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AN ACT relating to revenue and declaring an emergency. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 45A.837 is amended to read as follows: 3
(1) Notwithstanding the provisions of KRS 45A.800 to 45A.835, the Finance and 4
Administration Cabinet and the Transportation Cabinet may enter into price 5
contracts for architectural, engineering, and engineering-related services. If the 6
agencies choose to enter into a price contract, subsection (2) of this section shall 7
apply. 8
(2) Price contracts shall be awarded to firms qualified by the Finance and 9
Administration Cabinet, Department of Facilities Management or by the 10
Transportation Cabinet, Department of Highways. The Finance and Administration 11
Cabinet selection committee established by KRS 45A.810 shall meet at least 12
quarterly during each fiscal year to review and make recommendations to the 13
commissioner of the Department for Facilities Management for qualification of 14
interested firms. The Transportation Cabinet selection committee established by 15
KRS 45A.810 shall meet at least quarterly during each fiscal year to review and 16
make recommendations to the commissioner of the Department of Highways for 17
qualification of interested firms. 18
(a) The respective committees shall evaluate those firms submitting statements of 19
interest in obtaining a price contract. The submitting firms shall be reviewed 20
according to the following criteria: 21
1. Qualifications; 22
2. Ability of professional personnel; and 23
3. Past record and experience. 24
(b) Firms qualified by the commissioner of the Department for Facilities 25
Management or by the commissioner of the Department of Highways shall be 26
awarded price contracts by the respective departments for the type of work for 27 UNOFFICIAL COPY 23 RS HB 360/GA
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which they have been qualified. 1
(c) The commissioner of the Department for Facilities Management or the 2
commissioner of the Department of Highways may select firms to perform 3
work under price contract for small projects for which the architectural, 4
engineering, or engineering-related fees do not exceed one hundred 5
fifty[seventy-five] thousand dollars ($150,000)[($75,000)]. However, no firm 6
that has received more than three[one] hundred[ fifty] thousand dollars 7
($300,000)[($150,000) in price contract fees in any one (1) fiscal year in the 8
contract discipline being awarded shall be selected to work under a price 9
contract unless the secretary of finance and administration or the secretary of 10
transportation makes a written determination that the selection is in the best 11
interest of the Commonwealth and the determination is confirmed by the 12
appropriate cabinet's selection committee established by KRS 45A.810. 13
(3) Notwithstanding any provision of the Kentucky Revised Statutes, no price contract 14
shall be awarded under the provisions of this section before completion of the 15
review procedure provided for in KRS 45A.695 and 45A.705. 16
SECTION 2. A NEW SECTION OF KRS CHAPTER 132 IS CREATED TO 17
READ AS FOLLOWS: 18
The following classes of property shall be exempt from state and local ad valorem 19
taxes, including the county, city, school, and other taxing district in which it has a 20
taxable situs: 21
(1) Farm implements and farm machinery owned by or leased to a person actually 22
engaged in farming and used in his or her farm operations; 23
(2) Livestock, ratite birds, and domestic fowl; 24
(3) Tangible personal property located in a foreign trade zone established pursuant 25
to 19 U.S.C. secs. 81a to 81u, provided that the zone is activated in accordance 26
with the regulations of the United States Customs Service and the Foreign Trade 27 UNOFFICIAL COPY 23 RS HB 360/GA
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Zones Board; 1
(4) Property that is certified as an alcohol production facility as defined in KRS 2
247.910; 3
(5) Property that is certified as a fluidized bed energy production facility as defined 4
in KRS 211.390; 5
(6) Computer software, except prewritten computer software as defined in Section 7 6
of this Act; 7
(7) Trucks, tractors, and buses used on routes or in systems that are partly within 8
and partly outside this state, and that are subject to the fee imposed by KRS 9
136.188; 10
(8) Semitrailers and trailers, as defined in KRS 189.010, if the semitrailers or trailers 11
are used on a route or in a system that is partly within and partly outside this 12
state. Semitrailers or trailers required to be registered under KRS 186.655 that 13
are used only in this state shall be subject to the ad valorem tax imposed by KRS 14
132.487; 15
(9) All intangible personal property, except intangible personal property assessed 16
under KRS 132.030 or KRS Chapter 136. Nothing in this subsection shall 17
prohibit local taxation of franchises of: 18
(a) Corporations; 19
(b) Financial institutions as provided in KRS 136.575; or 20
(c) Domestic life insurance companies; 21
(10) All real and personal property owned by another state or a political subdivision of 22
another state that is used exclusively for public purposes, if a comparable 23
exemption is provided in that state or political subdivision for property owned by 24
the Commonwealth of Kentucky or its political subdivisions; 25
(11) Every fraternal benefit society organized or licensed under Subtitle 29 of KRS 26
Chapter 304 that is a charitable and benevolent institution, and its funds shall be 27 UNOFFICIAL COPY 23 RS HB 360/GA
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exempt from all state, county, district, city, and school taxes, other than taxes on 1
real property and office equipment; and 2
(12) (a) Any bridge built by an adjoining state, by the government of the United 3
States, or by any commission created by an Act of Congress, over a 4
boundary line stream between this state and an adjoining state, which is: 5
1. Not operated for profit and, if it connects with a primary highway of 6
this state, is declared to be public property used for public purposes; 7
and 8
2. Exempt from taxation unless the adjoining state, or other public body 9
constructing the bridge, taxes similar bridges built by this 10
Commonwealth in like manner. 11
(b) The issuance of bonds for the purpose of amortizing the cost of construction 12
of the bridges, as described in paragraph (a) of this subsection, shall not 13
affect the tax exemption granted. 14
Section 3. KRS 132.020 is amended to read as follows: 15
(1) The owner or person assessed shall pay an annual ad valorem tax for state purposes 16
at the rate of: 17
(a) Thirty-one and one-half cents ($0.315) upon each one hundred dollars ($100) 18
of value of all real property directed to be assessed for taxation; 19
(b) Twenty-five cents ($0.25) upon each one hundred dollars ($100) of value of 20
all motor vehicles qualifying for permanent registration as historic motor 21
vehicles under KRS 186.043; 22
(c) Fifteen cents ($0.15) upon each one hundred dollars ($100) of value of all: 23
1. Machinery actually engaged in manufacturing; 24
2. Commercial radio and television equipment used to receive, capture, 25
produce, edit, enhance, modify, process, store, convey, or transmit audio 26
or video content or electronic signals which are broadcast over the air to 27 UNOFFICIAL COPY 23 RS HB 360/GA
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an antenna, including radio and television towers used to transmit or 1
facilitate the transmission of the signal broadcast and equipment used to 2
gather or transmit weather information, but excluding telephone and 3
cellular communication towers; and 4
3. Tangible personal property which has been certified as a pollution 5
control facility as defined in KRS 224.1-300. In the case of tangible 6
personal property certified as a pollution control facility which is 7
incorporated into a landfill facility, the tangible personal property shall 8
be presumed to remain tangible personal property for purposes of this 9
paragraph if the tangible personal property is being used for its intended 10
purposes; 11
(d) Ten cents ($0.10) upon each one hundred dollars ($100) of value on the 12
operating property of railroads or railway companies that operate solely 13
within the Commonwealth; 14
(e) Five cents ($0.05) upon each one hundred dollars ($100) of value of goods 15
held for sale in the regular course of business, which includes: 16
1. Machinery and equipment held in a retailer's inventory for sale or lease 17
originating under a floor plan financing arrangement; 18
2. Motor vehicles: 19
a. Held for sale in the inventory of a licensed motor vehicle dealer, 20
including licensed motor vehicle auction dealers, which are not 21
currently titled and registered in Kentucky and are held on an 22
assignment pursuant to KRS 186A.230; or 23
b. That are in the possession of a licensed motor vehicle dealer, 24
including licensed motor vehicle auction dealers, for sale, although 25
ownership has not been transferred to the dealer; 26
3. Raw materials, which includes distilled spirits and distilled spirits 27 UNOFFICIAL COPY 23 RS HB 360/GA
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inventory; 1
4. In-process materials, which includes distilled spirits and distilled spirits 2
inventory, held for incorporation in finished goods held for sale in the 3
regular course of business; and 4
5. Qualified heavy equipment; 5
(f) One and one-half cents ($0.015) upon each one hundred dollars ($100) of 6
value of all: 7
1. Privately owned leasehold interests in industrial buildings, as defined 8
under KRS 103.200, owned and financed by a tax-exempt governmental 9
unit, or tax-exempt statutory authority under the provisions of KRS 10
Chapter 103, upon the prior approval of the Kentucky Economic 11
Development Finance Authority, except that the rate shall not apply to 12
the proportion of value of the leasehold interest created through any 13
private financing; 14
2. Qualifying voluntary environmental remediation property, provided the 15
property owner has corrected the effect of all known releases of 16
hazardous substances, pollutants, contaminants, petroleum, or petroleum 17
products located on the property consistent with a corrective action plan 18
approved by the Energy and Environment Cabinet pursuant to KRS 19
224.1-400, 224.1-405, or 224.60-135, and provided the cleanup was not 20
financed through a public grant or the petroleum storage tank 21
environmental assurance fund. This rate shall apply for a period of three 22
(3) years following the Energy and Environment Cabinet's issuance of a 23
No Further Action Letter or its equivalent, after which the regular tax 24
rate shall apply; 25
3. Tobacco directed to be assessed for taxation; 26
4. Unmanufactured agricultural products; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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5. Aircraft not used in the business of transporting persons or property for 1
compensation or hire; 2
6. Federally documented vessels not used in the business of transporting 3
persons or property for compensation or hire, or for other commercial 4
purposes; and 5
7. Privately owned leasehold interests in residential property described in 6
KRS 132.195(2)(g); and 7
(g)[ One-tenth of one cent ($0.001) upon each one hundred dollars ($100) of value 8
of all: 9
1. Farm implements and farm machinery owned by or leased to a person 10
actually engaged in farming and used in his farm operations; 11
2. Livestock and domestic fowl; 12
3. Tangible personal property located in a foreign trade zone established 13
pursuant to 19 U.S.C. sec. 81, provided that the zone is activated in 14
accordance with the regulations of the United States Customs Service 15
and the Foreign Trade Zones Board; and 16
4. Property which has been certified as an alcohol production facility as 17
defined in KRS 247.910, or as a fluidized bed energy production facility 18
as defined in KRS 211.390; and 19
(h)] Forty-five cents ($0.45) upon each one hundred dollars ($100) of value of all 20
other property directed to be assessed for taxation shall be paid by the owner 21
or person assessed, except as provided in KRS 132.030, 132.200, 136.300, 22
and 136.320, providing a different tax rate for particular property. 23
(2) Notwithstanding subsection (1)(a) of this section, the state tax rate on real property 24
shall be reduced to compensate for any increase in the aggregate assessed value of 25
real property to the extent that the increase exceeds the preceding year's assessment 26
by more than four percent (4%), excluding: 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(a) The assessment of new property as defined in KRS 132.010(8); 1
(b) The assessment from property which is subject to tax increment financing 2
pursuant to KRS Chapter 65; and 3
(c) The assessment from leasehold property which is owned and financed by a 4
tax-exempt governmental unit, or tax-exempt statutory authority under the 5
provisions of KRS Chapter 103 and entitled to the reduced rate of one and 6
one-half cents ($0.015) pursuant to subsection (1)(f) of this section. In any 7
year in which the aggregate assessed value of real property is less than the 8
preceding year, the state rate shall be increased to the extent necessary to 9
produce the approximate amount of revenue that was produced in the 10
preceding year from real property. 11
(3) By July 1 each year, the department shall compute the state tax rate applicable to 12
real property for the current year in accordance with the provisions of subsection 13
(2) of this section and certify the rate to the county clerks for their use in preparing 14
the tax bills. If the assessments for all counties have not been certified by July 1, the 15
department shall, when either real property assessments of at least seventy-five 16
percent (75%) of the total number of counties of the Commonwealth have been 17
determined to be acceptable by the department, or when the number of counties 18
having at least seventy-five percent (75%) of the total real property assessment for 19
the previous year have been determined to be acceptable by the department, make 20
an estimate of the real property assessments of the uncertified counties and compute 21
the state tax rate. 22
(4) If the tax rate set by the department as provided in subsection (2) of this section 23
produces more than a four percent (4%) increase in real property tax revenues, 24
excluding: 25
(a) The revenue resulting from new property as defined in KRS 132.010(8); 26
(b) The revenue from property which is subject to tax increment financing 27 UNOFFICIAL COPY 23 RS HB 360/GA
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pursuant to KRS Chapter 65; and 1
(c) The revenue from leasehold property which is owned and financed by a tax-2
exempt governmental unit, or tax-exempt statutory authority under the 3
provisions of KRS Chapter 103 and entitled to the reduced rate of one and 4
one-half cents ($0.015) pursuant to subsection (1) of this section; 5
the rate shall be adjusted in the succeeding year so that the cumulative total of each 6
year's property tax revenue increase shall not exceed four percent (4%) per year. 7
(5) The provisions of subsection (2) of this section notwithstanding, the assessed value 8
of unmined coal certified by the department after July 1, 1994, shall not be included 9
with the assessed value of other real property in determining the state real property 10
tax rate. All omitted unmined coal assessments made after July 1, 1994, shall also 11
be excluded from the provisions of subsection (2) of this section. The calculated 12
rate shall, however, be applied to unmined coal property, and the state revenue shall 13
be devoted to the program described in KRS 146.550 to 146.570, except that four 14
hundred thousand dollars ($400,000) of the state revenue shall be paid annually to 15
the State Treasury and credited to the Office of Energy Policy for the purpose of 16
public education of coal-related issues. 17
Section 4. KRS 132.200 is amended to read as follows: 18
All property subject to taxation for state purposes shall also be subject to taxation in the 19
county, city, school, or other taxing district in which it has a taxable situs, except the 20
class of property described in KRS 132.030 and the following classes of property, which 21
shall be subject to taxation for state purposes only: 22
(1)[ Farm implements and farm machinery owned by or leased to a person actually 23
engaged in farming and used in his farm operation; 24
(2) Livestock, ratite birds, and domestic fowl; 25
(3)] Capital stock of savings and loan associations; 26
(2)[(4)] Machinery actually engaged in manufacturing, products in the course of 27 UNOFFICIAL COPY 23 RS HB 360/GA
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manufacture, and raw material actually on hand at the plant for the purpose of 1
manufacture. The printing, publication, and distribution of a newspaper or operating 2
a job printing plant shall be deemed to be manufacturing; 3
(3)[(5)] (a) Commercial radio and television equipment used to receive, capture, 4
produce, edit, enhance, modify, process, store, convey, or transmit audio or 5
video content or electronic signals which are broadcast over the air to an 6
antenna; 7
(b) Equipment directly used or associated with the equipment identified in 8
paragraph (a) of this subsection, including radio and television towers used to 9
transmit or facilitate the transmission of the signal broadcast, but excluding 10
telephone and cellular communications towers; and 11
(c) Equipment used to gather or transmit weather information; 12
(4)[(6)] Unmanufactured agricultural products. They shall be exempt from taxation for 13
state purposes to the extent of the value, or amount, of any unpaid nonrecourse 14
loans thereon granted by the United States government or any agency thereof, and 15
except that cities and counties may each impose an ad valorem tax of not exceeding 16
one and one-half cents ($0.015) on each one hundred dollars ($100) of the fair cash 17
value of all unmanufactured tobacco and not exceeding four and one-half cents 18
($0.045) on each one hundred dollars ($100) of the fair cash value of all other 19
unmanufactured agricultural products, subject to taxation within their limits that are 20
not actually on hand at the plants of manufacturing concerns for the purpose of 21
manufacture, nor in the hands of the producer or any agent of the producer to whom 22
the products have been conveyed or assigned for the purpose of sale; 23
(5)[(7)] All privately owned leasehold interest in industrial buildings, as defined under 24
KRS 103.200, owned and financed by a tax-exempt governmental unit, or tax-25
exempt statutory authority under the provisions of KRS Chapter 103, except that 26
the rate shall not apply to the proportion of value of the leasehold interest created 27 UNOFFICIAL COPY 23 RS HB 360/GA
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through any private financing; 1
(6)[(8)] Tangible personal property which has been certified as a pollution control 2
facility as defined in KRS 224.1-300. In the case of tangible personal property 3
certified as a pollution control facility which is incorporated into a landfill facility, 4
the tangible personal property shall be presumed to remain tangible personal 5
property for purposes of this subsection if the tangible personal property is being 6
used for its intended purposes;[ 7
(9) Property which has been certified as an alcohol production facility as defined in 8
KRS 247.910;] 9
(7)[(10)] On and after January 1, 1977, the assessed value of unmined coal shall be 10
included in the formula contained in KRS 132.590(9) in determining the amount of 11
county appropriation to the office of the property valuation administrator;[ 12
(11) Tangible personal property located in a foreign trade zone established pursuant to 13
19 U.S.C. sec. 81, provided that the zone is activated in accordance with the 14
regulations of the United States Customs Service and the Foreign Trade Zones 15
Board;] 16
(8)[(12)] Motor vehicles qualifying for permanent registration as historic motor 17
vehicles under the provisions of KRS 186.043. However, nothing herein shall be 18
construed to exempt historical motor vehicles from the usage tax imposed by KRS 19
138.460;[ 20
(13) Property which has been certified as a fluidized bed energy production facility as 21
defined in KRS 211.390;] 22
(9)[(14)] All motor vehicles: 23
(a) Held for sale in the inventory of a licensed motor vehicle dealer, including 24
motor vehicle auction dealers, which are not currently titled and registered in 25
Kentucky and are held on an assignment pursuant to the provisions of KRS 26
186A.230; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(b) That are in the possession of a licensed motor vehicle dealer, including 1
licensed motor vehicle auction dealers, for sale, although ownership has not 2
been transferred to the dealer; and 3
(c) With a salvage title held by an insurance company; 4
(10)[(15)] Machinery or equipment owned by a business, industry, or organization in 5
order to collect, source separate, compress, bale, shred, or otherwise handle waste 6
materials if the machinery or equipment is primarily used for recycling purposes as 7
defined in KRS 139.010; 8
(11)[(16)] New farm machinery and other equipment held in the retailer's inventory for 9
sale under a floor plan financing arrangement by a retailer, as defined under KRS 10
365.800; 11
(12)[(17)] New boats and new marine equipment held for retail sale under a floor plan 12
financing arrangement by a dealer registered under KRS 235.220; 13
(13)[(18)] Aircraft not used in the business of transporting persons or property for 14
compensation or hire if an exemption is approved by the county, city, school, or 15
other taxing district in which the aircraft has its taxable situs; 16
(14)[(19)] Federally documented vessels not used in the business of transporting persons 17
or property for compensation or hire or for other commercial purposes, if an 18
exemption is approved by the county, city, school, or other taxing district in which 19
the federally documented vessel has its taxable situs; 20
(15)[(20)] Any nonferrous metal that conforms to the quality, shape, and weight 21
specifications set by the New York Mercantile Exchange's special contract rules for 22
metals, and which is located or stored in a commodity warehouse and held on 23
warrant, or for which a written request has been made to a commodity warehouse to 24
place it on warrant, according to the rules and regulations of a trading facility. In 25
this subsection: 26
(a) "Commodity warehouse" means a warehouse, shipping plant, depository, or 27 UNOFFICIAL COPY 23 RS HB 360/GA
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other facility that has been designated or approved by a trading facility as a 1
regular delivery point for a commodity on contracts of sale for future delivery; 2
and 3
(b) "Trading facility" means a facility that is designated by or registered with the 4
federal Commodity Futures Trading Commission under 7 U.S.C. secs. 1 et 5
seq. "Trading facility" includes the Board of Trade of the City of Chicago, the 6
Chicago Mercantile Exchange, and the New York Mercantile Exchange; 7
(16)[(21)] Qualifying voluntary environmental remediation property for a period of three 8
(3) years following the Energy and Environment Cabinet's issuance of a No Further 9
Action Letter or its equivalent, pursuant to the correction of the effect of all known 10
releases of hazardous substances, pollutants, contaminants, petroleum, or petroleum 11
products located on the property consistent with a corrective action plan approved 12
by the Energy and Environment Cabinet pursuant to KRS 224.1-400, 224.1-405, or 13
224.60-135, and provided the cleanup was not financed through a public grant 14
program of the petroleum storage tank environmental assurance fund; 15
(17)[(22)] Biotechnology products held in a warehouse for distribution by the 16
manufacturer or by an affiliate of the manufacturer. For the purposes of this section: 17
(a) "Biotechnology products" means those products that are applicable to the 18
prevention, treatment, or cure of a disease or condition of human beings and 19
that are produced using living organisms, materials derived from living 20
organisms, or cellular, subcellular, or molecular components of living 21
organisms. Biotechnology products does not include pharmaceutical products 22
which are produced from chemical compounds; 23
(b) "Warehouse" includes any establishment that is designed to house or store 24
biotechnology products, but does not include blood banks, plasma centers, or 25
other similar establishments; 26
(c) "Affiliate" means an individual, partnership, or corporation that directly or 27 UNOFFICIAL COPY 23 RS HB 360/GA
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indirectly owns or controls, or is owned or controlled by, or is under common 1
ownership or control with, another individual, partnership, or corporation; 2
(18)[(23)] Recreational vehicles held for sale in a retailer's inventory; 3
(19)[(24)] A privately owned leasehold interest in residential property described in KRS 4
132.195(2)(g), if an exemption is approved by the county, city, school, or other 5
taxing district in which the residential property is located; and 6
(20)[(25)] Prefabricated homes held for sale in a manufacturer's or retailer's inventory. 7
Section 5. KRS 132.0225 is amended to read as follows: 8
(1) (a) A taxing district that does not elect to attempt to set a rate that will produce 9
more than four percent (4%) in additional revenue, exclusive of revenue from 10
new property as defined in KRS 132.010, over the amount of revenue 11
produced by the compensating tax rate as defined in KRS 132.010 shall 12
establish a final tax rate within forty-five (45) days of the department's 13
certification of the county's property tax roll. 14
(b) For boards of education, the forty-five (45) days shall begin from the date of 15
the department's certification to the chief state school officer as required by 16
KRS 160.470(4). 17
(c) A city that does not elect to have city ad valorem taxes collected by the sheriff 18
as provided in KRS 91A.070(1) shall be exempt from the forty-five (45) 19
day[this] deadline. 20
(d) Any nonexempt taxing district that fails to meet the forty-five (45) day[this] 21
deadline shall be required to use the compensating tax rate for that year's 22
property tax bills. 23
(2) A taxing district that elects to attempt to set a rate that will produce more than four 24
percent (4%) in additional revenue, exclusive of revenue from new property as 25
defined in KRS 132.010, over the amount of revenue produced by the compensating 26
tax rate as defined in KRS 132.010 shall follow the provisions of KRS 132.017. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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Section 6. KRS 138.472 is amended to read as follows: 1
(1) As used in this section: 2
(a) "Department" means the Kentucky Department of Revenue; 3
(b) "Gross receipts" means the total consideration received for the: 4
1. Rental of a vehicle, including the daily or hourly rental fee, fees charged 5
for using the services, charges for insurance protection plans, fuel 6
charges, pickup and delivery fees, late fees, and any charges for any 7
services necessary to complete the rental transaction made by a: 8
a. Peer-to-peer car sharing company; or 9
b. Motor vehicle rental company; and 10
2. Charges made to provide the service to a user, including any charges for 11
time or mileage, fees for using the services, and any charges for any 12
services necessary to complete the transaction made by a: 13
a. TNC; 14
b. Taxicab; or 15
c. Limousine service provider; 16
(c) The following terms have the same meaning as in KRS 281.010: 17
1. "Human service transportation delivery"; 18
2. "Limousine"; 19
3.[2.] "Peer-to-peer car sharing certificate"; 20
4.[3.] "Peer-to-peer car sharing company"; 21
5.[4.] "Peer-to-peer car sharing driver"; 22
6.[5.] "Peer-to-peer car sharing program"; 23
7.[6.] "Shared vehicle"; 24
8.[7.] "Shared vehicle driver"; 25
9.[8.] "Taxicab"; 26
10.[9.] "Transportation network company" or "TNC"; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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11.[10.] "Transportation network company service" or "TNC service"; and 1
12.[11.] "U-Drive-It"; 2
(d) "Motor vehicle rental company" has the same meaning as in KRS 281.687; 3
and 4
(e) "Person" means the individual or the entity required to be the holder of any 5
of the following certificates in KRS 281.630: 6
1. Limousine; 7
2. Peer-to-peer car sharing; 8
3. Taxicab; 9
4. Transportation network; and 10
5. U-Drive-It. 11
(2) (a) An excise tax is imposed upon every person for the privilege of providing a 12
motor vehicle for sharing or for rent, with or without a driver, within the 13
Commonwealth. 14
(b) The tax is imposed at the rate of six percent (6%) of the gross receipts derived 15
from the: 16
1.[(a)] Rental of a shared vehicle by a peer-to-peer car sharing company; 17
2.[(b)] Rental of a vehicle by a motor vehicle renting company; 18
3.[(c)] Sales of TNC services; 19
4.[(d)] Sales of taxicab services; and 20
5.[(e)] Sales of limousine services. 21
(c) Excluded from the tax are receipts derived from the provision of human 22
service transportation delivery. 23
(3) (a) The tax imposed under subsection (2) of this section shall be administered and 24
collected by the department. Revenues generated from the tax shall be 25
deposited into the general fund. 26
(b) On or before the twentieth day of the month following each calendar month, 27 UNOFFICIAL COPY 23 RS HB 360/GA
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a return for the preceding month shall be filed with the department by every 1
person required to pay the tax in a form prescribed by the department. 2
(4) The tax imposed by subsection (2) of this section shall be the direct obligation of 3
the peer-to-peer car sharing company, the motor vehicle renting company, the TNC, 4
the taxicab service provider, and the limousine service provider, but it may be 5
charged to and collected from the user of the service. The tax shall be remitted to 6
the department each month on forms and pursuant to administrative regulations 7
promulgated by the department. 8
(5) (a) As soon as practicable after each return is received, the department shall 9
examine and audit the return. If the amount of taxes computed by the 10
department is greater than the amount returned by the person, the excess shall 11
be assessed by the department within four (4) years from the date the return 12
was filed, except as provided in paragraph (c) of this subsection, and except 13
that in the case of a failure to file a return or of a fraudulent return the excess 14
may be assessed at any time. A notice of such assessment shall be mailed to 15
the person. 16
(b) For the purpose of paragraphs (a) and (c) of this subsection, a return filed 17
before the last day prescribed by law for the filing thereof shall be considered 18
as filed on such last day. 19
(c) Notwithstanding the four (4) year time limitation of paragraph (a) of this 20
subsection, in the case of a return where the amount of taxes computed by the 21
department is greater by twenty-five percent (25%) or more than the amount 22
returned by the person, the excess shall be assessed by the department within 23
six (6) years from the date the return was filed. 24
(6) Failure to remit the taxes shall be sufficient cause for the Department of Vehicle 25
Regulation to void the certificate issued to a: 26
(a) Limousine certificate holder; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(b) Peer-to-peer car sharing certificate holder; 1
(c) Taxicab certificate holder; 2
(d) TNC certificate holder; or 3
(e) U-Drive-It certificate holder. 4
(7) If a person fails or refuses to file a return or furnish any information requested in 5
writing, the department may, from any information in its possession, make an 6
estimate of the certificate holder's total trip costs and issue an assessment against 7
the certificate holder based on the estimated trip cost charges and add a penalty of 8
ten percent (10%) of the amount of the assessment so determined. This penalty shall 9
be in addition to all other applicable penalties provided by law. 10
(8)[ If any person fails to make and file a return required by subsection (4) of this 11
section on or before the due date of the return, or if the taxes, or portion thereof, is 12
not paid on or before the date prescribed for its payment, then, unless it is shown to 13
the satisfaction of the department that the failure is due to a reasonable cause, five 14
