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AN ACT relating to menstrual discharge collection devices and making an 1
appropriation therefor. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
SECTION 1. A NEW SECTION OF KRS CHAPTER 158 IS CREATED TO 4
READ AS FOLLOWS: 5
(1) All public schools or public charter schools that include any of grades six (6) 6
through twelve (12) shall make at least one (1) type of age-appropriate menstrual 7
discharge collection device available in: 8
(a) Each school building for use by students at no cost; and 9
(b) At least fifty percent (50%) of the combined total of the female, handicap, 10
unisex, or family bathrooms in each school building. 11
(2) Each local board of education or public charter school board of directors shall 12
adopt policies: 13
(a) Establishing procedures for the distribution of age-appropriate menstrual 14
discharge collection devices for use by students and related guidance 15
regarding the safe and healthy use of the products; 16
(b) Prohibiting the resale, redistribution, or misuse of menstrual discharge 17
collection devices distributed to students in accordance with this section. 18
(3) As used in this section, "menstrual discharge collection device" means tampons, 19
panty liners, menstrual cups, pads, and other similar tangible personal property 20
designed for use in connection with the human menstrual cycle, but does not 21
include "grooming and hygiene products" as defined in KRS 139.472; 22
Section 2. KRS 139.010 is amended to read as follows: 23
As used in this chapter, unless the context otherwise provides: 24
(1) (a) "Admissions" means the fees paid for: 25
1. The right of entrance to a display, program, sporting event, music 26
concert, performance, play, show, movie, exhibit, fair, or other 27 UNOFFICIAL COPY 24 RS BR 266
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entertainment or amusement event or venue; and 1
2. The privilege of using facilities or participating in an event or activity, 2
including but not limited to: 3
a. Bowling centers; 4
b. Skating rinks; 5
c. Health spas; 6
d. Swimming pools; 7
e. Tennis courts; 8
f. Weight training facilities; 9
g. Fitness and recreational sports centers; and 10
h. Golf courses, both public and private; 11
regardless of whether the fee paid is per use or in any other form, 12
including but not limited to an initiation fee, monthly fee, membership 13
fee, or combination thereof. 14
(b) "Admissions" does not include: 15
1. Any fee paid to enter or participate in a fishing tournament; or 16
2. Any fee paid for the use of a boat ramp for the purpose of allowing 17
boats to be launched into or hauled out from the water; 18
(2) "Advertising and promotional direct mail" means direct mail the primary purpose of 19
which is to attract public attention to a product, person, business, or organization, or 20
to attempt to sell, popularize, or secure financial support for a product, person, 21
business, or organization. As used in this definition, "product" means tangible 22
personal property, an item transferred electronically, or a service; 23
(3) "Business" includes any activity engaged in by any person or caused to be engaged 24
in by that person with the object of gain, benefit, or advantage, either direct or 25
indirect; 26
(4) "Commonwealth" means the Commonwealth of Kentucky; 27 UNOFFICIAL COPY 24 RS BR 266
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(5) (a) "Cosmetic surgery services" means modifications to all areas of the head, 1
neck, and body to enhance appearance through surgical and medical 2
techniques. 3
(b) "Cosmetic surgery services" does not include surgery services that are 4
medically necessary to reconstruct or correct dysfunctional areas of the face 5
and body due to birth disorders, trauma, burns, or disease; 6
(6) "Department" means the Department of Revenue; 7
(7) (a) "Digital audio-visual works" means a series of related images which, when 8
shown in succession, impart an impression of motion, with accompanying 9
sounds, if any. 10
(b) "Digital audio-visual works" includes movies, motion pictures, musical 11
videos, news and entertainment programs, and live events. 12
(c) "Digital audio-visual works" shall not include video greeting cards, video 13
games, and electronic games; 14
(8) (a) "Digital audio works" means works that result from the fixation of a series of 15
musical, spoken, or other sounds. 16
(b) "Digital audio works" includes ringtones, recorded or live songs, music, 17
readings of books or other written materials, speeches, or other sound 18
recordings. 19
(c) "Digital audio works" shall not include audio greeting cards sent by electronic 20
mail; 21
(9) (a) "Digital books" means works that are generally recognized in the ordinary and 22
usual sense as books, including any literary work expressed in words, 23
numbers, or other verbal or numerical symbols or indicia if the literary work 24
is generally recognized in the ordinary or usual sense as a book. 25
(b) "Digital books" shall not include digital audio-visual works, digital audio 26
works, periodicals, magazines, newspapers, or other news or information 27 UNOFFICIAL COPY 24 RS BR 266
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products, chat rooms, or weblogs; 1
(10) (a) "Digital code" means a code which provides a purchaser with a right to obtain 2
one (1) or more types of digital property. A "digital code" may be obtained by 3
any means, including electronic mail messaging or by tangible means, 4
regardless of the code's designation as a song code, video code, or book code. 5
(b) "Digital code" shall not include a code that represents: 6
1. A stored monetary value that is deducted from a total as it is used by the 7
purchaser; or 8
2. A redeemable card, gift card, or gift certificate that entitles the holder to 9
select specific types of digital property; 10
(11) (a) "Digital property" means any of the following which is transferred 11
electronically: 12
1. Digital audio works; 13
2. Digital books; 14
3. Finished artwork; 15
4. Digital photographs; 16
5. Periodicals; 17
6. Newspapers; 18
7. Magazines; 19
8. Video greeting cards; 20
9. Audio greeting cards; 21
10. Video games; 22
11. Electronic games; or 23
12. Any digital code related to this property. 24
(b) "Digital property" shall not include digital audio-visual works or satellite 25
radio programming; 26
(12) (a) "Direct mail" means printed material delivered or distributed by United States 27 UNOFFICIAL COPY 24 RS BR 266
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mail or other delivery service to a mass audience or to addressees on a mailing 1
list provided by the purchaser or at the direction of the purchaser when the 2
cost of the items are not billed directly to the recipient. 3
(b) "Direct mail" includes tangible personal property supplied directly or 4
indirectly by the purchaser to the direct mail retailer for inclusion in the 5
package containing the printed material. 6
(c) "Direct mail" does not include multiple items of printed material delivered to 7
a single address; 8
(13) "Directly used in the manufacturing or industrial processing process" means the 9
process that commences with the movement of raw materials from storage into a 10
continuous, unbroken, integrated process and ends when the finished product is 11
packaged and ready for sale; 12
(14) (a) "Executive employee recruitment services" means services provided by a 13
person to locate potential candidates to fill open senior-level management 14
positions. 15
(b) "Executive employee recruitment services" includes but is not limited to 16
making a detailed list of client requirements, researching and identifying 17
potential candidates, performing prescreening interviews, and providing 18
contract and salary negotiations; 19
(15) (a) "Extended warranty services" means services provided through a service 20
contract agreement between the contract provider and the purchaser where the 21
purchaser agrees to pay compensation for the contract and the provider agrees 22
to repair, replace, support, or maintain tangible personal property, digital 23
property, real property, or prewritten computer software access services 24
according to the terms of the contract. 25
(b) "Extended warranty services" does not include the sale of a service contract 26
agreement for tangible personal property to be used by a small telephone 27 UNOFFICIAL COPY 24 RS BR 266
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utility as defined in KRS 278.516 or a Tier III CMRS provider as defined in 1
KRS 65.7621 to deliver communications services as defined in KRS 136.602 2
or broadband; 3
(16) (a) "Finished artwork" means final art that is used for actual reproduction by 4
photomechanical or other processes or for display purposes. 5
(b) "Finished artwork" includes: 6
1. Assemblies; 7
2. Charts; 8
3. Designs; 9
4. Drawings; 10
5. Graphs; 11
6. Illustrative materials; 12
7. Lettering; 13
8. Mechanicals; 14
9. Paintings; and 15
10. Paste-ups; 16
(17) (a) "Gross receipts" and "sales price" mean the total amount or consideration, 17
including cash, credit, property, and services, for which tangible personal 18
property, digital property, or services are sold, leased, or rented, valued in 19
money, whether received in money or otherwise, without any deduction for 20
any of the following: 21
1. The retailer's cost of the tangible personal property, digital property, or 22
services sold; 23
2. The cost of the materials used, labor or service cost, interest, losses, all 24
costs of transportation to the retailer, all taxes imposed on the retailer, or 25
any other expense of the retailer; 26
3. Charges by the retailer for any services necessary to complete the sale; 27 UNOFFICIAL COPY 24 RS BR 266
