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AN ACT relating to the taxation of feminine hygiene products. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 139.010 is amended to read as follows: 3
As used in this chapter, unless the context otherwise provides: 4
(1) (a) "Admissions" means the fees paid for: 5
1. The right of entrance to a display, program, sporting event, music 6
concert, performance, play, show, movie, exhibit, fair, or other 7
entertainment or amusement event or venue; and 8
2. The privilege of using facilities or participating in an event or activity, 9
including but not limited to: 10
a. Bowling centers; 11
b. Skating rinks; 12
c. Health spas; 13
d. Swimming pools; 14
e. Tennis courts; 15
f. Weight training facilities; 16
g. Fitness and recreational sports centers; and 17
h. Golf courses, both public and private; 18
regardless of whether the fee paid is per use or in any other form, 19
including but not limited to an initiation fee, monthly fee, membership 20
fee, or combination thereof. 21
(b) "Admissions" does not include: 22
1. Any fee paid to enter or participate in a fishing tournament; or 23
2. Any fee paid for the use of a boat ramp for the purpose of allowing 24
boats to be launched into or hauled out from the water; 25
(2) "Advertising and promotional direct mail" means direct mail the primary purpose of 26
which is to attract public attention to a product, person, business, or organization, or 27 UNOFFICIAL COPY 23 RS BR 1313
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to attempt to sell, popularize, or secure financial support for a product, person, 1
business, or organization. As used in this definition, "product" means tangible 2
personal property, an item transferred electronically, or a service; 3
(3) "Business" includes any activity engaged in by any person or caused to be engaged 4
in by that person with the object of gain, benefit, or advantage, either direct or 5
indirect; 6
(4) "Commonwealth" means the Commonwealth of Kentucky; 7
(5) (a) "Cosmetic surgery services" means modifications to all areas of the head, 8
neck, and body to enhance appearance through surgical and medical 9
techniques. 10
(b) "Cosmetic surgery services" does not include reconstruction of facial and 11
body defects due to birth disorders, trauma, burns, or disease; 12
(6) "Department" means the Department of Revenue; 13
(7) (a) "Digital audio-visual works" means a series of related images which, when 14
shown in succession, impart an impression of motion, with accompanying 15
sounds, if any. 16
(b) "Digital audio-visual works" includes movies, motion pictures, musical 17
videos, news and entertainment programs, and live events. 18
(c) "Digital audio-visual works" shall not include video greeting cards, video 19
games, and electronic games; 20
(8) (a) "Digital audio works" means works that result from the fixation of a series of 21
musical, spoken, or other sounds. 22
(b) "Digital audio works" includes ringtones, recorded or live songs, music, 23
readings of books or other written materials, speeches, or other sound 24
recordings. 25
(c) "Digital audio works" shall not include audio greeting cards sent by electronic 26
mail; 27 UNOFFICIAL COPY 23 RS BR 1313
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(9) (a) "Digital books" means works that are generally recognized in the ordinary and 1
usual sense as books, including any literary work expressed in words, 2
numbers, or other verbal or numerical symbols or indicia if the literary work 3
is generally recognized in the ordinary or usual sense as a book. 4
(b) "Digital books" shall not include digital audio-visual works, digital audio 5
works, periodicals, magazines, newspapers, or other news or information 6
products, chat rooms, or Web logs; 7
(10) (a) "Digital code" means a code which provides a purchaser with a right to obtain 8
one (1) or more types of digital property. A "digital code" may be obtained by 9
any means, including electronic mail messaging or by tangible means, 10
regardless of the code's designation as a song code, video code, or book code. 11
(b) "Digital code" shall not include a code that represents: 12
1. A stored monetary value that is deducted from a total as it is used by the 13
purchaser; or 14
2. A redeemable card, gift card, or gift certificate that entitles the holder to 15
select specific types of digital property; 16
(11) (a) "Digital property" means any of the following which is transferred 17
electronically: 18
1. Digital audio works; 19
2. Digital books; 20
3. Finished artwork; 21
4. Digital photographs; 22
5. Periodicals; 23
6. Newspapers; 24
7. Magazines; 25
8. Video greeting cards; 26
9. Audio greeting cards; 27 UNOFFICIAL COPY 23 RS BR 1313
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10. Video games; 1
11. Electronic games; or 2
12. Any digital code related to this property. 3
(b) "Digital property" shall not include digital audio-visual works or satellite 4
radio programming; 5
(12) (a) "Direct mail" means printed material delivered or distributed by United States 6
mail or other delivery service to a mass audience or to addressees on a mailing 7
list provided by the purchaser or at the direction of the purchaser when the 8
cost of the items are not billed directly to the recipient. 9
(b) "Direct mail" includes tangible personal property supplied directly or 10
indirectly by the purchaser to the direct mail retailer for inclusion in the 11
package containing the printed material. 12
(c) "Direct mail" does not include multiple items of printed material delivered to 13
a single address; 14
(13) "Directly used in the manufacturing or industrial processing process" means the 15
process that commences with the movement of raw materials from storage into a 16
continuous, unbroken, integrated process and ends when the finished product is 17
packaged and ready for sale; 18
(14) "Feminine hygiene product" means tampons, panty liners, menstrual cups, 19
sanitary napkins, and other similar tangible personal property designed for 20
feminine hygiene in connection with the human menstrual cycle, but does not 21
include grooming and hygiene products as defined in KRS 139.472; 22
(15) (a) "Extended warranty services" means services provided through a service 23
contract agreement between the contract provider and the purchaser where the 24
purchaser agrees to pay compensation for the contract and the provider agrees 25
to repair, replace, support, or maintain tangible personal property, digital 26
property, or real property according to the terms of the contract. 27 UNOFFICIAL COPY 23 RS BR 1313
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(b) "Extended warranty services" does not include the sale of a service contract 1