percent (5%) of the taxes found to be due shall be added to the tax for each thirty 15
(30) days or fraction thereof elapsing between the due date of the return and the 16
date on which filed, but the total penalty shall not exceed twenty-five percent (25%) 17
of the tax; provided, however, that in no case shall the penalty be less than ten 18
dollars ($10). 19
(9)] If the tax imposed by subsection (2) of this section is not paid on or before the date 20
prescribed for its payment, there shall be collected, as a part of the tax, interest upon 21
the unpaid amount at the tax interest rate as defined in KRS 131.010(6) from the 22
date prescribed for its payment until payment is actually made. 23
(9)[(10)] Notwithstanding any other provisions of this chapter to the contrary, the 24
president, vice president, secretary, treasurer, or any other person holding any 25
equivalent corporate office of any corporation subject to the provisions of this 26
chapter shall be personally and individually liable, both jointly and severally, for 27 UNOFFICIAL COPY 23 RS HB 360/GA
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the taxes imposed under this chapter, and neither the corporate dissolution nor 1
withdrawal of the corporation from the state nor the cessation of holding any 2
corporate office shall discharge the foregoing liability of any person. The personal 3
and individual liability shall apply to each and every person holding the corporate 4
office at the time the taxes become or became due. No person will be personally 5
and individually liable pursuant to this section who had no authority in the 6
management of the business or financial affairs of the corporation at the time that 7
the taxes imposed by this chapter become or became due. "Taxes" as used in this 8
section shall include interest accrued at the rate provided by KRS 139.650 and all 9
applicable penalties imposed under this chapter and all applicable penalties and fees 10
imposed under KRS 131.180, 131.410 to 131.445, and 131.990. 11
(10)[(11)] Notwithstanding any other provisions of this chapter, KRS 275.150, 362.1-12
306(3) or predecessor law, or 362.2-404(3) to the contrary, the managers of a 13
limited liability company, the partners of a limited liability partnership, and the 14
general partners of a limited liability limited partnership, or any other person 15
holding any equivalent office of a limited liability company, limited liability 16
partnership, or limited liability limited partnership subject to the provisions of this 17
chapter, shall be personally and individually liable, both jointly and severally, for 18
the taxes imposed under this chapter. Dissolution, withdrawal of the limited liability 19
company, limited liability partnership, or limited liability limited partnership from 20
the state, or the cessation of holding any office shall not discharge the liability of 21
any person. The personal and individual liability shall apply to each and every 22
manager of a limited liability company, partner of a limited liability partnership, 23
and general partner of a limited liability limited partnership at the time the taxes 24
become or became due. No person shall be personally and individually liable under 25
this subsection who had no authority to collect, truthfully account for, or pay over 26
any tax imposed by this chapter at the time that the taxes imposed by this chapter 27 UNOFFICIAL COPY 23 RS HB 360/GA
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become or became due. "Taxes" as used in this section shall include interest 1
accrued at the rate provided by KRS 131.183, all applicable penalties imposed 2
under this chapter, and all applicable penalties and fees imposed under KRS 3
131.180, 131.410 to 131.445, and 131.990. 4
(11)[(12)] Any person who violates any of the provisions of this section shall be subject 5
to the uniform civil penalties imposed pursuant to KRS 131.180. 6
Section 7. KRS 139.010 is amended to read as follows: 7
As used in this chapter, unless the context otherwise provides: 8
(1) (a) "Admissions" means the fees paid for: 9
1. The right of entrance to a display, program, sporting event, music 10
concert, performance, play, show, movie, exhibit, fair, or other 11
entertainment or amusement event or venue; and 12
2. The privilege of using facilities or participating in an event or activity, 13
including but not limited to: 14
a. Bowling centers; 15
b. Skating rinks; 16
c. Health spas; 17
d. Swimming pools; 18
e. Tennis courts; 19
f. Weight training facilities; 20
g. Fitness and recreational sports centers; and 21
h. Golf courses, both public and private; 22
regardless of whether the fee paid is per use or in any other form, 23
including but not limited to an initiation fee, monthly fee, membership 24
fee, or combination thereof. 25
(b) "Admissions" does not include: 26
1. Any fee paid to enter or participate in a fishing tournament; or 27 UNOFFICIAL COPY 23 RS HB 360/GA
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2. Any fee paid for the use of a boat ramp for the purpose of allowing 1
boats to be launched into or hauled out from the water; 2
(2) "Advertising and promotional direct mail" means direct mail the primary purpose of 3
which is to attract public attention to a product, person, business, or organization, or 4
to attempt to sell, popularize, or secure financial support for a product, person, 5
business, or organization. As used in this definition, "product" means tangible 6
personal property, an item transferred electronically, or a service; 7
(3) "Business" includes any activity engaged in by any person or caused to be engaged 8
in by that person with the object of gain, benefit, or advantage, either direct or 9
indirect; 10
(4) "Commonwealth" means the Commonwealth of Kentucky; 11
(5) (a) "Cosmetic surgery services" means modifications to all areas of the head, 12
neck, and body to enhance appearance through surgical and medical 13
techniques. 14
(b) "Cosmetic surgery services" does not include surgery services that are 15
medically necessary to reconstruct or correct dysfunctional areas of the 16
face[reconstruction of facial] and body[ defects] due to birth disorders, 17
trauma, burns, or disease; 18
(6) "Department" means the Department of Revenue; 19
(7) (a) "Digital audio-visual works" means a series of related images which, when 20
shown in succession, impart an impression of motion, with accompanying 21
sounds, if any. 22
(b) "Digital audio-visual works" includes movies, motion pictures, musical 23
videos, news and entertainment programs, and live events. 24
(c) "Digital audio-visual works" shall not include video greeting cards, video 25
games, and electronic games; 26
(8) (a) "Digital audio works" means works that result from the fixation of a series of 27 UNOFFICIAL COPY 23 RS HB 360/GA
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musical, spoken, or other sounds. 1
(b) "Digital audio works" includes ringtones, recorded or live songs, music, 2
readings of books or other written materials, speeches, or other sound 3
recordings. 4
(c) "Digital audio works" shall not include audio greeting cards sent by electronic 5
mail; 6
(9) (a) "Digital books" means works that are generally recognized in the ordinary and 7
usual sense as books, including any literary work expressed in words, 8
numbers, or other verbal or numerical symbols or indicia if the literary work 9
is generally recognized in the ordinary or usual sense as a book. 10
(b) "Digital books" shall not include digital audio-visual works, digital audio 11
works, periodicals, magazines, newspapers, or other news or information 12
products, chat rooms, or Web logs; 13
(10) (a) "Digital code" means a code which provides a purchaser with a right to obtain 14
one (1) or more types of digital property. A "digital code" may be obtained by 15
any means, including electronic mail messaging or by tangible means, 16
regardless of the code's designation as a song code, video code, or book code. 17
(b) "Digital code" shall not include a code that represents: 18
1. A stored monetary value that is deducted from a total as it is used by the 19
purchaser; or 20
2. A redeemable card, gift card, or gift certificate that entitles the holder to 21
select specific types of digital property; 22
(11) (a) "Digital property" means any of the following which is transferred 23
electronically: 24
1. Digital audio works; 25
2. Digital books; 26
3. Finished artwork; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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4. Digital photographs; 1
5. Periodicals; 2
6. Newspapers; 3
7. Magazines; 4
8. Video greeting cards; 5
9. Audio greeting cards; 6
10. Video games; 7
11. Electronic games; or 8
12. Any digital code related to this property. 9
(b) "Digital property" shall not include digital audio-visual works or satellite 10
radio programming; 11
(12) (a) "Direct mail" means printed material delivered or distributed by United States 12
mail or other delivery service to a mass audience or to addressees on a mailing 13
list provided by the purchaser or at the direction of the purchaser when the 14
cost of the items are not billed directly to the recipient. 15
(b) "Direct mail" includes tangible personal property supplied directly or 16
indirectly by the purchaser to the direct mail retailer for inclusion in the 17
package containing the printed material. 18
(c) "Direct mail" does not include multiple items of printed material delivered to 19
a single address; 20
(13) "Directly used in the manufacturing or industrial processing process" means the 21
process that commences with the movement of raw materials from storage into a 22
continuous, unbroken, integrated process and ends when the finished product is 23
packaged and ready for sale; 24
(14) (a) "Executive employee recruitment services" means services provided by a 25
person to locate potential candidates to fill open senior-level management 26
positions. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(b) "Executive employee recruitment services" includes but is not limited to 1
making a detailed list of client requirements, researching and identifying 2
potential candidates, preforming pre-screening interviews, and providing 3
contract and salary negotiations; 4
(15) (a) "Extended warranty services" means services provided through a service 5
contract agreement between the contract provider and the purchaser where the 6
purchaser agrees to pay compensation for the contract and the provider agrees 7
to repair, replace, support, or maintain tangible personal property, digital 8
property,[ or] real property, or prewritten computer software access services 9
according to the terms of the contract. 10
(b) "Extended warranty services" does not include the sale of a service contract 11
agreement for tangible personal property to be used by a small telephone 12
utility as defined in KRS 278.516 or a Tier III CMRS provider as defined in 13
KRS 65.7621 to deliver communications services as defined in KRS 136.602 14
or broadband; 15
(16)[(15)] (a) "Finished artwork" means final art that is used for actual reproduction 16
by photomechanical or other processes or for display purposes. 17
(b) "Finished artwork" includes: 18
1. Assemblies; 19
2. Charts; 20
3. Designs; 21
4. Drawings; 22
5. Graphs; 23
6. Illustrative materials; 24
7. Lettering; 25
8. Mechanicals; 26
9. Paintings; and 27 UNOFFICIAL COPY 23 RS HB 360/GA
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10. Paste-ups; 1
(17)[(16)] (a) "Gross receipts" and "sales price" mean the total amount or 2
consideration, including cash, credit, property, and services, for which 3
tangible personal property, digital property, or services are sold, leased, or 4
rented, valued in money, whether received in money or otherwise, without 5
any deduction for any of the following: 6
1. The retailer's cost of the tangible personal property, digital property, or 7
services sold; 8
2. The cost of the materials used, labor or service cost, interest, losses, all 9
costs of transportation to the retailer, all taxes imposed on the retailer, or 10
any other expense of the retailer; 11
3. Charges by the retailer for any services necessary to complete the sale; 12
4. Delivery charges, which are defined as charges by the retailer for the 13
preparation and delivery to a location designated by the purchaser 14
including transportation, shipping, postage, handling, crating, and 15
packing; 16
5. Any amount for which credit is given to the purchaser by the retailer, 17
other than credit for tangible personal property or digital property traded 18
when the tangible personal property or digital property traded is of like 19
kind and character to the property purchased and the property traded is 20
held by the retailer for resale; and 21
6. The amount charged for labor or services rendered in installing or 22
applying the tangible personal property, digital property, or service sold. 23
(b) "Gross receipts" and "sales price" shall include consideration received by the 24
retailer from a third party if: 25
1. The retailer actually receives consideration from a third party and the 26
consideration is directly related to a price reduction or discount on the 27 UNOFFICIAL COPY 23 RS HB 360/GA
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sale to the purchaser; 1
2. The retailer has an obligation to pass the price reduction or discount 2
through to the purchaser; 3
3. The amount of consideration attributable to the sale is fixed and 4
determinable by the retailer at the time of the sale of the item to the 5
purchaser; and 6
4. One (1) of the following criteria is met: 7
a. The purchaser presents a coupon, certificate, or other 8
documentation to the retailer to claim a price reduction or discount 9
where the coupon, certificate, or documentation is authorized, 10
distributed, or granted by a third party with the understanding that 11
the third party will reimburse any seller to whom the coupon, 12
certificate, or documentation is presented; 13
b. The price reduction or discount is identified as a third-party price 14
reduction or discount on the invoice received by the purchaser or 15
on a coupon, certificate, or other documentation presented by the 16
purchaser; or 17
c. The purchaser identifies himself or herself to the retailer as a 18
member of a group or organization entitled to a price reduction or 19
discount. A "preferred customer" card that is available to any 20
patron does not constitute membership in such a group. 21
(c) "Gross receipts" and "sales price" shall not include: 22
1. Discounts, including cash, term, or coupons that are not reimbursed by a 23
third party and that are allowed by a retailer and taken by a purchaser on 24
a sale; 25
2. Interest, financing, and carrying charges from credit extended on the 26
sale of tangible personal property, digital property, or services, if the 27 UNOFFICIAL COPY 23 RS HB 360/GA
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amount is separately stated on the invoice, bill of sale, or similar 1
document given to the purchaser; 2
3. Any taxes legally imposed directly on the purchaser that are separately 3
stated on the invoice, bill of sale, or similar document given to the 4
purchaser; or 5
4. Local alcohol regulatory license fees authorized under KRS 243.075 that 6
are separately stated on the invoice, bill of sale, or similar document 7
given to the purchaser. 8
(d) As used in this subsection, "third party" means a person other than the 9
purchaser; 10
(18)[(17)] "In this state" or "in the state" means within the exterior limits of the 11
Commonwealth and includes all territory within these limits owned by or ceded to 12
the United States of America; 13
(19)[(18)] "Industrial processing" includes: 14
(a) Refining; 15
(b) Extraction of minerals, ores, coal, clay, stone, petroleum, or natural gas; 16
(c) Mining, quarrying, fabricating, and industrial assembling; 17
(d) The processing and packaging of raw materials, in-process materials, and 18
finished products; and 19
(e) The processing and packaging of farm and dairy products for sale; 20
(20)[(19)] (a) "Lease or rental" means any transfer of possession or control of tangible 21
personal property for a fixed or indeterminate term for consideration. A lease 22
or rental shall include future options to: 23
1. Purchase the property; or 24
2. Extend the terms of the agreement and agreements covering trailers 25
where the amount of consideration may be increased or decreased by 26
reference to the amount realized upon sale or disposition of the property 27 UNOFFICIAL COPY 23 RS HB 360/GA
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as defined in 26 U.S.C. sec. 7701(h)(1). 1
(b) "Lease or rental" shall not include: 2
1. A transfer of possession or control of property under a security 3
agreement or deferred payment plan that requires the transfer of title 4
upon completion of the required payments; 5
2. A transfer of possession or control of property under an agreement that 6
requires the transfer of title upon completion of the required payments 7
and payment of an option price that does not exceed the greater of one 8
hundred dollars ($100) or one percent (1%) of the total required 9
payments; or 10
3. Providing tangible personal property and an operator for the tangible 11
personal property for a fixed or indeterminate period of time. To qualify 12
for this exclusion, the operator must be necessary for the equipment to 13
perform as designed, and the operator must do more than maintain, 14
inspect, or setup the tangible personal property. 15
(c) This definition shall apply regardless of the classification of a transaction 16
under generally accepted accounting principles, the Internal Revenue Code, or 17
other provisions of federal, state, or local law; 18
(21) (a) "Lobbying services" means the act of promoting or securing passage of 19
legislation or an attempt to influence or sway a public official or other 20
public servant toward a desired action, including but not limited to the 21
support of or opposition to a project or the passage, amendment, defeat, 22
approval, or veto of any legislation, regulation, rule, or ordinance; 23
(b) "Lobbying services" includes but is not limited to the performance of 24
activities described as executive agency lobbying activities as defined in KRS 25
11A.201, activities described under the definition of lobby in KRS 6.611, 26
and any similar activities performed at the local, state, or federal levels; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(22)[(20)] (a) "Machinery for new and expanded industry" means machinery: 1
1. Directly used in the manufacturing or industrial processing process of: 2
a. Tangible personal property at a plant facility; 3
b. Distilled spirits or wine at a plant facility or on the premises of a 4
distiller, rectifier, winery, or small farm winery licensed under 5
KRS 243.030 that includes a retail establishment on the premises; 6
or 7
c. Malt beverages at a plant facility or on the premises of a brewer or 8
microbrewery licensed under KRS 243.040 that includes a retail 9
establishment; 10
2. Which is incorporated for the first time into: 11
a. A plant facility established in this state; or 12
b. Licensed premises located in this state; and 13
3. Which does not replace machinery in the plant facility or licensed 14
premises unless that machinery purchased to replace existing machinery: 15
a. Increases the consumption of recycled materials at the plant 16
facility by not less than ten percent (10%); 17
b. Performs different functions; 18
c. Is used to manufacture a different product; or 19
d. Has a greater productive capacity, as measured in units of 20
production, than the machinery being replaced. 21
(b) "Machinery for new and expanded industry" does not include repair, 22
replacement, or spare parts of any kind, regardless of whether the purchase of 23
repair, replacement, or spare parts is required by the manufacturer or seller as 24
a condition of sale or as a condition of warranty; 25
(23)[(21)] "Manufacturing" means any process through which material having little or 26
no commercial value for its intended use before processing has appreciable 27 UNOFFICIAL COPY 23 RS HB 360/GA
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commercial value for its intended use after processing by the machinery;[ 1
(22) "Marketing services" means developing marketing objectives and policies, sales 2
forecasting, new product developing and pricing, licensing, and franchise planning;] 3
(24)[(23)] "Marketplace" means any physical or electronic means through which one (1) 4
or more retailers may advertise and sell tangible personal property, digital property, 5
or services, or lease tangible personal property or digital property, such as a catalog, 6
Internet Web site, or television or radio broadcast, regardless of whether the 7
tangible personal property, digital property, or retailer is physically present in this 8
state; 9
(25)[(24)] (a) "Marketplace provider" means a person, including any affiliate of the 10
person, that facilitates a retail sale by satisfying subparagraphs 1. and 2. of 11
this paragraph as follows: 12
1. The person directly or indirectly: 13
a. Lists, makes available, or advertises tangible personal property, 14
digital property, or services for sale by a marketplace retailer in a 15
marketplace owned, operated, or controlled by the person; 16
b. Facilitates the sale of a marketplace retailer's product through a 17
marketplace by transmitting or otherwise communicating an offer 18
or acceptance of a retail sale of tangible personal property, digital 19
property, or services between a marketplace retailer and a 20
purchaser in a forum including a shop, store, booth, catalog, 21
Internet site, or similar forum; 22
c. Owns, rents, licenses, makes available, or operates any electronic 23
or physical infrastructure or any property, process, method, 24
copyright, trademark, or patent that connects marketplace retailers 25
to purchasers for the purpose of making retail sales of tangible 26
personal property, digital property, or services; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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d. Provides a marketplace for making retail sales of tangible personal 1
property, digital property, or services, or otherwise facilitates retail 2
sales of tangible personal property, digital property, or services, 3
regardless of ownership or control of the tangible personal 4
property, digital property, or services, that are the subject of the 5
retail sale; 6
e. Provides software development or research and development 7
activities related to any activity described in this subparagraph, if 8
the software development or research and development activities 9
are directly related to the physical or electronic marketplace 10
provided by a marketplace provider; 11
f. Provides or offers fulfillment or storage services for a marketplace 12
retailer; 13
g. Sets prices for a marketplace retailer's sale of tangible personal 14
property, digital property, or services; 15
h. Provides or offers customer service to a marketplace retailer or a 16
marketplace retailer's customers, or accepts or assists with taking 17
orders, returns, or exchanges of tangible personal property, digital 18
property, or services sold by a marketplace retailer; or 19
i. Brands or otherwise identifies sales as those of the marketplace 20
provider; and 21
2. The person directly or indirectly: 22
a. Collects the sales price or purchase price of a retail sale of tangible 23
personal property, digital property, or services; 24
b. Provides payment processing services for a retail sale of tangible 25
personal property, digital property, or services; 26
c. Through terms and conditions, agreements, or arrangements with a 27 UNOFFICIAL COPY 23 RS HB 360/GA
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third party, collects payment in connection with a retail sale of 1
tangible personal property, digital property, or services from a 2
purchaser and transmits that payment to the marketplace retailer, 3
regardless of whether the person collecting and transmitting the 4
payment receives compensation or other consideration in exchange 5
for the service; or 6
d. Provides a virtual currency that purchasers are allowed or required 7
to use to purchase tangible personal property, digital property, or 8
services. 9
(b) "Marketplace provider" includes but is not limited to a person that satisfies the 10
requirements of this subsection through the ownership, operation, or control 11
of a digital distribution service, digital distribution platform, online portal, or 12
application store; 13
(26)[(25)] "Marketplace retailer" means a seller that makes retail sales through any 14
marketplace owned, operated, or controlled by a marketplace provider; 15
(27)[(26)] (a) "Occasional sale" includes: 16
1. A sale of tangible personal property or digital property not held or used 17
by a seller in the course of an activity for which he or she is required to 18
hold a seller's permit, provided such sale is not one (1) of a series of 19
sales sufficient in number, scope, and character to constitute an activity 20
requiring the holding of a seller's permit. In the case of the sale of the 21
entire, or a substantial portion of the nonretail assets of the seller, the 22
number of previous sales of similar assets shall be disregarded in 23
determining whether or not the current sale or sales shall qualify as an 24
occasional sale; or 25
2. Any transfer of all or substantially all the tangible personal property or 26
digital property held or used by a person in the course of such an activity 27 UNOFFICIAL COPY 23 RS HB 360/GA
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when after such transfer the real or ultimate ownership of such property 1
is substantially similar to that which existed before such transfer. 2
(b) For the purposes of this subsection, stockholders, bondholders, partners, or 3
other persons holding an interest in a corporation or other entity are regarded 4
as having the "real or ultimate ownership" of the tangible personal property or 5
digital property of such corporation or other entity; 6
(28)[(27)] (a) "Other direct mail" means any direct mail that is not advertising and 7
promotional direct mail, regardless of whether advertising and promotional 8
direct mail is included in the same mailing. 9
(b) "Other direct mail" includes but is not limited to: 10
1. Transactional direct mail that contains personal information specific to 11
the addressee, including but not limited to invoices, bills, statements of 12
account, and payroll advices; 13
2. Any legally required mailings, including but not limited to privacy 14
notices, tax reports, and stockholder reports; and 15
3. Other nonpromotional direct mail delivered to existing or former 16
shareholders, customers, employees, or agents, including but not limited 17
to newsletters and informational pieces. 18
(c) "Other direct mail" does not include the development of billing information or 19
the provision of any data processing service that is more than incidental to the 20
production of printed material; 21
(29)[(28)] "Person" includes any individual, firm, copartnership, joint venture, 22
association, social club, fraternal organization, corporation, estate, trust, business 23
trust, receiver, trustee, syndicate, cooperative, assignee, governmental unit or 24
agency, or any other group or combination acting as a unit; 25
(30)[(29)] "Permanent," as the term applies to digital property, means perpetual or for an 26
indefinite or unspecified length of time; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(31)[(30)] (a) "Photography and photofinishing services" means: 1
1. The taking, developing, or printing of an original photograph; or 2
2. Image editing, including shadow removal, tone adjustments, vertical and 3
horizontal alignment and cropping, composite image creation, 4
formatting, watermarking printing, and delivery of an original 5
photograph in the form of tangible personal property, digital property, or 6
other media. 7
(b) "Photography and photofinishing services" does not include photography 8
services necessary for medical or dental health; 9
(32)[(31)] "Plant facility" means a single location that is exclusively dedicated to 10
manufacturing or industrial processing activities. A location shall be deemed to be 11
exclusively dedicated to manufacturing or industrial processing activities even if 12
retail sales are made there, provided that the retail sales are incidental to the 13
manufacturing or industrial processing activities occurring at the location. The term 14
"plant facility" shall not include any restaurant, grocery store, shopping center, or 15
other retail establishment; 16
(33)[(32)] (a) "Prewritten computer software" means: 17
1. Computer software, including prewritten upgrades, that are not designed 18
and developed by the author or other creator to the specifications of a 19
specific purchaser; 20
2. Software designed and developed by the author or other creator to the 21
specifications of a specific purchaser when it is sold to a person other 22
than the original purchaser; or 23
3. Any portion of prewritten computer software that is modified or 24
enhanced in any manner, where the modification or enhancement is 25
designed and developed to the specifications of a specific purchaser, 26
unless there is a reasonable, separately stated charge on an invoice or 27 UNOFFICIAL COPY 23 RS HB 360/GA
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other statement of the price to the purchaser for the modification or 1
enhancement. 2
(b) When a person modifies or enhances computer software of which the person 3
is not the author or creator, the person shall be deemed to be the author or 4
creator only of the modifications or enhancements the person actually made. 5
(c) The combining of two (2) or more prewritten computer software programs or 6
portions thereof does not cause the combination to be other than prewritten 7
computer software; 8
(34)[(33)] "Prewritten computer software access services" means the right of access to 9
prewritten computer software where the object of the transaction is to use the 10
prewritten computer software while possession of the prewritten computer software 11
is maintained by the seller or a third party, wherever located, regardless of whether 12
the charge for the access or use is on a per use, per user, per license, subscription, or 13
some other basis; 14
(35)[(34)] (a) "Purchase" means any transfer of title or possession, exchange, barter, 15
lease, or rental, conditional or otherwise, in any manner or by any means 16
whatsoever, of: 17
1. Tangible personal property; 18
2. An extended warranty service; 19
3. Digital property transferred electronically; or 20
4. Services included in KRS 139.200; 21
for a consideration. 22
(b) "Purchase" includes: 23
1. When performed outside this state or when the customer gives a resale 24
certificate, the producing, fabricating, processing, printing, or imprinting 25
of tangible personal property for a consideration for consumers who 26
furnish either directly or indirectly the materials used in the producing, 27 UNOFFICIAL COPY 23 RS HB 360/GA
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fabricating, processing, printing, or imprinting; 1
2. A transaction whereby the possession of tangible personal property or 2
digital property is transferred but the seller retains the title as security 3
for the payment of the price; and 4
3. A transfer for a consideration of the title or possession of tangible 5
personal property or digital property which has been produced, 6
fabricated, or printed to the special order of the customer, or of any 7
publication; 8
(36)[(35)] "Recycled materials" means materials which have been recovered or diverted 9
from the solid waste stream and reused or returned to use in the form of raw 10
materials or products; 11
(37)[(36)] "Recycling purposes" means those activities undertaken in which materials 12
that would otherwise become solid waste are collected, separated, or processed in 13
order to be reused or returned to use in the form of raw materials or products; 14
(38)[(37)] "Remote retailer" means a retailer with no physical presence in this state; 15
(39)[(38)] (a) "Repair, replacement, or spare parts" means any tangible personal 16
property used to maintain, restore, mend, or repair machinery or equipment. 17
(b) "Repair, replacement, or spare parts" does not include machine oils, grease, or 18
industrial tools; 19
(40)[(39)] (a) "Retailer" means: 20
1. Every person engaged in the business of making retail sales of tangible 21
personal property, digital property, or furnishing any services in a retail 22
sale included in KRS 139.200; 23
2. Every person engaged in the business of making sales at auction of 24