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4. Delivery charges, which are defined as charges by the retailer for the 1
preparation and delivery to a location designated by the purchaser 2
including transportation, shipping, postage, handling, crating, and 3
packing; 4
5. Any amount for which credit is given to the purchaser by the retailer, 5
other than credit for tangible personal property or digital property traded 6
when the tangible personal property or digital property traded is of like 7
kind and character to the property purchased and the property traded is 8
held by the retailer for resale; and 9
6. The amount charged for labor or services rendered in installing or 10
applying the tangible personal property, digital property, or service sold. 11
(b) "Gross receipts" and "sales price" shall include consideration received by the 12
retailer from a third party if: 13
1. The retailer actually receives consideration from a third party and the 14
consideration is directly related to a price reduction or discount on the 15
sale to the purchaser; 16
2. The retailer has an obligation to pass the price reduction or discount 17
through to the purchaser; 18
3. The amount of consideration attributable to the sale is fixed and 19
determinable by the retailer at the time of the sale of the item to the 20
purchaser; and 21
4. One (1) of the following criteria is met: 22
a. The purchaser presents a coupon, certificate, or other 23
documentation to the retailer to claim a price reduction or discount 24
where the coupon, certificate, or documentation is authorized, 25
distributed, or granted by a third party with the understanding that 26
the third party will reimburse any seller to whom the coupon, 27 UNOFFICIAL COPY 24 RS BR 266
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certificate, or documentation is presented; 1
b. The price reduction or discount is identified as a third-party price 2
reduction or discount on the invoice received by the purchaser or 3
on a coupon, certificate, or other documentation presented by the 4
purchaser; or 5
c. The purchaser identifies himself or herself to the retailer as a 6
member of a group or organization entitled to a price reduction or 7
discount. A "preferred customer" card that is available to any 8
patron does not constitute membership in such a group. 9
(c) "Gross receipts" and "sales price" shall not include: 10
1. Discounts, including cash, term, or coupons that are not reimbursed by a 11
third party and that are allowed by a retailer and taken by a purchaser on 12
a sale; 13
2. Interest, financing, and carrying charges from credit extended on the 14
sale of tangible personal property, digital property, or services, if the 15
amount is separately stated on the invoice, bill of sale, or similar 16
document given to the purchaser; 17
3. Any taxes legally imposed directly on the purchaser that are separately 18
stated on the invoice, bill of sale, or similar document given to the 19
purchaser; or 20
4. Local alcohol regulatory license fees authorized under KRS 243.075 that 21
are separately stated on the invoice, bill of sale, or similar document 22
given to the purchaser. 23
(d) As used in this subsection, "third party" means a person other than the 24
purchaser; 25
(18) "In this state" or "in the state" means within the exterior limits of the 26
Commonwealth and includes all territory within these limits owned by or 27 UNOFFICIAL COPY 24 RS BR 266
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ceded to the United States of America; 1
(19) "Industrial processing" includes: 2
(a) Refining; 3
(b) Extraction of minerals, ores, coal, clay, stone, petroleum, or natural gas; 4
(c) Mining, quarrying, fabricating, and industrial assembling; 5
(d) The processing and packaging of raw materials, in-process materials, and 6
finished products; and 7
(e) The processing and packaging of farm and dairy products for sale; 8
(20) (a) "Lease or rental" means any transfer of possession or control of tangible 9
personal property for a fixed or indeterminate term for consideration. A lease 10
or rental shall include future options to: 11
1. Purchase the property; or 12
2. Extend the terms of the agreement and agreements covering trailers 13
where the amount of consideration may be increased or decreased by 14
reference to the amount realized upon sale or disposition of the property 15
as defined in 26 U.S.C. sec. 7701(h)(1). 16
(b) "Lease or rental" shall not include: 17
1. A transfer of possession or control of property under a security 18
agreement or deferred payment plan that requires the transfer of title 19
upon completion of the required payments; 20
2. A transfer of possession or control of property under an agreement that 21
requires the transfer of title upon completion of the required payments 22
and payment of an option price that does not exceed the greater of one 23
hundred dollars ($100) or one percent (1%) of the total required 24
payments; or 25
3. Providing tangible personal property and an operator for the tangible 26
personal property for a fixed or indeterminate period of time. To qualify 27 UNOFFICIAL COPY 24 RS BR 266
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for this exclusion, the operator must be necessary for the equipment to 1
perform as designed, and the operator must do more than maintain, 2
inspect, or setup the tangible personal property. 3
(c) This definition shall apply regardless of the classification of a transaction 4
under generally accepted accounting principles, the Internal Revenue Code, or 5
other provisions of federal, state, or local law; 6
(21) (a) "Lobbying services" means the act of promoting or securing passage of 7
legislation or an attempt to influence or sway a public official or other public 8
servant toward a desired action, including but not limited to the support of or 9
opposition to a project or the passage, amendment, defeat, approval, or veto of 10
any legislation, regulation, rule, or ordinance; 11
(b) "Lobbying services" includes but is not limited to the performance of 12
activities described as executive agency lobbying activities as defined in KRS 13
11A.201, activities described under the definition of lobby in KRS 6.611, and 14
any similar activities performed at the local, state, or federal levels; 15
(22) (a) "Machinery for new and expanded industry" means machinery: 16
1. Directly used in the manufacturing or industrial processing process of: 17
a. Tangible personal property at a plant facility; 18
b. Distilled spirits or wine at a plant facility or on the premises of a 19
distiller, rectifier, winery, or small farm winery licensed under 20
KRS 243.030 that includes a retail establishment on the premises; 21
or 22
c. Malt beverages at a plant facility or on the premises of a brewer or 23
microbrewery licensed under KRS 243.040 that includes a retail 24
establishment; 25
2. Which is incorporated for the first time into: 26
a. A plant facility established in this state; or 27 UNOFFICIAL COPY 24 RS BR 266
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b. Licensed premises located in this state; and 1
3. Which does not replace machinery in the plant facility or licensed 2
premises unless that machinery purchased to replace existing machinery: 3
a. Increases the consumption of recycled materials at the plant 4
facility by not less than ten percent (10%); 5
b. Performs different functions; 6
c. Is used to manufacture a different product; or 7
d. Has a greater productive capacity, as measured in units of 8
production, than the machinery being replaced. 9
(b) "Machinery for new and expanded industry" does not include repair, 10
replacement, or spare parts of any kind, regardless of whether the purchase of 11
repair, replacement, or spare parts is required by the manufacturer or seller as 12
a condition of sale or as a condition of warranty; 13
(23) "Manufacturing" means any process through which material having little or no 14
commercial value for its intended use before processing has appreciable 15
commercial value for its intended use after processing by the machinery; 16
(24) "Marketplace" means any physical or electronic means through which one (1) or 17
more retailers may advertise and sell tangible personal property, digital property, or 18
services, or lease tangible personal property or digital property, such as a catalog, 19
Internet website, or television or radio broadcast, regardless of whether the tangible 20
personal property, digital property, or retailer is physically present in this state; 21
(25) (a) "Marketplace provider" means a person, including any affiliate of the person, 22
that facilitates a retail sale by satisfying subparagraphs 1. and 2. of this 23
paragraph as follows: 24
1. The person directly or indirectly: 25
a. Lists, makes available, or advertises tangible personal property, 26
digital property, or services for sale by a marketplace retailer in a 27 UNOFFICIAL COPY 24 RS BR 266
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marketplace owned, operated, or controlled by the person; 1
b. Facilitates the sale of a marketplace retailer's product through a 2
marketplace by transmitting or otherwise communicating an offer 3
or acceptance of a retail sale of tangible personal property, digital 4
property, or services between a marketplace retailer and a 5
purchaser in a forum including a shop, store, booth, catalog, 6
Internet site, or similar forum; 7
c. Owns, rents, licenses, makes available, or operates any electronic 8
or physical infrastructure or any property, process, method, 9
copyright, trademark, or patent that connects marketplace retailers 10
to purchasers for the purpose of making retail sales of tangible 11
