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Department of Revenue tells committee about $1.3 billion in HPIP investment tax-credit carryforwards
Summary
At a Legislative Post Audit Committee briefing, the Kansas Department of Revenue reported roughly $1.3 billion in High Performance Incentive Program (HPIP) investment tax-credit carryforwards held by about 360 taxpayers and described manual review work and recent adjustments to records.
Kathleen Smith of the Kansas Department of Revenue told the Legislative Post Audit Committee that the department has calculated about $1.3 billion in HPIP investment tax-credit carryforwards that remain available to be claimed, attributable to roughly 360 certified entities. Smith said the department removed about $402 million from its books because of statute-of-limitations expirations and businesses that have closed, and those removals are not included in the $1.3 billion figure.
Smith summarized how the HPIP works: a nonrefundable training-and-education credit (up to $50,000 in a tax year) and a 10% investment tax credit for qualifying capital investment, with a 16-year carryforward and a higher $1,000,000 threshold in Douglas, Johnson, Sedgwick, Shawnee and Wyandotte counties. She said the Department reviewed returns and credit schedules for tax years 2019–2023 and adjusted numbers where amended or newly filed returns changed prior totals.
On administrative workload, Smith said 17 Department of Revenue positions process returns that claim HPIP credits and that the team spends about 6,500 staff hours per year—about 19% of each position’s annual time—because many pass-through entity returns require manual tracking. She also said transfers permitted by Senate Bill 65 (2021) allow certified companies to transfer up to 50% of credits for investments placed in service after Jan. 1, 2021; the Department has processed nearly 200 transfers totaling about $117.6 million to date and will hold original earners responsible for any later adjustments.
Senator Tyson pressed whether the Department’s manual processes could be streamlined, suggested sharing the Department’s figures with Ways and Means or Appropriations, and expressed concern about the fiscal implications. The committee chair confirmed with Smith that the $1.3 billion is the current carryforward that can still be claimed and that carryforwards date back under the 16-year window to roughly 2009 for the oldest claims.
The Department offered to continue refining data, pursue system enhancements where feasible and provide additional details to other committees on request. Smith closed by standing for questions; the committee proceeded to other reports without a consent calendar because a quorum was not present.