tangible personal property or digital property owned by the person or 25
others for storage, use or other consumption, except as provided in 26
paragraph (c) of this subsection; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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3. Every person making more than two (2) retail sales of tangible personal 1
property, digital property, or services included in KRS 139.200 during 2
any twelve (12) month period, including sales made in the capacity of 3
assignee for the benefit of creditors, or receiver or trustee in bankruptcy; 4
4. Any person conducting a race meeting under the provision of KRS 5
Chapter 230, with respect to horses which are claimed during the 6
meeting. 7
(b) When the department determines that it is necessary for the efficient 8
administration of this chapter to regard any salesmen, representatives, 9
peddlers, or canvassers as the agents of the dealers, distributors, supervisors or 10
employers under whom they operate or from whom they obtain the tangible 11
personal property, digital property, or services sold by them, irrespective of 12
whether they are making sales on their own behalf or on behalf of the dealers, 13
distributors, supervisors or employers, the department may so regard them and 14
may regard the dealers, distributors, supervisors or employers as retailers for 15
purposes of this chapter. 16
(c) 1. Any person making sales at a charitable auction for a qualifying entity 17
shall not be a retailer for purposes of the sales made at the charitable 18
auction if: 19
a. The qualifying entity, not the person making sales at the auction, is 20
sponsoring the auction; 21
b. The purchaser of tangible personal property at the auction directly 22
pays the qualifying entity sponsoring the auction for the property 23
and not the person making the sales at the auction; and 24
c. The qualifying entity, not the person making sales at the auction, is 25
responsible for the collection, control, and disbursement of the 26
auction proceeds. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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2. If the conditions set forth in subparagraph 1. of this paragraph are met, 1
the qualifying entity sponsoring the auction shall be the retailer for 2
purposes of the sales made at the charitable auction. 3
3. For purposes of this paragraph, "qualifying entity" means a resident: 4
a. Church; 5
b. School; 6
c. Civic club; or 7
d. Any other nonprofit charitable, religious, or educational 8
organization; 9
(41)[(40)] "Retail sale" means any sale, lease, or rental for any purpose other than resale, 10
sublease, or subrent; 11
(42)[(41)] (a) "Ringtones" means digitized sound files that are downloaded onto a 12
device and that may be used to alert the customer with respect to a 13
communication. 14
(b) "Ringtones" shall not include ringback tones or other digital files that are not 15
stored on the purchaser's communications device; 16
(43)[(42)] (a) "Sale" means: 17
1. The furnishing of any services included in KRS 139.200; 18
2. Any transfer of title or possession, exchange, barter, lease, or rental, 19
conditional or otherwise, in any manner or by any means whatsoever, 20
of: 21
a. Tangible personal property; or 22
b. Digital property transferred electronically; 23
for a consideration. 24
(b) "Sale" includes but is not limited to: 25
1. The producing, fabricating, processing, printing, or imprinting of 26
tangible personal property or digital property for a consideration for 27 UNOFFICIAL COPY 23 RS HB 360/GA
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purchasers who furnish, either directly or indirectly, the materials used 1
in the producing, fabricating, processing, printing, or imprinting; 2
2. A transaction whereby the possession of tangible personal property or 3
digital property is transferred, but the seller retains the title as security 4
for the payment of the price; and 5
3. A transfer for a consideration of the title or possession of tangible 6
personal property or digital property which has been produced, 7
fabricated, or printed to the special order of the purchaser. 8
(c) This definition shall apply regardless of the classification of a transaction 9
under generally accepted accounting principles, the Internal Revenue Code, or 10
other provisions of federal, state, or local law; 11
(44)[(43)] "Seller" includes every person engaged in the business of selling tangible 12
personal property, digital property, or services of a kind, the gross receipts from the 13
retail sale of which are required to be included in the measure of the sales tax, and 14
every person engaged in making sales for resale; 15
(45)[(44)] (a) "Storage" includes any keeping or retention in this state for any purpose 16
except sale in the regular course of business or subsequent use solely outside 17
this state of tangible personal property,[ or] digital property, or prewritten 18
computer software access services purchased from a retailer. 19
(b) "Storage" does not include the keeping, retaining, or exercising any right or 20
power over tangible personal property for the purpose of subsequently 21
transporting it outside the state for use thereafter solely outside the state, or 22
for the purpose of being processed, fabricated, or manufactured into, attached 23
to, or incorporated into, other tangible personal property to be transported 24
outside the state and thereafter used solely outside the state; 25
(46)[(45)] "Tangible personal property" means personal property which may be seen, 26
weighed, measured, felt, or touched, or which is in any other manner perceptible to 27 UNOFFICIAL COPY 23 RS HB 360/GA
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the senses and includes natural, artificial, and mixed gas, electricity, water, steam, 1
and prewritten computer software; 2
(47)[(46)] "Taxpayer" means any person liable for tax under this chapter; 3
(48)[(47)] "Telemarketing services" means services provided via telephone, facsimile, 4
electronic mail, text messages, or other modes of communications, including but 5
not limited to various forms of social media, to another person, which are 6
unsolicited by that person, for the purposes of: 7
(a) 1. Promoting products or services; 8
2. Taking orders; or 9
3. Providing information or assistance regarding the products or services; 10
or 11
(b) Soliciting contributions; 12
(49)[(48)] "Transferred electronically" means accessed or obtained by the purchaser by 13
means other than tangible storage media; and 14
(50)[(49)] (a) "Use" includes the exercise of: 15
1. Any right or power over tangible personal property or digital property 16
incident to the ownership of that property, or by any transaction in 17
which possession is given, or by any transaction involving digital 18
property or tangible personal property where the right of access is 19
granted; or 20
2. Any right or power to benefit from any services subject to tax under 21
KRS 139.200(2)(p) to (ax)[ (ay)]. 22
(b) "Use" does not include the keeping, retaining, or exercising any right or 23
power over: 24
1. Tangible personal property or digital property for the purpose of: 25
a.[1.] Selling tangible personal property or digital property in the regular 26
course of business; or 27 UNOFFICIAL COPY 23 RS HB 360/GA
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b.[2.] Subsequently transporting tangible personal property outside the 1
state for use thereafter solely outside the state, or for the purpose 2
of being processed, fabricated, or manufactured into, attached to, 3
or incorporated into, other tangible personal property to be 4
transported outside the state and thereafter used solely outside the 5
state; or 6
2. Prewritten computer software access services purchased for use 7
outside the state and transferred electronically outside the state for use 8
thereafter solely outside the state. 9
Section 8. KRS 139.200 is amended to read as follows: 10
A tax is hereby imposed upon all retailers at the rate of six percent (6%) of the gross 11
receipts derived from: 12
(1) Retail sales of: 13
(a) Tangible personal property, regardless of the method of delivery, made within 14
this Commonwealth; and 15
(b) Digital property regardless of whether: 16
1. The purchaser has the right to permanently use the property; 17
2. The purchaser's right to access or retain the property is not permanent; 18
or 19
3. The purchaser's right of use is conditioned upon continued payment; and 20
(2) The furnishing of the following services: 21
(a) The rental of any room or rooms, lodgings, campsites, or accommodations 22
furnished by any hotel, motel, inn, tourist camp, tourist cabin, campgrounds, 23
recreational vehicle parks, or any other place in which rooms, lodgings, 24
campsites, or accommodations are regularly furnished to transients for a 25
consideration. The tax shall not apply to rooms, lodgings, campsites, or 26
accommodations supplied for a continuous period of thirty (30) days or more 27 UNOFFICIAL COPY 23 RS HB 360/GA
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to a person; 1
(b) Sewer services; 2
(c) The sale of admissions, except: 3
1. Admissions to enter the grounds or enclosure of any track licensed 4
under KRS Chapter 230 at which live horse racing or historical horse 5
racing is being conducted under the jurisdiction of the Kentucky Horse 6
Racing Commission; 7
2. Admissions taxed under KRS 229.031; 8
3. Admissions that are charged by nonprofit educational, charitable, or 9
religious institutions and for which an exemption is provided under KRS 10
139.495; and 11
4. Admissions that are charged by nonprofit civic, governmental, or other 12
nonprofit organizations and for which an exemption is provided under 13
KRS 139.498; 14
(d) Prepaid calling service and prepaid wireless calling service; 15
(e) Intrastate, interstate, and international communications services as defined in 16
KRS 139.195, except the furnishing of pay telephone service as defined in 17
KRS 139.195; 18
(f) Distribution, transmission, or transportation services for natural gas that is for 19
storage, use, or other consumption in this state, excluding those services 20
furnished: 21
1. For natural gas that is classified as residential use as provided in KRS 22
139.470(7); or 23
2. To a seller or reseller of natural gas; 24
(g) Landscaping services, including but not limited to: 25
1. Lawn care and maintenance services; 26
2. Tree trimming, pruning, or removal services; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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3. Landscape design and installation services; 1
4. Landscape care and maintenance services; and 2
5. Snow plowing or removal services; 3
(h) Janitorial services, including but not limited to residential and commercial 4
cleaning services, and carpet, upholstery, and window cleaning services; 5
(i) Small animal veterinary services, excluding veterinary services for equine, 6
cattle, poultry, swine, sheep, goats, llamas, alpacas, ratite birds, buffalo, and 7
cervids; 8
(j) Pet care services, including but not limited to grooming and boarding 9
services, pet sitting services, and pet obedience training services; 10
(k) Industrial laundry services, including but not limited to industrial uniform 11
supply services, protective apparel supply services, and industrial mat and rug 12
supply services; 13
(l) Non-coin-operated laundry and dry cleaning services; 14
(m) Linen supply services, including but not limited to table and bed linen supply 15
services and nonindustrial uniform supply services; 16
(n) Indoor skin tanning services, including but not limited to tanning booth or 17
tanning bed services and spray tanning services; 18
(o) Non-medical diet and weight reducing services; 19
(p) Extended warranty services; 20
(q) Photography and photofinishing services; 21
(r)[ Marketing services; 22
(s)] Telemarketing services; 23
(s)[(t)] Public opinion and research polling services; 24
(t)[(u)] Lobbying services; 25
(u)[(v)] Executive employee recruitment services; 26
(v)[(w)] Web site design and development services; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(w)[(x)] Web site hosting services; 1
(x)[(y)] Facsimile transmission services; 2
(y)[(z)] Private mailroom services, including: 3
1. Presorting mail and packages by postal code; 4
2. Address barcoding; 5
3. Tracking; 6
4. Delivery to postal service; and 7
5. Private mailbox rentals; 8
(z)[(aa)] Bodyguard services; 9
(aa)[(ab)] Residential and nonresidential security system monitoring services, 10
excluding separately stated onsite security guard services; 11
(ab)[(ac)] Private investigation services; 12
(ac)[(ad)] Process server services; 13
(ad)[(ae)] Repossession of tangible personal property services; 14
(ae)[(af)] Personal background check services; 15
(af)[(ag)] Parking services; 16
1. Including: 17
a. Valet services; and 18
b. The use of parking lots and parking structures; but 19
2. Excluding any parking services at an educational institution; 20
(ag)[(ah)] Road and travel services provided by automobile clubs as defined in 21
KRS 281.010; 22
(ah)[(ai)] Condominium time-share exchange services; 23
(ai)[(aj)] Rental of space for meetings, conventions, short-term business uses, 24
entertainment events, weddings, banquets, parties, and other short-term social 25
events; 26
(aj)[(ak)] Social event planning and coordination services; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(ak)[(al)] Leisure, recreational, and athletic instructional services; 1
(al)[(am)] Recreational camp tuition and fees; 2
(am)[(an)] Personal fitness training services; 3
(an)[(ao)] Massage services, except when medically necessary; 4
(ao)[(ap)] Cosmetic surgery services; 5
(ap)[(aq)] Body modification services, including tattooing, piercing, scarification, 6
branding, tongue splitting, transdermal and subdermal implants, ear pointing, 7
teeth pointing, and any other modifications that are not necessary for medical 8
or dental health; 9
(aq)[(ar)] Laboratory testing services, excluding laboratory[except] testing: 10
1. For medical, educational, or veterinary reasons; or 11
2. Required by a federal, state, or local statute, regulation, court order, 12
or other government-related requirement; 13
(ar)[(as)] Interior decorating and design services; 14
(as)[(at)] Household moving services; 15
(at)[(au)] Specialized design services, including the design of clothing, costumes, 16
fashion, furs, jewelry, shoes, textiles, and lighting; 17
(au)[(av)] Lapidary services, including cutting, polishing, and engraving precious 18
stones; 19
(av)[(aw)] Labor and services to repair or maintain commercial refrigeration 20
equipment and systems when no tangible personal property is sold in that 21
transaction including service calls and trip charges; 22
(aw)[(ax)] Labor to repair or alter apparel, footwear, watches, or jewelry when no 23
tangible personal property is sold in that transaction; and 24
(ax)[(ay)] Prewritten computer software access services. 25
Section 9. KRS 139.480 is amended to read as follows: 26
Any other provision of this chapter to the contrary notwithstanding, the terms "sale at 27 UNOFFICIAL COPY 23 RS HB 360/GA
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retail," "retail sale," "use," "storage," and "consumption," as used in this chapter, shall not 1
include the sale, use, storage, or other consumption of: 2
(1) Locomotives or rolling stock, including materials for the construction, repair, or 3
modification thereof, or fuel or supplies for the direct operation of locomotives and 4
trains, used or to be used in interstate commerce; 5
(2) Coal for the manufacture of electricity; 6
(3) (a) All energy or energy-producing fuels used in the course of manufacturing, 7
processing, mining, or refining and any related distribution, transmission, and 8
transportation services for this energy that are billed to the user, to the extent 9
that the cost of the energy or energy-producing fuels used, and related 10
distribution, transmission, and transportation services for this energy that are 11
billed to the user exceed three percent (3%) of the cost of production. 12
(b) Cost of production shall be computed on the basis of a plant facility, which 13
shall include all operations within the continuous, unbroken, integrated 14
manufacturing or industrial processing process that ends with a product 15
packaged and ready for sale. 16
(c) A person who performs a manufacturing or industrial processing activity for a 17
fee and does not take ownership of the tangible personal property that is 18
incorporated into, or becomes the product of, the manufacturing or industrial 19
processing activity is a toller. For periods on or after July 1, 2018, the costs of 20
the tangible personal property shall be excluded from the toller's cost of 21
production at a plant facility with tolling operations in place as of July 1, 22
2018. 23
(d) For plant facilities that begin tolling operations after July 1, 2018, the costs of 24
tangible personal property shall be excluded from the toller's cost of 25
production if the toller: 26
1. Maintains a binding contract for periods after July 1, 2018, that governs 27 UNOFFICIAL COPY 23 RS HB 360/GA
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the terms, conditions, and responsibilities with a separate legal entity, 1
which holds title to the tangible personal property that is incorporated 2
into, or becomes the product of, the manufacturing or industrial 3
processing activity; 4
2. Maintains accounting records that show the expenses it incurs to fulfill 5
the binding contract that include but are not limited to energy or energy-6
producing fuels, materials, labor, procurement, depreciation, 7
maintenance, taxes, administration, and office expenses; 8
3. Maintains separate payroll, bank accounts, tax returns, and other records 9
that demonstrate its independent operations in the performance of its 10
tolling responsibilities; 11
4. Demonstrates one (1) or more substantial business purposes for the 12
tolling operations germane to the overall manufacturing, industrial 13
processing activities, or corporate structure at the plant facility. A 14
business purpose is a purpose other than the reduction of sales tax 15
liability for the purchases of energy and energy-producing fuels; and 16
5. Provides information to the department upon request that documents 17
fulfillment of the requirements in subparagraphs 1. to 4. of this 18
paragraph and gives an overview of its tolling operations with an 19
explanation of how the tolling operations relate and connect with all 20
other manufacturing or industrial processing activities occurring at the 21
plant facility; 22
(4) Livestock of a kind the products of which ordinarily constitute food for human 23
consumption, provided the sales are made for breeding or dairy purposes and by or 24
to a person regularly engaged in the business of farming; 25
(5) Poultry for use in breeding or egg production; 26
(6) Farm work stock for use in farming operations; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(7) Seeds, the products of which ordinarily constitute food for human consumption or 1
are to be sold in the regular course of business, and commercial fertilizer to be 2
applied on land, the products from which are to be used for food for human 3
consumption or are to be sold in the regular course of business; provided such sales 4
are made to farmers who are regularly engaged in the occupation of tilling and 5
cultivating the soil for the production of crops as a business, or who are regularly 6
engaged in the occupation of raising and feeding livestock or poultry or producing 7
milk for sale; and provided further that tangible personal property so sold is to be 8
used only by those persons designated above who are so purchasing; 9
(8) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals to be 10
used in the production of crops as a business, or in the raising and feeding of 11
livestock or poultry, the products of which ordinarily constitute food for human 12
consumption; 13
(9) Feed, including pre-mixes and feed additives, for livestock or poultry of a kind the 14
products of which ordinarily constitute food for human consumption; 15
(10) Machinery for new and expanded industry; 16
(11) Farm machinery. As used in this section, the term "farm machinery": 17
(a) Means machinery used exclusively and directly in the occupation of: 18
1. Tilling the soil for the production of crops as a business; 19
2. Raising and feeding livestock or poultry for sale; or 20
3. Producing milk for sale; 21
(b) Includes machinery, attachments, and replacements therefor, repair parts, and 22
replacement parts which are used or manufactured for use on, or in the 23
operation of farm machinery and which are necessary to the operation of the 24
machinery, and are customarily so used, including but not limited to combine 25
header wagons, combine header trailers, or any other implements specifically 26
designed and used to move or transport a combine head; and 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(c) Does not include: 1
1. Automobiles; 2
2. Trucks; 3
3. Trailers, except combine header trailers; or 4
4. Truck-trailer combinations; 5
(12) Tombstones and other memorial grave markers; 6
(13) On-farm facilities used exclusively for grain or soybean storing, drying, processing, 7
or handling. The exemption applies to the equipment, machinery, attachments, 8
repair and replacement parts, and any materials incorporated into the construction, 9
renovation, or repair of the facilities; 10
(14) On-farm facilities used exclusively for raising poultry or livestock. The exemption 11
shall apply to the equipment, machinery, attachments, repair and replacement parts, 12
and any materials incorporated into the construction, renovation, or repair of the 13
facilities. The exemption shall apply but not be limited to vent board equipment, 14
waterer and feeding systems, brooding systems, ventilation systems, alarm systems, 15
and curtain systems. In addition, the exemption shall apply whether or not the seller 16
is under contract to deliver, assemble, and incorporate into real estate the 17
equipment, machinery, attachments, repair and replacement parts, and any materials 18
incorporated into the construction, renovation, or repair of the facilities; 19
(15) Gasoline, special fuels, liquefied petroleum gas, and natural gas used exclusively 20
and directly to: 21
(a) Operate farm machinery as defined in subsection (11) of this section; 22
(b) Operate on-farm grain or soybean drying facilities as defined in subsection 23
(13) of this section; 24
(c) Operate on-farm poultry or livestock facilities defined in subsection (14) of 25
this section; 26
(d) Operate on-farm ratite facilities defined in subsection (23) of this section; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(e) Operate on-farm llama or alpaca facilities as defined in subsection (25) of this 1
section; or 2
(f) Operate on-farm dairy facilities; 3
(16) Textbooks, including related workbooks and other course materials, purchased for 4
use in a course of study conducted by an institution which qualifies as a nonprofit 5
educational institution under KRS 139.495. The term "course materials" means only 6
those items specifically required of all students for a particular course but shall not 7
include notebooks, paper, pencils, calculators, tape recorders, or similar student 8
aids; 9
(17) Any property which has been certified as an alcohol production facility as defined 10
in KRS 247.910; 11
(18) Aircraft, repair and replacement parts therefor, and supplies, except fuel, for the 12
direct operation of aircraft in interstate commerce and used exclusively for the 13
conveyance of property or passengers for hire. Nominal intrastate use shall not 14
subject the property to the taxes imposed by this chapter; 15
(19) Any property which has been certified as a fluidized bed energy production facility 16
as defined in KRS 211.390; 17
(20) (a) 1. Any property to be incorporated into the construction, rebuilding, 18
modification, or expansion of a blast furnace or any of its components or 19
appurtenant equipment or structures as part of an approved supplemental 20
project, as defined by KRS 154.26-010; and 21
2. Materials, supplies, and repair or replacement parts purchased for use in 22
the operation and maintenance of a blast furnace and related carbon 23
steel-making operations as part of an approved supplemental project, as 24
defined by KRS 154.26-010. 25
(b) The exemptions provided in this subsection shall be effective for sales made: 26
1. On and after July 1, 2018; and 27 UNOFFICIAL COPY 23 RS HB 360/GA
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2. During the term of a supplemental project agreement entered into 1
pursuant to KRS 154.26-090; 2
(21) Beginning on October 1, 1986, food or food products purchased for human 3
consumption with food coupons issued by the United States Department of 4
Agriculture pursuant to the Food Stamp Act of 1977, as amended, and required to 5
be exempted by the Food Security Act of 1985 in order for the Commonwealth to 6
continue participation in the federal food stamp program; 7
(22) Machinery or equipment purchased or leased by a business, industry, or 8
organization in order to collect, source separate, compress, bale, shred, or otherwise 9
handle waste materials if the machinery or equipment is primarily used for 10
recycling purposes; 11
(23) Ratite birds and eggs to be used in an agricultural pursuit for the breeding and 12
production of ratite birds, feathers, hides, breeding stock, eggs, meat, and ratite by-13
products, and the following items used in this agricultural 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 incubation 19
systems, egg processing equipment, waterer and feeding systems, brooding 20
systems, ventilation systems, alarm systems, and curtain systems. In addition, 21
the exemption shall apply whether or not the seller is under contract to 22
deliver, assemble, and incorporate into real estate the equipment, machinery, 23
attachments, repair and replacement parts, and any materials incorporated into 24
the construction, renovation, or repair of the facilities; 25
(24) Embryos and semen that are used in the reproduction of livestock, if the products of 26
these embryos and semen ordinarily constitute food for human consumption, and if 27 UNOFFICIAL COPY 23 RS HB 360/GA
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the sale is made to a person engaged in the business of farming; 1
(25) Llamas and alpacas to be used as beasts of burden or in an agricultural pursuit for 2
the breeding and production of hides, breeding stock, fiber and wool products, 3
meat, and llama and alpaca by-products, and the following items used in this 4
pursuit: 5
(a) Feed and feed additives; 6
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 7
and 8
(c) On-farm facilities, including equipment, machinery, attachments, repair and 9
replacement parts, and any materials incorporated into the construction, 10
renovation, or repair of the facilities. The exemption shall apply to waterer 11
and feeding systems, ventilation systems, and alarm systems. In addition, the 12
exemption shall apply whether or not the seller is under contract to deliver, 13
assemble, and incorporate into real estate the equipment, machinery, 14
attachments, repair and replacement parts, and any materials incorporated into 15
the construction, renovation, or repair of the facilities; 16
(26) Baling twine and baling wire for the baling of hay and straw; 17
(27) Water sold to a person regularly engaged in the business of farming and used in the: 18
(a) Production of crops; 19
(b) Production of milk for sale; or 20
(c) Raising and feeding of: 21
1. Livestock or poultry, the products of which ordinarily constitute food 22
for human consumption; or 23
2. Ratites, llamas, alpacas, buffalo, cervids or aquatic organisms; 24
(28) Buffalos to be used as beasts of burden or in an agricultural pursuit for the 25
production of hides, breeding stock, meat, and buffalo by-products, and the 26
following items used in this pursuit: 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(a) Feed and feed additives; 1
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 2
(c) On-farm facilities, including equipment, machinery, attachments, repair and 3
replacement parts, and any materials incorporated into the construction, 4
renovation, or repair of the facilities. The exemption shall apply to waterer 5
and feeding systems, ventilation systems, and alarm systems. In addition, the 6
exemption shall apply whether or not the seller is under contract to deliver, 7
assemble, and incorporate into real estate the equipment, machinery, 8
attachments, repair and replacement parts, and any materials incorporated into 9
the construction, renovation, or repair of the facilities; 10
(29) Aquatic organisms sold directly to or raised by a person regularly engaged in the 11
business of producing products of aquaculture, as defined in KRS 260.960, for sale, 12
and the following items used in this pursuit: 13
(a) Feed and feed additives; 14
(b) Water; 15
(c) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 16
and 17
(d) On-farm facilities, including equipment, machinery, attachments, repair and 18
replacement parts, and any materials incorporated into the construction, 19
renovation, or repair of the facilities and, any gasoline, special fuels, liquefied 20
petroleum gas, or natural gas used to operate the facilities. The exemption 21
shall apply, but not be limited to: waterer and feeding systems; ventilation, 22
aeration, and heating systems; processing and storage systems; production 23
systems such as ponds, tanks, and raceways; harvest and transport equipment 24
and systems; and alarm systems. In addition, the exemption shall apply 25
whether or not the seller is under contract to deliver, assemble, and 26
incorporate into real estate the equipment, machinery, attachments, repair and 27 UNOFFICIAL COPY 23 RS HB 360/GA
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replacement parts, and any materials incorporated into the construction, 1
renovation, or repair of the facilities; 2
(30) Members of the genus cervidae permitted by KRS Chapter 150 that are used for the 3
production of hides, breeding stock, meat, and cervid by-products, and the 4
following items used in this pursuit: 5
(a) Feed and feed additives; 6
(b) Insecticides, fungicides, herbicides, rodenticides, and other chemicals; and 7
(c) On-site facilities, including equipment, machinery, attachments, repair and 8
replacement parts, and any materials incorporated into the construction, 9
renovation, or repair of the facilities. In addition, the exemption shall apply 10
whether or not the seller is under contract to deliver, assemble, and 11
incorporate into real estate the equipment, machinery, attachments, repair and 12
replacement parts, and any materials incorporated into the construction, 13
renovation, or repair of the facilities; 14
(31) (a) Repair or replacement parts for the direct operation or maintenance of a motor 15
vehicle, including any towed unit, used exclusively in interstate commerce for 16
the conveyance of property or passengers for hire, provided the motor vehicle 17
is licensed for use on the highway and its declared gross vehicle weight with 18
any towed unit is forty-four thousand and one (44,001) pounds or greater. 19
Nominal intrastate use shall not subject the property to the taxes imposed by 20
this chapter; 21
(b) Repair or replacement parts for the direct operation and maintenance of a 22
motor vehicle operating under a charter bus certificate issued by the 23
Transportation Cabinet under KRS Chapter 281, or under similar authority 24
granted by the United States Department of Transportation; and 25
(c) For the purposes of this subsection, "repair or replacement parts" means tires, 26
brakes, engines, transmissions, drive trains, chassis, body parts, and their 27 UNOFFICIAL COPY 23 RS HB 360/GA
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components. "Repair or replacement parts" shall not include fuel, machine 1
oils, hydraulic fluid, brake fluid, grease, supplies, or accessories not essential 2
to the operation of the motor vehicle itself, except when sold as part of the 3
assembled unit, such as cigarette lighters, radios, lighting fixtures not 4
otherwise required by the manufacturer for operation of the vehicle, or tool or 5
utility boxes; 6
(32) Food donated by a retail food establishment or any other entity regulated under 7
KRS 217.127 to a nonprofit organization for distribution to the needy;[ and] 8
(33) Drugs and over-the counter drugs, as defined in KRS 139.472, that are purchased 9
by a person regularly engaged in the business of farming and used in the treatment 10