personal property, digital property, or services; 12
d. Provides a marketplace for making retail sales of tangible personal 13
property, digital property, or services, or otherwise facilitates retail 14
sales of tangible personal property, digital property, or services, 15
regardless of ownership or control of the tangible personal 16
property, digital property, or services, that are the subject of the 17
retail sale; 18
e. Provides software development or research and development 19
activities related to any activity described in this subparagraph, if 20
the software development or research and development activities 21
are directly related to the physical or electronic marketplace 22
provided by a marketplace provider; 23
f. Provides or offers fulfillment or storage services for a marketplace 24
retailer; 25
g. Sets prices for a marketplace retailer's sale of tangible personal 26
property, digital property, or services; 27 UNOFFICIAL COPY 24 RS BR 266
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h. Provides or offers customer service to a marketplace retailer or a 1
marketplace retailer's customers, or accepts or assists with taking 2
orders, returns, or exchanges of tangible personal property, digital 3
property, or services sold by a marketplace retailer; or 4
i. Brands or otherwise identifies sales as those of the marketplace 5
provider; and 6
2. The person directly or indirectly: 7
a. Collects the sales price or purchase price of a retail sale of tangible 8
personal property, digital property, or services; 9
b. Provides payment processing services for a retail sale of tangible 10
personal property, digital property, or services; 11
c. Through terms and conditions, agreements, or arrangements with a 12
third party, collects payment in connection with a retail sale of 13
tangible personal property, digital property, or services from a 14
purchaser and transmits that payment to the marketplace retailer, 15
regardless of whether the person collecting and transmitting the 16
payment receives compensation or other consideration in exchange 17
for the service; or 18
d. Provides a virtual currency that purchasers are allowed or required 19
to use to purchase tangible personal property, digital property, or 20
services. 21
(b) "Marketplace provider" includes but is not limited to a person that satisfies the 22
requirements of this subsection through the ownership, operation, or control 23
of a digital distribution service, digital distribution platform, online portal, or 24
application store; 25
(26) "Marketplace retailer" means a seller that makes retail sales through any 26
marketplace owned, operated, or controlled by a marketplace provider; 27 UNOFFICIAL COPY 24 RS BR 266
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(27) "Menstrual discharge collection devices" means tampons, panty liners, 1
menstrual cups, pads, period underwear, other items that meet the definition of 2
"clothing" but are marked specifically for use as menstrual discharge collection 3
devices for the human menstrual cycle such as period swimwear, period running 4
shorts, or period sleep shorts, and other similar tangible personal property 5
designed for use in connection with the human menstrual cycle, but does not 6
include "grooming and hygiene products" as defined in KRS 139.472; 7
(28) (a) "Occasional sale" includes: 8
1. A sale of tangible personal property or digital property not held or used 9
by a seller in the course of an activity for which he or she is required to 10
hold a seller's permit, provided such sale is not one (1) of a series of 11
sales sufficient in number, scope, and character to constitute an activity 12
requiring the holding of a seller's permit. In the case of the sale of the 13
entire, or a substantial portion of the nonretail assets of the seller, the 14
number of previous sales of similar assets shall be disregarded in 15
determining whether or not the current sale or sales shall qualify as an 16
occasional sale; or 17
2. Any transfer of all or substantially all the tangible personal property or 18
digital property held or used by a person in the course of such an activity 19
when after such transfer the real or ultimate ownership of such property 20
is substantially similar to that which existed before such transfer. 21
(b) For the purposes of this subsection, stockholders, bondholders, partners, or 22
other persons holding an interest in a corporation or other entity are regarded 23
as having the "real or ultimate ownership" of the tangible personal property or 24
digital property of such corporation or other entity; 25
(29)[(28)] (a) "Other direct mail" means any direct mail that is not advertising and 26
promotional direct mail, regardless of whether advertising and promotional 27 UNOFFICIAL COPY 24 RS BR 266
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direct mail is included in the same mailing. 1
(b) "Other direct mail" includes but is not limited to: 2
1. Transactional direct mail that contains personal information specific to 3
the addressee, including but not limited to invoices, bills, statements of 4
account, and payroll advices; 5
2. Any legally required mailings, including but not limited to privacy 6
notices, tax reports, and stockholder reports; and 7
3. Other nonpromotional direct mail delivered to existing or former 8
shareholders, customers, employees, or agents, including but not limited 9
to newsletters and informational pieces. 10
(c) "Other direct mail" does not include the development of billing information or 11
the provision of any data processing service that is more than incidental to the 12
production of printed material; 13
(30)[(29)] "Person" includes any individual, firm, copartnership, joint venture, 14
association, social club, fraternal organization, corporation, estate, trust, business 15
trust, receiver, trustee, syndicate, cooperative, assignee, governmental unit or 16
agency, or any other group or combination acting as a unit; 17
(31)[(30)] "Permanent," as the term applies to digital property, means perpetual or for an 18
indefinite or unspecified length of time; 19
(32)[(31)] (a) "Photography and photofinishing services" means: 20
1. The taking, developing, or printing of an original photograph; or 21
2. Image editing, including shadow removal, tone adjustments, vertical and 22
horizontal alignment and cropping, composite image creation, 23
formatting, watermarking printing, and delivery of an original 24
photograph in the form of tangible personal property, digital property, or 25
other media. 26
(b) "Photography and photofinishing services" does not include photography 27 UNOFFICIAL COPY 24 RS BR 266
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services necessary for medical or dental health; 1
(33)[(32)] "Plant facility" means a single location that is exclusively dedicated to 2
manufacturing or industrial processing activities. A location shall be deemed to be 3
exclusively dedicated to manufacturing or industrial processing activities even if 4
retail sales are made there, provided that the retail sales are incidental to the 5
manufacturing or industrial processing activities occurring at the location. The term 6
"plant facility" shall not include any restaurant, grocery store, shopping center, or 7
other retail establishment; 8
(34)[(33)] (a) "Prewritten computer software" means: 9
1. Computer software, including prewritten upgrades, that are not designed 10
and developed by the author or other creator to the specifications of a 11
specific purchaser; 12
2. Software designed and developed by the author or other creator to the 13
specifications of a specific purchaser when it is sold to a person other 14
than the original purchaser; or 15
3. Any portion of prewritten computer software that is modified or 16
enhanced in any manner, where the modification or enhancement is 17
designed and developed to the specifications of a specific purchaser, 18
unless there is a reasonable, separately stated charge on an invoice or 19
other statement of the price to the purchaser for the modification or 20
enhancement. 21
(b) When a person modifies or enhances computer software of which the person 22
is not the author or creator, the person shall be deemed to be the author or 23
creator only of the modifications or enhancements the person actually made. 24
(c) The combining of two (2) or more prewritten computer software programs or 25
portions thereof does not cause the combination to be other than prewritten 26
computer software; 27 UNOFFICIAL COPY 24 RS BR 266
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(35)[(34)] "Prewritten computer software access services" means the right of access to 1
prewritten computer software where the object of the transaction is to use the 2
prewritten computer software while possession of the prewritten computer software 3
is maintained by the seller or a third party, wherever located, regardless of whether 4
the charge for the access or use is on a per use, per user, per license, subscription, or 5
some other basis; 6
(36)[(35)] (a) "Purchase" means any transfer of title or possession, exchange, barter, 7
lease, or rental, conditional or otherwise, in any manner or by any means 8
whatsoever, of: 9
1. Tangible personal property; 10
2. An extended warranty service; 11
3. Digital property transferred electronically; or 12
4. Services included in KRS 139.200; 13
for a consideration. 14
(b) "Purchase" includes: 15
1. When performed outside this state or when the customer gives a resale 16
certificate, the producing, fabricating, processing, printing, or imprinting 17
of tangible personal property for a consideration for consumers who 18
