renovations that meet the requirements of a "qualified business investment" are also eligible for tax credits under these programs. The facility must be owned and operated by the taxpayer before improvements are made. A qualified business investment is defined as the difference between the final value of the facility after the expansion and the average value of the facility in the year prior to the investment. If the property is newly acquired, its value (for the purpose of calculating the credit) is the original cost or eight times the first full year's lease payments if leased by the taxpayer. The business may opt to transfer or retain the credits if the facility is acquired by or leased to a related taxpayer as defined in K.S.A.79-32, 154.

High Performance Incentive Program

To be eligible for the High Performance Incentive Program, a worksite must either pay above-average wages for its industry, or one-and-a-half times the statewide average wage exclusive of owner compensation. To determine whether a worksite pays above-average wages for business establishments located within the metropolitan counties of Douglas, Johnson, Leavenworth, Sedgwick, Shawnee, and Wyandotte, the worksite's wages of the firm will be compared to those of business establishments in like industries within that county. For a worksite located in any other county, the worksite's wages will be compared to like business establishments within an aggregation of counties representing that region of the state. Once the wage criterion has been met, the worksite must either invest an amount equal to two percent of its total payroll on employee training or participate in either the Kansas Industrial Training (KIT) program, the Kansas Industrial Retraining (KIR) program, or the State of Kansas Investment in Lifelong Learning (SKILL) program.

Firms must be certified by Commerce before filing for this credit. Participating businesses must be in major Standard Industrial Classification (SIC) categories of 20-51 or 60-89, or the North American Industry Classification System (NAICS) equivalent. If a business is in major SIC categories 40-51 or 60-89 (or equivalent NAICS) categories, more than half of sales must be to Kansas manufacturers and/or out-of-state commercial or government customers. HPIP also provides that a business establishment may be assigned a standard industrial classification code or NAICS designation according to the primary business activity at a single physical location in the state.

Specific incentives extended to firms meeting the qualifications include the following:

• A sales tax exemption on purchases relating to new investment in facility or equipment (without being tied to job creation as with E-Zone sales tax exemption).
• A ten percent investment tax credit against corporate income tax on qualified business facility investment (as defined by KSA 79-32,154) that exceeds $50,000. The investment tax credit is a one-time credit with a ten-year carry-over provision, subject to requalification for any unused credits, up to 100 percent of a firm's annual tax liability.
• A workforce training tax credit of up to $50,000 per annum on training expenditures above two percent of total company payroll.
• Priority consideration for other state business assistance programs.

High Performance Incentive Program and Premium Example

Credit may be used against 100 percent of annual income tax liability and premium carried forward for ten years.

Requirements:

1. Company pays above-average wages.
2. Company invests at least two percent of payroll in training, or is participating in one of the state's workforce training programs.
3. Business is in major SIC category of 20-51 or 60-89, or the equivalent NAICS category.
4. If business is in major SIC category of 40-51 or 60-89 or the equivalent NAICS category, more than half of sales are to Kansas manufacturers and/or out-of-state commercial or government customers.
5. For any investment on which the company anticipates claiming a related tax credit through HPIP, a Capital Investment Project Description must be submitted before the company has committed to that investment.

Assumptions:

1. Capital investment: $500,000 (all expenses in this example go toward equipment)
2. Number of jobs created*:30 (not required to qualify for HPIP)
3. Annual payroll: $1,000,000
4. Investment in training: $60,000 (may utilize state training programs: KIT, KIR, SKILL)
5. Approved consultant expenses: $20,000
6. Year's income tax liability: $75,000

Benefits:

1. Employee training credit: $40,000 (exceeding two percent of annual payroll; max. $50,000)
2. Sales tax exemption on capital investment**: $26,500 (capital investment x 5.3 percent plus any local sales tax)
3. Income tax credit for capital investment***: $45,000 (ten percent of amount exceeding $50,000)
4. Matched consultant fees: $0 (no funding currently approved)

Total HPIP Benefit: $111,500
Less: Total income tax liability during year of investment: $75,000
Benefit to use toward future tax liability: $36,500

*Job Creation Tax Credit
Qualifying companies may utilize job creation available through the E-Zone program. Unused credits may be carried forward until exhausted.
Statewide, basic incentive: $45,000 ($1,500 per net new job created)
Or if located in a designated non-metropolitan region: $75,000 ($2,500 per net new job created)

**Prior to certification for HPIP, sales tax exemption may be available through the E-Zone program.

***Qualifying companies may substitute the E-Zone investment tax credit for the HPIP investment tax credit. Eligible purchases covered by the sales tax exemption and capital outlays that qualify for the Investment Tax Credit are identical to those set forth under the E-Zone program without being tied to a job creation requirement.