of cattle, sheep, goats, swine, poultry, ratite birds, llamas, alpacas, buffalo, aquatic 11
organisms, or cervids; 12
(34) Prewritten computer software access services sold to or purchased by a retailer 13
that develops prewritten computer software for print technology and uses and 14
sells prewritten computer software access services for print technology; 15
(35) On or after July 1, 2023: 16
(a) Currency or bullion. 17
(b) As used in this subsection: 18
1. "Bullion": 19
a. Means bars, ingots, or coins, which are: 20
i. Made of gold, silver, platinum, palladium, or a 21
combination of these metals; 22
ii. Valued based on the content of the metal and not its form; 23
and 24
iii. Used, or have been used, as a medium of exchange, 25
security, or commodity by any state, the United States 26
government, or a foreign nation; and 27 UNOFFICIAL COPY 23 RS HB 360/GA
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b. Does not include medallions or coins that are incorporated into a 1
pendant or other jewelry; and 2
2. "Currency": 3
a. Means a coin or currency made of gold, silver, platinum, 4
palladium, or other metal or paper money that is or has been 5
used as legal tender and is sold based on its value as a collectible 6
item rather than the value as a medium of exchange; and 7
b. Does not include a coin or currency that has been incorporated 8
into jewelry; 9
(36) (a) Building materials, fixtures, or supplies purchased by a construction 10
contractor if: 11
1. Fulfilled by a construction contract with: 12
a. A municipally owned water utility organized under KRS Chapter 13
96; 14
b. A water district or water commission farmed or organized under 15
KRS Chapter 74; 16
c. A sanitation district established under KRS Chapter 220 or 17
formed pursuant to KRS Chapter 65; or 18
d. A nonprofit corporation created under KRS 58.180 to act on 19
behalf of a governmental agency in the acquisition and 20
financing of public projects; and 21
2. The building materials, fixtures, or supplies: 22
a. Will be permanently incorporated into a structure or 23
improvement to real property, or will be completely consumed, in 24
fulfilling a construction contract for the purpose of furnishing 25
water or sewer services to the general public; and 26
b. Would be exempt if purchased directly by the entities listed in 27 UNOFFICIAL COPY 23 RS HB 360/GA
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subparagraph 1. of this paragraph. 1
(b) As used in this subsection, "construction contract" means a: 2
1. Lump sum contract; 3
2. Cost plus contract; 4
3. Materials only contract; 5
4. Labor and materials contract; or 6
5. Any other type of contract. 7
(c) The exemption provided in this subsection shall apply without regard to the 8
payment arrangement between the construction contractor, the retailer, and 9
the entities listed in paragraph (a)1. of this subsection or to the place of 10
delivery for the building materials, fixtures, or supplies. 11
(37) (a) On or after February 25, 2022, the rental of space for meetings, 12
conventions, short-term business uses, entertainment events, weddings, 13
banquets, parties, and other short-term social events, as referenced in 14
Section 8 of this Act, if the tax established in Section 8 of this Act, is paid by 15
the primary lessee to the lessor. 16
(b) For the purpose of this subsection, "primary lessee" means the person who 17
leases the space and who has a contract with the lessor of the space only if: 18
1. The contract between the lessor and the lessee specifies that the lessee 19
may sublease, subrent, or otherwise sell the space; and 20
2. The space is then sublet, subrented, or otherwise sold to exhibitors, 21
vendors, sponsors, or other entities and persons who will use the space 22
associated with the event to be conducted under the primary lease. 23
Section 10. KRS 139.260 is amended to read as follows: 24
For the purpose of the proper administration of this chapter and to prevent evasion of the 25
duty to collect the taxes imposed by KRS 139.200 and 139.310, it shall be presumed that 26
all gross receipts and all tangible personal property, digital property, and services sold by 27 UNOFFICIAL COPY 23 RS HB 360/GA
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any person for delivery or access in this state are subject to the tax until the contrary is 1
established. The burden of proving the contrary is upon the person who makes the sale of: 2
(1) (a) Except as provided in paragraph (b) of this subsection, tangible personal 3
property or digital property unless the person takes from the purchaser a 4
certificate to the effect that the property is either: 5
1. Purchased for resale according to the provisions of KRS 139.270; 6
2. Purchased through a fully completed certificate of exemption or fully 7
completed Streamlined Sales and Use Tax Agreement Certificate of 8
Exemption in accordance with KRS 139.270; or 9
3. Purchased according to administrative regulations promulgated by the 10
department governing a direct pay authorization; or 11
(b) Tangible personal property to a purchaser claiming an agriculture exemption 12
under KRS 139.480(4) to (9), (11), (13) to (15), [or ](23) to (30), or (33) 13
unless the person obtains from the purchaser an agriculture exemption license 14
number or a fully completed Streamlined Sales and Use Tax Agreement 15
Certificate of Exemption that contains an agriculture exemption license 16
number in accordance with KRS 139.270; 17
(2) A service included in KRS 139.200(2)(a) to (f) unless the person takes from the 18
purchaser a certificate to the effect that the service is purchased through a fully 19
completed certificate of exemption or fully completed Streamlined Sales and Use 20
Tax Agreement Certificate of Exemption in accordance with KRS 139.270; and 21
(3) A service included in KRS 139.200(2)(g) to (ax)[(ay)] unless the person takes from 22
the purchaser a certificate to the effect that the service is: 23
(a) Purchased for resale according to KRS 139.270; 24
(b) Purchased through a fully completed certificate of exemption or fully 25
completed Streamlined Sales and Use Tax Agreement Certificate of 26
Exemption in accordance with KRS 139.270; or 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(c) Purchased according to administrative regulations promulgated by the 1
department governing a direct pay authorization. 2
Section 11. KRS 139.481 is amended to read as follows: 3
(1) On and after January 1, 2023, every person claiming an exemption provided under 4
KRS 139.480(4) to (9), [KRS 139.480](11), [KRS 139.480](13) to (15), [and KRS 5
139.480](23) to (30), and (33) shall provide to the seller or retailer a valid 6
agriculture exemption license number issued by the department. 7
(2) A person is eligible to apply for an agriculture exemption license number if the 8
person is: 9
(a) Regularly engaged in the occupation of tilling and cultivating the soil for the 10
production of crops as a business; 11
(b) Regularly engaged in the occupation of raising and feeding livestock of a kind 12
the products of which ordinarily constitute food for human consumption; 13
(c) Raising and feeding poultry; 14
(d) Producing milk for sale; or 15
(e) Regularly engaged in raising ratite birds, llamas, alpacas, buffalos, cervids, or 16
aquatic organisms as an agricultural pursuit. 17
(3) (a) On and after January 1, 2023, persons that receive an agriculture exemption 18
license number and choose to claim the exemptions outlined in subsection (1) 19
of this section shall, at least one (1) time, provide the seller or retailer from 20
whom they purchase exempt tangible personal property with one (1) of the 21
following: 22
1. The agriculture exemption license number issued by the department; or 23
2. A fully completed Streamlined Sales Tax Certificate of Exemption 24
which shall include the agriculture exemption license number. 25
(b) A purchaser that has met the requirements of paragraph (a) of this subsection 26
may issue the agriculture exemption license number to the seller or retailer for 27 UNOFFICIAL COPY 23 RS HB 360/GA
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subsequent purchases as evidence of an exempt purchase for as long as the 1
agriculture exemption license number is valid. 2
(c) Persons that meet the requirements of subsection (2) of this section but have 3
not yet received an agriculture exemption license number from the department 4
prior to January 1, 2023, may issue a fully completed exemption certificate or 5
a fully completed Streamlined Sales Tax Certificate of Exemption without the 6
agriculture exemption license number prior to January 1, 2023. 7
(4) (a) The department, by administrative regulation, shall develop an application 8
form for the agriculture exemption license number and procedures by which 9
the application form may also be submitted either electronically or by paper 10
filing. 11
(b) The application shall include: 12
1. The person's name and mailing address; 13
2. The farm address, if different from the person's mailing address; 14
3. An affirmation that the person meets at least one (1) of the criteria 15
outlined in subsection (2) of this section; 16
4. The person's driver's license number; and 17
5. One (1) of the following forms of documentation: 18
a. IRS Schedule F, Profit or Loss from Farming; 19
b. IRS Form 4835, Farm Rental Income and Expenses; 20
c. The farm service agency number or numbers assigned by the 21
United States Department of Agriculture pertaining to the parcels 22
of land on which agriculture activity will take place; or 23
d. Any other type of information that may establish to the satisfaction 24
of the Commissioner that the applicant qualifies for the agriculture 25
exemption license number. 26
(5) (a) The agriculture exemption license number shall expire on December 31, 2026, 27 UNOFFICIAL COPY 23 RS HB 360/GA
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and every four (4) years thereafter, or when the person ceases to engage in the 1
agriculture activity for which the agriculture exemption license number was 2
granted, whichever comes first. 3
(b) When a person ceases to engage in the agriculture activity for which the 4
license number was granted, the person shall notify the department within 5
sixty (60) days. 6
(c) The person may apply for a renewal of the agriculture exemption license 7
number prior to the expiration date if the person continues to meet the 8
requirements of subsection (2) of this section and provides documentation 9
required by subsection (4)(b)5. of this section. The department shall, by 10
administrative regulation, prescribe the electronic process for renewing an 11
agriculture exemption license number. 12
(6) (a) On or before January 1, 2023, the department shall develop and provide an 13
online searchable database on the department's Web site that the seller or 14
retailer may use to confirm the agriculture exemption license number if the 15
purchaser cannot produce documentation of the agriculture exemption license 16
number at the time of sale. 17
(b) To search the database, the seller or retailer shall provide the name of the 18
person assigned the agriculture exemption license number and one (1) of the 19
following: 20
1. The agriculture exemption license number; 21
2. The agriculture exemption license number expiration date; 22
3. The person's driver's license number; 23
4. The farm service agency parcel number; or 24
5. Any other unique identifier that may be accepted by the department. 25
(c) The seller or retailer shall be relieved of the liability for collecting and 26
remitting the sales and use tax if the seller or retailer meets the requirements 27 UNOFFICIAL COPY 23 RS HB 360/GA
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of KRS 139.260 and 139.270. 1
Section 12. KRS 139.202 is amended to read as follows: 2
Excluded from the additional taxable services imposed by KRS 139.200(2)(q) to 3
(ax)[(ay)] are gross receipts derived from: 4
(1) Sales of the services in fulfillment of a lump-sum, fixed-fee contract or a fixed price 5
sales contract executed on or before February 25, 2022; and 6
(2) A lease or rental agreement entered into on or before February 25, 2022. 7
Section 13. KRS 139.310 is amended to read as follows: 8
(1) An excise tax is hereby imposed on the storage, use, or other consumption in this 9
state of tangible personal property, digital property, and services listed under KRS 10
139.200(2)(p) to (ax)[(ay)] purchased for storage, use, or other consumption in this 11
state at the rate of six percent (6%) of the sales price. 12
(2) The excise tax applies to the purchase of digital property regardless of whether: 13
(a) The purchaser has the right to permanently use the goods; 14
(b) The purchaser's right to access or retain the digital property is not permanent; 15
or 16
(c) The purchaser's right of use is conditioned upon continued payment. 17
Section 14. KRS 139.340 is amended to read as follows: 18
(1) Except as provided in KRS 139.470 and 139.480, every retailer engaged in business 19
in this state shall collect the tax imposed by KRS 139.310 from the purchaser and 20
give to the purchaser a receipt therefor in the manner and form prescribed by the 21
department. The taxes collected or required to be collected by the retailer under this 22
section shall be deemed to be held in trust for and on account of the 23
Commonwealth. 24
(2) "Retailer engaged in business in this state" as used in KRS 139.330 and this section 25
includes any of the following: 26
(a) Any retailer maintaining, occupying, or using, permanently or temporarily, 27 UNOFFICIAL COPY 23 RS HB 360/GA
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directly or indirectly, or through a subsidiary or any other related entity, 1
representative, or agent, by whatever name called, an office, place of 2
distribution, sales or sample room or place, warehouse or storage place, or 3
other place of business. Property owned by a person who has contracted with 4
a printer for printing, which consists of the final printed product, property 5
which becomes a part of the final printed product, or copy from which the 6
printed product is produced, and which is located at the premises of the 7
printer, shall not be deemed to be an office, place of distribution, sales or 8
sample room or place, warehouse or storage place, or other place of business 9
maintained, occupied, or used by the person; 10
(b) Any retailer having any representative, agent, salesman, canvasser, or solicitor 11
operating in this state under the authority of the retailer or its subsidiary for 12
the purpose of selling, delivering, or the taking of orders for any tangible 13
personal property, digital property, or any services subject to tax under KRS 14
139.200(2)(p) to (ax)[(ay)]. An unrelated printer with which a person has 15
contracted for printing shall not be deemed to be a representative, agent, 16
salesman, canvasser, or solicitor for the person; 17
(c) Any retailer soliciting orders for tangible personal property, digital property, 18
or any services subject to tax under KRS 139.200(2)(p) to (ax)[(ay)] from 19
residents of this state on a continuous, regular, or systematic basis in which 20
the solicitation of the order, placement of the order by the customer or the 21
payment for the order utilizes the services of any financial institution, 22
telecommunication system, radio or television station, cable television 23
service, print media, or other facility or service located in this state; 24
(d) Any retailer deriving receipts from the lease or rental of tangible personal 25
property situated in this state; 26
(e) Any retailer soliciting orders for tangible personal property, digital property, 27 UNOFFICIAL COPY 23 RS HB 360/GA
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or any services subject to tax under KRS 139.200(2)(p) to (ax)[(ay)] from 1
residents of this state on a continuous, regular, systematic basis if the retailer 2
benefits from an agent or representative operating in this state under the 3
authority of the retailer to repair or service tangible personal property or 4
digital property sold by the retailer; 5
(f) Any retailer located outside Kentucky that uses a representative in Kentucky, 6
either full-time or part-time, if the representative performs any activities that 7
help establish or maintain a marketplace for the retailer, including receiving or 8
exchanging returned merchandise; or 9
(g) 1. Any remote retailer selling tangible personal property or digital property 10
delivered or transferred electronically to a purchaser in this state, 11
including retail sales facilitated by a marketplace provider on behalf of 12
the remote retailer, if: 13
a. The remote retailer sold tangible personal property or digital 14
property that was delivered or transferred electronically to a 15
purchaser in this state in two hundred (200) or more separate 16
transactions in the previous calendar year or the current calendar 17
year; or 18
b. The remote retailer's gross receipts derived from the sale of 19
tangible personal property or digital property delivered or 20
transferred electronically to a purchaser in this state in the previous 21
calendar year or current calendar year exceeds one hundred 22
thousand dollars ($100,000). 23
2. Any remote retailer that meets either threshold provided in subparagraph 24
1. of this paragraph shall register for a sales and use tax permit and 25
collect the tax imposed by KRS 139.310 from the purchaser no later 26
than the first day of the calendar month that is at the most sixty (60) 27 UNOFFICIAL COPY 23 RS HB 360/GA
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days after either threshold is reached. 1
Section 15. KRS 139.470 is amended to read as follows: 2
There are excluded from the computation of the amount of taxes imposed by this chapter: 3
(1) Gross receipts from the sale of, and the storage, use, or other consumption in this 4
state of, tangible personal property or digital property which this state is prohibited 5
from taxing under the Constitution or laws of the United States, or under the 6
Constitution of this state; 7
(2) Gross receipts from sales of, and the storage, use, or other consumption in this state 8
of: 9
(a) Nonreturnable and returnable containers when sold without the contents to 10
persons who place the contents in the container and sell the contents together 11
with the container; and 12
(b) Returnable containers when sold with the contents in connection with a retail 13
sale of the contents or when resold for refilling; 14
As used in this section the term "returnable containers" means containers of a kind 15
customarily returned by the buyer of the contents for reuse. All other containers are 16
"nonreturnable containers"; 17
(3) Gross receipts from occasional sales of tangible personal property or digital 18
property and the storage, use, or other consumption in this state of tangible personal 19
property or digital property, the transfer of which to the purchaser is an occasional 20
sale; 21
(4) Gross receipts from sales of tangible personal property to a common carrier, 22
shipped by the retailer via the purchasing carrier under a bill of lading, whether the 23
freight is paid in advance or the shipment is made freight charges collect, to a point 24
outside this state and the property is actually transported to the out-of-state 25
destination for use by the carrier in the conduct of its business as a common carrier; 26
(5) Gross receipts from sales of tangible personal property sold through coin-operated 27 UNOFFICIAL COPY 23 RS HB 360/GA
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bulk vending machines, if the sale amounts to fifty cents ($0.50) or less, if the 1
retailer is primarily engaged in making the sales and maintains records satisfactory 2
to the department. As used in this subsection, "bulk vending machine" means a 3
vending machine containing unsorted merchandise which, upon insertion of a coin, 4
dispenses the same in approximately equal portions, at random and without 5
selection by the customer; 6
(6) Gross receipts from sales to any cabinet, department, bureau, commission, board, or 7
other statutory or constitutional agency of the state and gross receipts from sales to 8
counties, cities, or special districts as defined in KRS 65.005. This exemption shall 9
apply only to purchases of tangible personal property, digital property, or services 10
for use solely in the government function. A purchaser not qualifying as a 11
governmental agency or unit shall not be entitled to the exemption even though the 12
purchaser may be the recipient of public funds or grants; 13
(7) (a) Gross receipts from the sale of sewer services, water, and fuel to Kentucky 14
residents for use in heating, water heating, cooking, lighting, and other 15
residential uses if the sewer services, water, and fuel are purchased and 16
declared by the resident as used in his or her place of domicile. 17
(b) As used in this subsection: 18
1. "Fuel" shall include but not be limited to natural gas, electricity, fuel oil, 19
bottled gas, coal, coke, and wood; and 20
2. "Place of domicile" means the place where an individual has his or her 21
legal, true, fixed, and permanent home and principal establishment, and 22
to which, whenever the individual is absent, the individual has the 23
intention of returning. 24
(c) Determinations of eligibility for the exemption shall be made by the 25
department. 26
(d) The exemption shall apply if charges for sewer service, water, and fuel are 27 UNOFFICIAL COPY 23 RS HB 360/GA
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billed to an owner or operator of a multi-unit residential rental facility or 1
mobile home and recreational vehicle park if the sewer services, water, and 2
fuel are purchased for and declared by the Kentucky resident as used in his or 3
her place of domicile. 4
(e) The exemption shall apply also to residential property which may be held by 5
legal or equitable title, by the entireties, jointly, in common, as a 6
condominium, or indirectly by the stock ownership or membership 7
representing the owner's or member's proprietary interest in a corporation 8
owning a fee or a leasehold initially in excess of ninety-eight (98) years if the 9
sewer services, water, and fuel are purchased for and declared by the 10
Kentucky resident as used in his or her place of domicile; 11
(8) Gross receipts from sales to an out-of-state agency, organization, or institution 12
exempt from sales and use tax in its state of residence when that agency, 13
organization, or institution gives proof of its tax-exempt status to the retailer and the 14
retailer maintains a file of the proof; 15
(9) (a) Gross receipts derived from the sale of tangible personal property, as provided 16
in paragraph (b) of this subsection, to a manufacturer or industrial processor if 17
the property is to be directly used in the manufacturing or industrial 18
processing process of: 19
1. Tangible personal property at a plant facility; 20
2. Distilled spirits or wine at a plant facility or on the premises of a 21
distiller, rectifier, winery, or small farm winery licensed under KRS 22
243.030 that includes a retail establishment on the premises; or 23
3. Malt beverages at a plant facility or on the premises of a brewer or 24
microbrewery licensed under KRS 243.040 that includes a retail 25
establishment; 26
and which will be for sale. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(b) The following tangible personal property shall qualify for exemption under 1
this subsection: 2
1. Materials which enter into and become an ingredient or component part 3
of the manufactured product; 4
2. Other tangible personal property which is directly used in the 5
manufacturing or industrial processing process, if the property has a 6
useful life of less than one (1) year. Specifically these items are 7
categorized as follows: 8
a. Materials. This refers to the raw materials which become an 9
ingredient or component part of supplies or industrial tools exempt 10
under subdivisions b. and c. below; 11
b. Supplies. This category includes supplies such as lubricating and 12
compounding oils, grease, machine waste, abrasives, chemicals, 13
solvents, fluxes, anodes, filtering materials, fire brick, catalysts, 14
dyes, refrigerants, and explosives. The supplies indicated above 15
need not come in direct contact with a manufactured product to be 16
exempt. "Supplies" does not include repair, replacement, or spare 17
parts of any kind; and 18
c. Industrial tools. This group is limited to hand tools such as jigs, 19
dies, drills, cutters, rolls, reamers, chucks, saws, and spray guns 20
and to tools attached to a machine such as molds, grinding balls, 21
grinding wheels, dies, bits, and cutting blades. Normally, for 22
industrial tools to be considered directly used in the manufacturing 23
or industrial processing process, they shall come into direct 24
contact with the product being manufactured or processed; and 25
3. Materials and supplies that are not reusable in the same manufacturing 26
or industrial processing process at the completion of a single 27 UNOFFICIAL COPY 23 RS HB 360/GA
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manufacturing or processing cycle. A single manufacturing cycle shall 1
be considered to be the period elapsing from the time the raw materials 2
enter into the manufacturing process until the finished product emerges 3
at the end of the manufacturing process. 4
(c) The property described in paragraph (b) of this subsection shall be regarded as 5
having been purchased for resale. 6
(d) For purposes of this subsection, a manufacturer or industrial processor 7
includes an individual or business entity that performs only part of the 8
manufacturing or industrial processing activity, and the person or business 9
entity need not take title to tangible personal property that is incorporated 10
into, or becomes the product of, the activity. 11
(e) The exemption provided in this subsection does not include repair, 12
replacement, or spare parts; 13
(10) Any water use fee paid or passed through to the Kentucky River Authority by 14
facilities using water from the Kentucky River basin to the Kentucky River 15
Authority in accordance with KRS 151.700 to 151.730 and administrative 16
regulations promulgated by the authority; 17
(11) Gross receipts from the sale of newspaper inserts or catalogs purchased for storage, 18
use, or other consumption outside this state and delivered by the retailer's own 19
vehicle to a location outside this state, or delivered to the United States Postal 20
Service, a common carrier, or a contract carrier for delivery outside this state, 21
regardless of whether the carrier is selected by the purchaser or retailer or an agent 22
or representative of the purchaser or retailer, or whether the F.O.B. is retailer's 23
shipping point or purchaser's destination. 24
(a) As used in this subsection: 25
1. "Catalogs" means tangible personal property that is printed to the special 26
order of the purchaser and composed substantially of information 27 UNOFFICIAL COPY 23 RS HB 360/GA
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regarding goods and services offered for sale; and 1
2. "Newspaper inserts" means printed materials that are placed in or 2
distributed with a newspaper of general circulation. 3
(b) The retailer shall be responsible for establishing that delivery was made to a 4
non-Kentucky location through shipping documents or other credible 5
evidence as determined by the department; 6
(12) Gross receipts from the sale of water used in the raising of equine as a business; 7
(13) Gross receipts from the sale of metal retail fixtures manufactured in this state and 8
purchased for storage, use, or other consumption outside this state and delivered by 9
the retailer's own vehicle to a location outside this state, or delivered to the United 10
States Postal Service, a common carrier, or a contract carrier for delivery outside 11
this state, regardless of whether the carrier is selected by the purchaser or retailer or 12
an agent or representative of the purchaser or retailer, or whether the F.O.B. is the 13
retailer's shipping point or the purchaser's destination. 14
(a) As used in this subsection, "metal retail fixtures" means check stands and 15
belted and nonbelted checkout counters, whether made in bulk or pursuant to 16
specific purchaser specifications, that are to be used directly by the purchaser 17
or to be distributed by the purchaser. 18
(b) The retailer shall be responsible for establishing that delivery was made to a 19
non-Kentucky location through shipping documents or other credible 20
evidence as determined by the department; 21
(14) Gross receipts from the sale of unenriched or enriched uranium purchased for 22
ultimate storage, use, or other consumption outside this state and delivered to a 23
common carrier in this state for delivery outside this state, regardless of whether the 24
carrier is selected by the purchaser or retailer, or is an agent or representative of the 25
purchaser or retailer, or whether the F.O.B. is the retailer's shipping point or 26
purchaser's destination; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(15) Amounts received from a tobacco buydown. As used in this subsection, "buydown" 1
means an agreement whereby an amount, whether paid in money, credit, or 2
otherwise, is received by a retailer from a manufacturer or wholesaler based upon 3
the quantity and unit price of tobacco products sold at retail that requires the retailer 4
to reduce the selling price of the product to the purchaser without the use of a 5
manufacturer's or wholesaler's coupon or redemption certificate; 6
(16) Gross receipts from the sale of tangible personal property or digital property 7
returned by a purchaser when the full sales price is refunded either in cash or credit. 8
This exclusion shall not apply if the purchaser, in order to obtain the refund, is 9
required to purchase other tangible personal property or digital property at a price 10
greater than the amount charged for the property that is returned; 11
(17) Gross receipts from the sales of gasoline and special fuels subject to tax under KRS 12
Chapter 138; 13
(18) The amount of any tax imposed by the United States upon or with respect to retail 14
sales, whether imposed on the retailer or the consumer, not including any 15
manufacturer's excise or import duty; 16
(19) Gross receipts from the sale of any motor vehicle as defined in KRS 138.450 which 17
is: 18
(a) Sold to a Kentucky resident, registered for use on the public highways, and 19
upon which any applicable tax levied by KRS 138.460 has been paid; or 20
(b) Sold to a nonresident of Kentucky if the nonresident registers the motor 21
vehicle in a state that: 22
1. Allows residents of Kentucky to purchase motor vehicles without 23
payment of that state's sales tax at the time of sale; or 24
2. Allows residents of Kentucky to remove the vehicle from that state 25
within a specific period for subsequent registration and use in Kentucky 26
without payment of that state's sales tax; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(20) Gross receipts from the sale of a semi-trailer as defined in KRS 189.010(12) and 1
trailer as defined in KRS 189.010(17); 2
(21) Gross receipts from the collection of: 3
(a) Any fee or charge levied by a local government pursuant to KRS 65.760; 4
(b) The charge imposed by KRS 65.7629(3); 5
(c) The fee imposed by KRS 65.7634; and 6
(d) The service charge imposed by KRS 65.7636; 7
(22) Gross receipts derived from charges for labor or services to apply, install, repair, or 8
maintain tangible personal property directly used in manufacturing or industrial 9
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 distiller, 12
rectifier, winery, or small farm winery licensed under KRS 243.030; or 13
(c) Malt beverages at a plant facility or on the premises of a brewer or 14
microbrewery licensed under KRS 243.040; 15
that is not otherwise exempt under subsection (9) of this section or KRS 16
139.480(10), if the charges for labor or services are separately stated on the invoice, 17
bill of sale, or similar document given to purchaser; 18
(23) (a) For persons selling services included in KRS 139.200(2)(g) to (p) prior to 19
January 1, 2019, gross receipts derived from the sale of those services if the 20
gross receipts were less than six thousand dollars ($6,000) during calendar 21
year 2018. When gross receipts from these services exceed six thousand 22
dollars ($6,000) in a calendar year: 23
1. All gross receipts over six thousand dollars ($6,000) are taxable in that 24
calendar year; and 25
2. All gross receipts are subject to tax in subsequent calendar years. 26
(b) For persons selling services included in KRS 139.200(2)(q) to (ax)[(ay)] prior 27 UNOFFICIAL COPY 23 RS HB 360/GA