agreement for tangible personal property to be used by a small telephone 2
utility as defined in KRS 278.516 or a Tier III CMRS provider as defined in 3
KRS 65.7621 to deliver communications services as defined in KRS 136.602 4
or broadband; 5
(16)[(15)] (a) "Finished artwork" means final art that is used for actual reproduction 6
by photomechanical or other processes or for display purposes. 7
(b) "Finished artwork" includes: 8
1. Assemblies; 9
2. Charts; 10
3. Designs; 11
4. Drawings; 12
5. Graphs; 13
6. Illustrative materials; 14
7. Lettering; 15
8. Mechanicals; 16
9. Paintings; and 17
10. Paste-ups; 18
(17)[(16)] (a) "Gross receipts" and "sales price" mean the total amount or 19
consideration, including cash, credit, property, and services, for which 20
tangible personal property, digital property, or services are sold, leased, or 21
rented, valued in money, whether received in money or otherwise, without 22
any deduction for any of the following: 23
1. The retailer's cost of the tangible personal property, digital property, or 24
services sold; 25
2. The cost of the materials used, labor or service cost, interest, losses, all 26
costs of transportation to the retailer, all taxes imposed on the retailer, or 27 UNOFFICIAL COPY 23 RS BR 1313
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any other expense of the retailer; 1
3. Charges by the retailer for any services necessary to complete the sale; 2
4. Delivery charges, which are defined as charges by the retailer for the 3
preparation and delivery to a location designated by the purchaser 4
including transportation, shipping, postage, handling, crating, and 5
packing; 6
5. Any amount for which credit is given to the purchaser by the retailer, 7
other than credit for tangible personal property or digital property traded 8
when the tangible personal property or digital property traded is of like 9
kind and character to the property purchased and the property traded is 10
held by the retailer for resale; and 11
6. The amount charged for labor or services rendered in installing or 12
applying the tangible personal property, digital property, or service sold. 13
(b) "Gross receipts" and "sales price" shall include consideration received by the 14
retailer from a third party if: 15
1. The retailer actually receives consideration from a third party and the 16
consideration is directly related to a price reduction or discount on the 17
sale to the purchaser; 18
2. The retailer has an obligation to pass the price reduction or discount 19
through to the purchaser; 20
3. The amount of consideration attributable to the sale is fixed and 21
determinable by the retailer at the time of the sale of the item to the 22
purchaser; and 23
4. One (1) of the following criteria is met: 24
a. The purchaser presents a coupon, certificate, or other 25
documentation to the retailer to claim a price reduction or discount 26
where the coupon, certificate, or documentation is authorized, 27 UNOFFICIAL COPY 23 RS BR 1313
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distributed, or granted by a third party with the understanding that 1
the third party will reimburse any seller to whom the coupon, 2
certificate, or documentation is presented; 3
b. The price reduction or discount is identified as a third-party price 4
reduction or discount on the invoice received by the purchaser or 5
on a coupon, certificate, or other documentation presented by the 6
purchaser; or 7
c. The purchaser identifies himself or herself to the retailer as a 8
member of a group or organization entitled to a price reduction or 9
discount. A "preferred customer" card that is available to any 10
patron does not constitute membership in such a group. 11
(c) "Gross receipts" and "sales price" shall not include: 12
1. Discounts, including cash, term, or coupons that are not reimbursed by a 13
third party and that are allowed by a retailer and taken by a purchaser on 14
a sale; 15
2. Interest, financing, and carrying charges from credit extended on the 16
sale of tangible personal property, digital property, or services, if the 17
amount is separately stated on the invoice, bill of sale, or similar 18
document given to the purchaser; 19
3. Any taxes legally imposed directly on the purchaser that are separately 20
stated on the invoice, bill of sale, or similar document given to the 21
purchaser; or 22
4. Local alcohol regulatory license fees authorized under KRS 243.075 that 23
are separately stated on the invoice, bill of sale, or similar document 24
given to the purchaser. 25
(d) As used in this subsection, "third party" means a person other than the 26
purchaser; 27 UNOFFICIAL COPY 23 RS BR 1313
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(18)[(17)] "In this state" or "in the state" means within the exterior limits of the 1
Commonwealth and includes all territory within these limits owned by or ceded to 2
the United States of America; 3
(19)[(18)] "Industrial processing" includes: 4
(a) Refining; 5
(b) Extraction of minerals, ores, coal, clay, stone, petroleum, or natural gas; 6
(c) Mining, quarrying, fabricating, and industrial assembling; 7
(d) The processing and packaging of raw materials, in-process materials, and 8
finished products; and 9
(e) The processing and packaging of farm and dairy products for sale; 10
(20)[(19)] (a) "Lease or rental" means any transfer of possession or control of tangible 11
personal property for a fixed or indeterminate term for consideration. A lease 12
or rental shall include future options to: 13
1. Purchase the property; or 14
2. Extend the terms of the agreement and agreements covering trailers 15
where the amount of consideration may be increased or decreased by 16
reference to the amount realized upon sale or disposition of the property 17
as defined in 26 U.S.C. sec. 7701(h)(1). 18
(b) "Lease or rental" shall not include: 19
1. A transfer of possession or control of property under a security 20
agreement or deferred payment plan that requires the transfer of title 21
upon completion of the required payments; 22
2. A transfer of possession or control of property under an agreement that 23
requires the transfer of title upon completion of the required payments 24
and payment of an option price that does not exceed the greater of one 25
hundred dollars ($100) or one percent (1%) of the total required 26
payments; or 27 UNOFFICIAL COPY 23 RS BR 1313
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3. Providing tangible personal property and an operator for the tangible 1
personal property for a fixed or indeterminate period of time. To qualify 2
for this exclusion, the operator must be necessary for the equipment to 3
perform as designed, and the operator must do more than maintain, 4
inspect, or setup the tangible personal property. 5