HPIP credits are available to firms regardless of their location throughout the state, and participation is voluntary. They do not detract from the state's existing set of incentives or other assistance available to companies under current law. However, a company may not simultaneously claim the investment credit that is tied to new job creation and the ten percent investment credit available to high-performance establishments.

In order to take advantage of HPIP tax credits, the firm must submit a Capital Investment Project Description Form HPIP6k to Commerce, estimating the scope of anticipated investment. Statute requires submittal of the project description form before the company makes any expenditure or signs any document that compels it to move forward with the investment identified on the form (e.g., before signing an equipment purchase order, lease agreement, or construction contract).

Business Machinery and Equipment Credit

The Kansas Legislature passed legislation in the 2005-2006 session that exempts the property tax on commercial and industrial machinery and equipment brought into Kansas after June 30, 2006. Specific language pertaining to the exemption includes the following passage: "commercial and industrial machinery and equipment acquired by qualified purchase or lease made or entered into after June 30, 2006 as a result of a bonafide transaction and commercial and industrial machinery and equipment transported into this state after June 30, 2006, for the purpose of expanding an existing business or creation of a new business." This new legislation will significantly reduce a company's property tax bill in Kansas for tangible personal property.

Also, in Kansas, currently items with a retail cost of $400 or less, when purchased new, are exempt from property tax. However, legislation passed this session, provides "an existing exemption for certain "low-cost" items of machinery and equipment, materials, and supplies by removing from the tax rolls such property with a retail cost when new of greater than $400 but equal to or less than $1,500." This would take effect in tax year 2007.

The Kansas Tax Reduction and Reform Act of 1998 provides an annual tax credit (K.S.A. 79-32, 206) against the income tax, privilege tax, and insurance company premiums tax. The credit equals 20 percent of the personal property tax paid on commercial and industrial machinery and equipment. The amount of the credit that exceeds the tax liability will be refunded for companies paying income tax. The credit will be increased to 25 percent beginning in 2007.

Inventory Tax Exemption

All merchants' and manufacturers' inventories have been exempt from property taxes by constitutional amendment since 1989 (K.S.A. 79-201m).

Tax Exemptions for Industrial Revenue Bonds

Businesses using Industrial Revenue Bonds (IRBs) as a financing mechanism may enjoy certain tax exemptions:

• Property financed with IRBs is exempt from ad valorem taxation for up to ten years after the bonds are issued. However, localities may elect to negotiate payments in lieu of taxes (K.S.A. 79-201a).
• The cost of construction labor, building materials and machinery, and equipment is exempt from state and local sales taxes (K.S.A. 79-3603).

Click here for more information about local Industrial Revenue Bonds.

Property Tax Exemption

The board of county commissioners or the governing body of a city may exempt certain business property from ad valorem taxation. Qualifying properties must be used exclusively for manufacturing articles of commerce, conducting research and development, or storing goods or commodities that are sold or traded in interstate commerce. The tax exemption includes all or any portion of the appraised value of buildings, commensurate land and improvements, and associated tangible personal property. Property additions and expansions of existing businesses are eligible for the property tax exemption if new jobs are created as a result of such activity.

A total or partial ad valorem tax exemption may be in effect for up to ten years after the calendar year in which the business commences its operations or an expansion is completed (H.C.R. 5047, Laws 1986; Art. 11, Sec. 13, Kansas Constitution).

Please note that items with a retail cost of $400 or less, when purchased new, are exempt from property tax (refer to new legislation effective July 1, 2006 - Business Machinery and Equipment Property Tax Exemption above)

Click here for more information about local property tax exemption

Property Tax Exemption for Electric Power Generators

Kansas offers incentives in place to increase the amount of electric power generated in the state. These incentives work for the construction or expansion of electricity generating facilities for both independent power producers (so-called "merchant power plants") and rate-based utilities. Independent power producer facilities are exempt from property taxes from the commencement of construction and for 12 years after the taxable year in which construction is completed. The eligibility period for plants used exclusively during peak load periods is six years. Electricity generation facilities constructed by regulated public utilities are exempt for ten years (four years for peak load plants).