furnish either directly or indirectly the materials used in the producing, 19
fabricating, processing, printing, or imprinting; 20
2. A transaction whereby the possession of tangible personal property or 21
digital property is transferred but the seller retains the title as security 22
for the payment of the price; and 23
3. A transfer for a consideration of the title or possession of tangible 24
personal property or digital property which has been produced, 25
fabricated, or printed to the special order of the customer, or of any 26
publication; 27 UNOFFICIAL COPY 24 RS BR 266
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(37)[(36)] "Recycled materials" means materials which have been recovered or diverted 1
from the solid waste stream and reused or returned to use in the form of raw 2
materials or products; 3
(38)[(37)] "Recycling purposes" means those activities undertaken in which materials 4
that would otherwise become solid waste are collected, separated, or processed in 5
order to be reused or returned to use in the form of raw materials or products; 6
(39)[(38)] "Remote retailer" means a retailer with no physical presence in this state; 7
(40)[(39)] (a) "Repair, replacement, or spare parts" means any tangible personal 8
property used to maintain, restore, mend, or repair machinery or equipment. 9
(b) "Repair, replacement, or spare parts" does not include machine oils, grease, or 10
industrial tools; 11
(41)[(40)] (a) "Retailer" means: 12
1. Every person engaged in the business of making retail sales of tangible 13
personal property, digital property, or furnishing any services in a retail 14
sale included in KRS 139.200; 15
2. Every person engaged in the business of making sales at auction of 16
tangible personal property or digital property owned by the person or 17
others for storage, use or other consumption, except as provided in 18
paragraph (c) of this subsection; 19
3. Every person making more than two (2) retail sales of tangible personal 20
property, digital property, or services included in KRS 139.200 during 21
any twelve (12) month period, including sales made in the capacity of 22
assignee for the benefit of creditors, or receiver or trustee in bankruptcy; 23
4. Any person conducting a race meeting under the provision of KRS 24
Chapter 230, with respect to horses which are claimed during the 25
meeting. 26
(b) When the department determines that it is necessary for the efficient 27 UNOFFICIAL COPY 24 RS BR 266
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administration of this chapter to regard any salesmen, representatives, 1
peddlers, or canvassers as the agents of the dealers, distributors, supervisors or 2
employers under whom they operate or from whom they obtain the tangible 3
personal property, digital property, or services sold by them, irrespective of 4
whether they are making sales on their own behalf or on behalf of the dealers, 5
distributors, supervisors or employers, the department may so regard them and 6
may regard the dealers, distributors, supervisors or employers as retailers for 7
purposes of this chapter. 8
(c) 1. Any person making sales at a charitable auction for a qualifying entity 9
shall not be a retailer for purposes of the sales made at the charitable 10
auction if: 11
a. The qualifying entity, not the person making sales at the auction, is 12
sponsoring the auction; 13
b. The purchaser of tangible personal property at the auction directly 14
pays the qualifying entity sponsoring the auction for the property 15
and not the person making the sales at the auction; and 16
c. The qualifying entity, not the person making sales at the auction, is 17
responsible for the collection, control, and disbursement of the 18
auction proceeds. 19
2. If the conditions set forth in subparagraph 1. of this paragraph are met, 20
the qualifying entity sponsoring the auction shall be the retailer for 21
purposes of the sales made at the charitable auction. 22
3. For purposes of this paragraph, "qualifying entity" means a resident: 23
a. Church; 24
b. School; 25
c. Civic club; or 26
d. Any other nonprofit charitable, religious, or educational 27 UNOFFICIAL COPY 24 RS BR 266
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organization; 1
(42)[(41)] "Retail sale" means any sale, lease, or rental for any purpose other than resale, 2
sublease, or subrent; 3
(43)[(42)] (a) "Ringtones" means digitized sound files that are downloaded onto a 4
device and that may be used to alert the customer with respect to a 5
communication. 6
(b) "Ringtones" shall not include ringback tones or other digital files that are not 7
stored on the purchaser's communications device; 8
(44)[(43)] (a) "Sale" means: 9
1. The furnishing of any services included in KRS 139.200; 10
2. Any transfer of title or possession, exchange, barter, lease, or rental, 11
conditional or otherwise, in any manner or by any means whatsoever, 12
of: 13
a. Tangible personal property; or 14
b. Digital property transferred electronically; 15
for a consideration. 16
(b) "Sale" includes but is not limited to: 17
1. The producing, fabricating, processing, printing, or imprinting of 18
tangible personal property or digital property for a consideration for 19
purchasers who furnish, either directly or indirectly, the materials used 20
in the producing, fabricating, processing, printing, or imprinting; 21
2. A transaction whereby the possession of tangible personal property or 22
digital property is transferred, but the seller retains the title as security 23
for the payment of the price; and 24
3. A transfer for a consideration of the title or possession of tangible 25
personal property or digital property which has been produced, 26
fabricated, or printed to the special order of the purchaser. 27 UNOFFICIAL COPY 24 RS BR 266
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(c) This definition shall apply regardless of the classification of a transaction 1
under generally accepted accounting principles, the Internal Revenue Code, or 2
other provisions of federal, state, or local law; 3
(45)[(44)] "Seller" includes every person engaged in the business of selling tangible 4
personal property, digital property, or services of a kind, the gross receipts from the 5
retail sale of which are required to be included in the measure of the sales tax, and 6
every person engaged in making sales for resale; 7
(46)[(45)] (a) "Storage" includes any keeping or retention in this state for any purpose 8
except sale in the regular course of business or subsequent use solely outside 9
this state of tangible personal property, digital property, or prewritten 10
computer software access services purchased from a retailer. 11
(b) "Storage" does not include the keeping, retaining, or exercising any right or 12
power over tangible personal property for the purpose of subsequently 13
transporting it outside the state for use thereafter solely outside the state, or 14
for the purpose of being processed, fabricated, or manufactured into, attached 15
to, or incorporated into, other tangible personal property to be transported 16
outside the state and thereafter used solely outside the state; 17
(47)[(46)] "Tangible personal property" means personal property which may be seen, 18
weighed, measured, felt, or touched, or which is in any other manner perceptible to 19
the senses and includes natural, artificial, and mixed gas, electricity, water, steam, 20
and prewritten computer software; 21
(48)[(47)] "Taxpayer" means any person liable for tax under this chapter; 22
(49)[(48)] "Telemarketing services" means services provided via telephone, facsimile, 23
electronic mail, text messages, or other modes of communications to another 24
person, which are unsolicited by that person, for the purposes of: 25
(a) 1. Promoting products or services; 26
2. Taking orders; or 27 UNOFFICIAL COPY 24 RS BR 266
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3. Providing information or assistance regarding the products or services; 1
or 2
(b) Soliciting contributions; 3
(50)[(49)] "Transferred electronically" means accessed or obtained by the purchaser by 4
means other than tangible storage media; and 5
(51)[(50)] (a) "Use" includes the exercise of: 6
1. Any right or power over tangible personal property or digital property 7
incident to the ownership of that property, or by any transaction in 8
which possession is given, or by any transaction involving digital 9
property or tangible personal property where the right of access is 10
granted; or 11
2. Any right or power to benefit from any services subject to tax under 12
KRS 139.200(2)(p) to (ax). 13
(b) "Use" does not include the keeping, retaining, or exercising any right or 14
power over: 15
1. Tangible personal property or digital property for the purpose of: 16
a. Selling tangible personal property or digital property in the regular 17
course of business; or 18
b. Subsequently transporting tangible personal property outside the 19
state for use thereafter solely outside the state, or for the purpose 20
of being processed, fabricated, or manufactured into, attached to, 21
or incorporated into, other tangible personal property to be 22
transported outside the state and thereafter used solely outside the 23
state; or 24
2. Prewritten computer software access services purchased for use outside 25
the state and transferred electronically outside the state for use thereafter 26
solely outside the state. 27 UNOFFICIAL COPY 24 RS BR 266
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Section 3. KRS 139.480 (Effective until January 1, 2025) is amended to read as 1
follows: 2
Any other provision of this chapter to the contrary notwithstanding, the terms "sale at 3
