Kansas Statutes Annotated

K.S.A. § 79-201m (2026)

Property exempt from taxation; merchants' and manufacturers' inventory

✓ current as of May 2026

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79-201m. Property exempt from taxation; merchants' and manufacturers' inventory. To the extent herein specified, merchants' and manufacturers' inventory shall be and is hereby exempt from all property or ad valorem taxes levied under the laws of the state of Kansas.

(a) As used in this section:

(1) "Merchant" means and includes every person, company or corporation who shall own or hold, subject to their control, any tangible personal property within this state which shall have been purchased primarily for resale in the ordinary course of business without modification or change in form or substance, and without any intervening use, except that, an incidental use, including but not limited to the rental or lease of any such property, shall not be deemed to be an intervening use;

(2) "manufacturer" means and includes every person, company or corporation who is engaged in the business of transforming, refining or combining materials and labor to convert tangible personal property from one form to another including packaging; and

(3) "inventory" means and includes those items of tangible personal property that: (1) Are primarily held for sale in the ordinary course of business (finished goods); (2) are in process of production for such sale (work in process); or (3) are to be consumed either directly or indirectly in the production of finished goods (raw materials and supplies). A capital asset subject to depreciation or cost recovery accounting for federal income tax purposes that is retired from regular use by its owner and held for sale or as standby or surplus equipment by such owner shall not be classified as inventory.

(b) The provisions of this section shall not apply to any tangible personal property of a public utility as defined by K.S.A. 79-5a01, and amendments thereto.

The provisions of this section shall apply to all taxable years commencing after December 31, 1988.

History: L. 1988, ch. 375, § 2; L. 1989, ch. 289, § 1; L. 1989, ch. 1, § 1 (Special Session); December 14.

Notes of Decisions

Cited in 12 cases, 1990–2013 · leading case: In Re Tax Exemption Application of Cent. Illinois Pub. Servs. Co., 78 P.3d 419 (Kan. 2003).

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In Re Tax Exemption Application of Cent. Illinois Pub. Servs. Co., 78 P.3d 419 (Kan. 2003). · cites it 9× “79-5a01 their *615 natural gas inventories are exempt from taxation under K.S.A. 79-201m as merchants’ inventory. BOTA did not address the appel-lees’ alternative arguments that their natural gas inventories were eligible for the “freeport” exemption pursuant to K.”

Bd. of Sedgwick Cnty. Commissioners v. Action Rent to Own, Inc., 969 P.2d 844 (Kan. 1998). · cites it 13× “: A county appeals the district court’s affirmance of an administrative board’s order granting an ad valorem tax exemption to a rent-to-own store’s inventory of rental furniture under K.S.A. 79-201m. The county claims (1) the administrative board and the district court had no…”

Colorado Interstate Gas Co. v. Bd. of Cnty. Commissioners, 802 P.2d 584 (Kan. 1990). · cites it 9× “In 1988, the Kansas Legislature enacted legislation, codified at K.S.A. 1988 Supp. 79-201m, concerning the exemption, as follows: “To the extent herein specified, merchants’ and manufacturers’ inventory shall be and is hereby exempt from all property or ad valorem taxes levied…”

In re the Appeals of Various Applicants from a Decision of the Div. of Prop. Valuation, 313 P.3d 789 (Kan. 2013). · cites it 7× “79-201f(a); (2) merchants’ and manufacturers’ inventoiy under K.S.A. 79-201m; and (3) merchants’ and manufacturers’ inventory under Article 11, § 1(b) of the Kansas Constitution (2012 Supp.”

Kansas Enters., Inc. v. Frantz, 6 P.3d 857 (Kan. 2000). · cites it 38× “It claimed that its property was exempt as merchant’s inventory under Article 11 of the Kansas Constitution and K.S.A. 79-201m. After a full hearing, BOTA denied the exemption.”