Transmission lines and appurtenances constructed by regulated public utilities after January 1, 2001, also receive a ten-year property tax exemption. Nuclear power plants do not qualify for these exemptions, and power plants using renewable energy sources are not eligible to receive the public utility exemption. The two laws also authorized the Kansas Development Finance Authority to issue revenue bonds to pay the construction costs of pollution control equipment at power plants.

Renewable Energy Incentives

Rated first in 2003 for wind energy potential and fourth for clean biomass energy potential by the U.S. Public Interest Research Group Education Fund, Kansas offers outstanding opportunities for electricity production from renewable energy sources. In 1998, the Kansas Legislature enacted a property tax exemption for projects that use wind, solar, thermal, photovoltaic, biomass, hydropower, geothermal, or landfill gas resources to generate electrical energy. In 2000, commercial biodiesel and ethanol plants became property tax exempt as well. Kansas Statute 79-201 grants a property tax exemption for all property actually and regularly used in the generation of electricity from renewable sources, whether it is an industrial, commercial, utility, or personal application.

Sales Tax Exemption

Electricity, gas, and water consumed during manufacturing are exempt from the Kansas sales tax (K.S.A. 79-3603). Sales tax paid on facility construction or renovation, and on the purchase of machinery, equipment, and certain other tangible property, may be exempted if the applicant's business qualifies for Job and Investment Tax Credits and is located within a state-designated Enterprise Zone (K.S.A. 79-3606). Companies that qualify for the High Performance Incentive Program are eligible to receive this exemption without being tied to the job creation requirement. This exemption covers the same facility and equipment purchases as under the Enterprise Zone program.

All sales of manufacturing machinery and equipment are exempt from sales taxes (K.S.A. 79-3606). This exemption extends to machinery and equipment purchased primarily for use in the assembly, processing, finishing, storing, warehousing, or distribution of tangible personal property intended for resale.

Businesses may take advantage of several other items exempt from sales tax (K.S.A. 79-3606):

• Labor and services used in original construction.
• Tangible personal property purchased by a railroad or public utility for direct and immediate consumption or movement in interstate commerce.
• Tangible personal property that becomes an ingredient or component part of tangible personal property or services produced, manufactured, or compounded for ultimate sale at retail either inside or outside of Kansas.
• Tangible personal property that is immediately consumed or dissipated in the actual production, manufacturing, processing, mining, drilling, refining, or compounding of tangible personal property for ultimate sale at retail either inside or outside Kansas.
• Purchases of animals, fowl, and fish primarily used in agriculture; the production of food for human consumption; the production of animal, dairy, poultry, or fish products, fiber, or fur; or the production of offspring for use in any such endeavor.
• Tangible personal property purchased by a city from the proceeds of industrial revenue bonds. The cost of the building and all items of fixed equipment are entitled to exemption from Kansas sales tax at the time of initial purchase.
• Incoming and outgoing interstate-wide area telephone or transmission services (WATTS). The gross receipts from sales of interstate telephone or telegraph services utilizing a WATTS line are specifically exempted from state sales taxes (K.S.A. 79-3603).

It should be noted that a sales tax exemption certificate must be obtained from the Kansas Department of Revenue prior to any purchases. The one exception involves labor on original construction, which does not require a certificate. Commerce can assist businesses in obtaining exemption certificates.

Kansas applies the "Integrated Plant" standard to the taxation of machinery and equipment used in production (K.S.A. 79-3606[kk]). Adoption of the integrated plant standard makes it easier for the taxpayer to interpret the boundaries of the exemption. Traditionally, manufacturing machinery and equipment used in production qualified for the tax exemption only if they had a "direct and immediate effect" on the physical transformation of raw material into new material.

The integrated plant theory is broader and allows for additional machinery and equipment to qualify for the tax exemption. Machinery such as air conditioners, water purifiers, and pollution control equipment will qualify for the tax exemption under the integrated plant theory.

The integrated plant theory is specifically intended to include the following:

• Pre-production machinery and equipment (e.g., raw material storage equipment, raw material handling equipment).
• Machinery that services the production line (e.g., machinery that purifies water, cleans oil, screens chemicals).
• Machinery that deals with byproducts of production (e.g., pollution control equipment, waste handling equipment).
• Ancillary property that might otherwise not be viewed as machinery or equipment (e.g., gas pipes, electric wiring, special foundations, clean rooms).
• Labor services for installation and repair of qualified machinery or equipment.