(c) This definition shall apply regardless of the classification of a transaction 6
under generally accepted accounting principles, the Internal Revenue Code, or 7
other provisions of federal, state, or local law; 8
(21)[(20)] (a) "Machinery for new and expanded industry" means machinery: 9
1. Directly used in the manufacturing or industrial processing process of: 10
a. Tangible personal property at a plant facility; 11
b. Distilled spirits or wine at a plant facility or on the premises of a 12
distiller, rectifier, winery, or small farm winery licensed under 13
KRS 243.030 that includes a retail establishment on the premises; 14
or 15
c. Malt beverages at a plant facility or on the premises of a brewer or 16
microbrewery licensed under KRS 243.040 that includes a retail 17
establishment; 18
2. Which is incorporated for the first time into: 19
a. A plant facility established in this state; or 20
b. Licensed premises located in this state; and 21
3. Which does not replace machinery in the plant facility or licensed 22
premises unless that machinery purchased to replace existing machinery: 23
a. Increases the consumption of recycled materials at the plant 24
facility by not less than ten percent (10%); 25
b. Performs different functions; 26
c. Is used to manufacture a different product; or 27 UNOFFICIAL COPY 23 RS BR 1313
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d. Has a greater productive capacity, as measured in units of 1
production, than the machinery being replaced. 2
(b) "Machinery for new and expanded industry" does not include repair, 3
replacement, or spare parts of any kind, regardless of whether the purchase of 4
repair, replacement, or spare parts is required by the manufacturer or seller as 5
a condition of sale or as a condition of warranty; 6
(22)[(21)] "Manufacturing" means any process through which material having little or 7
no commercial value for its intended use before processing has appreciable 8
commercial value for its intended use after processing by the machinery; 9
(23)[(22)] "Marketing services" means developing marketing objectives and policies, 10
sales forecasting, new product developing and pricing, licensing, and franchise 11
planning; 12
(24)[(23)] "Marketplace" means any physical or electronic means through which one (1) 13
or more retailers may advertise and sell tangible personal property, digital property, 14
or services, or lease tangible personal property or digital property, such as a catalog, 15
Internet website[Web site], or television or radio broadcast, regardless of whether 16
the tangible personal property, digital property, or retailer is physically present in 17
this state; 18
(25)[(24)] (a) "Marketplace provider" means a person, including any affiliate of the 19
person, that facilitates a retail sale by satisfying subparagraphs 1. and 2. of 20
this paragraph as follows: 21
1. The person directly or indirectly: 22
a. Lists, makes available, or advertises tangible personal property, 23
digital property, or services for sale by a marketplace retailer in a 24
marketplace owned, operated, or controlled by the person; 25
b. Facilitates the sale of a marketplace retailer's product through a 26
marketplace by transmitting or otherwise communicating an offer 27 UNOFFICIAL COPY 23 RS BR 1313
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or acceptance of a retail sale of tangible personal property, digital 1
property, or services between a marketplace retailer and a 2
purchaser in a forum including a shop, store, booth, catalog, 3
Internet site, or similar forum; 4
c. Owns, rents, licenses, makes available, or operates any electronic 5
or physical infrastructure or any property, process, method, 6
copyright, trademark, or patent that connects marketplace retailers 7
to purchasers for the purpose of making retail sales of tangible 8
personal property, digital property, or services; 9
d. Provides a marketplace for making retail sales of tangible personal 10
property, digital property, or services, or otherwise facilitates retail 11
sales of tangible personal property, digital property, or services, 12
regardless of ownership or control of the tangible personal 13
property, digital property, or services, that are the subject of the 14
retail sale; 15
e. Provides software development or research and development 16
activities related to any activity described in this subparagraph, if 17
the software development or research and development activities 18
are directly related to the physical or electronic marketplace 19
provided by a marketplace provider; 20
f. Provides or offers fulfillment or storage services for a marketplace 21
retailer; 22
g. Sets prices for a marketplace retailer's sale of tangible personal 23
property, digital property, or services; 24
h. Provides or offers customer service to a marketplace retailer or a 25
marketplace retailer's customers, or accepts or assists with taking 26
orders, returns, or exchanges of tangible personal property, digital 27 UNOFFICIAL COPY 23 RS BR 1313
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property, or services sold by a marketplace retailer; or 1
i. Brands or otherwise identifies sales as those of the marketplace 2
provider; and 3
2. The person directly or indirectly: 4
a. Collects the sales price or purchase price of a retail sale of tangible 5
personal property, digital property, or services; 6
b. Provides payment processing services for a retail sale of tangible 7
personal property, digital property, or services; 8
c. Through terms and conditions, agreements, or arrangements with a 9
third party, collects payment in connection with a retail sale of 10
tangible personal property, digital property, or services from a 11
purchaser and transmits that payment to the marketplace retailer, 12
regardless of whether the person collecting and transmitting the 13
payment receives compensation or other consideration in exchange 14
for the service; or 15
d. Provides a virtual currency that purchasers are allowed or required 16
to use to purchase tangible personal property, digital property, or 17
services. 18
(b) "Marketplace provider" includes but is not limited to a person that satisfies the 19
requirements of this subsection through the ownership, operation, or control 20
of a digital distribution service, digital distribution platform, online portal, or 21
application store; 22
(26)[(25)] "Marketplace retailer" means a seller that makes retail sales through any 23
marketplace owned, operated, or controlled by a marketplace provider; 24
(27)[(26)] (a) "Occasional sale" includes: 25
1. A sale of tangible personal property or digital property not held or used 26
by a seller in the course of an activity for which he or she is required to 27 UNOFFICIAL COPY 23 RS BR 1313