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to January 1, 2023, gross receipts derived from the sale of those services if the 1
gross receipts were less than six thousand dollars ($6,000) during calendar 2
year 2021. When gross receipts from these services exceed six thousand 3
dollars ($6,000) in a calendar year: 4
1. All gross receipts over six thousand dollars ($6,000) are taxable in that 5
calendar year; and 6
2. All gross receipts are subject to tax in subsequent calendar years. 7
(c) The exemption provided in this subsection shall not apply to a person also 8
engaged in the business of selling tangible personal property, digital property, 9
or services included in KRS 139.200(2)(a) to (f); and 10
(24) (a) For persons that first begin making sales of services included in KRS 11
139.200(2)(g) to (p) on or after January 1, 2019, gross receipts derived from 12
the sale of those services if the gross receipts are less than six thousand dollars 13
($6,000) within the first calendar year of operation. When gross receipts from 14
these services exceed six thousand dollars ($6,000) in a calendar year: 15
1. All gross receipts over six thousand dollars ($6,000) are taxable in that 16
calendar year; and 17
2. All gross receipts are subject to tax in subsequent calendar years. 18
(b) For persons that first begin making sales of services included in KRS 19
139.200(2)(q) to (ax)[(ay)] on or after January 1, 2023, gross receipts derived 20
from the sale of those services if the gross receipts are less than six thousand 21
dollars ($6,000) within the first calendar year of operation. When gross 22
receipts from these services exceed six thousand dollars ($6,000) in a calendar 23
year: 24
1. All gross receipts over six thousand dollars ($6,000) are taxable in that 25
calendar year; and 26
2. All gross receipts are subject to tax in subsequent calendar years. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(c) The exemption provided in this subsection shall not apply to a person that is 1
also engaged in the business of selling tangible personal property, digital 2
property, or services included in KRS 139.200(2)(a) to (f). 3
SECTION 16. A NEW SECTION OF KRS CHAPTER 141 IS CREATED TO 4
READ AS FOLLOWS: 5
(1) For taxable years beginning on or after January 1, 2022, a pass-through entity 6
may elect to pay the tax liability at the entity level, utilizing the tax rate 7
computation under Section 22 of this Act, on behalf of the individual partner, 8
member, or shareholder of the pass-through entity. 9
(2) The election shall be: 10
(a) Made on a form prescribed by the department; 11
(b) Made by the: 12
1. Fifteenth day of the fourth month upon the close of the taxable year; 13
or 14
2. Fifteenth day of the tenth month upon the close of the taxable year, if 15
the return is filed under KRS 141.170; 16
(c) Made only upon the consent of all partners, members, or shareholders 17
holding more than fifty percent (50%) ownership in the pass-through entity; 18
and 19
(d) Binding upon all individual partners, members, or shareholders of the pass-20
through entity. 21
(3) For taxable years beginning on or after January 1, 2022, there shall be allowed a 22
pass-through entity tax credit which shall be: 23
(a) Equal to ninety-five percent (95%) of the tax paid by the pass-through entity 24
on behalf of the individual partner, member, or shareholder of the pass-25
through entity; 26
(b) Claimed against the tax imposed under Section 22 of this Act on a return 27 UNOFFICIAL COPY 23 RS HB 360/GA
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filed by the individual partner, member, or shareholder of the pass-through 1
entity, with the ordering of credits as provided in Section 18 of this Act; 2
(c) Nonrefundable; 3
(d) Based on the pro rata share of the individual partner's, member's, or 4
shareholder's income from the pass-through entity. 5
(4) The pass-through entity shall report to each individual partner, member, or 6
shareholder the individual's proportionate share of the tax paid by the pass-7
through entity for the taxable year and for purposes of the pass-through entity tax 8
credit created in subsection (3) of this section. 9
(5) The department shall prescribe forms and may promulgate administrative 10
regulations as needed to administer this section. 11
Section 17. KRS 141.206 is amended to read as follows: 12
(1) Every pass-through entity doing business in this state shall, on or before the 13
fifteenth day of the fourth month following the close of its annual accounting 14
period, file a copy of its federal tax return with the form prescribed and furnished 15
by the department. 16
(2) (a) Pass-through entities shall calculate net income in the same manner as in the 17
case of an individual under KRS 141.019 and the adjustment required under 18
Sections 703(a) and 1363(b) of the Internal Revenue Code. 19
(b) Computation of net income under this section and the computation of the 20
partner's, member's, or shareholder's distributive share shall be computed as 21
nearly as practicable identical with those required for federal income tax 22
purposes except to the extent required by differences between this chapter and 23
the federal income tax law and regulations. 24
(3) Individuals, estates, trusts, or corporations doing business in this state as a partner, 25
member, or shareholder in a pass-through entity shall be liable for income tax only 26
in their individual, fiduciary, or corporate capacities, and no income tax shall be 27 UNOFFICIAL COPY 23 RS HB 360/GA
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assessed against the net income of any pass-through entity, except as required: 1
(a) For S corporations under KRS 141.040;[ and] 2
(b) For a partnership level audit under KRS 141.211; and 3
(c) For a pass-through entity making an election under Section 16 of this Act. 4
(4) (a) Every pass-through entity required to file a return under subsection (1) of this 5
section, except publicly traded partnerships as described in KRS 6
141.0401(6)(a)18. and (b)14., shall withhold Kentucky income tax on the 7
distributive share, whether distributed or undistributed, of each nonresident 8
individual partner, member, or shareholder. 9
(b) Withholding shall be at the maximum rate provided in KRS 141.020. 10
(5) (a) Every pass-through entity required to withhold Kentucky income tax as 11
provided by subsection (4) of this section shall pay estimated tax for the 12
taxable year, if for a nonresident individual partner, member, or shareholder, 13
the estimated tax liability can reasonably be expected to exceed five hundred 14
dollars ($500). 15
(b) The payment of estimated tax shall contain the information and shall be filed 16
as provided in KRS 141.207. 17
(6) (a) If a pass-through entity demonstrates to the department that a partner, 18
member, or shareholder has filed an appropriate tax return for the prior year 19
with the department, then the pass-through entity shall not be required to 20
withhold on that partner, member, or shareholder for the current year unless 21
the exemption from withholding has been revoked pursuant to paragraph (b) 22
of this subsection. 23
(b) 1. An exemption from withholding shall be considered revoked if the 24
partner, member, or shareholder does not file and pay all taxes due in a 25
timely manner. 26
2. An exemption so revoked shall be reinstated only with permission of the 27 UNOFFICIAL COPY 23 RS HB 360/GA
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department. 1
3. If a partner, member, or shareholder who has been exempted from 2
withholding does not file a return or pay the tax due, the department 3
may require the pass-through entity to pay to the department the amount 4
that should have been withheld, up to the amount of the partner's, 5
member's, or shareholder's ownership interest in the entity. 6
4. The pass-through entity shall be entitled to recover a payment made 7
pursuant to this paragraph from the partner, member, or shareholder on 8
whose behalf the payment was made. 9
(7) In determining the tax under this chapter, a resident individual, estate, or trust that 10
is a partner, member, or shareholder in a pass-through entity shall take into account 11
the partner's, member's, or shareholder's total distributive share of the pass-through 12
entity's items of income, loss, deduction, and credit. 13
(8) In determining the tax under this chapter, a nonresident individual, estate, or trust 14
that is a partner, member, or shareholder in a pass-through entity required to file a 15
return under subsection (1) of this section shall take into account: 16
(a) 1. If the pass-through entity is doing business only in this state, the 17
partner's, member's, or shareholder's total distributive share of the pass-18
through entity's items of income, loss, and deduction; or 19
2. If the pass-through entity is doing business both within and without this 20
state, the partner's, member's, or shareholder's distributive share of the 21
pass-through entity's items of income, loss, and deduction multiplied by 22
the apportionment fraction of the pass-through entity as prescribed in 23
subsection (11) of this section; and 24
(b) The partner's, member's, or shareholder's total distributive share of credits of 25
the pass-through entity. 26
(9) A corporation that is subject to tax under KRS 141.040 and is a partner or member 27 UNOFFICIAL COPY 23 RS HB 360/GA
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in a pass-through entity shall take into account the corporation's distributive share 1
of the pass-through entity's items of income, loss, and deduction and: 2
(a) 1. For taxable years beginning on or after January 1, 2007, but prior to 3
January 1, 2018, shall include the proportionate share of the sales, 4
property, and payroll of the limited liability pass-through entity or 5
general partnership in computing its own apportionment factor; and 6
2. For taxable years beginning on or after January 1, 2018, shall include 7
the proportionate share of the sales of the limited liability pass-through 8
entity or general partnership in computing its own apportionment factor; 9
and 10
(b) Credits from the partnership. 11
(10) (a) If a pass-through entity is doing business both within and without this state, 12
the pass-through entity shall compute and furnish to each partner, member, or 13
shareholder the numerator and denominator of each factor of the 14
apportionment fraction determined in accordance with subsection (11) of this 15
section. 16
(b) For purposes of determining an apportionment fraction under paragraph (a) of 17
this subsection, if the pass-through entity is: 18
1. Doing business both within and without this state; and 19
2. A partner or member in another pass-through entity; 20
then the pass-through entity shall be deemed to own the pro rata share of the 21
property owned or leased by the other pass-through entity, and shall also 22
include its pro rata share of the other pass-through entity's payroll and sales. 23
(c) The phrases "a partner or member in another pass-through entity" and "doing 24
business both within and without this state" shall extend to each level of 25
multiple-tiered pass-through entities. 26
(d) The attribution to the pass-through entity of the pro rata share of property, 27 UNOFFICIAL COPY 23 RS HB 360/GA
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payroll and sales from its role as a partner or member in another pass-through 1
entity will also apply when determining the pass-through entity's ultimate 2
apportionment factor for property, payroll and sales as required under 3
subsection (11) of this section. 4
(11) (a) For taxable years beginning prior to January 1, 2018, a pass-through entity 5
doing business within and without the state shall compute an apportionment 6
fraction, the numerator of which is the property factor, representing twenty-7
five percent (25%) of the fraction, plus the payroll factor, representing 8
twenty-five percent (25%) of the fraction, plus the sales factor, representing 9
fifty percent (50%) of the fraction, with each factor determined in the same 10
manner as provided in KRS 141.901, and the denominator of which is four 11
(4), reduced by the number of factors, if any, having no denominator, 12
provided that if the sales factor has no denominator, then the denominator 13
shall be reduced by two (2). 14
(b) For taxable years beginning on or after January 1, 2018, a pass-through entity 15
doing business within and without the state shall compute an apportionment 16
fraction as provided in KRS 141.120. 17
(12) Resident individuals, estates, or trusts that are partners in a partnership, members of 18
a limited liability company electing partnership tax treatment for federal income tax 19
purposes, owners of single member limited liability companies, or shareholders in 20
an S corporation which does not do business in this state are subject to tax under 21
KRS 141.020 on federal net income, gain, deduction, or loss passed through the 22
partnership, limited liability company, or S corporation. 23
(13) An S corporation election made in accordance with Section 1362 of the Internal 24
Revenue Code for federal tax purposes is a binding election for Kentucky tax 25
purposes. 26
(14) (a) Nonresident individuals shall not be taxable on investment income distributed 27 UNOFFICIAL COPY 23 RS HB 360/GA
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by a qualified investment partnership. For purposes of this subsection, a 1
"qualified investment partnership" means a pass-through entity that, during 2
the taxable year, holds only investments that produce income that would not 3
be taxable to a nonresident individual if held or owned individually. 4
(b) A qualified investment partnership shall be subject to all other provisions 5
relating to a pass-through entity under this section and shall not be subject to 6
the tax imposed under KRS 141.040 or 141.0401. 7
(15) (a) A pass-through entity shall deliver to the department a return upon a form 8
prescribed by the department showing the total amounts paid or credited to its 9
nonresident individual partners, members, or shareholders, the amount paid in 10
accordance with this subsection, and any other information the department 11
may require. 12
(b) A pass-through entity shall furnish to its nonresident partner, member, or 13
shareholder annually, but not later than the fifteenth day of the fourth month 14
after the end of its taxable year, a record of the amount of tax paid on behalf 15
of the partner, member, or shareholder on a form prescribed by the 16
department. 17
Section 18. KRS 141.0205 is amended to read as follows: 18
If a taxpayer is entitled to more than one (1) of the tax credits allowed against the tax 19
imposed by KRS 141.020, 141.040, and 141.0401, the priority of application and use of 20
the credits shall be determined as follows: 21
(1) The nonrefundable business incentive credits against the tax imposed by KRS 22
141.020 shall be taken in the following order: 23
(a) The limited liability entity tax credit permitted by KRS 141.0401; 24
(b) The economic development credits computed under KRS 141.347, 141.381, 25
141.384, 141.3841, 141.400, 141.401, 141.403, 141.407, 141.415, 154.12-26
207, and 154.12-2088; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(c) The qualified farming operation credit permitted by KRS 141.412; 1
(d) The certified rehabilitation credit permitted by KRS 171.397(1)(a); 2
(e) The health insurance credit permitted by KRS 141.062; 3
(f) The tax paid to other states credit permitted by KRS 141.070; 4
(g) The credit for hiring the unemployed permitted by KRS 141.065; 5
(h) The recycling or composting equipment credit permitted by KRS 141.390; 6
(i) The tax credit for cash contributions in investment funds permitted by KRS 7
154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 8
154.20-258; 9
(j) The research facilities credit permitted by KRS 141.395; 10
(k) The employer High School Equivalency Diploma program incentive credit 11
permitted under KRS 151B.402; 12
(l) The voluntary environmental remediation credit permitted by KRS 141.418; 13
(m) The biodiesel and renewable diesel credit permitted by KRS 141.423; 14
(n) The clean coal incentive credit permitted by KRS 141.428; 15
(o) The ethanol credit permitted by KRS 141.4242; 16
(p) The cellulosic ethanol credit permitted by KRS 141.4244; 17
(q) The energy efficiency credits permitted by KRS 141.436; 18
(r) The railroad maintenance and improvement credit permitted by KRS 141.385; 19
(s) The Endow Kentucky credit permitted by KRS 141.438; 20
(t) The New Markets Development Program credit permitted by KRS 141.434; 21
(u) The distilled spirits credit permitted by KRS 141.389; 22
(v) The angel investor credit permitted by KRS 141.396; 23
(w) The film industry credit permitted by KRS 141.383 for applications approved 24
on or after April 27, 2018, but before January 1, 2022; 25
(x) The inventory credit permitted by KRS 141.408; and 26
(y) The renewable chemical production credit permitted by KRS 141.4231. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(2) After the application of the nonrefundable credits in subsection (1) of this section, 1
the nonrefundable personal tax credits against the tax imposed by KRS 141.020 2
shall be taken in the following order: 3
(a) The individual credits permitted by KRS 141.020(3); 4
(b) The credit permitted by KRS 141.066; 5
(c) The tuition credit permitted by KRS 141.069; 6
(d) The household and dependent care credit permitted by KRS 141.067; 7
(e) The income gap credit permitted by KRS 141.066;[ and] 8
(f) The Education Opportunity Account Program tax credit permitted by KRS 9
141.522; and 10
(g) The pass-through entity tax credit permitted by Section 16 of this Act. 11
(3) After the application of the nonrefundable credits provided for in subsection (2) of 12
this section, the refundable credits against the tax imposed by KRS 141.020 shall be 13
taken in the following order: 14
(a) The individual withholding tax credit permitted by KRS 141.350; 15
(b) The individual estimated tax payment credit permitted by KRS 141.305; 16
(c) The certified rehabilitation credit permitted by KRS 171.3961, 171.3963, and 17
171.397(1)(b); 18
(d) The film industry tax credit permitted by KRS 141.383 for applications 19
approved prior to April 27, 2018, or on or after January 1, 2022; 20
(e) The development area tax credit permitted by KRS 141.398; and 21
(f) The decontamination tax credit permitted by KRS 141.419. 22
(4) The nonrefundable credit permitted by KRS 141.0401 shall be applied against the 23
tax imposed by KRS 141.040. 24
(5) The following nonrefundable credits shall be applied against the sum of the tax 25
imposed by KRS 141.040 after subtracting the credit provided for in subsection (4) 26
of this section, and the tax imposed by KRS 141.0401 in the following order: 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(a) The economic development credits computed under KRS 141.347, 141.381, 1
141.384, 141.3841, 141.400, 141.401, 141.403, 141.407, 141.415, 154.12-2
207, and 154.12-2088; 3
(b) The qualified farming operation credit permitted by KRS 141.412; 4
(c) The certified rehabilitation credit permitted by KRS 171.397(1)(a); 5
(d) The health insurance credit permitted by KRS 141.062; 6
(e) The unemployment credit permitted by KRS 141.065; 7
(f) The recycling or composting equipment credit permitted by KRS 141.390; 8
(g) The coal conversion credit permitted by KRS 141.041; 9
(h) The enterprise zone credit permitted by KRS 154.45-090, for taxable periods 10
ending prior to January 1, 2008; 11
(i) The tax credit for cash contributions to investment funds permitted by KRS 12
154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 13
154.20-258; 14
(j) The research facilities credit permitted by KRS 141.395; 15
(k) The employer High School Equivalency Diploma program incentive credit 16
permitted by KRS 151B.402; 17
(l) The voluntary environmental remediation credit permitted by KRS 141.418; 18
(m) The biodiesel and renewable diesel credit permitted by KRS 141.423; 19
(n) The clean coal incentive credit permitted by KRS 141.428; 20
(o) The ethanol credit permitted by KRS 141.4242; 21
(p) The cellulosic ethanol credit permitted by KRS 141.4244; 22
(q) The energy efficiency credits permitted by KRS 141.436; 23
(r) The ENERGY STAR home or ENERGY STAR manufactured home credit 24
permitted by KRS 141.437; 25
(s) The railroad maintenance and improvement credit permitted by KRS 141.385; 26
(t) The railroad expansion credit permitted by KRS 141.386; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(u) The Endow Kentucky credit permitted by KRS 141.438; 1
(v) The New Markets Development Program credit permitted by KRS 141.434; 2
(w) The distilled spirits credit permitted by KRS 141.389; 3
(x) The film industry credit permitted by KRS 141.383 for applications approved 4
on or after April 27, 2018, but before January 1, 2022; 5
(y) The inventory credit permitted by KRS 141.408; 6
(z) The renewable chemical production tax credit permitted by KRS 141.4231; 7
and 8
(aa) The Education Opportunity Account Program tax credit permitted by KRS 9
141.522. 10
(6) After the application of the nonrefundable credits in subsection (5) of this section, 11
the refundable credits shall be taken in the following order: 12
(a) The corporation estimated tax payment credit permitted by KRS 141.044; 13
(b) The certified rehabilitation credit permitted by KRS 171.3961, 171.3963, and 14
171.397(1)(b); 15
(c) The film industry tax credit permitted by KRS 141.383 for applications 16
approved prior to April 27, 2018, or on or after January 1, 2022; and 17
(d) The decontamination tax credit permitted by KRS 141.419. 18
Section 19. KRS 141.010 is amended to read as follows: 19
As used in this chapter, for taxable years beginning on or after January 1, 2018: 20
(1) "Adjusted gross income," in the case of taxpayers other than corporations, means 21
the amount calculated in KRS 141.019; 22
(2) "Captive real estate investment trust" means a real estate investment trust as defined 23
in Section 856 of the Internal Revenue Code that meets the following requirements: 24
(a) 1. The shares or other ownership interests of the real estate investment 25
trust are not regularly traded on an established securities market; or 26
2. The real estate investment trust does not have enough shareholders or 27 UNOFFICIAL COPY 23 RS HB 360/GA
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owners to be required to register with the Securities and Exchange 1
Commission; 2
(b) 1. The maximum amount of stock or other ownership interest that is owned 3
or constructively owned by a corporation equals or exceeds: 4
a. Twenty-five percent (25%), if the corporation does not occupy 5
property owned, constructively owned, or controlled by the real 6
estate investment trust; or 7
b. Ten percent (10%), if the corporation occupies property owned, 8
constructively owned, or controlled by the real estate investment 9
trust. 10
The total ownership interest of a corporation shall be determined by 11
aggregating all interests owned or constructively owned by a 12
corporation; and 13
2. For the purposes of this paragraph: 14
a. "Corporation" means a corporation taxable under KRS 141.040, 15
and includes an affiliated group as defined in KRS 141.200, that is 16
required to file a consolidated return pursuant to KRS 141.200; 17
and 18
b. "Owned or constructively owned" means owning shares or having 19
an ownership interest in the real estate investment trust, or owning 20
an interest in an entity that owns shares or has an ownership 21
interest in the real estate investment trust. Constructive ownership 22
shall be determined by looking across multiple layers of a 23
multilayer pass-through structure; and 24
(c) The real estate investment trust is not owned by another real estate investment 25
trust; 26
(3) "Commissioner" means the commissioner of the department; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(4) "Corporation" has the same meaning as in Section 7701(a)(3) of the Internal 1
Revenue Code; 2
(5) "Critical infrastructure" means property and equipment owned or used by 3
communications networks, electric generation, transmission or distribution systems, 4
gas distribution systems, or water or wastewater pipelines that service multiple 5
customers or citizens, including but not limited to real and personal property such 6
as buildings, offices, lines, poles, pipes, structures, or equipment; 7
(6) "Declared state disaster or emergency" means a disaster or emergency event for 8
which: 9
(a) The Governor has declared a state of emergency pursuant to KRS 39A.100; or 10
(b) A presidential declaration of a federal major disaster or emergency has been 11
issued; 12
(7) "Department" means the Department of Revenue; 13
(8) "Dependent" means those persons defined as dependents in the Internal Revenue 14
Code; 15
(9) "Disaster or emergency-related work" means repairing, renovating, installing, 16
building, or rendering services that are essential to the restoration of critical 17
infrastructure that has been damaged, impaired, or destroyed by a declared state 18
disaster or emergency; 19
(10) "Disaster response business" means any entity: 20
(a) That has no presence in the state and conducts no business in the state, except 21
for disaster or emergency-related work during a disaster response period; 22
(b) Whose services are requested by a registered business or by a state or local 23
government for purposes of performing disaster or emergency-related work in 24
the state during a disaster response period; and 25
(c) That has no registrations, tax filings, or nexus in this state other than disaster 26
or emergency-related work during the calendar year immediately preceding 27 UNOFFICIAL COPY 23 RS HB 360/GA
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the declared state disaster or emergency; 1
(11) "Disaster response employee" means an employee who does not work or reside in 2
the state, except for disaster or emergency-related work during the disaster response 3
period; 4
(12) "Disaster response period" means a period that begins ten (10) days prior to the first 5
day of the Governor's declaration under KRS 39A.100, or the President's 6
declaration of a federal major disaster or emergency, whichever occurs first, and 7
that extends thirty (30) calendar days after the declared state disaster or emergency; 8
(13) "Doing business in this state" includes but is not limited to: 9
(a) Being organized under the laws of this state; 10
(b) Having a commercial domicile in this state; 11
(c) Owning or leasing property in this state; 12
(d) Having one (1) or more individuals performing services in this state; 13
(e) Maintaining an interest in a pass-through entity doing business in this state; 14
(f) Deriving income from or attributable to sources within this state, including 15
deriving income directly or indirectly from a trust doing business in this state, 16
or deriving income directly or indirectly from a single-member limited 17
liability company that is doing business in this state and is disregarded as an 18
entity separate from its single member for federal income tax purposes; or 19
(g) Directing activities at Kentucky customers for the purpose of selling them 20
goods or services. 21
Nothing in this subsection shall be interpreted in a manner that goes beyond the 22
limitations imposed and protections provided by the United States Constitution or 23
Pub. L. No. 86-272; 24
(14) "Employee" has the same meaning as in Section 3401(c) of the Internal Revenue 25
Code; 26
(15) "Employer" has the same meaning as in Section 3401(d) of the Internal Revenue 27 UNOFFICIAL COPY 23 RS HB 360/GA
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Code; 1
(16) "Fiduciary" has the same meaning as in Section 7701(a)(6) of the Internal Revenue 2
Code; 3
(17) "Financial institution" means: 4
(a) A national bank organized as a body corporate and existing or in the process 5
of organizing as a national bank association pursuant to the provisions of the 6
National Bank Act, 12 U.S.C. secs. 21 et seq., in effect on December 31, 7
1997, exclusive of any amendments made subsequent to that date; 8
(b) Any bank or trust company incorporated or organized under the laws of any 9
state, except a banker's bank organized under KRS 286.3-135; 10
(c) Any corporation organized under the provisions of 12 U.S.C. secs. 611 to 631, 11
in effect on December 31, 1997, exclusive of any amendments made 12
subsequent to that date, or any corporation organized after December 31, 13
1997, that meets the requirements of 12 U.S.C. secs. 611 to 631, in effect on 14
December 31, 1997; or 15
(d) Any agency or branch of a foreign depository as defined in 12 U.S.C. sec. 16
3101, in effect on December 31, 1997, exclusive of any amendments made 17
subsequent to that date, or any agency or branch of a foreign depository 18
established after December 31, 1997, that meets the requirements of 12 U.S.C. 19
sec. 3101 in effect on December 31, 1997; 20
(18) "Fiscal year" has the same meaning as in Section 7701(a)(24) of the Internal 21
Revenue Code; 22
(19) "Gross income": 23
(a) In the case of taxpayers other than corporations, has the same meaning as in 24
Section 61 of the Internal Revenue Code; and 25
(b) In the case of corporations, means the amount calculated in KRS 141.039; 26
(20) "Individual" means a natural person; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(21) "Internal Revenue Code" means for taxable years beginning on or after January 1, 1
2023[2022], the Internal Revenue Code in effect on December 31, 2022[2021], 2
exclusive of any amendments made subsequent to that date, other than amendments 3
that extend provisions in effect on December 31, 2022[2021], that would otherwise 4
terminate; 5
(22) "Limited liability pass-through entity" means any pass-through entity that affords 6
any of its partners, members, shareholders, or owners, through function of the laws 7
of this state or laws recognized by this state, protection from general liability for 8
actions of the entity; 9
(23) "Modified gross income" means the greater of: 10
(a) Adjusted gross income as defined in 26 U.S.C. sec. 62, including any 11
amendments in effect on December 31 of the taxable year, and adjusted as 12
follows: 13
1. Include interest income derived from obligations of sister states and 14
political subdivisions thereof; and 15
2. Include lump-sum pension distributions taxed under the special 16
transition rules of Pub. L. No. 104-188, sec. 1401(c)(2); or 17
(b) Adjusted gross income as defined in subsection (1) of this section and 18
adjusted to include lump-sum pension distributions taxed under the special 19
transition rules of Pub. L. No. 104-188, sec. 1401(c)(2); 20
(24) "Net income": 21
(a) In the case of taxpayers other than corporations, means the amount calculated 22
in KRS 141.019; and 23
(b) In the case of corporations, means the amount calculated in KRS 141.039; 24
(25) "Nonresident" means any individual not a resident of this state; 25
(26) "Number of withholding exemptions claimed" means the number of withholding 26
exemptions claimed in a withholding exemption certificate in effect under KRS 27 UNOFFICIAL COPY 23 RS HB 360/GA
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141.325, except that if no such certificate is in effect, the number of withholding 1
exemptions claimed shall be considered to be zero; 2
(27) "Part-year resident" means any individual that has established or abandoned 3
Kentucky residency during the calendar year; 4
(28) "Pass-through entity" means any partnership, S corporation, limited liability 5
company, limited liability partnership, limited partnership, or similar entity 6
recognized by the laws of this state that is not taxed for federal purposes at the 7
entity level, but instead passes to each partner, member, shareholder, or owner their 8
proportionate share of income, deductions, gains, losses, credits, and any other 9
similar attributes; 10
(29) "Payroll period" has the same meaning as in Section 3401(b) of the Internal 11
Revenue Code; 12
(30) "Person" has the same meaning as in Section 7701(a)(1) of the Internal Revenue 13
Code; 14
(31) "Registered business" means a business entity that owns or otherwise possesses 15
critical infrastructure and that is registered to do business in the state prior to the 16
declared state disaster or emergency; 17
(32) "Resident" means an individual domiciled within this state or an individual who is 18
not domiciled in this state, but maintains a place of abode in this state and spends in 19
the aggregate more than one hundred eighty-three (183) days of the taxable year in 20
this state; 21
(33) "S corporation" has the same meaning as in Section 1361(a) of the Internal Revenue 22
Code; 23
(34) "State" means a state of the United States, the District of Columbia, the 24
Commonwealth of Puerto Rico, or any territory or possession of the United States; 25