retail," "retail sale," "use," "storage," and "consumption," as used in this chapter, shall not 4
include the sale, use, storage, or other consumption of: 5
(1) Locomotives or rolling stock, including materials for the construction, repair, or 6
modification thereof, or fuel or supplies for the direct operation of locomotives and 7
trains, used or to be used in interstate commerce; 8
(2) Coal for the manufacture of electricity; 9
(3) (a) All energy or energy-producing fuels used in the course of manufacturing, 10
processing, mining, or refining and any related distribution, transmission, and 11
transportation services for this energy that are billed to the user, to the extent 12
that the cost of the energy or energy-producing fuels used, and related 13
distribution, transmission, and transportation services for this energy that are 14
billed to the user exceed three percent (3%) of the cost of production. 15
(b) Cost of production shall be computed on the basis of a plant facility, which 16
shall include all operations within the continuous, unbroken, integrated 17
manufacturing or industrial processing process that ends with a product 18
packaged and ready for sale. 19
(c) A person who performs a manufacturing or industrial processing activity for a 20
fee and does not take ownership of the tangible personal property that is 21
incorporated into, or becomes the product of, the manufacturing or industrial 22
processing activity is a toller. For periods on or after July 1, 2018, the costs of 23
the tangible personal property shall be excluded from the toller's cost of 24
production at a plant facility with tolling operations in place as of July 1, 25
2018. 26
(d) For plant facilities that begin tolling operations after July 1, 2018, the costs of 27 UNOFFICIAL COPY 24 RS BR 266
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tangible personal property shall be excluded from the toller's cost of 1
production if the toller: 2
1. Maintains a binding contract for periods after July 1, 2018, that governs 3
the terms, conditions, and responsibilities with a separate legal entity, 4
which holds title to the tangible personal property that is incorporated 5
into, or becomes the product of, the manufacturing or industrial 6
processing activity; 7
2. Maintains accounting records that show the expenses it incurs to fulfill 8
the binding contract that include but are not limited to energy or energy-9
producing fuels, materials, labor, procurement, depreciation, 10
maintenance, taxes, administration, and office expenses; 11
3. Maintains separate payroll, bank accounts, tax returns, and other records 12
that demonstrate its independent operations in the performance of its 13
tolling responsibilities; 14
4. Demonstrates one (1) or more substantial business purposes for the 15
tolling operations germane to the overall manufacturing, industrial 16
processing activities, or corporate structure at the plant facility. A 17
business purpose is a purpose other than the reduction of sales tax 18
liability for the purchases of energy and energy-producing fuels; and 19
5. Provides information to the department upon request that documents 20
fulfillment of the requirements in subparagraphs 1. to 4. of this 21
paragraph and gives an overview of its tolling operations with an 22
explanation of how the tolling operations relate and connect with all 23
other manufacturing or industrial processing activities occurring at the 24
plant facility; 25
(4) Livestock of a kind the products of which ordinarily constitute food for human 26
consumption, provided the sales are made for breeding or dairy purposes and by or 27 UNOFFICIAL COPY 24 RS BR 266
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to a person regularly engaged in the business of farming; 1
(5) Poultry for use in breeding or egg production; 2
(6) Farm work stock for use in farming operations; 3
(7) Seeds, the products of which ordinarily constitute food for human consumption or 4
are to be sold in the regular course of business, and commercial fertilizer to be 5
applied on land, the products from which are to be used for food for human 6
consumption or are to be sold in the regular course of business; provided such sales 7
are made to farmers who are regularly engaged in the occupation of tilling and 8
cultivating the soil for the production of crops as a business, or who are regularly 9
engaged in the occupation of raising and feeding livestock or poultry or producing 10
milk for sale; and provided further that tangible personal property so sold is to be 11
used only by those persons designated above who are so purchasing; 12
(8) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals to be 13
used in the production of crops as a business, or in the raising and feeding of 14
livestock or poultry, the products of which ordinarily constitute food for human 15
consumption; 16
(9) Feed, including pre-mixes and feed additives, for livestock or poultry of a kind the 17
products of which ordinarily constitute food for human consumption; 18
(10) Machinery for new and expanded industry; 19
(11) Farm machinery. As used in this section, the term "farm machinery": 20
(a) Means machinery used exclusively and directly in the occupation of: 21
1. Tilling the soil for the production of crops as a business; 22
2. Raising and feeding livestock or poultry for sale; or 23
3. Producing milk for sale; 24
(b) Includes machinery, attachments, and replacements therefor, repair parts, and 25
replacement parts which are used or manufactured for use on, or in the 26
operation of farm machinery and which are necessary to the operation of the 27 UNOFFICIAL COPY 24 RS BR 266
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machinery, and are customarily so used, including but not limited to combine 1
header wagons, combine header trailers, or any other implements specifically 2
designed and used to move or transport a combine head; and 3
(c) Does not include: 4
1. Automobiles; 5
2. Trucks; 6
3. Trailers, except combine header trailers; or 7
4. Truck-trailer combinations; 8
(12) Tombstones and other memorial grave markers; 9
(13) On-farm facilities used exclusively for grain or soybean storing, drying, processing, 10
or handling. The exemption applies to the equipment, machinery, attachments, 11
repair and replacement parts, and any materials incorporated into the construction, 12
renovation, or repair of the facilities; 13
(14) On-farm facilities used exclusively for raising poultry or livestock. The exemption 14
shall apply to the equipment, machinery, attachments, repair and replacement parts, 15
and any materials incorporated into the construction, renovation, or repair of the 16
facilities. The exemption shall apply but not be limited to vent board equipment, 17
waterer and feeding systems, brooding systems, ventilation systems, alarm systems, 18
and curtain systems. In addition, the exemption shall apply whether or not the seller 19
is under contract to deliver, assemble, and incorporate into real estate the 20
equipment, machinery, attachments, repair and replacement parts, and any materials 21
incorporated into the construction, renovation, or repair of the facilities; 22
(15) Gasoline, special fuels, liquefied petroleum gas, and natural gas used exclusively 23
and directly to: 24
(a) Operate farm machinery as defined in subsection (11) of this section; 25
(b) Operate on-farm grain or soybean drying facilities as defined in subsection 26
(13) of this section; 27 UNOFFICIAL COPY 24 RS BR 266
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(c) Operate on-farm poultry or livestock facilities defined in subsection (14) of 1
this section; 2
(d) Operate on-farm ratite facilities defined in subsection (23) of this section; 3
(e) Operate on-farm llama or alpaca facilities as defined in subsection (25) of this 4
section; or 5
(f) Operate on-farm dairy facilities; 6
(16) Textbooks, including related workbooks and other course materials, purchased for 7
use in a course of study conducted by an institution which qualifies as a nonprofit 8
educational institution under KRS 139.495. The term "course materials" means only 9
those items specifically required of all students for a particular course but shall not 10
include notebooks, paper, pencils, calculators, tape recorders, or similar student 11
aids; 12
(17) Any property which has been certified as an alcohol production facility as defined 13
in KRS 247.910; 14
(18) Aircraft, repair and replacement parts therefor, and supplies, except fuel, for the 15
direct operation of aircraft in interstate commerce and used exclusively for the 16
conveyance of property or passengers for hire. Nominal intrastate use shall not 17
subject the property to the taxes imposed by this chapter; 18
(19) Any property which has been certified as a fluidized bed energy production facility 19
as defined in KRS 211.390; 20
(20) (a) 1. Any property to be incorporated into the construction, rebuilding, 21
modification, or expansion of a blast furnace or any of its components or 22
appurtenant equipment or structures as part of an approved supplemental 23
project, as defined by KRS 154.26-010; and 24
2. Materials, supplies, and repair or replacement parts purchased for use in 25
the operation and maintenance of a blast furnace and related carbon 26
steel-making operations as part of an approved supplemental project, as 27 UNOFFICIAL COPY 24 RS BR 266
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defined by KRS 154.26-010. 1
(b) The exemptions provided in this subsection shall be effective for sales made: 2
1. On and after July 1, 2018; and 3
2. During the term of a supplemental project agreement entered into 4
pursuant to KRS 154.26-090; 5
(21) Beginning on October 1, 1986, food or food products purchased for human 6