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hold a seller's permit, provided such sale is not one (1) of a series of 1
sales sufficient in number, scope, and character to constitute an activity 2
requiring the holding of a seller's permit. In the case of the sale of the 3
entire, or a substantial portion of the nonretail assets of the seller, the 4
number of previous sales of similar assets shall be disregarded in 5
determining whether or not the current sale or sales shall qualify as an 6
occasional sale; or 7
2. Any transfer of all or substantially all the tangible personal property or 8
digital property held or used by a person in the course of such an activity 9
when after such transfer the real or ultimate ownership of such property 10
is substantially similar to that which existed before such transfer. 11
(b) For the purposes of this subsection, stockholders, bondholders, partners, or 12
other persons holding an interest in a corporation or other entity are regarded 13
as having the "real or ultimate ownership" of the tangible personal property or 14
digital property of such corporation or other entity; 15
(28)[(27)] (a) "Other direct mail" means any direct mail that is not advertising and 16
promotional direct mail, regardless of whether advertising and promotional 17
direct mail is included in the same mailing. 18
(b) "Other direct mail" includes but is not limited to: 19
1. Transactional direct mail that contains personal information specific to 20
the addressee, including but not limited to invoices, bills, statements of 21
account, and payroll advices; 22
2. Any legally required mailings, including but not limited to privacy 23
notices, tax reports, and stockholder reports; and 24
3. Other nonpromotional direct mail delivered to existing or former 25
shareholders, customers, employees, or agents, including but not limited 26
to newsletters and informational pieces. 27 UNOFFICIAL COPY 23 RS BR 1313
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(c) "Other direct mail" does not include the development of billing information or 1
the provision of any data processing service that is more than incidental to the 2
production of printed material; 3
(29)[(28)] "Person" includes any individual, firm, copartnership, joint venture, 4
association, social club, fraternal organization, corporation, estate, trust, business 5
trust, receiver, trustee, syndicate, cooperative, assignee, governmental unit or 6
agency, or any other group or combination acting as a unit; 7
(30)[(29)] "Permanent," as the term applies to digital property, means perpetual or for an 8
indefinite or unspecified length of time; 9
(31)[(30)] (a) "Photography and photofinishing services" means: 10
1. The taking, developing, or printing of an original photograph; or 11
2. Image editing, including shadow removal, tone adjustments, vertical and 12
horizontal alignment and cropping, composite image creation, 13
formatting, watermarking printing, and delivery of an original 14
photograph in the form of tangible personal property, digital property, or 15
other media. 16
(b) "Photography and photofinishing services" does not include photography 17
services necessary for medical or dental health; 18
(32)[(31)] "Plant facility" means a single location that is exclusively dedicated to 19
manufacturing or industrial processing activities. A location shall be deemed to be 20
exclusively dedicated to manufacturing or industrial processing activities even if 21
retail sales are made there, provided that the retail sales are incidental to the 22
manufacturing or industrial processing activities occurring at the location. The term 23
"plant facility" shall not include any restaurant, grocery store, shopping center, or 24
other retail establishment; 25
(33)[(32)] (a) "Prewritten computer software" means: 26
1. Computer software, including prewritten upgrades, that are not designed 27 UNOFFICIAL COPY 23 RS BR 1313
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and developed by the author or other creator to the specifications of a 1
specific purchaser; 2
2. Software designed and developed by the author or other creator to the 3
specifications of a specific purchaser when it is sold to a person other 4
than the original purchaser; or 5
3. Any portion of prewritten computer software that is modified or 6
enhanced in any manner, where the modification or enhancement is 7
designed and developed to the specifications of a specific purchaser, 8
unless there is a reasonable, separately stated charge on an invoice or 9
other statement of the price to the purchaser for the modification or 10
enhancement. 11
(b) When a person modifies or enhances computer software of which the person 12
is not the author or creator, the person shall be deemed to be the author or 13
creator only of the modifications or enhancements the person actually made. 14
(c) The combining of two (2) or more prewritten computer software programs or 15
portions thereof does not cause the combination to be other than prewritten 16
computer software; 17
(34)[(33)] "Prewritten computer software access services" means the right of access to 18
prewritten computer software where the object of the transaction is to use the 19
prewritten computer software while possession of the prewritten computer software 20
is maintained by the seller or a third party, wherever located, regardless of whether 21
the charge for the access or use is on a per use, per user, per license, subscription, or 22
some other basis; 23
(35)[(34)] (a) "Purchase" means any transfer of title or possession, exchange, barter, 24
lease, or rental, conditional or otherwise, in any manner or by any means 25
whatsoever, of: 26
1. Tangible personal property; 27 UNOFFICIAL COPY 23 RS BR 1313
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2. An extended warranty service; 1
3. Digital property transferred electronically; or 2
4. Services included in KRS 139.200; 3
for a consideration. 4
(b) "Purchase" includes: 5
1. When performed outside this state or when the customer gives a resale 6
certificate, the producing, fabricating, processing, printing, or imprinting 7
of tangible personal property for a consideration for consumers who 8
furnish either directly or indirectly the materials used in the producing, 9
fabricating, processing, printing, or imprinting; 10
2. A transaction whereby the possession of tangible personal property or 11
digital property is transferred but the seller retains the title as security 12
for the payment of the price; and 13
3. A transfer for a consideration of the title or possession of tangible 14
personal property or digital property which has been produced, 15
fabricated, or printed to the special order of the customer, or of any 16
publication; 17