(35) "Taxable net income": 26
(a) In the case of corporations that are taxable in this state, means "net income" as 27 UNOFFICIAL COPY 23 RS HB 360/GA
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defined in subsection (24) of this section; 1
(b) In the case of corporations that are taxable in this state and taxable in another 2
state, means "net income" as defined in subsection (24) of this section and as 3
allocated and apportioned under KRS 141.120; 4
(c) For homeowners' associations as defined in Section 528(c) of the Internal 5
Revenue Code, means "taxable income" as defined in Section 528(d) of the 6
Internal Revenue Code. Notwithstanding the provisions of subsection (21) of 7
this section, the Internal Revenue Code sections referred to in this paragraph 8
shall be those code sections in effect for the applicable tax year; and 9
(d) For a corporation that meets the requirements established under Section 856 10
of the Internal Revenue Code to be a real estate investment trust, means "real 11
estate investment trust taxable income" as defined in Section 857(b)(2) of the 12
Internal Revenue Code, except that a captive real estate investment trust shall 13
not be allowed any deduction for dividends paid; 14
(36) "Taxable year" means the calendar year or fiscal year ending during such calendar 15
year, upon the basis of which net income is computed, and in the case of a return 16
made for a fractional part of a year under the provisions of this chapter or under 17
administrative regulations prescribed by the commissioner, "taxable year" means 18
the period for which the return is made; and 19
(37) "Wages" has the same meaning as in Section 3401(a) of the Internal Revenue Code 20
and includes other income subject to withholding as provided in Section 3401(f) 21
and Section 3402(k), (o), (p), (q), and (s) of the Internal Revenue Code. 22
Section 20. KRS 141.019 is amended to read as follows: 23
In the case of taxpayers other than corporations: 24
(1) Adjusted gross income shall be calculated by subtracting from the gross income of 25
those taxpayers the deductions allowed individuals by Section 62 of the Internal 26
Revenue Code and adjusting as follows: 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(a) Exclude income that is exempt from state taxation by the Kentucky 1
Constitution and the Constitution and statutory laws of the United States; 2
(b) Exclude income from supplemental annuities provided by the Railroad 3
Retirement Act of 1937 as amended and which are subject to federal income 4
tax by Pub. L. No. 89-699; 5
(c) Include interest income derived from obligations of sister states and political 6
subdivisions thereof; 7
(d) Exclude employee pension contributions picked up as provided for in KRS 8
6.505, 16.545, 21.360, 61.523, 61.560, 65.155, 67A.320, 67A.510, 78.610, 9
and 161.540 upon a ruling by the Internal Revenue Service or the federal 10
courts that these contributions shall not be included as gross income until such 11
time as the contributions are distributed or made available to the employee; 12
(e) Exclude Social Security and railroad retirement benefits subject to federal 13
income tax; 14
(f) Exclude any money received because of a settlement or judgment in a lawsuit 15
brought against a manufacturer or distributor of "Agent Orange" for damages 16
resulting from exposure to Agent Orange by a member or veteran of the 17
Armed Forces of the United States or any dependent of such person who 18
served in Vietnam; 19
(g) 1. a. For taxable years beginning after December 31, 2005, but before 20
January 1, 2018, exclude up to forty-one thousand one hundred ten 21
dollars ($41,110) of total distributions from pension plans, annuity 22
contracts, profit-sharing plans, retirement plans, or employee 23
savings plans; and 24
b. For taxable years beginning on or after January 1, 2018, exclude 25
up to thirty-one thousand one hundred ten dollars ($31,110) of 26
total distributions from pension plans, annuity contracts, profit-27 UNOFFICIAL COPY 23 RS HB 360/GA
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sharing plans, retirement plans, or employee savings plans. 1
2. As used in this paragraph: 2
a. "Annuity contract" has the same meaning as set forth in Section 3
1035 of the Internal Revenue Code; 4
b. "Distributions" includes but is not limited to any lump-sum 5
distribution from pension or profit-sharing plans qualifying for the 6
income tax averaging provisions of Section 402 of the Internal 7
Revenue Code; any distribution from an individual retirement 8
account as defined in Section 408 of the Internal Revenue Code; 9
and any disability pension distribution; and 10
c. "Pension plans, profit-sharing plans, retirement plans, or employee 11
savings plans" means any trust or other entity created or organized 12
under a written retirement plan and forming part of a stock bonus, 13
pension, or profit-sharing plan of a public or private employer for 14
the exclusive benefit of employees or their beneficiaries and 15
includes plans qualified or unqualified under Section 401 of the 16
Internal Revenue Code and individual retirement accounts as 17
defined in Section 408 of the Internal Revenue Code; 18
(h) 1. a. Exclude the portion of the distributive share of a shareholder's net 19
income from an S corporation subject to the franchise tax imposed 20
under KRS 136.505 or the capital stock tax imposed under KRS 21
136.300; and 22
b. Exclude the portion of the distributive share of a shareholder's net 23
income from an S corporation related to a qualified subchapter S 24
subsidiary subject to the franchise tax imposed under KRS 25
136.505 or the capital stock tax imposed under KRS 136.300. 26
2. The shareholder's basis of stock held in an S corporation where the S 27 UNOFFICIAL COPY 23 RS HB 360/GA
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corporation or its qualified subchapter S subsidiary is subject to the 1
franchise tax imposed under KRS 136.505 or the capital stock tax 2
imposed under KRS 136.300 shall be the same as the basis for federal 3
income tax purposes; 4
(i) Exclude income received for services performed as a precinct worker for 5
election training or for working at election booths in state, county, and local 6
primaries or regular or special elections; 7
(j) Exclude any capital gains income attributable to property taken by eminent 8
domain; 9
(k) 1. Exclude all income from all sources for members of the Armed Forces 10
who are on active duty and who are killed in the line of duty, for the 11
year during which the death occurred and the year prior to the year 12
during which the death occurred. 13
2. For the purposes of this paragraph, "all income from all sources" shall 14
include all federal and state death benefits payable to the estate or any 15
beneficiaries; 16
(l) Exclude all military pay received by members of the Armed Forces while on 17
active duty; 18
(m) 1. Include the amount deducted for depreciation under 26 U.S.C. sec. 167 19
or 168; and 20
2. Exclude the amounts allowed by KRS 141.0101 for depreciation; 21
(n) Include the amount deducted under 26 U.S.C. sec. 199A; 22
(o) Ignore any change in the cost basis of the surviving spouse's share of property 23
owned by a Kentucky community property trust occurring for federal income 24
tax purposes as a result of the death of the predeceasing spouse;[ and] 25
(p) Allow the same treatment allowed under Pub. L. No. 116-260, secs. 276 and 26
278, related to the tax treatment of forgiven covered loans, deductions 27 UNOFFICIAL COPY 23 RS HB 360/GA
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attributable to those loans, and tax attributes associated with those loans for 1
taxable years ending on or after March 27, 2020, but before January 1, 2022; 2
and 3
(q) For taxable years beginning on or after January 1, 2020, but before March 4
11, 2023, allow the same treatment of restaurant revitalization grants in 5
accordance with Pub. L. No. 117-2, sec. 9673 and 15 U.S.C. sec. 9009c; and 6
(2) Net income shall be calculated by subtracting from adjusted gross income all the 7
deductions allowed individuals by Chapter 1 of the Internal Revenue Code, as 8
modified by KRS 141.0101, except: 9
(a) Any deduction allowed by 26 U.S.C. sec. 164 for taxes; 10
(b) Any deduction allowed by 26 U.S.C. sec. 165 for losses, except wagering 11
losses allowed under Section 165(d) of the Internal Revenue Code; 12
(c) Any deduction allowed by 26 U.S.C. sec. 213 for medical care expenses; 13
(d) Any deduction allowed by 26 U.S.C. sec. 217 for moving expenses; 14
(e) Any deduction allowed by 26 U.S.C. sec. 67 for any other miscellaneous 15
deduction; 16
(f) Any deduction allowed by the Internal Revenue Code for amounts allowable 17
under KRS 140.090(1)(h) in calculating the value of the distributive shares of 18
the estate of a decedent, unless there is filed with the income return a 19
statement that the deduction has not been claimed under KRS 140.090(1)(h); 20
(g) Any deduction allowed by 26 U.S.C. sec. 151 for personal exemptions and 21
any other deductions in lieu thereof; 22
(h) Any deduction allowed for amounts paid to any club, organization, or 23
establishment which has been determined by the courts or an agency 24
established by the General Assembly and charged with enforcing the civil 25
rights laws of the Commonwealth, not to afford full and equal membership 26
and full and equal enjoyment of its goods, services, facilities, privileges, 27 UNOFFICIAL COPY 23 RS HB 360/GA
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advantages, or accommodations to any person because of race, color, religion, 1
national origin, or sex, except nothing shall be construed to deny a deduction 2
for amounts paid to any religious or denominational club, group, or 3
establishment or any organization operated solely for charitable or educational 4
purposes which restricts membership to persons of the same religion or 5
denomination in order to promote the religious principles for which it is 6
established and maintained; and 7
(i) A taxpayer may elect to claim the standard deduction allowed by KRS 8
141.081 instead of itemized deductions allowed pursuant to 26 U.S.C. sec. 63 9
and as modified by this section. 10
Section 21. KRS 141.039 is amended to read as follows: 11
In the case of corporations: 12
(1) Gross income shall be calculated by adjusting federal gross income as defined in 13
Section 61 of the Internal Revenue Code as follows: 14
(a) Exclude income that is exempt from state taxation by the Kentucky 15
Constitution and the Constitution and statutory laws of the United States; 16
(b) Exclude all dividend income; 17
(c) Include interest income derived from obligations of sister states and political 18
subdivisions thereof; 19
(d) Exclude fifty percent (50%) of gross income derived from any disposal of 20
coal covered by Section 631(c) of the Internal Revenue Code if the 21
corporation does not claim any deduction for percentage depletion, or for 22
expenditures attributable to the making and administering of the contract 23
under which such disposition occurs or to the preservation of the economic 24
interests retained under such contract; 25
(e) Include the amount calculated under KRS 141.205; 26
(f) Ignore the provisions of Section 281 of the Internal Revenue Code in 27 UNOFFICIAL COPY 23 RS HB 360/GA
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computing gross income; 1
(g) Include the amount of deprecation deduction calculated under 26 U.S.C. sec. 2
167 or 168;[ and] 3
(h) Allow the same treatment allowed under Pub. L. No. 116-260, secs. 276 and 4
278, related to the tax treatment of forgiven covered loans, deductions 5
attributable to those loans, and tax attributes associated with those loans for 6
taxable years ending on or after March 27, 2020, but before January 1, 2022; 7
and 8
(i) For taxable years beginning on or after January 1, 2020, but before March 9
11, 2023, allow the same treatment of restaurant revitalization grants in 10
accordance with Pub. L. No. 117-2, sec. 9673 and 15 U.S.C. sec. 9009c; and 11
(2) Net income shall be calculated by subtracting from gross income: 12
(a) The deduction for depreciation allowed by KRS 141.0101; 13
(b) Any amount paid for vouchers or similar instruments that provide health 14
insurance coverage to employees or their families; 15
(c) All the deductions from gross income allowed corporations by Chapter 1 of 16
the Internal Revenue Code, as modified by KRS 141.0101, except: 17
1. Any deduction for a state tax which is computed, in whole or in part, by 18
reference to gross or net income and which is paid or accrued to any 19
state of the United States, the District of Columbia, the Commonwealth 20
of Puerto Rico, any territory or possession of the United States, or to any 21
foreign country or political subdivision thereof; 22
2. The deductions contained in Sections 243, 245, and 247 of the Internal 23
Revenue Code; 24
3. The provisions of Section 281 of the Internal Revenue Code shall be 25
ignored in computing net income; 26
4. Any deduction directly or indirectly allocable to income which is either 27 UNOFFICIAL COPY 23 RS HB 360/GA
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exempt from taxation or otherwise not taxed under the provisions of this 1
chapter, except for deductions allowed under Pub. L. No. 116-260, secs. 2
276 and 278, related to the tax treatment of forgiven covered loans and 3
deductions attributable to those loans for taxable years ending on or 4
after March 27, 2020, but before January 1, 2022, and nothing in this 5
chapter shall be construed to permit the same item to be deducted more 6
than once; 7
5. Any deduction for amounts paid to any club, organization, or 8
establishment which has been determined by the courts or an agency 9
established by the General Assembly and charged with enforcing the 10
civil rights laws of the Commonwealth, not to afford full and equal 11
membership and full and equal enjoyment of its goods, services, 12
facilities, privileges, advantages, or accommodations to any person 13
because of race, color, religion, national origin, or sex, except nothing 14
shall be construed to deny a deduction for amounts paid to any religious 15
or denominational club, group, or establishment or any organization 16
operated solely for charitable or educational purposes which restricts 17
membership to persons of the same religion or denomination in order to 18
promote the religious principles for which it is established and 19
maintained; 20
6. Any deduction prohibited by KRS 141.205; and 21
7. Any dividends-paid deduction of any captive real estate investment 22
trust; and 23
(d) 1. A deferred tax deduction in an amount computed in accordance with this 24
paragraph. 25
2. For purposes of this paragraph: 26
a. "Net deferred tax asset" means that deferred tax assets exceed the 27 UNOFFICIAL COPY 23 RS HB 360/GA
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deferred tax liabilities of the combined group, as computed in 1
accordance with accounting principles generally accepted in the 2
United States of America; and 3
b. "Net deferred tax liability" means deferred tax liabilities that 4
exceed the deferred tax assets of a combined group as defined in 5
KRS 141.202, as computed in accordance with accounting 6
principles generally accepted in the United States of America. 7
3. Only publicly traded companies, including affiliated corporations 8
participating in the filing of a publicly traded company's financial 9
statements prepared in accordance with accounting principles generally 10
accepted in the United States of America, as of January 1, 2019, shall be 11
eligible for this deduction. 12
4. If the provisions of KRS 141.202 result in an aggregate increase to the 13
member's net deferred tax liability, an aggregate decrease to the 14
member's net deferred tax asset, or an aggregate change from a net 15
deferred tax asset to a net deferred tax liability, the combined group 16
shall be entitled to a deduction, as determined in this paragraph. 17
5. For ten (10) years beginning with the combined group's first taxable 18
year beginning on or after January 1, 2024, a combined group shall be 19
entitled to a deduction from the combined group's entire net income 20
equal to one-tenth (1/10) of the amount necessary to offset the increase 21
in the net deferred tax liability, decrease in the net deferred tax asset, or 22
aggregate change from a net deferred tax asset to a net deferred tax 23
liability. The increase in the net deferred tax liability, decrease in the net 24
deferred tax asset, or the aggregate change from a net deferred tax asset 25
to a net deferred tax liability shall be computed based on the change that 26
would result from the imposition of the combined reporting requirement 27 UNOFFICIAL COPY 23 RS HB 360/GA
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under KRS 141.202, but for the deduction provided under this paragraph 1
as of June 27, 2019. 2
6. The deferred tax impact determined in subparagraph 5. of this paragraph 3
shall be converted to the annual deferred tax deduction amount, as 4
follows: 5
a. The deferred tax impact determined in subparagraph 5. of this 6
paragraph shall be divided by the tax rate determined under KRS 7
141.040; 8
b. The resulting amount shall be further divided by the 9
apportionment factor determined by KRS 141.120 or 141.121 that 10
was used by the combined group in the calculation of the deferred 11
tax assets and deferred tax liabilities as described in subparagraph 12
5. of this paragraph; and 13
c. The resulting amount represents the total net deferred tax 14
deduction available over the ten (10) year period as described in 15
subparagraph 5. of this paragraph. 16
7. The deduction calculated under this paragraph shall not be adjusted as a 17
result of any events happening subsequent to the calculation, including 18
but not limited to any disposition or abandonment of assets. The 19
deduction shall be calculated without regard to the federal tax effect and 20
shall not alter the tax basis of any asset. If the deduction under this 21
section is greater than the combined group's entire Kentucky net income, 22
any excess deduction shall be carried forward and applied as a deduction 23
to the combined group's entire net income in future taxable years until 24
fully utilized. 25
8. Any combined group intending to claim a deduction under this 26
paragraph shall file a statement with the department on or before July 1, 27 UNOFFICIAL COPY 23 RS HB 360/GA
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2019. The statement shall specify the total amount of the deduction 1
which the combined group claims on the form, including calculations 2
and other information supporting the total amounts of the deduction as 3
required by the department. No deduction shall be allowed under this 4
paragraph for any taxable year, except to the extent claimed on the 5
timely filed statement in accordance with this paragraph. 6
Section 22. KRS 141.020 is amended to read as follows: 7
(1) An annual tax shall be paid for each taxable year by every resident individual of 8
this state upon his or her entire net income as defined in this chapter. The tax shall 9
be determined by applying the rates in subsection (2) of this section to net income 10
and subtracting allowable tax credits provided in subsection (3) of this section. 11
(2) (a) As used in this subsection: 12
1. "Balance in the BRTF at the end of a fiscal year" means the budget 13
reserve trust fund account established in KRS 48.705 and includes the 14
following amounts and actions resulting from the final close of the fiscal 15
year: 16
a. The amount of moneys in the fund at the end of a fiscal year; 17
b. All close-out actions related to a budget reduction plan under KRS 18
48.130 or as modified in a branch budget bill; and 19
c. All close-out actions related to the surplus expenditure plan under 20
KRS 48.140 or as modified in a branch budget bill; 21
2. "GF appropriations" means the authorization by the General Assembly 22
to expend GF moneys, excluding: 23
a. Continuing appropriations; 24
b. Any appropriation to the budget reserve trust fund; and 25
c.[b.] Any lump-sum appropriation to a state-administered retirement 26
system, as defined in KRS 7A.210, that is in excess of the 27 UNOFFICIAL COPY 23 RS HB 360/GA
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appropriations specifically budgeted to meet the recurring 1
statutorily required contributions or recurring actuarially 2
determined contributions for a state-administered retirement 3
system under KRS 21.525, 61.565, 61.702, 78.635, 78.5536, or 4
161.550, as applicable; 5
3. "GF moneys" means receipts deposited in the general fund defined in 6
KRS 48.010, excluding tobacco moneys deposited in the fund 7
established in KRS 248.654; 8
4. "IIT equivalent" means the amount of reduction in GF moneys resulting 9
from a one (1) percentage point reduction to the individual income tax 10
rate and shall be calculated by dividing the actual individual income 11
tax receipts for the fiscal year under consideration by: 12
a. The sum of: 13
i. The individual income tax rate, expressed as a percentage, 14
for the first six (6) months of the fiscal year; and 15
ii. The individual income tax rate, expressed as a percentage, 16
for the second six (6) months of the fiscal year; and 17
b. Dividing the sum determined in subdivision a. of this 18
subparagraph by two (2); 19
5. "Reduction conditions" means: 20
a. The balance in the BRTF at the end of a fiscal year shall be equal 21
to or greater than ten percent (10%) of the GF moneys for that 22
fiscal year; and 23
b. GF moneys at the end of a fiscal year shall be equal to or greater 24
than GF appropriations for that fiscal year plus the IIT equivalent 25
for that fiscal year; and 26
6. "Tax rate reduction" means the current tax rate minus five-tenths of one 27 UNOFFICIAL COPY 23 RS HB 360/GA
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percent (0.5%). 1
(b) For taxable years beginning on or after January 1, 2023, but prior to 2
January 1, 2024, the tax shall be four and one-half percent (4.5%) of net 3
income. 4
(c) For taxable years beginning on or after January 1, 2024, the tax shall be 5
four percent (4%) of net income. 6
(d) 1. For taxable years beginning on or after January 1, 2025, the income 7
tax rate may be reduced according to the annual process established in 8
subparagraphs 2. to 5. of this paragraph. 9
2.[1.] [Beginning no later than September 1, 2022, the department, with 10
assistance from ]The Office of State Budget Director[,] shall review the 11
reduction conditions for the fiscal year 2022-2023 no later than 12
September 1, 2023[as they apply to fiscal year 2020-2021 and fiscal 13
year 2021-2022 and make a determination if the reduction conditions 14
have been met for each fiscal year]. 15
3.[2.] After reviewing the reduction conditions under subparagraph 2.[1.] of 16
this paragraph, the Office of State Budget Director[department] shall, [: 17
a. ]no later than September 5, 2023[2022], report to the Interim Joint 18
Committee on Appropriations and Revenue: 19
a.[i.] Whether the reduction conditions for the fiscal year 2022-2023 20
have been met[a tax rate reduction will occur for the taxable year 21
beginning on January 1, 2023]; and 22
b.[ii.] The amounts associated with each item within the reduction 23
conditions used for making that determination[; and 24
b. i. Implement the tax rate reduction for the taxable year 25
beginning on January 1, 2023, if the reduction conditions are 26
met; or 27 UNOFFICIAL COPY 23 RS HB 360/GA
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ii. Maintain the current tax rate, if the reduction conditions are 1
not met]. 2
4. a. If the reduction conditions have been met for fiscal year 2022-3
2023, the General Assembly may take action to reduce the rate in 4
paragraph (c) of this subsection for the taxable year beginning 5
January 1, 2025. 6
b. If the reduction conditions have not been met for fiscal year 7
2022-2023 or the General Assembly does not take action to 8
reduce the rate in paragraph (c) of this subsection, the 9
department shall maintain the rate in paragraph (c) of this 10
subsection for the taxable year beginning January 1, 2025. 11
5. a.[(c) 1.] The Office of State Budget Director[department] shall 12
implement an annual process to review and report future reduction 13
conditions at the same time and in the same manner for each fiscal 14
year subsequent to the fiscal year 2022-2023 and each taxable 15
year subsequent to the taxable year beginning January 1, 2025. 16
b. The department shall not implement an income tax rate 17
reduction without an action by the General Assembly. 18
c. The annual process shall continue until the income tax rate is 19
zero[as under paragraph (b) of this subsection, except that the 20
department shall use the next succeeding year related to the dates 21
for review and reporting and the next succeeding fiscal year data 22
to evaluate the reduction conditions]. 23
[2. Notwithstanding subparagraph 1. of this paragraph, the department shall 24
not implement an income tax rate reduction without a future action by 25
the General Assembly.] 26
(e)[(d)] For taxable years beginning on or after January 1, 2018, but before 27 UNOFFICIAL COPY 23 RS HB 360/GA
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January 1, 2023, the tax shall be five percent (5%) of net income. 1
(f)[(e)] For taxable years beginning after December 31, 2004, and before 2
January 1, 2018, the tax shall be determined by applying the following rates to 3
net income: 4
1. Two percent (2%) of the amount of net income up to three thousand 5
dollars ($3,000); 6
2. Three percent (3%) of the amount of net income over three thousand 7
dollars ($3,000) and up to four thousand dollars ($4,000); 8
3. Four percent (4%) of the amount of net income over four thousand 9
dollars ($4,000) and up to five thousand dollars ($5,000); 10
4. Five percent (5%) of the amount of net income over five thousand 11
dollars ($5,000) and up to eight thousand dollars ($8,000); 12
5. Five and eight-tenths percent (5.8%) of the amount of net income over 13
eight thousand dollars ($8,000) and up to seventy-five thousand dollars 14
($75,000); and 15
6. Six percent (6%) of the amount of net income over seventy-five 16
thousand dollars ($75,000). 17
(3) (a) The following tax credits, when applicable, shall be deducted from the result 18
obtained under subsection (2) of this section to arrive at the annual tax: 19
1. a. For taxable years beginning before January 1, 2014, twenty dollars 20
($20) for an unmarried individual; and 21
b. For taxable years beginning on or after January 1, 2014, and 22
before January 1, 2018, ten dollars ($10) for an unmarried 23
individual; 24
2. a. For taxable years beginning before January 1, 2014, twenty dollars 25
($20) for a married individual filing a separate return and an 26
additional twenty dollars ($20) for the spouse of taxpayer if a 27 UNOFFICIAL COPY 23 RS HB 360/GA
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separate return is made by the taxpayer and if the spouse, for the 1
calendar year in which the taxable year of the taxpayer begins, had 2
no Kentucky gross income and is not the dependent of another 3
taxpayer; or forty dollars ($40) for married persons filing a joint 4
return, provided neither spouse is the dependent of another 5
taxpayer. The determination of marital status for the purpose of 6
this section shall be made in the manner prescribed in Section 153 7
of the Internal Revenue Code; and 8
b. For taxable years beginning on or after January 1, 2014, and 9
before January 1, 2018, ten dollars ($10) for a married individual 10
filing a separate return and an additional ten dollars ($10) for the 11
spouse of a taxpayer if a separate return is made by the taxpayer 12
and if the spouse, for the calendar year in which the taxable year of 13
the taxpayer begins, had no Kentucky gross income and is not the 14
dependent of another taxpayer; or twenty dollars ($20) for married 15
persons filing a joint return, provided neither spouse is the 16
dependent of another taxpayer. The determination of marital status 17
for the purpose of this section shall be made in the manner 18
prescribed in Section 153 of the Internal Revenue Code; 19
3. a. For taxable years beginning before January 1, 2014, twenty dollars 20
($20) credit for each dependent. No credit shall be allowed for any 21
dependent who has made a joint return with his or her spouse; and 22
b. For taxable years beginning on or after January 1, 2014, and 23
before January 1, 2018, ten dollars ($10) credit for each 24
dependent. No credit shall be allowed for any dependent who has 25
made a joint return with his or her spouse; 26
4. An additional forty dollars ($40) credit if the taxpayer has attained the 27 UNOFFICIAL COPY 23 RS HB 360/GA
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age of sixty-five (65) before the close of the taxable year; 1
5. An additional forty dollars ($40) credit for taxpayer's spouse if a 2
separate return is made by the taxpayer and if the taxpayer's spouse has 3
attained the age of sixty-five (65) before the close of the taxable year, 4
and, for the calendar year in which the taxable year of the taxpayer 5
begins, has no Kentucky gross income and is not the dependent of 6
another taxpayer; 7
6. An additional forty dollars ($40) credit if the taxpayer is blind at the 8
close of the taxable year; 9
7. An additional forty dollars ($40) credit for taxpayer's spouse if a 10
separate return is made by the taxpayer and if the taxpayer's spouse is 11
blind, and, for the calendar year in which the taxable year of the 12
taxpayer begins, has no Kentucky gross income and is not the dependent 13
of another taxpayer; and 14
8. An additional twenty dollars ($20) credit shall be allowed if the taxpayer 15
is a member of the Kentucky National Guard at the close of the taxable 16
year. 17
(b) In the case of nonresidents, the tax credits allowable under this subsection 18
shall be the portion of the credits that are represented by the ratio of the 19
taxpayer's Kentucky adjusted gross income as determined by KRS 141.019 to 20
the taxpayer's adjusted gross income as defined in Section 62 of the Internal 21
Revenue Code. However, in the case of a married nonresident taxpayer with 22
income from Kentucky sources, whose spouse has no income from Kentucky 23
sources, the taxpayer shall determine allowable tax credit(s) by either: 24
1. The method contained above applied to the taxpayer's tax credit(s), 25
excluding credits for a spouse and dependents; or 26
2. Prorating the taxpayer's tax credit(s) plus the tax credits for the 27 UNOFFICIAL COPY 23 RS HB 360/GA
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taxpayer's spouse and dependents by the ratio of the taxpayer's 1
Kentucky adjusted gross income as determined by KRS 141.019 to the 2
total joint federal adjusted gross income of the taxpayer and the 3
taxpayer's spouse. 4
(c) In the case of a part-year resident, the tax credits allowable under this 5
subsection shall be the portion of the credits represented by the ratio of the 6
taxpayer's Kentucky adjusted gross income as determined by KRS 141.019 to 7
the taxpayer's adjusted gross income as defined in Section 62 of the Internal 8
Revenue Code. 9
(4) An annual tax shall be paid for each taxable year as specified in this section upon 10
the entire net income except as herein provided, from all tangible property located 11
in this state, from all intangible property that has acquired a business situs in this 12
state, and from business, trade, profession, occupation, or other activities carried on 13
in this state, by natural persons not residents of this state. A nonresident individual 14
shall be taxable only upon the amount of income received by the individual from 15
labor performed, business done, or from other activities in this state, from tangible 16
property located in this state, and from intangible property which has acquired a 17
business situs in this state; provided, however, that the situs of intangible personal 18
property shall be at the residence of the real or beneficial owner and not at the 19
residence of a trustee having custody or possession thereof. For taxable years 20
beginning on or after January 1, 2021, but before January 1, 2025, the tax imposed 21
by this section shall not apply to a disaster response employee or to a disaster 22
response business. The remainder of the income received by such nonresident shall 23
be deemed nontaxable by this state. 24
(5) Subject to the provisions of KRS 141.081, any individual may elect to pay the 25
annual tax imposed by KRS 141.023 in lieu of the tax levied under this section. 26
(6) A part-year resident is subject to taxation, as prescribed in subsection (1) of this 27 UNOFFICIAL COPY 23 RS HB 360/GA