consumption with food coupons issued by the United States Department of 7
Agriculture pursuant to the Food Stamp Act of 1977, as amended, and required to 8
be exempted by the Food Security Act of 1985 in order for the Commonwealth to 9
continue participation in the federal food stamp program; 10
(22) Machinery or equipment purchased or leased by a business, industry, or 11
organization in order to collect, source separate, compress, bale, shred, or otherwise 12
handle waste materials if the machinery or equipment is primarily used for 13
recycling purposes; 14
(23) Ratite birds and eggs to be used in an agricultural pursuit for the breeding and 15
production of ratite birds, feathers, hides, breeding stock, eggs, meat, and ratite by-16
products, and the following items used in this agricultural pursuit: 17
(a) Feed and feed additives; 18
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 19
and 20
(c) On-farm facilities, including equipment, machinery, attachments, repair and 21
replacement parts, and any materials incorporated into the construction, 22
renovation, or repair of the facilities. The exemption shall apply to incubation 23
systems, egg processing equipment, waterer and feeding systems, brooding 24
systems, ventilation systems, alarm systems, and curtain systems. In addition, 25
the exemption shall apply whether or not the seller is under contract to 26
deliver, assemble, and incorporate into real estate the equipment, machinery, 27 UNOFFICIAL COPY 24 RS BR 266
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attachments, repair and replacement parts, and any materials incorporated into 1
the construction, renovation, or repair of the facilities; 2
(24) Embryos and semen that are used in the reproduction of livestock, if the products of 3
these embryos and semen ordinarily constitute food for human consumption, and if 4
the sale is made to a person engaged in the business of farming; 5
(25) Llamas and alpacas to be used as beasts of burden or in an agricultural pursuit for 6
the breeding and production of hides, breeding stock, fiber and wool products, 7
meat, and llama and alpaca by-products, and the following items used in this 8
pursuit: 9
(a) Feed and feed additives; 10
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 11
and 12
(c) On-farm facilities, including equipment, machinery, attachments, repair and 13
replacement parts, and any materials incorporated into the construction, 14
renovation, or repair of the facilities. The exemption shall apply to waterer 15
and feeding systems, ventilation systems, and alarm systems. In addition, the 16
exemption shall apply whether or not the seller is under contract to deliver, 17
assemble, and incorporate into real estate the equipment, machinery, 18
attachments, repair and replacement parts, and any materials incorporated into 19
the construction, renovation, or repair of the facilities; 20
(26) Baling twine and baling wire for the baling of hay and straw; 21
(27) Water sold to a person regularly engaged in the business of farming and used in the: 22
(a) Production of crops; 23
(b) Production of milk for sale; or 24
(c) Raising and feeding of: 25
1. Livestock or poultry, the products of which ordinarily constitute food 26
for human consumption; or 27 UNOFFICIAL COPY 24 RS BR 266
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2. Ratites, llamas, alpacas, buffalo, cervids or aquatic organisms; 1
(28) Buffalos to be used as beasts of burden or in an agricultural pursuit for the 2
production of hides, breeding stock, meat, and buffalo by-products, and the 3
following items used in this pursuit: 4
(a) Feed and feed additives; 5
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 6
and 7
(c) On-farm facilities, including equipment, machinery, attachments, repair and 8
replacement parts, and any materials incorporated into the construction, 9
renovation, or repair of the facilities. The exemption shall apply to waterer 10
and feeding systems, ventilation systems, and alarm systems. In addition, the 11
exemption shall apply whether or not the seller is under contract to deliver, 12
assemble, and incorporate into real estate the equipment, machinery, 13
attachments, repair and replacement parts, and any materials incorporated into 14
the construction, renovation, or repair of the facilities; 15
(29) Aquatic organisms sold directly to or raised by a person regularly engaged in the 16
business of producing products of aquaculture, as defined in KRS 260.960, for sale, 17
and the following items used in this pursuit: 18
(a) Feed and feed additives; 19
(b) Water; 20
(c) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 21
and 22
(d) On-farm facilities, including equipment, machinery, attachments, repair and 23
replacement parts, and any materials incorporated into the construction, 24
renovation, or repair of the facilities and, any gasoline, special fuels, liquefied 25
petroleum gas, or natural gas used to operate the facilities. The exemption 26
shall apply, but not be limited to: waterer and feeding systems; ventilation, 27 UNOFFICIAL COPY 24 RS BR 266
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aeration, and heating systems; processing and storage systems; production 1
systems such as ponds, tanks, and raceways; harvest and transport equipment 2
and systems; and alarm systems. In addition, the exemption shall apply 3
whether or not the seller is under contract to deliver, assemble, and 4
incorporate into real estate the equipment, machinery, attachments, repair and 5
replacement parts, and any materials incorporated into the construction, 6
renovation, or repair of the facilities; 7
(30) Members of the genus cervidae permitted by KRS Chapter 150 that are used for the 8
production of hides, breeding stock, meat, and cervid by-products, and the 9
following items used in this pursuit: 10
(a) Feed and feed additives; 11
(b) Insecticides, fungicides, herbicides, rodenticides, and other chemicals; and 12
(c) On-site facilities, including equipment, machinery, attachments, repair and 13
replacement parts, and any materials incorporated into the construction, 14
renovation, or repair of the facilities. In addition, the exemption shall apply 15
whether or not the seller is under contract to deliver, assemble, and 16
incorporate into real estate the equipment, machinery, attachments, repair and 17
replacement parts, and any materials incorporated into the construction, 18
renovation, or repair of the facilities; 19
(31) (a) Repair or replacement parts for the direct operation or maintenance of a motor 20
vehicle, including any towed unit, used exclusively in interstate commerce for 21
the conveyance of property or passengers for hire, provided the motor vehicle 22
is licensed for use on the highway and its declared gross vehicle weight with 23
any towed unit is forty-four thousand and one (44,001) pounds or greater. 24
Nominal intrastate use shall not subject the property to the taxes imposed by 25
this chapter; and 26
(b) Repair or replacement parts for the direct operation and maintenance of a 27 UNOFFICIAL COPY 24 RS BR 266
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motor vehicle operating under a charter bus certificate issued by the 1
Transportation Cabinet under KRS Chapter 281, or under similar authority 2
granted by the United States Department of Transportation. 3
(c) For the purposes of this subsection, "repair or replacement parts" means tires, 4
brakes, engines, transmissions, drive trains, chassis, body parts, and their 5
components. "Repair or replacement parts" shall not include fuel, machine 6
oils, hydraulic fluid, brake fluid, grease, supplies, or accessories not essential 7
to the operation of the motor vehicle itself, except when sold as part of the 8
assembled unit, such as cigarette lighters, radios, lighting fixtures not 9
otherwise required by the manufacturer for operation of the vehicle, or tool or 10
utility boxes; 11
(32) Food donated by a retail food establishment or any other entity regulated under 12
KRS 217.127 to a nonprofit organization for distribution to the needy; 13
(33) Drugs and over-the counter drugs, as defined in KRS 139.472, that are purchased 14
by a person regularly engaged in the business of farming and used in the treatment 15
of cattle, sheep, goats, swine, poultry, ratite birds, llamas, alpacas, buffalo, aquatic 16
organisms, or cervids; 17
(34) (a) Building materials, fixtures, or supplies purchased by a construction 18
contractor if: 19
1. Fulfilled by a construction contract for a sewer or water project with: 20
a. A municipally owned water utility organized under KRS Chapter 21
96; 22
b. A water district or water commission formed or organized under 23
KRS Chapter 74; 24
c. A sanitation district established under KRS Chapter 220 or formed 25
pursuant to KRS Chapter 65; 26
d. A nonprofit corporation created under KRS 58.180 to act on behalf 27 UNOFFICIAL COPY 24 RS BR 266
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of a governmental agency in the acquisition and financing of 1
public projects; 2
e. Regional wastewater commissions formed under KRS Chapter 3
278; 4
f. A municipally owned joint sewer agency formed under KRS 5
Chapter 76; or 6
g. Any other governmental agency; and 7
2. The building materials, fixtures, or supplies: 8
a. Will be permanently incorporated into a structure or improvement 9
to real property, or will be completely consumed, in fulfilling a 10
construction contract for the purpose of furnishing water or sewer 11
services to the general public; and 12
b. Would be exempt if purchased directly by the entities listed in 13
subparagraph 1. of this paragraph. 14
(b) As used in this subsection, "construction contract" means a: 15