(36)[(35)] "Recycled materials" means materials which have been recovered or diverted 18
from the solid waste stream and reused or returned to use in the form of raw 19
materials or products; 20
(37)[(36)] "Recycling purposes" means those activities undertaken in which materials 21
that would otherwise become solid waste are collected, separated, or processed in 22
order to be reused or returned to use in the form of raw materials or products; 23
(38)[(37)] "Remote retailer" means a retailer with no physical presence in this state; 24
(39)[(38)] (a) "Repair, replacement, or spare parts" means any tangible personal 25
property used to maintain, restore, mend, or repair machinery or equipment. 26
(b) "Repair, replacement, or spare parts" does not include machine oils, grease, or 27 UNOFFICIAL COPY 23 RS BR 1313
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industrial tools; 1
(40)[(39)] (a) "Retailer" means: 2
1. Every person engaged in the business of making retail sales of tangible 3
personal property, digital property, or furnishing any services in a retail 4
sale included in KRS 139.200; 5
2. Every person engaged in the business of making sales at auction of 6
tangible personal property or digital property owned by the person or 7
others for storage, use or other consumption, except as provided in 8
paragraph (c) of this subsection; 9
3. Every person making more than two (2) retail sales of tangible personal 10
property, digital property, or services included in KRS 139.200 during 11
any twelve (12) month period, including sales made in the capacity of 12
assignee for the benefit of creditors, or receiver or trustee in bankruptcy; 13
4. Any person conducting a race meeting under the provision of KRS 14
Chapter 230, with respect to horses which are claimed during the 15
meeting. 16
(b) When the department determines that it is necessary for the efficient 17
administration of this chapter to regard any salesmen, representatives, 18
peddlers, or canvassers as the agents of the dealers, distributors, supervisors or 19
employers under whom they operate or from whom they obtain the tangible 20
personal property, digital property, or services sold by them, irrespective of 21
whether they are making sales on their own behalf or on behalf of the dealers, 22
distributors, supervisors or employers, the department may so regard them and 23
may regard the dealers, distributors, supervisors or employers as retailers for 24
purposes of this chapter. 25
(c) 1. Any person making sales at a charitable auction for a qualifying entity 26
shall not be a retailer for purposes of the sales made at the charitable 27 UNOFFICIAL COPY 23 RS BR 1313
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auction if: 1
a. The qualifying entity, not the person making sales at the auction, is 2
sponsoring the auction; 3
b. The purchaser of tangible personal property at the auction directly 4
pays the qualifying entity sponsoring the auction for the property 5
and not the person making the sales at the auction; and 6
c. The qualifying entity, not the person making sales at the auction, is 7
responsible for the collection, control, and disbursement of the 8
auction proceeds. 9
2. If the conditions set forth in subparagraph 1. of this paragraph are met, 10
the qualifying entity sponsoring the auction shall be the retailer for 11
purposes of the sales made at the charitable auction. 12
3. For purposes of this paragraph, "qualifying entity" means a resident: 13
a. Church; 14
b. School; 15
c. Civic club; or 16
d. Any other nonprofit charitable, religious, or educational 17
organization; 18
(41)[(40)] "Retail sale" means any sale, lease, or rental for any purpose other than resale, 19
sublease, or subrent; 20
(42)[(41)] (a) "Ringtones" means digitized sound files that are downloaded onto a 21
device and that may be used to alert the customer with respect to a 22
communication. 23
(b) "Ringtones" shall not include ringback tones or other digital files that are not 24
stored on the purchaser's communications device; 25
(43)[(42)] (a) "Sale" means: 26
1. The furnishing of any services included in KRS 139.200; 27 UNOFFICIAL COPY 23 RS BR 1313
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2. Any transfer of title or possession, exchange, barter, lease, or rental, 1
conditional or otherwise, in any manner or by any means whatsoever, 2
of: 3
a. Tangible personal property; or 4
b. Digital property transferred electronically; 5
for a consideration. 6
(b) "Sale" includes but is not limited to: 7
1. The producing, fabricating, processing, printing, or imprinting of 8
tangible personal property or digital property for a consideration for 9
purchasers who furnish, either directly or indirectly, the materials used 10
in the producing, fabricating, processing, printing, or imprinting; 11
2. A transaction whereby the possession of tangible personal property or 12
digital property is transferred, but the seller retains the title as security 13
for the payment of the price; and 14
3. A transfer for a consideration of the title or possession of tangible 15
personal property or digital property which has been produced, 16
fabricated, or printed to the special order of the purchaser. 17
(c) This definition shall apply regardless of the classification of a transaction 18
under generally accepted accounting principles, the Internal Revenue Code, or 19
other provisions of federal, state, or local law; 20
(44)[(43)] "Seller" includes every person engaged in the business of selling tangible 21
personal property, digital property, or services of a kind, the gross receipts from the 22
retail sale of which are required to be included in the measure of the sales tax, and 23
every person engaged in making sales for resale; 24
(45)[(44)] (a) "Storage" includes any keeping or retention in this state for any purpose 25
except sale in the regular course of business or subsequent use solely outside 26
this state of tangible personal property or digital property purchased from a 27 UNOFFICIAL COPY 23 RS BR 1313
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retailer. 1
(b) "Storage" does not include the keeping, retaining, or exercising any right or 2
power over tangible personal property for the purpose of subsequently 3
transporting it outside the state for use thereafter solely outside the state, or 4
for the purpose of being processed, fabricated, or manufactured into, attached 5
to, or incorporated into, other tangible personal property to be transported 6
outside the state and thereafter used solely outside the state; 7
(46)[(45)] "Tangible personal property" means personal property which may be seen, 8
weighed, measured, felt, or touched, or which is in any other manner perceptible to 9
the senses and includes natural, artificial, and mixed gas, electricity, water, steam, 10