Tax Credit for Research

In order to stimulate increased research and development activity by Kansas businesses, the State offers an income tax credit equal to 6.5 percent of a company's investment in research and development above an average expenditure of the previous three-year period. Only 25 percent of the allowable annual credit may be claimed in any one year. Any remaining credit may be carried forward in 25 percent increments until exhausted. Expenditures in research and development activities are defined by Kansas law as separate from other allowable expense deductions identified by United States Internal Revenue Code. This tax credit was renewed and made permanent by the 2001 Kansas Legislature.

Research Tax Credit Calculations Table

Disabled Access Credit

Any taxpayer who spends money to make all or any portion of an existing building or facility accessible to persons with a disability is entitled to a tax credit. The building or facility must be on real property located in Kansas and used in a trade, business, or for the production of income. The tax credit available is equal to 50 percent of expenditures of this kind, or $10,000, whichever is less. The tax credit is applied against the income tax, premium tax, or privilege fees, and shall be deducted from the taxpayer's tax liability in the taxable year following the year in which the expenditures are made. This tax credit may be carried over for a period of four years after the year the credit was earned (Schedule K-37 K.S.A. 1997 Supp. 40-2813).

Tax Credit for Day Care Facilities

Tax credits are offered against Kansas income tax liability for businesses providing child day care services to employees. These credits apply to taxpayers who pay for or provide child day care services for their employees or that provide facilities and necessary equipment for child day care services (K.S.A. 79-32, 190 et seq.).

The credit is equal to 30 percent of the amount spent in Kansas during the tax year for child day care services purchased for the dependent children of the taxpayer's employees. However, the credit for any taxpayer cannot exceed $30,000 for any tax year.

Employers wishing to establish a child day care facility primarily for the employees' dependent children can claim additional benefits. A credit of up to 50 percent of the amount spent in the establishment of such a facility can be taken, up to $45,000 per taxpayer, during the first year. One or more taxpayers may work together to establish such a facility.

In the taxable years after the year of establishment, the annual credit available to the taxpayer would be 30 percent of the amount expended for the annual operation of the facility. When computing the credit, amounts received by the taxpayer as payment for use of the child day care services are subtracted from the annual cost of operating the facility.

In order to receive this tax credit, the child day care facility or provider must be licensed or registered in Kansas. Should the taxpayer qualify for the credit, the amount of the credit in excess of the taxpayer's liability for the tax year will be refunded. The aggregate amount of child day care facility credits that may be claimed for any fiscal year cannot exceed $3 million statewide. (Schedule K-56 K.S.A. 79-32, 190 et seq.)

Entrepreneurship Tax Credit

Taxpayers, including corporations, that invest in the Kansas Community Entrepreneurship Fund starting in 2006 can claim state income tax credit of 50 percent of the amount donated. The minimum investment to claim the tax credit is $250 and the tax credit is limited to a total of $2 million for any fiscal year. Funds will be used for awards to regional and community organizations that provide seed capital to qualified entrepreneurs, especially those located in distressed and rural communities.

Rural Business Development Tax Credit

Donations made to designated regional foundations by taxpayers, including corporations, are eligible for a state income tax credit. The credit is 50 percent of the donation, with a minimum donation of $250. Each region will have $3 million in tax credits available over a three-year period.

Kansas Angel Investor Tax Credit

An accredited investor will be allowed a 50 percent tax credit not to exceed $50,000 of cash investment in a qualified Kansas business. Such credits are limited to five such cash investments between the years 2006 and 2016, with a cumulative aggregate of $20 million over this ten-year period. This tax credit is slated to expire in 2016. An accredited investor is defined by the U.S. Securities and Exchange Commission Rule 501, Regulation D. A qualified Kansas business will be certified by the Kansas Technology Enterprise Corporation (KTEC).

Kansas Downtown Redevelopment Tax Rebate

Downtown Redevelopment Areas designated by the Secretary of Commerce receive a rebate of property tax collected on properties that have undergone approved improvements. A property owner submits a written application to the governing body of the city to request the rebate. A rebate of the incremental tax increase between the valuation prior to the improvements and the new assessed valuation is made available for five years. For the sixth year, 80 percent of the tax increment is subject to rebate. For the seventh, eighth, and ninth years, the percentage of the tax increment that is not subject to rebate will increase by 20 percent each year. Beginning in the tenth year, no rebate is available.