1. Lump sum contract; 16
2. Cost plus contract; 17
3. Materials only contract; 18
4. Labor and materials contract; or 19
5. Any other type of contract. 20
(c) The exemption provided in this subsection shall apply without regard to the 21
payment arrangement between the construction contractor, the retailer, and 22
the entities listed in paragraph (a)1. of this subsection or to the place of 23
delivery for the building materials, fixtures, or supplies; 24
(35) (a) On or after February 25, 2022, the rental of space for meetings, conventions, 25
short-term business uses, entertainment events, weddings, banquets, parties, 26
and other short-term social events, as referenced in KRS 139.200, if the tax 27 UNOFFICIAL COPY 24 RS BR 266
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established in KRS 139.200 is paid by the primary lessee to the lessor. 1
(b) For the purpose of this subsection, "primary lessee" means the person who 2
leases the space and who has a contract with the lessor of the space only if: 3
1. The contract between the lessor and the lessee specifies that the lessee 4
may sublease, subrent, or otherwise sell the space; and 5
2. The space is then sublet, subrented, or otherwise sold to exhibitors, 6
vendors, sponsors, or other entities and persons who will use the space 7
associated with the event to be conducted under the primary lease;[ and] 8
(36) Prewritten computer software access services sold to or purchased by a retailer that 9
develops prewritten computer software for print technology and uses and sells 10
prewritten computer software access services for print technology; and 11
(37) Menstrual discharge collection devices sold or purchased. 12
Section 4. KRS 139.480 (Effective January 1, 2025) is amended to read as 13
follows: 14
Any other provision of this chapter to the contrary notwithstanding, the terms "sale at 15
retail," "retail sale," "use," "storage," and "consumption," as used in this chapter, shall not 16
include the sale, use, storage, or other consumption of: 17
(1) Locomotives or rolling stock, including materials for the construction, repair, or 18
modification thereof, or fuel or supplies for the direct operation of locomotives and 19
trains, used or to be used in interstate commerce; 20
(2) Coal for the manufacture of electricity; 21
(3) (a) All energy or energy-producing fuels used in the course of manufacturing, 22
processing, mining, or refining and any related distribution, transmission, and 23
transportation services for this energy that are billed to the user, to the extent 24
that the cost of the energy or energy-producing fuels used, and related 25
distribution, transmission, and transportation services for this energy that are 26
billed to the user exceed three percent (3%) of the cost of production. 27 UNOFFICIAL COPY 24 RS BR 266
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(b) Cost of production shall be computed on the basis of a plant facility, which 1
shall include all operations within the continuous, unbroken, integrated 2
manufacturing or industrial processing process that ends with a product 3
packaged and ready for sale. 4
(c) A person who performs a manufacturing or industrial processing activity for a 5
fee and does not take ownership of the tangible personal property that is 6
incorporated into, or becomes the product of, the manufacturing or industrial 7
processing activity is a toller. For periods on or after July 1, 2018, the costs of 8
the tangible personal property shall be excluded from the toller's cost of 9
production at a plant facility with tolling operations in place as of July 1, 10
2018. 11
(d) For plant facilities that begin tolling operations after July 1, 2018, the costs of 12
tangible personal property shall be excluded from the toller's cost of 13
production if the toller: 14
1. Maintains a binding contract for periods after July 1, 2018, that governs 15
the terms, conditions, and responsibilities with a separate legal entity, 16
which holds title to the tangible personal property that is incorporated 17
into, or becomes the product of, the manufacturing or industrial 18
processing activity; 19
2. Maintains accounting records that show the expenses it incurs to fulfill 20
the binding contract that include but are not limited to energy or energy-21
producing fuels, materials, labor, procurement, depreciation, 22
maintenance, taxes, administration, and office expenses; 23
3. Maintains separate payroll, bank accounts, tax returns, and other records 24
that demonstrate its independent operations in the performance of its 25
tolling responsibilities; 26
4. Demonstrates one (1) or more substantial business purposes for the 27 UNOFFICIAL COPY 24 RS BR 266
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tolling operations germane to the overall manufacturing, industrial 1
processing activities, or corporate structure at the plant facility. A 2
business purpose is a purpose other than the reduction of sales tax 3
liability for the purchases of energy and energy-producing fuels; and 4
5. Provides information to the department upon request that documents 5
fulfillment of the requirements in subparagraphs 1. to 4. of this 6
paragraph and gives an overview of its tolling operations with an 7
explanation of how the tolling operations relate and connect with all 8
other manufacturing or industrial processing activities occurring at the 9
plant facility; 10
(4) Livestock of a kind the products of which ordinarily constitute food for human 11
consumption, provided the sales are made for breeding or dairy purposes and by or 12
to a person regularly engaged in the business of farming; 13
(5) Poultry for use in breeding or egg production; 14
(6) Farm work stock for use in farming operations; 15
(7) Seeds, the products of which ordinarily constitute food for human consumption or 16
are to be sold in the regular course of business, and commercial fertilizer to be 17
applied on land, the products from which are to be used for food for human 18
consumption or are to be sold in the regular course of business; provided such sales 19
are made to farmers who are regularly engaged in the occupation of tilling and 20
cultivating the soil for the production of crops as a business, or who are regularly 21
engaged in the occupation of raising and feeding livestock or poultry or producing 22
milk for sale; and provided further that tangible personal property so sold is to be 23
used only by those persons designated above who are so purchasing; 24
(8) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals to be 25
used in the production of crops as a business, or in the raising and feeding of 26
livestock or poultry, the products of which ordinarily constitute food for human 27 UNOFFICIAL COPY 24 RS BR 266
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consumption; 1
(9) Feed, including pre-mixes and feed additives, for livestock or poultry of a kind the 2
products of which ordinarily constitute food for human consumption; 3
(10) Machinery for new and expanded industry; 4
(11) Farm machinery. As used in this section, the term "farm machinery": 5
(a) Means machinery used exclusively and directly in the occupation of: 6
1. Tilling the soil for the production of crops as a business; 7
2. Raising and feeding livestock or poultry for sale; or 8
3. Producing milk for sale; 9
(b) Includes machinery, attachments, and replacements therefor, repair parts, and 10
replacement parts which are used or manufactured for use on, or in the 11
operation of farm machinery and which are necessary to the operation of the 12
machinery, and are customarily so used, including but not limited to combine 13
header wagons, combine header trailers, or any other implements specifically 14
designed and used to move or transport a combine head; and 15
(c) Does not include: 16
1. Automobiles; 17
2. Trucks; 18
3. Trailers, except combine header trailers; or 19
4. Truck-trailer combinations; 20
(12) Tombstones and other memorial grave markers; 21
(13) On-farm facilities used exclusively for grain or soybean storing, drying, processing, 22
or handling. The exemption applies to the equipment, machinery, attachments, 23
repair and replacement parts, and any materials incorporated into the construction, 24
renovation, or repair of the facilities; 25
(14) On-farm facilities used exclusively for raising poultry or livestock. The exemption 26
shall apply to the equipment, machinery, attachments, repair and replacement parts, 27 UNOFFICIAL COPY 24 RS BR 266
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and any materials incorporated into the construction, renovation, or repair of the 1
facilities. The exemption shall apply but not be limited to vent board equipment, 2
waterer and feeding systems, brooding systems, ventilation systems, alarm systems, 3
and curtain systems. In addition, the exemption shall apply whether or not the seller 4
is under contract to deliver, assemble, and incorporate into real estate the 5
equipment, machinery, attachments, repair and replacement parts, and any materials 6
incorporated into the construction, renovation, or repair of the facilities; 7
(15) Gasoline, special fuels, liquefied petroleum gas, and natural gas used exclusively 8
and directly to: 9
(a) Operate farm machinery as defined in subsection (11) of this section; 10
(b) Operate on-farm grain or soybean drying facilities as defined in subsection 11
(13) of this section; 12
(c) Operate on-farm poultry or livestock facilities defined in subsection (14) of 13
this section; 14
(d) Operate on-farm ratite facilities defined in subsection (23) of this section; 15
(e) Operate on-farm llama or alpaca facilities as defined in subsection (25) of this 16