and prewritten computer software; 11
(47)[(46)] "Taxpayer" means any person liable for tax under this chapter; 12
(48)[(47)] "Telemarketing services" means services provided via telephone, facsimile, 13
electronic mail, or other modes of communications to another person, which are 14
unsolicited by that person, for the purposes of: 15
(a) 1. Promoting products or services; 16
2. Taking orders; or 17
3. Providing information or assistance regarding the products or services; 18
or 19
(b) Soliciting contributions; 20
(49)[(48)] "Transferred electronically" means accessed or obtained by the purchaser by 21
means other than tangible storage media; and 22
(50)[(49)] (a) "Use" includes the exercise of: 23
1. Any right or power over tangible personal property or digital property 24
incident to the ownership of that property, or by any transaction in 25
which possession is given, or by any transaction involving digital 26
property or tangible personal property where the right of access is 27 UNOFFICIAL COPY 23 RS BR 1313
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granted; or 1
2. Any right or power to benefit any services subject to tax under KRS 2
139.200(2)(p) to (ay). 3
(b) "Use" does not include the keeping, retaining, or exercising any right or 4
power over tangible personal property or digital property for the purpose of: 5
1. Selling tangible personal property or digital property in the regular 6
course of business; or 7
2. Subsequently transporting tangible personal property outside the state 8
for use thereafter solely outside the state, or for the purpose of being 9
processed, fabricated, or manufactured into, attached to, or incorporated 10
into, other tangible personal property to be transported outside the state 11
and thereafter used solely outside the state. 12
Section 2. KRS 139.480 is amended to read as follows: 13
Any other provision of this chapter to the contrary notwithstanding, the terms "sale at 14
retail," "retail sale," "use," "storage," and "consumption," as used in this chapter, shall not 15
include the sale, use, storage, or other consumption of: 16
(1) Locomotives or rolling stock, including materials for the construction, repair, or 17
modification thereof, or fuel or supplies for the direct operation of locomotives and 18
trains, used or to be used in interstate commerce; 19
(2) Coal for the manufacture of electricity; 20
(3) (a) All energy or energy-producing fuels used in the course of manufacturing, 21
processing, mining, or refining and any related distribution, transmission, and 22
transportation services for this energy that are billed to the user, to the extent 23
that the cost of the energy or energy-producing fuels used, and related 24
distribution, transmission, and transportation services for this energy that are 25
billed to the user exceed three percent (3%) of the cost of production. 26
(b) Cost of production shall be computed on the basis of a plant facility, which 27 UNOFFICIAL COPY 23 RS BR 1313
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shall include all operations within the continuous, unbroken, integrated 1
manufacturing or industrial processing process that ends with a product 2
packaged and ready for sale. 3
(c) A person who performs a manufacturing or industrial processing activity for a 4
fee and does not take ownership of the tangible personal property that is 5
incorporated into, or becomes the product of, the manufacturing or industrial 6
processing activity is a toller. For periods on or after July 1, 2018, the costs of 7
the tangible personal property shall be excluded from the toller's cost of 8
production at a plant facility with tolling operations in place as of July 1, 9
2018. 10
(d) For plant facilities that begin tolling operations after July 1, 2018, the costs of 11
tangible personal property shall be excluded from the toller's cost of 12
production if the toller: 13
1. Maintains a binding contract for periods after July 1, 2018, that governs 14
the terms, conditions, and responsibilities with a separate legal entity, 15
which holds title to the tangible personal property that is incorporated 16
into, or becomes the product of, the manufacturing or industrial 17
processing activity; 18
2. Maintains accounting records that show the expenses it incurs to fulfill 19
the binding contract that include but are not limited to energy or energy-20
producing fuels, materials, labor, procurement, depreciation, 21
maintenance, taxes, administration, and office expenses; 22
3. Maintains separate payroll, bank accounts, tax returns, and other records 23
that demonstrate its independent operations in the performance of its 24
tolling responsibilities; 25
4. Demonstrates one (1) or more substantial business purposes for the 26
tolling operations germane to the overall manufacturing, industrial 27 UNOFFICIAL COPY 23 RS BR 1313
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processing activities, or corporate structure at the plant facility. A 1
business purpose is a purpose other than the reduction of sales tax 2
liability for the purchases of energy and energy-producing fuels; and 3
5. Provides information to the department upon request that documents 4
fulfillment of the requirements in subparagraphs 1. to 4. of this 5
paragraph and gives an overview of its tolling operations with an 6
explanation of how the tolling operations relate and connect with all 7
other manufacturing or industrial processing activities occurring at the 8
plant facility; 9
(4) Livestock of a kind the products of which ordinarily constitute food for human 10
consumption, provided the sales are made for breeding or dairy purposes and by or 11
to a person regularly engaged in the business of farming; 12
(5) Poultry for use in breeding or egg production; 13
(6) Farm work stock for use in farming operations; 14
(7) Seeds, the products of which ordinarily constitute food for human consumption or 15
are to be sold in the regular course of business, and commercial fertilizer to be 16
applied on land, the products from which are to be used for food for human 17
consumption or are to be sold in the regular course of business; provided such sales 18
are made to farmers who are regularly engaged in the occupation of tilling and 19
cultivating the soil for the production of crops as a business, or who are regularly 20
engaged in the occupation of raising and feeding livestock or poultry or producing 21
milk for sale; and provided further that tangible personal property so sold is to be 22
used only by those persons designated above who are so purchasing; 23
(8) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals to be 24
used in the production of crops as a business, or in the raising and feeding of 25