Click here for local downtown redevelopment grants and rebates.

Community Service Tax Credit

The Kansas Community Services Program Act authorized tax credits against income tax, premium tax, and privilege fees liability for business contributions to certain community service organizations or government entities. These organizations or entities must engage in activities meeting a demonstrated community need as provided for in the statute and that have been approved by local planning councils. The credit granted a contributor cannot exceed 50 percent of the amount contributed to a community service organization or 70 percent of the amount contributed to a rural community service organization. The Community Development Division of Commerce administers this program, determining the eligibility of contribution recipients by process of application (Schedule K-60 K.S.A. 79-32, 194 et seq.). For a listing of eligible community services, call Commerce at (785) 296-3485.

Incentives for Ethanol Production

The State of Kansas promotes renewable fuels, offering direct financial incentives for existing as well as new or expanded production of agricultural ethanol. Through 2005, current producers receive $0.05 for each gallon of agricultural ethanol sold to an alcohol blender, with an annual cap of $2 million. Additionally, new facilities that produce more than five million gallons, or existing facilities that increase their production by five million gallons, are eligible to receive an incentive of $0.075 per gallon sold for total sales up to 15 million gallons per year. Producers seeking this incentive file necessary forms with the Kansas Department of Revenue.

Foreign Trade Zones

Foreign trade zones in Kansas provide a duty-free and quota-free entry point for foreign goods into specific areas under customs supervision for an unlimited period of time. Kansas has three such zones located in Kansas City, Topeka, and Wichita.

The Kansas City zone has five operations, including 400,000 square feet of underground space available for dry storage, freezer storage, or refrigeration; a five-acre site with 220,000 square feet of above-ground covered space; a second five-acre site with a 26,000 square-foot warehouse; a 50,000 square-foot warehouse; and 23 acres on the Missouri River.

The Topeka zone encompasses nearly 3,400 acres at three locations: Forbes Field, Phillip Billard Airport, and the Topeka Air Industrial Park. The Wichita zone encompasses 280 acres and includes 800,000 square feet of covered warehouse and assembly space, as well as building sites for new manufacturing facilities.

Goods brought into a zone or sub-zone may be stored, manipulated, or mixed with domestic or foreign materials used in manufacturing processes or exhibited for sale. Anything shipped out of a zone into the United States customs territory is then subject to duties. Goods reshipped to foreign nations are never subject to U.S. customs duties.

First Stop Clearinghouse

Correctly registering a business is a crucial step in the business development process. To help with this process, the First Stop Clearinghouse within Commerce serves as a liaison between businesses and state agencies. We provide all necessary applications and forms required by agencies that license, regulate, or tax businesses and provide a central point-of-contact for state government requirements.

International Trade Incentives

The Trade Development Division of Commerce can help your company sell its products in international markets through the following programs.

Export Finance Counseling

The Trade Development Division helps Kansas small businesses organize effective export strategies. Division staff can provide access information to providers of export finance and help to secure working capital for export transactions. Division staff utilizes knowledge of federal government programs administered by the U.S. Small Business Administration and the U.S. Export-Import Bank. The Division also advises customers on contacts in the international banking community. The program goal is to assist Kansas small businesses in securing finance for export transactions.

Kansas International Trade Show Assistance Program

Upon approval, the Kansas International Trade Show Assistance Program (KITSAP) will reimburse up to one-half of your firm's direct exhibition-related expenses, up to $3,500 per foreign show or $1,500 per domestically held international show. A company can receive total reimbursements of $3,000 for domestically held international shows or $7,000 in total combined financial assistance annually. To be eligible, the KITSAP application must be submitted prior to the trade show.

Examples of reimbursable expenses:

• Booth space
• Booth utility costs
• Transportation of equipment or materials (to foreign shows only)
• Booth furniture and/or equipment rental
• Booth assembly/disassembly
• Interpreter fees at the show
• Translation fees for exhibition materials

Market Research

Market research assistance is available for your product in international markets at no cost. With Kansas state offices in Australia, Europe, Mexico, and Japan, our professional, multi-lingual staff offers direct and immediate assistance, information, introductions, and qualified agent/distributor searches around the globe.

Trade Missions/Trade Shows

Commerce organizes several trade missions every year. Kansas companies are invited to participate in these missions that are frequently led by the Governor.