In Re the Appeal of Dir. of Prop. Valuation, 161 P.3d 755 (Kan. 2007). · cites it 6× “79-5a01, and consequently their natural gas was exempt from property taxation as merchants’ inventory under K.S.A. 79-201m. Specifically, BOTA reasoned and held that “it would be improper for the Board to find that the taxpayers, who relinquish possession of natural gas to…”

J. Enter., Inc. v. Bd. of Harvey Cnty. Comm'rs, 857 P.2d 666 (Kan. 1993). · cites it 6× “, d/b/a Colortyme (Colortyme), is exempt from Kansas ad valorem tax as inventory under K.S.A. 1992 Supp. 79-201m. In 1991 the Harvey County appraiser performed a compliance review on Colortyme’s 1990 and 1991 ad valorem personal property tax renditions.”

Barnes v. Bd. of Cnty. Commissioners, 259 P.3d 725 (Kan. 2011). “The district court granted an injunction after finding the rent-to-own property was exempt inventory under K.S.A. 1992 Supp. 79-201m. The County appealed.”

Barnes v. Bd. of Cty. Com'rs of Cowley Cty., 259 P.3d 725 (Kan. 2011). “The district court granted an injunction after finding the rent-to-own property was exempt inventory under K.S.A. 1992 Supp. 79-201m. The County appealed.”

In re Am. Warrior, Inc., 43 P.3d 828 (Kan. Ct. App. 2002). · cites it 2× “Citing the definition of “manufacturer” found in K.S.A. 79-201m, BOTA found AWI did not qualify for the constitutional ad valorem tax exemption.”

Bd. of Cnty. Commissioners v. Dir. of Prop. Valuation, 861 P.2d 1348 (Kan. Ct. App. 1993). “ng issues: Is the personal property of a public utility exempt pursuánt to the merchants’ and manufacturers’ inventory exemption contained in Article 11, § 1(b)(1) of the Kansas Constitution; is the *721 personal property of a public utility exempt pursuant to Kansas statutes;…”

In re Allen, Gibbs & Houlik, L.C., 29 P.3d 431 (Kan. Ct. App. 2001). · cites it 2× “The applicant asserts that PVD’s directive is too broad and would have a disparate impact on the merchant’s and manufacturer’s inventory exemption granted pursuant to K.S.A. 79-201m, and amendments thereto. The applicant notes that K.”

— K.S.A. § 79-201m(a) — 2 cases

Colorado Interstate Gas Co. v. Bd. of Cnty. Commissioners, 802 P.2d 584 (Kan. 1990). “In 1988, the Kansas Legislature enacted legislation, codified at K.S.A. 1988 Supp. 79-201m, concerning the exemption, as follows: “To the extent herein specified, merchants’ and manufacturers’ inventory shall be and is hereby exempt from all property or ad valorem taxes levied…”

Kansas Enters., Inc. v. Frantz, 6 P.3d 857 (Kan. 2000). “It claimed that its property was exempt as merchant’s inventory under Article 11 of the Kansas Constitution and K.S.A. 79-201m. After a full hearing, BOTA denied the exemption.”

— K.S.A. § 79-201m(a)(2) — 1 case

In re Am. Warrior, Inc., 43 P.3d 828 (Kan. Ct. App. 2002). “Citing the definition of “manufacturer” found in K.S.A. 79-201m, BOTA found AWI did not qualify for the constitutional ad valorem tax exemption.”

— K.S.A. § 79-201m(a)(3) — 1 case

— K.S.A. § 79-201m(a)(l) — 2 cases

J. Enter., Inc. v. Bd. of Harvey Cnty. Comm'rs, 857 P.2d 666 (Kan. 1993). “, d/b/a Colortyme (Colortyme), is exempt from Kansas ad valorem tax as inventory under K.S.A. 1992 Supp. 79-201m. In 1991 the Harvey County appraiser performed a compliance review on Colortyme’s 1990 and 1991 ad valorem personal property tax renditions.”

— K.S.A. § 79-201m(c) — 1 case

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