livestock or poultry, the products of which ordinarily constitute food for human 26
consumption; 27 UNOFFICIAL COPY 23 RS BR 1313
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(9) Feed, including pre-mixes and feed additives, for livestock or poultry of a kind the 1
products of which ordinarily constitute food for human consumption; 2
(10) Machinery for new and expanded industry; 3
(11) Farm machinery. As used in this section, the term "farm machinery": 4
(a) Means machinery used exclusively and directly in the occupation of: 5
1. Tilling the soil for the production of crops as a business; 6
2. Raising and feeding livestock or poultry for sale; or 7
3. Producing milk for sale; 8
(b) Includes machinery, attachments, and replacements therefor, repair parts, and 9
replacement parts which are used or manufactured for use on, or in the 10
operation of farm machinery and which are necessary to the operation of the 11
machinery, and are customarily so used, including but not limited to combine 12
header wagons, combine header trailers, or any other implements specifically 13
designed and used to move or transport a combine head; and 14
(c) Does not include: 15
1. Automobiles; 16
2. Trucks; 17
3. Trailers, except combine header trailers; or 18
4. Truck-trailer combinations; 19
(12) Tombstones and other memorial grave markers; 20
(13) On-farm facilities used exclusively for grain or soybean storing, drying, processing, 21
or handling. The exemption applies to the equipment, machinery, attachments, 22
repair and replacement parts, and any materials incorporated into the construction, 23
renovation, or repair of the facilities; 24
(14) On-farm facilities used exclusively for raising poultry or livestock. The exemption 25
shall apply to the equipment, machinery, attachments, repair and replacement parts, 26
and any materials incorporated into the construction, renovation, or repair of the 27 UNOFFICIAL COPY 23 RS BR 1313
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facilities. The exemption shall apply but not be limited to vent board equipment, 1
waterer and feeding systems, brooding systems, ventilation systems, alarm systems, 2
and curtain systems. In addition, the exemption shall apply whether or not the seller 3
is under contract to deliver, assemble, and incorporate into real estate the 4
equipment, machinery, attachments, repair and replacement parts, and any materials 5
incorporated into the construction, renovation, or repair of the facilities; 6
(15) Gasoline, special fuels, liquefied petroleum gas, and natural gas used exclusively 7
and directly to: 8
(a) Operate farm machinery as defined in subsection (11) of this section; 9
(b) Operate on-farm grain or soybean drying facilities as defined in subsection 10
(13) of this section; 11
(c) Operate on-farm poultry or livestock facilities defined in subsection (14) of 12
this section; 13
(d) Operate on-farm ratite facilities defined in subsection (23) of this section; 14
(e) Operate on-farm llama or alpaca facilities as defined in subsection (25) of this 15
section; or 16
(f) Operate on-farm dairy facilities; 17
(16) Textbooks, including related workbooks and other course materials, purchased for 18
use in a course of study conducted by an institution which qualifies as a nonprofit 19
educational institution under KRS 139.495. The term "course materials" means only 20
those items specifically required of all students for a particular course but shall not 21
include notebooks, paper, pencils, calculators, tape recorders, or similar student 22
aids; 23
(17) Any property which has been certified as an alcohol production facility as defined 24
in KRS 247.910; 25
(18) Aircraft, repair and replacement parts therefor, and supplies, except fuel, for the 26
direct operation of aircraft in interstate commerce and used exclusively for the 27 UNOFFICIAL COPY 23 RS BR 1313
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conveyance of property or passengers for hire. Nominal intrastate use shall not 1
subject the property to the taxes imposed by this chapter; 2
(19) Any property which has been certified as a fluidized bed energy production facility 3
as defined in KRS 211.390; 4
(20) (a) 1. Any property to be incorporated into the construction, rebuilding, 5
modification, or expansion of a blast furnace or any of its components or 6
appurtenant equipment or structures as part of an approved supplemental 7
project, as defined by KRS 154.26-010; and 8
2. Materials, supplies, and repair or replacement parts purchased for use in 9
the operation and maintenance of a blast furnace and related carbon 10
steel-making operations as part of an approved supplemental project, as 11
defined by KRS 154.26-010. 12
(b) The exemptions provided in this subsection shall be effective for sales made: 13
1. On and after July 1, 2018; and 14
2. During the term of a supplemental project agreement entered into 15
pursuant to KRS 154.26-090; 16
(21) Beginning on October 1, 1986, food or food products purchased for human 17
consumption with food coupons issued by the United States Department of 18
Agriculture pursuant to the Food Stamp Act of 1977, as amended, and required to 19
be exempted by the Food Security Act of 1985 in order for the Commonwealth to 20
continue participation in the federal food stamp program; 21
(22) Machinery or equipment purchased or leased by a business, industry, or 22
organization in order to collect, source separate, compress, bale, shred, or otherwise 23
handle waste materials if the machinery or equipment is primarily used for 24
recycling purposes; 25
(23) Ratite birds and eggs to be used in an agricultural pursuit for the breeding and 26
production of ratite birds, feathers, hides, breeding stock, eggs, meat, and ratite by-27 UNOFFICIAL COPY 23 RS BR 1313
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products, and the following items used in this agricultural pursuit: 1
(a) Feed and feed additives; 2
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 3
(c) On-farm facilities, including equipment, machinery, attachments, repair and 4
replacement parts, and any materials incorporated into the construction, 5
renovation, or repair of the facilities. The exemption shall apply to incubation 6
systems, egg processing equipment, waterer and feeding systems, brooding 7
systems, ventilation systems, alarm systems, and curtain systems. In addition, 8
the exemption shall apply whether or not the seller is under contract to 9
deliver, assemble, and incorporate into real estate the equipment, machinery, 10
attachments, repair and replacement parts, and any materials incorporated into 11
the construction, renovation, or repair of the facilities; 12
(24) Embryos and semen that are used in the reproduction of livestock, if the products of 13