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section, during that portion of the taxable year that the individual is a resident and, 1
as prescribed in subsection (4) of this section, during that portion of the taxable year 2
when the individual is a nonresident. 3
Section 23. KRS 148.853 is amended to read as follows: 4
(1) The General Assembly finds and declares that: 5
(a) The general welfare and material well-being of the citizens of the 6
Commonwealth depend in large measure upon the development of tourism in 7
the Commonwealth; 8
(b) It is in the best interest of the Commonwealth to provide incentives for the 9
creation of new tourism attractions and the expansion of existing tourism 10
attractions within the Commonwealth in order to advance the public purposes 11
of relieving unemployment by preserving and creating jobs that would not 12
exist if not for the incentives offered by the authority to approved companies, 13
and by preserving and creating sources of tax revenues for the support of 14
public services provided by the Commonwealth; 15
(c) The authorities granted by KRS 148.851 to 148.860 are proper governmental 16
and public purposes for which public moneys may be expended; and 17
(d) That the creation or expansion of tourism development projects is of 18
paramount importance mandating that the provisions of KRS 139.536 and 19
KRS 148.851 to 148.860 be liberally construed and applied in order to 20
advance public purposes. 21
(2) To qualify for incentives provided in KRS 139.536 and 148.851 to 148.860, the 22
following requirements shall be met: 23
(a) For a tourism attraction project: 24
1. The total eligible costs shall exceed one million dollars ($1,000,000), 25
except for a tourism attraction project located in a county designated as 26
an enhanced incentive county at the time the eligible company becomes 27 UNOFFICIAL COPY 23 RS HB 360/GA
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an approved company as provided in KRS 148.857(6), the total eligible 1
costs shall exceed five hundred thousand dollars ($500,000); 2
2. In any year, including the first year of operation, the tourism attraction 3
project shall be open to the public at least one hundred (100) days; and 4
3. In any year following the third year of operation, the tourism attraction 5
project shall attract at least twenty-five percent (25%) of its visitors 6
from among persons who are not residents of the Commonwealth; 7
(b) For an entertainment destination center project: 8
1. The total eligible costs shall exceed five million dollars ($5,000,000); 9
2. The facility shall contain a minimum of two hundred thousand 10
(200,000) square feet of building space adjacent or complementary to an 11
existing tourism attraction project or a major convention facility; 12
3. The incentives shall be dedicated to a public infrastructure purpose that 13
shall relate to the entertainment destination center project; 14
4. In any year, including the first year of operation, the entertainment 15
destination center project shall: 16
a. Be open to the public at least one hundred (100) days per year; 17
b. Maintain at least one (1) major theme restaurant and at least three 18
(3) additional entertainment venues, including but not limited to 19
live entertainment, multiplex theaters, large-format theater, motion 20
simulators, family entertainment centers, concert halls, virtual 21
reality or other interactive games, museums, exhibitions, or other 22
cultural and leisure-time activities; and 23
c. Maintain a minimum occupancy of sixty percent (60%) of the total 24
gross area available for lease with entertainment and food and 25
drink options not including the retail sale of tangible personal 26
property; and 27 UNOFFICIAL COPY 23 RS HB 360/GA
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5. In any year following the third year of operation, the entertainment 1
destination center project shall attract at least twenty-five percent (25%) 2
of its visitors from among persons who are not residents of the 3
Commonwealth; 4
(c) For a theme restaurant destination attraction project: 5
1. The total eligible costs shall exceed five million dollars ($5,000,000); 6
2. In any year, including the first year of operation, the attraction shall: 7
a. Be open to the public at least three hundred (300) days per year 8
and for at least eight (8) hours per day; and 9
b. Generate no more than fifty percent (50%) of its revenue through 10
the sale of alcoholic beverages; 11
3. In any year following the third year of operation, the theme restaurant 12
destination attraction project shall attract a minimum of fifty percent 13
(50%) of its visitors from among persons who are not residents of the 14
Commonwealth; and 15
4. The theme restaurant destination attraction project shall: 16
a. At the time of final approval, offer a unique dining experience that 17
is not available in the Commonwealth within a one hundred (100) 18
mile radius of the attraction; 19
b. In any year, including the first year of operation, maintain seating 20
capacity of four hundred fifty (450) guests and offer live music or 21
live musical and theatrical entertainment during the peak business 22
hours that the facility is in operation and open to the public; or 23
c. Within three (3) years of the completion date, the attraction shall 24
obtain a top two (2) tier rating by a nationally accredited service 25
and shall maintain a top two (2) tier rating through the term of the 26
agreement; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(d) For a lodging facility project: 1
1. a. The eligible costs shall exceed five million dollars ($5,000,000) 2
unless the provisions of subdivision b. of this subparagraph apply. 3
b. i. If the lodging facility is an integral part of a major 4
convention or sports facility, the eligible costs shall exceed six 5
million dollars ($6,000,000); and 6
ii. If the lodging facility includes five hundred (500) or more 7
guest rooms, the eligible costs shall exceed ten million 8
dollars ($10,000,000); and 9
2. In any year, including the first year of operation, the lodging facility 10
shall: 11
a. Be open to the public at least one hundred (100) days; and 12
b. Attract at least twenty-five percent (25%) of its visitors from 13
among persons who are not residents of the Commonwealth; 14
(e) Any tourism development project shall not be eligible for incentives if it 15
includes material determined to be lewd, offensive, or deemed to have a 16
negative impact on the tourism industry in the Commonwealth; and 17
(f) An expansion of any tourism development project shall in all cases be treated 18
as a new stand-alone project. 19
(3) The incentives offered under the Kentucky Tourism Development Act shall be as 20
follows: 21
(a) An approved company may be granted a sales tax incentive based on the 22
Kentucky sales tax imposed on sales generated by or arising at the tourism 23
development project; and 24
(b) 1. For a tourism development project other than a lodging facility project 25
described in KRS 148.851(14)(e) or (f), or a tourism attraction project 26
described in subparagraph 2. of this paragraph: 27 UNOFFICIAL COPY 23 RS HB 360/GA
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a. A sales tax incentive shall be allowed to an approved company 1
over a period of ten (10) years, except as provided in 2
subparagraphs[subparagraph] 5. and 6. of this paragraph; and 3
b. The sales tax incentive shall not exceed the lesser of the total 4
amount of the sales tax liability of the approved company and its 5
lessees or a percentage of the approved costs as specified by the 6
agreement, not to exceed twenty-five percent (25%); 7
2. For a tourism attraction project located in an enhanced incentive county 8
at the time the eligible company becomes an approved company as 9
provided in KRS 148.857(6): 10
a. A sales tax incentive shall be allowed to the approved company 11
over a period of ten (10) years; and 12
b. The sales tax incentive shall not exceed the lesser of the total 13
amount of the sales tax liability of the approved company and its 14
lessees or a percentage of the approved costs as specified by the 15
agreement, not to exceed thirty percent (30%); 16
3. For a lodging facility project described in KRS 148.851(14)(e) or (f): 17
a. A sales tax incentive shall be allowed to the approved company 18
over a period of twenty (20) years; and 19
b. The sales tax incentive shall not exceed the lesser of total amount 20
of the sales tax liability of the approved company and its lessees or 21
a percentage of the approved costs as specified by the agreement, 22
not to exceed fifty percent (50%); 23
4. Any unused incentives from a previous year may be carried forward to 24
any succeeding year during the term of the agreement until the entire 25
specified percentage of the approved costs has been received through 26
sales tax incentives;[ and] 27 UNOFFICIAL COPY 23 RS HB 360/GA
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5. If the approved company is an entertainment destination center that has 1
dedicated at least thirty million dollars ($30,000,000) of the incentives 2
provided under the agreement to a public infrastructure purpose, the 3
agreement may be amended to extend the term of the agreement up to 4
two (2) additional years if the approved company agrees to: 5
a. Reinvest in the original entertainment destination project one 6
hundred percent (100%) of any incentives received during the 7
extension that were outstanding at the end of the original term of 8
the agreement; and 9
b. Report to the authority at the end of each fiscal year the amount of 10
incentives received during the extension and how the incentives 11
were reinvested in the original entertainment destination project; 12
and 13
6. The term of a tourism development agreement entered into with a 14
tourism attraction project that was in effect on January 1, 2020, shall 15
be extended for one (1) year if the tourism attraction project: 16
a. Has historically been open to the public on a seasonal basis 17
consisting of less than six (6) months; 18
b. Has previously met the requirement of being open to the public 19
at least one hundred (100) days during the entire term of the 20
tourism development agreement as required under subsection 21
(2)(a)2. of this section; 22
c. Failed to be open to the public at least one hundred (100) days 23
during the calendar year 2020 solely as a result of complying 24
with one (1) or more executive orders issued by the Governor 25
under the authority of KRS 39A.090 that prevented the tourism 26
attraction project from being open to the public for at least one 27 UNOFFICIAL COPY 23 RS HB 360/GA
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hundred (100) days during its normal operating season; and 1
d. Applied for a sales tax incentive related to the calendar year 2
2020 operating season and was denied the sales tax incentive 3
solely on the basis that the tourism attraction project was not 4
open to the public for at least one hundred (100) days in 5
calendar year 2020. 6
Section 24. KRS 139.210 is amended to read as follows: 7
(1) Except as provided in subsections[subsection] (2) and (3) of this section, the tax 8
shall be required to be collected by the retailer from the purchaser. The tax shall be 9
displayed separately from the sales price, the price advertised in the premises, the 10
marked price, or other price on the sales receipt or other proof of sales. 11
(2) The department may relieve certain retailers from the requirement in[provisions of] 12
subsection (1) of this section of separate display of the tax when the circumstances 13
of the retailer make compliance impracticable. If the retailer establishes to the 14
satisfaction of the department that the sales tax has been added to the total amount 15
of the sales price and has not been absorbed by the retailer, the amount of the sales 16
price shall be the amount received exclusive of the tax imposed. 17
(3) Retailers that provide road and travel services that are taxable under Section 8 of 18
this Act shall not be required to state the tax separately from the sales price if the 19
retailer can establish and provide evidence that the sales tax has been added to 20
the total amount of the sales price charged to the purchaser and has not been 21
absorbed by the retailer. The amount of the sales price shall be the amount 22
received exclusive of the tax imposed. 23
(4) The taxes collected under this section shall be deemed to be held in trust by the 24
retailer for and on account of the Commonwealth. 25
(5)[(4)] The taxes to be collected under this section shall constitute a debt of the 26
retailer to the Commonwealth. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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Section 25. KRS 138.450 is amended to read as follows: 1
As used in KRS 138.455 to 138.470, unless the context requires otherwise: 2
(1) "Current model year" means a motor vehicle of either the model year corresponding 3
to the current calendar year or of the succeeding calendar year, if the same model 4
and make is being offered for sale by local dealers; 5
(2) "Dealer" means "motor vehicle dealer" as defined in KRS 190.010; 6
(3) "Dealer demonstrator" means a new motor vehicle or a previous model year motor 7
vehicle with an odometer reading of least one thousand (1,000) miles that has been 8
used either by representatives of the manufacturer or by a licensed Kentucky dealer, 9
franchised to sell the particular model and make, for demonstration; 10
(4) "Historic motor vehicle" means a motor vehicle registered and licensed pursuant to 11
KRS 186.043; 12
(5) "Motor vehicle" means: 13
(a) Any vehicle that is propelled by other than muscular power and that is used 14
for transportation of persons or property over the public highways of the state, 15
except road rollers, mopeds, vehicles that travel exclusively on rails, and 16
vehicles propelled by electric power obtained from overhead wires; or 17
(b) Recreational vehicles; 18
(6) "Moped" means either a motorized bicycle whose frame design may include one (1) 19
or more horizontal crossbars supporting a fuel tank so long as it also has pedals, or 20
a motorized bicycle with a step through type frame which may or may not have 21
pedals rated no more than two (2) brake horsepower, a cylinder capacity not 22
exceeding fifty (50) cubic centimeters, an automatic transmission not requiring 23
clutching or shifting by the operator after the drive system is engaged, and capable 24
of a maximum speed of not more than thirty (30) miles per hour; 25
(7) "New motor vehicle" means a motor vehicle of the current model year which has 26
not previously been registered in any state or country; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(8) "Previous model year motor vehicle" means a motor vehicle not previously 1
registered in any state or country which is neither of the current model year nor a 2
dealer demonstrator; 3
(9) "Total consideration given" means the amount given, valued in money, whether 4
received in money or otherwise, at the time of purchase or at a later date, including 5
consideration given for all equipment and accessories, standard and optional. "Total 6
consideration given" shall not include: 7
(a) Any amount allowed as a manufacturer or dealer rebate if the rebate is 8
provided at the time of purchase and is applied to the purchase of the motor 9
vehicle; 10
(b) Any interest payments to be made over the life of a loan for the purchase of a 11
motor vehicle; and 12
(c) The value of any items that are not equipment or accessories including but not 13
limited to extended warranties, service contracts, and items that are given 14
away as part of a promotional sales campaign; 15
(10) "Trade-in allowance" means: 16
(a) The value assigned by the seller of a motor vehicle to a motor vehicle 17
registered to the purchaser and offered in trade by the purchaser as part of the 18
total consideration given by the purchaser and included in the notarized 19
affidavit attesting to total consideration given; or 20
(b) In the absence of a notarized affidavit, the value of the vehicle being offered 21
in trade as established by the department through the use of the reference 22
manual; 23
(11) "Used motor vehicle" means a motor vehicle which has been previously registered 24
in any state or country; 25
(12) "Retail price" for: 26
(a) New motor vehicles; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(b) Dealer demonstrator vehicles; 1
(c) Previous model year motor vehicles; and 2
(d) U-Drive-It motor vehicles that have been transferred within one hundred 3
eighty (180) days of being registered as a U-Drive-It and that have less than 4
five thousand (5,000) miles; 5
means the total consideration given, as determined in KRS 138.4603; 6
(13) "Retail price" for historic motor vehicles shall be one hundred dollars ($100); 7
(14) "Retail price" for used motor vehicles being titled or registered by a new resident 8
for the first time in Kentucky whose values appear in the reference manual means 9
the trade-in value given in the reference manual; 10
(15) "Retail price" for older used motor vehicles being titled or registered by a new 11
resident for the first time in Kentucky whose values no longer appear in the 12
reference manual shall be one hundred dollars ($100); 13
(16) (a) "Retail price" for: 14
1. Used motor vehicles, except those vehicles for which the retail price is 15
established in subsection (13), (14), (15), (17), or (19) of this section; 16
and 17
2. U-Drive-It motor vehicles that are not transferred within one hundred 18
eighty (180) days of being registered as a U-Drive-It or that have more 19
than five thousand (5,000) miles; 20
means the total consideration given, excluding any amount allowed as a trade-21
in allowance by the seller, as attested to in a notarized affidavit, provided that 22
the retail price established by the notarized affidavit shall not be less than fifty 23
percent (50%) of the difference between the trade-in value, as established by 24
the reference manual, of the motor vehicle offered for registration and the 25
trade-in value, as established by the reference manual, of any motor vehicle 26
offered in trade as part of the total consideration given. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(b) The trade-in allowance shall also be disclosed in the notarized affidavit. 1
(c) If a notarized affidavit is not available, "retail price" shall be established by 2
the department through the use of the reference manual; 3
(17) Except as provided in KRS 138.470(6), if a motor vehicle is received by an 4
individual as a gift and not purchased or leased by the individual, "retail price" shall 5
be the trade-in value given in the reference manual; 6
(18) If a dealer transfers a motor vehicle which he has registered as a loaner or rental 7
motor vehicle within one hundred eighty (180) days of the registration, and if less 8
than five thousand (5,000) miles have been placed on the vehicle during the period 9
of its registration as a loaner or rental motor vehicle, then the "retail price" of the 10
vehicle shall be the same as the retail price determined by paragraph (a) of 11
subsection (12) of this section computed as of the date on which the vehicle is 12
transferred; 13
(19) "Retail price" for motor vehicles titled pursuant to KRS 186A.520, 186A.525, 14
186A.530, or 186A.555 means the total consideration given as attested to in a 15
notarized affidavit; 16
(20) "Loaner or rental motor vehicle" means a motor vehicle owned or registered by a 17
dealer and which is regularly loaned or rented to customers of the service or repair 18
component of the dealership; 19
(21) "Department" means the Department of Revenue; 20
(22) "Notarized affidavit" means a dated affidavit signed by the buyer and the seller on 21
which the signature of the buyer and the signature of the seller are individually 22
notarized;[ and] 23
(23) "Reference manual" means the automotive reference manual prescribed by the 24
department; and 25
(24) "Recreational vehicle" means any motor home, travel trailer, fifth-wheel trailer, 26
pull-behind camper, or pop-up camping trailer, which: 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(a) Contains living quarters; and 1
(b) Is required to be licensed for use on the public highways. 2
Section 26. KRS 132.010 is amended to read as follows: 3
As used in this chapter, unless the context otherwise requires: 4
(1) "Department" means the Department of Revenue; 5
(2) "Taxpayer" means any person made liable by law to file a return or pay a tax; 6
(3) "Real property" includes all lands within this state and improvements thereon; 7
(4) "Personal property" includes every species and character of property, tangible and 8
intangible, other than real property; 9
(5) "Resident" means any person who has taken up a place of abode within this state 10
with the intention of continuing to abide in this state; any person who has had his or 11
her actual or habitual place of abode in this state for the larger portion of the twelve 12
(12) months next preceding the date as of which an assessment is due to be made 13
shall be deemed to have intended to become a resident of this state; 14
(6) "Compensating tax rate" means that rate which, rounded to the next higher one-15
tenth of one cent ($0.001) per one hundred dollars ($100) of assessed value and 16
applied to the current year's assessment of the property subject to taxation by a 17
taxing district, excluding new property and personal property, produces an amount 18
of revenue approximately equal to that produced in the preceding year from real 19
property. However, in no event shall the compensating tax rate be a rate which, 20
when applied to the total current year assessment of all classes of taxable property, 21
produces an amount of revenue less than was produced in the preceding year from 22
all classes of taxable property. For purposes of this subsection, "property subject to 23
taxation" means the total fair cash value of all property subject to full local rates, 24
less the total valuation exempted from taxation by the homestead exemption 25
provision of the Constitution and the difference between the fair cash value and 26
agricultural or horticultural value of agricultural or horticultural land; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(7) "Net assessment growth" means the difference between: 1
(a) The total valuation of property subject to taxation by the county, city, school 2
district, or special district in the preceding year, less the total valuation 3
exempted from taxation by the homestead exemption provision of the 4
Constitution in the current year over that exempted in the preceding year; and 5
(b) The total valuation of property subject to taxation by the county, city, school 6
district, or special district for the current year; 7
(8) "New property" means the net difference in taxable value between real property 8
additions and deletions to the property tax roll for the current year. "Real property 9
additions" shall mean: 10
(a) Property annexed or incorporated by a municipal corporation, or any other 11
taxing jurisdiction; however, this definition shall not apply to property 12
acquired through the merger or consolidation of school districts, or the 13
transfer of property from one (1) school district to another; 14
(b) Property, the ownership of which has been transferred from a tax-exempt 15
entity to a nontax-exempt entity; 16
(c) The value of improvements to existing nonresidential property; 17
(d) The value of new residential improvements to property; 18
(e) The value of improvements to existing residential property when the 19
improvement increases the assessed value of the property by fifty percent 20
(50%) or more; 21
(f) Property created by the subdivision of unimproved property, provided, that 22
when the property is reclassified from farm to subdivision by the property 23
valuation administrator, the value of the property as a farm shall be a deletion 24
from that category; 25
(g) Property exempt from taxation, as an inducement for industrial or business 26
use, at the expiration of its tax exempt status; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(h) Property, the tax rate of which will change, according to the provisions of 1
KRS 82.085, to reflect additional urban services to be provided by the taxing 2
jurisdiction, provided, however, that the property shall be considered "real 3
property additions" only in proportion to the additional urban services to be 4
provided to the property over the urban services previously provided; and 5
(i) The value of improvements to real property previously under assessment 6
moratorium. 7
"Real property deletions" shall be limited to the value of real property removed 8
from, or reduced over the preceding year on, the property tax roll for the current 9
year; 10
(9) "Agricultural land" means: 11
(a) Any tract of land, including all income-producing improvements, of at least 12
ten (10) contiguous acres in area used for the production of livestock, 13
livestock products, poultry, poultry products and/or the growing of tobacco 14
and/or other crops including timber; 15
(b) Any tract of land, including all income-producing improvements, of at least 16
five (5) contiguous acres in area commercially used for aquaculture; or 17
(c) Any tract of land devoted to and meeting the requirements and qualifications 18
for payments pursuant to agriculture programs under an agreement with the 19
state or federal government; 20
(10) "Horticultural land" means any tract of land, including all income-producing 21
improvements, of at least five (5) contiguous acres in area commercially used for 22
the cultivation of a garden, orchard, or the raising of fruits or nuts, vegetables, 23
flowers, or ornamental plants; 24
(11) "Agricultural or horticultural value" means the use value of "agricultural or 25
horticultural land" based upon income-producing capability and comparable sales 26
of farmland purchased for farm purposes where the price is indicative of farm use 27 UNOFFICIAL COPY 23 RS HB 360/GA
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value, excluding sales representing purchases for farm expansion, better 1
accessibility, and other factors which inflate the purchase price beyond farm use 2
value, if any, considering the following factors as they affect a taxable unit: 3
(a) Relative percentages of tillable land, pasture land, and woodland; 4
(b) Degree of productivity of the soil; 5
(c) Risk of flooding; 6
(d) Improvements to and on the land that relate to the production of income; 7
(e) Row crop capability including allotted crops other than tobacco; 8
(f) Accessibility to all-weather roads and markets; and 9
(g) Factors which affect the general agricultural or horticultural economy, such 10
as: interest, price of farm products, cost of farm materials and supplies, labor, 11
or any economic factor which would affect net farm income; 12
(12) "Deferred tax" means the difference in the tax based on agricultural or horticultural 13
value and the tax based on fair cash value; 14
(13) "Homestead" means real property maintained as the permanent residence of the 15
owner with all land and improvements adjoining and contiguous thereto including 16
but not limited to lawns, drives, flower or vegetable gardens, outbuildings, and all 17
other land connected thereto; 18
(14) "Residential unit" means all or that part of real property occupied as the permanent 19
residence of the owner; 20
(15) "Special benefits" are those which are provided by public works not financed 21
through the general tax levy but through special assessments against the benefited 22
property; 23
(16) "Manufactured home" means a structure manufactured after June 15, 1976, in 24
accordance with the National Manufactured Housing Construction and Safety 25
Standards Act, transportable in one (1) or more sections, which when erected on 26
site measures eight (8) body feet or more in width and thirty-two (32) body feet or 27 UNOFFICIAL COPY 23 RS HB 360/GA
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more in length, and which is built on a permanent chassis and designed to be used 1
as a dwelling, with or without a permanent foundation, when connected to the 2
required utilities, and includes the plumbing, heating, air-conditioning, and 3
electrical systems contained therein. It may be used as a place of residence, 4
business, profession, or trade by the owner, lessee, or their assignees and may 5
consist of one (1) or more units that can be attached or joined together to comprise 6
an integral unit or condominium structure; 7
(17) "Mobile home" means a structure manufactured on or before June 15, 1976, that 8
was not required to be constructed in accordance with the National Manufactured 9
Housing Construction and Safety Standards Act, transportable in one (1) or more 10
sections, which when erected on site measures eight (8) body feet or more in width 11
and thirty-two (32) body feet or more in length, and which is built on a permanent 12
chassis and designed to be used as a dwelling, with or without a permanent 13
foundation, when connected to the required utilities, and includes the plumbing, 14
heating, air-conditioning, and electrical systems contained therein. It may be used 15
as a place of residence, business, profession, or trade by the owner, lessee, or their 16
assigns and may consist of one (1) or more units that can be attached or joined 17
together to comprise an integral unit or condominium structure; 18
(18) "Modular home" means a structure which is certified by its manufacturer as being 19
constructed in accordance with all applicable provisions of the Kentucky Building 20
Code and standards adopted by the local authority which has jurisdiction, 21
transportable in one (1) or more sections, and designed to be used as a dwelling on 22
a permanent foundation when connected to the required utilities, and includes the 23
plumbing, heating, air-conditioning, and electrical systems contained therein; 24
(19) "Prefabricated home" means a manufactured home, a mobile home, or a modular 25
home; 26
(20) "Recreational vehicle" means a vehicular type unit primarily designed as temporary 27 UNOFFICIAL COPY 23 RS HB 360/GA
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living quarters for recreational, camping, or travel use, which either has its own 1
motive power or is mounted on or drawn by another vehicle. The basic entities are: 2
travel trailer, camping trailer, truck camper, and motor home. As used in this 3
subsection: 4
(a) "Travel trailer" means a vehicular unit, mounted on wheels, designed to 5
provide temporary living quarters for recreational, camping, or travel use, and 6
of a size or weight that does not require special highway movement permits 7
when drawn by a motorized vehicle, and with a living area of less than two 8
hundred twenty (220) square feet, excluding built-in equipment (such as 9
wardrobes, closets, cabinets, kitchen units or fixtures) and bath and toilet 10
rooms; 11
(b) "Camping trailer" means a vehicular portable unit mounted on wheels and 12
constructed with collapsible partial side walls which fold for towing by 13
another vehicle and unfold at the camp site to provide temporary living 14
quarters for recreational, camping, or travel use; 15
(c) "Truck camper" means a portable unit constructed to provide temporary living 16
quarters for recreational, travel, or camping use, consisting of a roof, floor, 17
and sides, designed to be loaded onto and unloaded from the bed of a pick-up 18
truck; and 19
(d) "Motor home" means a vehicular unit designed to provide temporary living 20
quarters for recreational, camping, or travel use built on or permanently 21
attached to a self-propelled motor vehicle chassis or on a chassis cab or van 22
which is an integral part of the completed vehicle; 23
(21) "Hazardous substances" shall have the meaning provided in KRS 224.1-400; 24
(22) "Pollutant or contaminant" shall have the meaning provided in KRS 224.1-400; 25
(23) "Release" shall have the meaning as provided in either or both KRS 224.1-400 and 26
KRS 224.60-115; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(24) "Qualifying voluntary environmental remediation property" means real property 1
subject to the provisions of KRS 224.1-400 and 224.1-405, or 224.60-135 where the 2
Energy and Environment Cabinet has made a determination that: 3
(a) All releases of hazardous substances, pollutants, contaminants, petroleum, or 4
petroleum products at the property occurred prior to the property owner's 5
acquisition of the property; 6
(b) The property owner has made all appropriate inquiry into previous ownership 7
and uses of the property in accordance with generally accepted practices prior 8
to the acquisition of the property; 9