these embryos and semen ordinarily constitute food for human consumption, and if 14
the sale is made to a person engaged in the business of farming; 15
(25) Llamas and alpacas to be used as beasts of burden or in an agricultural pursuit for 16
the breeding and production of hides, breeding stock, fiber and wool products, 17
meat, and llama and alpaca by-products, and the following items used in this 18
pursuit: 19
(a) Feed and feed additives; 20
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 21
and 22
(c) On-farm facilities, including equipment, machinery, attachments, repair and 23
replacement parts, and any materials incorporated into the construction, 24
renovation, or repair of the facilities. The exemption shall apply to waterer 25
and feeding systems, ventilation systems, and alarm systems. In addition, the 26
exemption shall apply whether or not the seller is under contract to deliver, 27 UNOFFICIAL COPY 23 RS BR 1313
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assemble, and incorporate into real estate the equipment, machinery, 1
attachments, repair and replacement parts, and any materials incorporated into 2
the construction, renovation, or repair of the facilities; 3
(26) Baling twine and baling wire for the baling of hay and straw; 4
(27) Water sold to a person regularly engaged in the business of farming and used in the: 5
(a) Production of crops; 6
(b) Production of milk for sale; or 7
(c) Raising and feeding of: 8
1. Livestock or poultry, the products of which ordinarily constitute food 9
for human consumption; or 10
2. Ratites, llamas, alpacas, buffalo, cervids or aquatic organisms; 11
(28) Buffalos to be used as beasts of burden or in an agricultural pursuit for the 12
production of hides, breeding stock, meat, and buffalo by-products, and the 13
following items used in this pursuit: 14
(a) Feed and feed additives; 15
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 16
(c) On-farm facilities, including equipment, machinery, attachments, repair and 17
replacement parts, and any materials incorporated into the construction, 18
renovation, or repair of the facilities. The exemption shall apply to waterer 19
and feeding systems, ventilation systems, and alarm systems. In addition, the 20
exemption shall apply whether or not the seller is under contract to deliver, 21
assemble, and incorporate into real estate the equipment, machinery, 22
attachments, repair and replacement parts, and any materials incorporated into 23
the construction, renovation, or repair of the facilities; 24
(29) Aquatic organisms sold directly to or raised by a person regularly engaged in the 25
business of producing products of aquaculture, as defined in KRS 260.960, for sale, 26
and the following items used in this pursuit: 27 UNOFFICIAL COPY 23 RS BR 1313
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(a) Feed and feed additives; 1
(b) Water; 2
(c) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 3
and 4
(d) On-farm facilities, including equipment, machinery, attachments, repair and 5
replacement parts, and any materials incorporated into the construction, 6
renovation, or repair of the facilities and, any gasoline, special fuels, liquefied 7
petroleum gas, or natural gas used to operate the facilities. The exemption 8
shall apply, but not be limited to: waterer and feeding systems; ventilation, 9
aeration, and heating systems; processing and storage systems; production 10
systems such as ponds, tanks, and raceways; harvest and transport equipment 11
and systems; and alarm systems. In addition, the exemption shall apply 12
whether or not the seller is under contract to deliver, assemble, and 13
incorporate into real estate the equipment, machinery, attachments, repair and 14
replacement parts, and any materials incorporated into the construction, 15
renovation, or repair of the facilities; 16
(30) Members of the genus cervidae permitted by KRS Chapter 150 that are used for the 17
production of hides, breeding stock, meat, and cervid by-products, and the 18
following items used in this pursuit: 19
(a) Feed and feed additives; 20
(b) Insecticides, fungicides, herbicides, rodenticides, and other chemicals; and 21
(c) On-site facilities, including equipment, machinery, attachments, repair and 22
replacement parts, and any materials incorporated into the construction, 23
renovation, or repair of the facilities. In addition, the exemption shall apply 24
whether or not the seller is under contract to deliver, assemble, and 25
incorporate into real estate the equipment, machinery, attachments, repair and 26
replacement parts, and any materials incorporated into the construction, 27 UNOFFICIAL COPY 23 RS BR 1313
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renovation, or repair of the facilities; 1
(31) (a) Repair or replacement parts for the direct operation or maintenance of a motor 2
vehicle, including any towed unit, used exclusively in interstate commerce for 3
the conveyance of property or passengers for hire, provided the motor vehicle 4
is licensed for use on the highway and its declared gross vehicle weight with 5
any towed unit is forty-four thousand and one (44,001) pounds or greater. 6
Nominal intrastate use shall not subject the property to the taxes imposed by 7
this chapter; 8
(b) Repair or replacement parts for the direct operation and maintenance of a 9
motor vehicle operating under a charter bus certificate issued by the 10
Transportation Cabinet under KRS Chapter 281, or under similar authority 11
granted by the United States Department of Transportation; and 12
(c) For the purposes of this subsection, "repair or replacement parts" means tires, 13
brakes, engines, transmissions, drive trains, chassis, body parts, and their 14
components. "Repair or replacement parts" shall not include fuel, machine 15
oils, hydraulic fluid, brake fluid, grease, supplies, or accessories not essential 16
to the operation of the motor vehicle itself, except when sold as part of the 17
assembled unit, such as cigarette lighters, radios, lighting fixtures not 18
otherwise required by the manufacturer for operation of the vehicle, or tool or 19
utility boxes; 20
(32) Food donated by a retail food establishment or any other entity regulated under 21
KRS 217.127 to a nonprofit organization for distribution to the needy;[ and] 22
(33) Drugs and over-the counter drugs, as defined in KRS 139.472, that are purchased 23
by a person regularly engaged in the business of farming and used in the treatment 24
of cattle, sheep, goats, swine, poultry, ratite birds, llamas, alpacas, buffalo, aquatic 25
organisms, or cervids; and 26
(34) Feminine hygiene products. 27 UNOFFICIAL COPY 23 RS BR 1313
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Section 3. This Act shall take effect on July 1, 2023. 1