(c) The property owner or a responsible party has provided all legally required 10
notices with respect to hazardous substances, pollutants, contaminants, 11
petroleum, or petroleum products found at the property; 12
(d) The property owner is in compliance with all land use restrictions and does 13
not impede the effectiveness or integrity of any institutional control; 14
(e) The property owner complied with any information request or administrative 15
subpoena under KRS Chapter 224; and 16
(f) The property owner is not affiliated with any person who is potentially liable 17
for the release of hazardous substances, pollutants, contaminants, petroleum, 18
or petroleum products on the property pursuant to KRS 224.1-400, 224.1-405, 19
or 224.60-135, through: 20
1. Direct or indirect familial relationship; 21
2. Any contractual, corporate, or financial relationship, excluding 22
relationships created by instruments conveying or financing title or by 23
contracts for sale of goods or services; or 24
3. Reorganization of a business entity that was potentially liable; 25
(25) "Intangible personal property" means stocks, mutual funds, money market funds, 26
bonds, loans, notes, mortgages, accounts receivable, land contracts, cash, credits, 27 UNOFFICIAL COPY 23 RS HB 360/GA
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patents, trademarks, copyrights, tobacco base, allotments, annuities, deferred 1
compensation, retirement plans, and any other type of personal property that is not 2
tangible personal property; 3
(26) (a) "County" means any county, consolidated local government, urban-county 4
government, unified local government, or charter county government; 5
(b) "Fiscal court" means the legislative body of any county, consolidated local 6
government, urban-county government, unified local government, or charter 7
county government; and 8
(c) "County judge/executive" means the chief executive officer of any county, 9
consolidated local government, urban-county government, unified local 10
government, or charter county government; 11
(27) "Taxing district" means any entity with the authority to levy a local ad valorem tax, 12
including special purpose governmental entities; 13
(28) "Special purpose governmental entity" shall have the same meaning as in KRS 14
65A.010, and as used in this chapter shall include only those special purpose 15
governmental entities with the authority to levy ad valorem taxes, and that are not 16
specifically exempt from the provisions of this chapter by another provision of the 17
Kentucky Revised Statutes; 18
(29) (a) "Broadcast" means the transmission of audio, video, or other signals, through 19
any electronic, radio, light, or similar medium or method now in existence or 20
later devised over the airwaves to the public in general. 21
(b) "Broadcast" shall not apply to operations performed by multichannel video 22
programming service providers as defined in KRS 136.602 or any other 23
operations that transmit audio, video, or other signals, exclusively to persons 24
for a fee; 25
(30) "Livestock" means cattle, sheep, swine, goats, horses, alpacas, llamas, buffaloes, 26
and any other animals of the bovine, ovine, porcine, caprine, equine, or camelid 27 UNOFFICIAL COPY 23 RS HB 360/GA
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species; 1
(31) "Heavy equipment rental agreement" means the short-term rental contract under 2
which qualified heavy equipment is rented without an operator for a period: 3
(a) Not to exceed three hundred sixty-five (365) days; or 4
(b) That is open-ended under the terms of the contract with no specified end date; 5
(32) "Heavy equipment rental company" means an entity that is primarily engaged in a 6
line of business described in Code 532412 or 532310 of the North American 7
Industry Classification System Manual in effect on January 1, 2019; 8
(33) "Qualified heavy equipment" means machinery and equipment, including ancillary 9
equipment and any attachments used in conjunction with the machinery and 10
equipment, that is: 11
(a) Primarily used and designed for construction, mining, forestry, or industrial 12
purposes, including but not limited to cranes, earthmoving equipment, well-13
drilling machinery and equipment, lifts, material handling equipment, pumps, 14
generators, and pollution-reducing equipment; and 15
(b) Held in a heavy equipment rental company's inventory for: 16
1. Rental under a heavy equipment rental agreement; or 17
2. Sale in the regular course of business; and 18
(34) "Veteran service organization" means an organization wholly dedicated to 19
advocating on behalf of military veterans and providing charitable programs in 20
honor and on behalf of military veterans; 21
(35) "Government restriction on use" means a limitation on the use of at least fifty 22
percent (50%) of the individual dwelling units of a multi-unit rental housing in 23
order to receive a federal or state government incentive based on low-income 24
renter restrictions, including the following government incentives: 25
(a) A tax credit under Section 42 of the Internal Revenue Code; 26
(b) Financing derived from exempt facility bonds for qualified residential 27 UNOFFICIAL COPY 23 RS HB 360/GA
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rental projects under Section 142 of the Internal Revenue Code; 1
(c) A low-interest loan under Section 235 or 236 of the National Housing Act 2
or Section 515 of the Housing Act of 1949; 3
(d) A rent subsidy; 4
(e) A guaranteed loan; 5
(f) A grant; or 6
(g) A guarantee; 7
(36) "Low income" means earning at or below eighty percent (80%) of the area 8
median income as defined by the United States Department of Housing and 9
Urban Development for the location of the multi-unit rental housing; and 10
(37) "Multi-unit rental housing" means residential property or project consisting of 11
four (4) or more individual dwelling units and does not include: 12
(a) Assisted living facilities; or 13
(b) Duplexes or single-family units unless they are included as part of a larger 14
property that is subject to government restriction on use. 15
Section 27. KRS 132.191 is amended to read as follows: 16
(1) The General Assembly recognizes that Section 172 of the Constitution of Kentucky 17
requires all property, not exempted from taxation by the Constitution, to be assessed 18
at one hundred percent (100%) of the fair cash value, estimated at the price the 19
property would bring at a fair voluntary sale, and that it is the responsibility of the 20
property valuation administrator to value property in accordance with the 21
Constitution. 22
(2) The General Assembly further recognizes that property valuation may be 23
determined using a variety of valid valuation methods, including but not limited to: 24
(a) A cost approach, which is a method of appraisal in which the estimated value 25
of the land is combined with the current depreciated reproduction or 26
replacement cost of improvements on the land; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(b) An income approach, which is a method of appraisal based on estimating the 1
present value of future benefits arising from the ownership of the property; 2
(c) A sales comparison approach, which is a method of appraisal based on a 3
comparison of the property with similar properties sold in the recent past;[ 4
and] 5
(d) A subdivision development approach, which is a method of appraisal of raw 6
land: 7
1. When subdivision and development are the highest and best use of the 8
parcel of raw land being appraised; and 9
2. When all direct and indirect costs and entrepreneurial incentives are 10
deducted from the estimated anticipated gross sales price of the finished 11
lots, and the resultant net sales proceeds are then discounted to present 12
value at a market-derived rate over the development and absorption 13
period; and 14
(e) The approaches listed in subsection (5) of this section for multi-unit rental 15
housing that is subject to government restriction on use. 16
(3) The valuation of a residential, commercial, or industrial tract development shall 17
meet the minimum applicable appraisal standards established by: 18
(a) The Kentucky Department of Revenue, as stated in its Guidelines for 19
Assessment of Vacant Lots, dated March 26, 2008; or 20
(b) The International Association of Assessing Officers. 21
(4) To be appraised using the subdivision development approach, a subdivision 22
development shall consist of five (5) or more units. The appraisal of the 23
development shall reflect deductions and discounts for: 24
(a) Holding costs, including interest and maintenance; 25
(b) Marketing costs, including commissions and advertising; and 26
(c) Entrepreneurial profit. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(5) (a) The property valuation of multi-unit rental housing that is subject to 1
government restriction on use may be determined: 2
1. a. Through an annual net operating income approach to value that 3
uses actual income and stabilized operating expenses that are 4
based on the actual history of the property, when available, and a 5
capitalization rate. 6
b. The methodology employed in the projection of income, 7
expenses, and capitalization rate used shall be consistent with 8
the Uniform Standards of Professional Appraisal Practice. 9
c. The capitalization rate shall be: 10
i. Based on the risks associated with multi-unit rental 11
housing subject to government restriction on use, including 12
diminished ownership control; income generating 13
potential; liquidity; the condition of the property; the class 14
of the property; and the property's location and size; 15
ii. Equal to or greater than the capitalization rate used for 16
valuing multi-unit rental housing that is not subject to 17
government restriction on use; and 18
iii. In the range of fifty (50) to one hundred fifty (150) basis 19
points above the most recent quarterly survey of the 20
national average cap rates of multifamily properties 21
published by realtyrates.com or a successor organization. 22
d. The department shall publish the capitalization rate range for 23
the property valuation administrators to use on its website at the 24
beginning of each year; or 25
2. By adjusting the unrestricted market value of the multi-unit rental 26
housing, computed without regard to any government restriction on 27 UNOFFICIAL COPY 23 RS HB 360/GA
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use applicable to the multi-unit rental housing, based on the ratio of 1
the average annual rent of those units of the property that are subject 2
to government restriction on use to the average annual rent of 3
comparable multi-unit rental housing that is not subject to 4
government restriction on use. 5
(b) Income tax credits received under Section 42 of the Internal Revenue Code 6
or from any state or federal program shall not be included in the methods 7
used under paragraph (a) of this subsection in determining the income 8
attributable to the multi-unit rental housing or in any separate intangible 9
assessment. 10
(c) 1. The owner of multi-unit rental housing shall: 11
a. Notify the property valuation administrator if: 12
i. The property is subject to government restriction on use; 13
ii. The property is no longer subject to government restriction 14
on use; or 15
iii. A foreclosure action has been brought upon the property; 16
and 17
b. File with the property valuation administrator, on a form 18
prescribed by the department, the information necessary for the 19
multi-unit rental housing to be valued based on the methods 20
described in paragraph (a) of this subsection. 21
2. The notification shall be in writing and submitted to the property 22
valuation administrator within sixty (60) days of the date on which the 23
applicable circumstance listed in subparagraph 1.a. i., ii., or iii. of this 24
paragraph occurred. 25
3. An owner who fails to comply with this paragraph may be subject to 26
penalties in an amount not to exceed two hundred dollars ($200) as 27 UNOFFICIAL COPY 23 RS HB 360/GA
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determined by the department. 1
(d) The department shall promulgate administrative regulations in accordance 2
with KRS Chapter 13A to adopt forms, penalties, and procedures to carry 3
out this subsection. 4
Section 28. KRS 154.30-010 is amended to read as follows: 5
As used in this subchapter: 6
(1) "Activation date" means: 7
(a) For all projects except those described in paragraph (b) of this subsection, the 8
date established any time within a two (2) year period after the 9
commencement date. The Commonwealth may extend the two (2) year period 10
to no more than four (4) years upon written application by the agency 11
requesting the extension; and 12
(b) For signature projects approved under KRS 154.30-050(2)(a), the date 13
established any time within a ten (10) year period after the commencement 14
date. 15
For all projects established after July 14, 2018, the activation date is the date on 16
which the time period for the pledge of incremental revenues shall commence. To 17
implement the activation date, the minimum capital investment must be met and the 18
agency that is a party to the tax incentive agreement shall notify the office; 19
(2) "Agency" means: 20
(a) An urban renewal and community development agency established under 21
KRS Chapter 99; 22
(b) A development authority established under KRS Chapter 99; 23
(c) A nonprofit corporation; 24
(d) A housing authority established under KRS Chapter 80; 25
(e) An air board established under KRS 183.132 to 183.160; 26
(f) A local industrial development authority established under KRS 154.50-301 27 UNOFFICIAL COPY 23 RS HB 360/GA
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to 154.50-346; 1
(g) A riverport authority established under KRS 65.510 to 65.650; or 2
(h) A designated department, division, or office of a city or county; 3
(3) "Approved public infrastructure costs" means costs associated with the acquisition, 4
installation, construction, or reconstruction of public works, public improvements, 5
and public buildings, including planning and design costs associated with the 6
development of such public amenities. "Approved public infrastructure costs" 7
includes but is not limited to costs incurred for the following: 8
(a) Land preparation, including demolition and clearance work; 9
(b) Buildings; 10
(c) Sewers and storm drainage; 11
(d) Curbs, sidewalks, promenades, and pedways; 12
(e) Roads; 13
(f) Street lighting; 14
(g) The provision of utilities; 15
(h) Environmental remediation; 16
(i) Floodwalls and floodgates; 17
(j) Public spaces or parks; 18
(k) Parking; 19
(l) Easements and rights-of-way; 20
(m) Transportation facilities; 21
(n) Public landings; 22
(o) Amenities, such as fountains, benches, and sculptures; and 23
(p) Riverbank modifications and improvements; 24
(4) "Approved signature project costs" means: 25
(a) The acquisition of land for portions of the project that are for infrastructure; 26
and 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(b) Costs associated with the acquisition, installation, development, construction, 1
improvement, or reconstruction of infrastructure, including planning and 2
design costs associated with the development of infrastructure, including but 3
not limited to parking structures, including portions of parking structures that 4
serve as platforms to support development above; 5
that have been determined by the commission to represent a unique challenge in the 6
financing of a project such that the project could not be developed without 7
incentives intended by this chapter to foster economic development; 8
(5) "Authority" means the Kentucky Economic Development Finance Authority 9
established by KRS 154.20-010; 10
(6) "Capital investment" means: 11
(a) Obligations incurred for labor and to contractors, subcontractors, builders, and 12
materialmen in connection with the acquisition, construction, installation, 13
equipping, and rehabilitation of a project; 14
(b) The cost of acquiring land or rights in land within the development area on the 15
footprint of the project, and any cost incident thereto, including recording 16
fees; 17
(c) The cost of contract bonds and of insurance of all kinds that may be required 18
or necessary during the course of acquisition, construction, installation, 19
equipping, and rehabilitation of a project which is not paid by the contractor 20
or contractors or otherwise provided; 21
(d) All costs of architectural and engineering services, including test borings, 22
surveys, estimates, plans, specifications, preliminary investigations, 23
supervision of construction, and the performance of all the duties required by 24
or consequent upon the acquisition, construction, installation, equipping, and 25
rehabilitation of a project; 26
(e) All costs that are required to be paid under the terms of any contract for the 27 UNOFFICIAL COPY 23 RS HB 360/GA
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acquisition, construction, installation, equipping, and rehabilitation of a 1
project; and 2
(f) All other costs of a nature comparable to those described in this subsection 3
that occur after preliminary approval; 4
(7) "City" means any city, consolidated local government, or urban-county 5
government; 6
(8) "Commencement date" means the final approval date or the date on which a tax 7
incentive agreement is executed; 8
(9) "Commonwealth" means the Commonwealth of Kentucky; 9
(10) "County" means any county, consolidated local government, charter county, unified 10
local government, or urban-county government; 11
(11) "CPI" means the nonseasonally adjusted Consumer Price Index for all urban 12
consumers, all items, base year computed for 1982 to 1984 equals one hundred 13
(100), published by the United States Department of Labor, Bureau of Labor 14
Statistics; 15
(12) "Department" means the Department of Revenue; 16
(13) "Development area" means an area established under KRS 65.7049, 65.7051, and 17
65.7053; 18
(14) "Economic development projects" means projects which are approved for tax 19
credits under Subchapter 20, 22, 23, 24, 25, 26, 27, 28, 34, or 48 of KRS Chapter 20
154; 21
(15) "Financing costs" means principal, interest, costs of issuance, debt service reserve 22
requirements, underwriting discount, costs of credit enhancement or liquidity 23
instruments, and other costs directly related to the issuance of bonds or debt for 24
approved public infrastructure costs or approved signature project costs for projects 25
approved pursuant to KRS 154.30-050; 26
(16) "Footprint" means the actual perimeter of a discrete, identified project within a 27 UNOFFICIAL COPY 23 RS HB 360/GA
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development area. The footprint shall not include any portion of a development area 1
outside the area for which actual capital investments are made and must be 2
contiguous; 3
(17) "Governing body" means the body possessing legislative authority in a city or 4
county; 5
(18) "Increment bonds" means bonds and notes issued for the purpose of paying the 6
costs of one (1) or more projects; 7
(19) "Incremental revenues" means: 8
(a) The amount of revenues received by a taxing district, as determined by 9
subtracting old revenues from new revenues in a calendar year with respect to 10
a development area, or a project within a development area; or 11
(b) The amount of revenues received by the Commonwealth as determined by 12
subtracting old revenues from new revenues in a calendar year with respect to 13
the footprint; 14
(20) "Local participation agreement" means the agreement entered into under KRS 15
65.7063; 16
(21) "Local tax revenues" has the same meaning as in KRS 65.7045; 17
(22) "New revenues" means: 18
(a) The amount of local tax revenues received by a taxing district with respect to 19
a development area in any calendar year beginning with the year in which the 20
activation date occurred; 21
(b) The amount of state tax revenues received by the Commonwealth with respect 22
to the footprint in any calendar year beginning with the year in which the 23
activation date occurred; 24
(23) "Old revenues" means: 25
(a) The amount of local tax revenues received by a taxing district with respect to 26
a development area as of December 31 of the year of preliminary approval; or 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(b) 1. The amount of state tax revenues received by the Commonwealth within 1
the footprint as of December 31 of the year of preliminary approval. If 2
the authority determines that the amount of state tax revenues received 3
as of December 31 of the last calendar year prior to the commencement 4
of preliminary approval does not represent a true and accurate depiction 5
of revenues, the authority may consider revenues for a period of no 6
longer than three (3) calendar years prior to the year of preliminary 7
approval, so as to determine a fair representation of state tax revenues. 8
The amount determined by the authority shall be specified in the tax 9
incentive agreement. If state tax revenues were derived from the 10
footprint prior to the year of preliminary approval, old revenues shall 11
increase each calendar year by: 12
a. The percentage increase, if any, of the CPI or a comparable index; 13
or 14
b. An alternative percentage increase that is determined to be 15
appropriate by the authority. 16
The method for increasing old revenues shall be set forth in the tax 17
incentive agreement; 18
2. If state revenues were derived from the footprint prior to the year of 19
preliminary approval, the calculation of incremental revenues shall be 20
based on the value of old revenues as increased using the method 21
prescribed in subparagraph 1. of this paragraph to reflect the same 22
calendar year as is used in the determination of new revenues; 23
(24) "Outstanding" means increment bonds that have been issued, delivered, and paid 24
for by the purchaser, except any of the following: 25
(a) Increment bonds canceled upon surrender, exchange, or transfer, or upon 26
payment or redemption; 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(b) Increment bonds in replacement of which or in exchange for which other 1
increment bonds have been issued; or 2
(c) Increment bonds for the payment, redemption, or purchase for cancellation 3
prior to maturity, of which sufficient moneys or investments, in accordance 4
with the ordinance or other proceedings or any applicable law, by mandatory 5
sinking fund redemption requirements, or otherwise, have been deposited, and 6
credited in a sinking fund or with a trustee or paying or escrow agent, whether 7
at or prior to their maturity or redemption, and, in the case of increment bonds 8
to be redeemed prior to their stated maturity, notice of redemption has been 9
given or satisfactory arrangements have been made for giving notice of that 10
redemption, or waiver of that notice by or on behalf of the affected bond 11
holders has been filed with the issuer or its agent; 12
(25) "Preliminary approval" means the action taken by the authority preliminarily 13
approving an eligible project for incentives under this subchapter; 14
(26) "Project" means any property, asset, or improvement located in a development area 15
and certified by the governing body as: 16
(a) Being for a public purpose; and 17
(b) Being for the development of facilities for residential, commercial, industrial, 18
public, recreational, or other uses, or for open space, including the 19
development, rehabilitation, renovation, installation, improvement, 20
enlargement, or extension of real estate and buildings; and 21
(c) Contributing to economic development or tourism; and 22
(d) Meeting the additional requirements established by KRS 154.30-040, 154.30-23
050, or 154.30-060; 24
(27) "Signature project" means a project approved under KRS 154.30-050; 25
(28) "State real property ad valorem tax" means real property ad valorem taxes levied 26
under KRS 132.020(1)(a); 27 UNOFFICIAL COPY 23 RS HB 360/GA
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(29) "State tax revenues" means revenues received by the Commonwealth from one (1) 1
or more of the following sources: 2
(a) State real property ad valorem taxes; 3
(b) Individual income taxes levied under KRS 141.020, other than individual 4
income taxes that have already been pledged to support an economic 5
development project within the development area; 6
(c) Corporation income taxes levied under KRS 141.040, other than corporation 7
income taxes that have already been pledged to support an economic 8
development project within the development area; 9
(d) Limited liability entity taxes levied under KRS 141.0401, other than limited 10
liability entity taxes that have already been pledged to support an economic 11
development project within the development area; and 12
(e) Sales taxes levied under KRS 139.200, excluding sales taxes already pledged 13
for: 14
1. Approved tourism attraction projects, as defined in KRS 148.851, within 15
the development area; and 16
2. Projects which are approved for sales tax refunds under Subchapter 20 17
of KRS Chapter 154 within the development area; 18
(30) "Tax incentive agreement" means an agreement entered into in accordance with 19
KRS 154.30-070; and 20
(31) (a) "Termination date" means: 21
1.[(a)] For a tax incentive agreement satisfying the requirements of KRS 22
154.30-040 or 154.30-060, a date established by the tax incentive 23
agreement that is no more than twenty (20) years from the activation 24
date. However, the termination date for a tax incentive agreement shall 25
in no event be more than forty (40) years from the establishment date of 26
the development area to which the tax incentive agreement relates; and 27 UNOFFICIAL COPY 23 RS HB 360/GA
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2.[(b)] For a project grant agreement satisfying the requirements of KRS 1
154.30-050, a date established by the tax incentive agreement that is no 2
more than thirty (30) years from the activation date. However, the 3
termination date for a tax incentive agreement shall in no event be more 4
than forty (40) years from the establishment date of the development 5
area to which the tax incentive agreement relates. 6
(b) 1. An agency may request an extension for any tax incentive agreement: 7
a. Executed prior to January 1, 2023; 8
b. That satisfies the requirements of KRS 154.30-050 or 154.30-9
060; and 10
c. That includes the pledge of individual income taxes levied under 11
KRS 141.020. 12
2. The authority may allow one (1) extension of the tax incentive 13
agreement, not to exceed five (5) years. 14
3. The extension shall be for the purpose of allowing additional time to 15
claim the agreed-upon incentive expected to be earned before the 16
initial termination date that is directly related to the reductions in the 17
tax rate under Section 22 of this Act. 18
4. The extension shall not result in a termination date that is more than 19
forty (40) years from the establishment date of the development area to 20
which the tax incentive agreement relates. 21
Section 29. KRS 67.805 is amended to read as follows: 22
The fiscal court of any county in which there are no incorporated areas shall receive any 23
funds arising from the imposition of taxes provided by KRS 138.220, 138.475(5)(b), 24
138.477, 138.660(1) and (2), and 234.320 that are designated for allocation to any 25
unincorporated urban place located within the county pursuant to KRS 177.366 and 26
177.369, in addition to any funds the county receives pursuant to KRS 177.320. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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Section 30. KRS 177.320 is amended to read as follows: 1
(1) Twenty-two and two-tenths percent (22.2%) of all funds arising from the imposition 2
of taxes provided by KRS 138.220(1) and (2), 138.475(5)(b), 138.477, 138.660(1) 3
and (2), and 234.320 shall be set aside for the construction, reconstruction and 4
maintenance of secondary and rural roads and for no other purpose, and shall be 5
expended for said purposes by the Transportation Cabinet of the Commonwealth of 6
Kentucky according to the terms and conditions prescribed in KRS 177.330 to 7
177.360. 8
(2) On or after July 1, 1980, eighteen and three-tenths percent (18.3%) of all funds 9
arising from the imposition of taxes provided by KRS 138.220(1) and (2), 10
138.475(5)(b), 138.477, 138.660(1) and (2), and 234.320 shall be set aside for the 11
construction, reconstruction and maintenance of county roads and bridges provided 12
by KRS 179.410 and 179.415. 13
(3) All funds set aside in subsection (2) of this section for the construction, 14
reconstruction and maintenance of county roads and bridges shall be allocated to 15
the county in accordance with the formula established in KRS 177.360(1) pursuant 16
to KRS 179.410. 17
(4) On or after July 1, 1986, one-tenth of one percent (0.1%) of all funds arising from 18
the imposition of taxes provided by KRS 138.220(1) and (2), 138.475(5)(b), 19
138.477, 138.660, and 234.320 shall be set aside for the purposes and functions of 20
the Kentucky Transportation Center as established by KRS 177.375 to 177.380, 21
except that the receipts provided to the center by this subsection shall not exceed 22
one hundred ninety thousand dollars ($190,000) for any fiscal year. 23
Section 31. KRS 177.365 is amended to read as follows: 24
(1) On and after July 1, 1980, seven and seven-tenths percent (7.7%) of all amounts 25
received from the imposition of the taxes provided for in KRS 138.220(1) and (2), 26
138.475(5)(b), 138.477, 138.660(1) and (2), and 234.320 shall be set aside by the 27 UNOFFICIAL COPY 23 RS HB 360/GA
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Finance and Administration Cabinet for the construction, reconstruction and 1
maintenance of urban roads and streets and for no other purpose. 2
(2) As used in this section unless the context requires otherwise "construction," 3
"reconstruction," and "maintenance" mean the supervising, inspecting, actual 4
building, and all expenses incidental to the construction, reconstruction, or 5
maintenance of a road or street, including planning, locating, surveying, and 6
mapping or preparing roadway plans, acquisition of rights-of-way, relocation of 7
utilities, lighting and the elimination of other hazards such as roadway grade 8
crossings, and all other items defined in the Department of Highways, design, 9
operations, and construction manuals. 10
(3) "Urban roads" mean all public ways lying within the limits of the unincorporated 11
urban place as defined in KRS 81.015, and as described by the Bureau of Census 12
tracts. 13
(4) "Streets" mean all public ways which have been designated by the incorporated city 14
as being city streets and said streets lying within the boundaries of an incorporated 15
city. 16
Section 32. The following KRS sections are repealed: 17
132.098 Exemption from state and local ad valorem tax of computer software, except 18
prewritten computer software. 19
132.192 Property tax exemption reciprocity. 20
132.205 Exemption of bridges built by adjoining state, United States or commission 21
created by Act of Congress over boundary line stream -- Bonds. 22
132.208 Exemption of intangible personal property from state and local ad valorem 23
taxes -- Local taxation permitted. 24
132.210 Exemption of fraternal benefit societies' funds. 25
132.760 Exemption from ad valorem taxes for trucks, tractors, buses, and trailers used 26
both in and outside Kentucky and subject to KRS 136.188 fee. 27 UNOFFICIAL COPY 23 RS HB 360/GA
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Section 33. Sections 2 to 5, 26, and 27 of this Act apply to property assessed on 1
or after January 1, 2024. 2
Section 34. Section 6 of this Act applies retroactively to January 1, 2023, except 3
that any penalty imposed under subsection (11) of Section 6 of this Act and any interest 4
imposed under KRS 131.183 shall not apply to a return required to be filed under 5
subsection (3)(b) of Section 6 of this Act before the effective date of this Act if the return 6
is filed and the tax is paid by the twentieth day of the month following the effective date 7
of this Act. 8
Section 35. Sections 7 to 15 of this Act apply retroactively to January 1, 2023. 9
Notwithstanding KRS 131.183, interest shall not be allowed or paid on a refund related to 10
the amendments made in Sections 7 to 11 of this Act. 11
Section 36. Section 24 of this Act takes effect July 1, 2023. 12
Section 37. Section 25, 29, 30, and 31 of this Act take effect January 1, 2024. 13
Section 38. Whereas many of the provisions of this Act impact tax returns 14
currently being filed by taxpayers, an emergency is declared to exist, and this Act takes 15
effect upon its passage and approval by the Governor or upon its otherwise becoming a 16
law. 17