section; or 17
(f) Operate on-farm dairy facilities; 18
(16) Textbooks, including related workbooks and other course materials, purchased for 19
use in a course of study conducted by an institution which qualifies as a nonprofit 20
educational institution under KRS 139.495. The term "course materials" means only 21
those items specifically required of all students for a particular course but shall not 22
include notebooks, paper, pencils, calculators, tape recorders, or similar student 23
aids; 24
(17) Any property which has been certified as an alcohol production facility as defined 25
in KRS 247.910; 26
(18) Aircraft, repair and replacement parts therefor, and supplies, except fuel, for the 27 UNOFFICIAL COPY 24 RS BR 266
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direct operation of aircraft in interstate commerce and used exclusively for the 1
conveyance of property or passengers for hire. Nominal intrastate use shall not 2
subject the property to the taxes imposed by this chapter; 3
(19) Any property which has been certified as a fluidized bed energy production facility 4
as defined in KRS 211.390; 5
(20) (a) 1. Any property to be incorporated into the construction, rebuilding, 6
modification, or expansion of a blast furnace or any of its components or 7
appurtenant equipment or structures as part of an approved supplemental 8
project, as defined by KRS 154.26-010; and 9
2. Materials, supplies, and repair or replacement parts purchased for use in 10
the operation and maintenance of a blast furnace and related carbon 11
steel-making operations as part of an approved supplemental project, as 12
defined by KRS 154.26-010. 13
(b) The exemptions provided in this subsection shall be effective for sales made: 14
1. On and after July 1, 2018; and 15
2. During the term of a supplemental project agreement entered into 16
pursuant to KRS 154.26-090; 17
(21) Beginning on October 1, 1986, food or food products purchased for human 18
consumption with food coupons issued by the United States Department of 19
Agriculture pursuant to the Food Stamp Act of 1977, as amended, and required to 20
be exempted by the Food Security Act of 1985 in order for the Commonwealth to 21
continue participation in the federal food stamp program; 22
(22) Machinery or equipment purchased or leased by a business, industry, or 23
organization in order to collect, source separate, compress, bale, shred, or otherwise 24
handle waste materials if the machinery or equipment is primarily used for 25
recycling purposes; 26
(23) Ratite birds and eggs to be used in an agricultural pursuit for the breeding and 27 UNOFFICIAL COPY 24 RS BR 266
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production of ratite birds, feathers, hides, breeding stock, eggs, meat, and ratite by-1
products, and the following items used in this agricultural pursuit: 2
(a) Feed and feed additives; 3
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 4
and 5
(c) On-farm facilities, including equipment, machinery, attachments, repair and 6
replacement parts, and any materials incorporated into the construction, 7
renovation, or repair of the facilities. The exemption shall apply to incubation 8
systems, egg processing equipment, waterer and feeding systems, brooding 9
systems, ventilation systems, alarm systems, and curtain systems. In addition, 10
the exemption shall apply whether or not the seller is under contract to 11
deliver, assemble, and incorporate into real estate the equipment, machinery, 12
attachments, repair and replacement parts, and any materials incorporated into 13
the construction, renovation, or repair of the facilities; 14
(24) Embryos and semen that are used in the reproduction of livestock, if the products of 15
these embryos and semen ordinarily constitute food for human consumption, and if 16
the sale is made to a person engaged in the business of farming; 17
(25) Llamas and alpacas to be used as beasts of burden or in an agricultural pursuit for 18
the breeding and production of hides, breeding stock, fiber and wool products, 19
meat, and llama and alpaca by-products, and the following items used in this 20
pursuit: 21
(a) Feed and feed additives; 22
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 23
and 24
(c) On-farm facilities, including equipment, machinery, attachments, repair and 25
replacement parts, and any materials incorporated into the construction, 26
renovation, or repair of the facilities. The exemption shall apply to waterer 27 UNOFFICIAL COPY 24 RS BR 266
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and feeding systems, ventilation systems, and alarm systems. In addition, the 1
exemption shall apply whether or not the seller is under contract to deliver, 2
assemble, and incorporate into real estate the equipment, machinery, 3
attachments, repair and replacement parts, and any materials incorporated into 4
the construction, renovation, or repair of the facilities; 5
(26) Baling twine and baling wire for the baling of hay and straw; 6
(27) Water sold to a person regularly engaged in the business of farming and used in the: 7
(a) Production of crops; 8
(b) Production of milk for sale; or 9
(c) Raising and feeding of: 10
1. Livestock or poultry, the products of which ordinarily constitute food 11
for human consumption; or 12
2. Ratites, llamas, alpacas, buffalo, cervids or aquatic organisms; 13
(28) Buffalos to be used as beasts of burden or in an agricultural pursuit for the 14
production of hides, breeding stock, meat, and buffalo by-products, and the 15
following items used in this pursuit: 16
(a) Feed and feed additives; 17
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 18
and 19
(c) On-farm facilities, including equipment, machinery, attachments, repair and 20
replacement parts, and any materials incorporated into the construction, 21
renovation, or repair of the facilities. The exemption shall apply to waterer 22
and feeding systems, ventilation systems, and alarm systems. In addition, the 23
exemption shall apply whether or not the seller is under contract to deliver, 24
assemble, and incorporate into real estate the equipment, machinery, 25
attachments, repair and replacement parts, and any materials incorporated into 26
the construction, renovation, or repair of the facilities; 27 UNOFFICIAL COPY 24 RS BR 266
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(29) Aquatic organisms sold directly to or raised by a person regularly engaged in the 1
business of producing products of aquaculture, as defined in KRS 260.960, for sale, 2
and the following items used in this pursuit: 3
(a) Feed and feed additives; 4
(b) Water; 5
(c) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 6
and 7
(d) On-farm facilities, including equipment, machinery, attachments, repair and 8
replacement parts, and any materials incorporated into the construction, 9
renovation, or repair of the facilities and, any gasoline, special fuels, liquefied 10
petroleum gas, or natural gas used to operate the facilities. The exemption 11
shall apply, but not be limited to: waterer and feeding systems; ventilation, 12
aeration, and heating systems; processing and storage systems; production 13
systems such as ponds, tanks, and raceways; harvest and transport equipment 14
and systems; and alarm systems. In addition, the exemption shall apply 15
whether or not the seller is under contract to deliver, assemble, and 16
incorporate into real estate the equipment, machinery, attachments, repair and 17
replacement parts, and any materials incorporated into the construction, 18
renovation, or repair of the facilities; 19
(30) Members of the genus cervidae permitted by KRS Chapter 150 that are used for the 20
production of hides, breeding stock, meat, and cervid by-products, and the 21
following items used in this pursuit: 22
(a) Feed and feed additives; 23
(b) Insecticides, fungicides, herbicides, rodenticides, and other chemicals; and 24
(c) On-site facilities, including equipment, machinery, attachments, repair and 25
replacement parts, and any materials incorporated into the construction, 26
renovation, or repair of the facilities. In addition, the exemption shall apply 27 UNOFFICIAL COPY 24 RS BR 266
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whether or not the seller is under contract to deliver, assemble, and 1
incorporate into real estate the equipment, machinery, attachments, repair and 2
replacement parts, and any materials incorporated into the construction, 3
renovation, or repair of the facilities; 4
(31) (a) Repair or replacement parts for the direct operation or maintenance of a motor 5
vehicle, including any towed unit, used exclusively in interstate commerce for 6
the conveyance of property or passengers for hire, provided the motor vehicle 7
is licensed for use on the highway and its declared gross vehicle weight with 8
any towed unit is forty-four thousand and one (44,001) pounds or greater. 9
Nominal intrastate use shall not subject the property to the taxes imposed by 10
this chapter; and 11
(b) Repair or replacement parts for the direct operation and maintenance of a 12
motor vehicle operating under a charter bus certificate issued by the 13
Transportation Cabinet under KRS Chapter 281, or under similar authority 14
granted by the United States Department of Transportation. 15
(c) For the purposes of this subsection, "repair or replacement parts" means tires, 16
brakes, engines, transmissions, drive trains, chassis, body parts, and their 17
components. "Repair or replacement parts" shall not include fuel, machine 18
oils, hydraulic fluid, brake fluid, grease, supplies, or accessories not essential 19
to the operation of the motor vehicle itself, except when sold as part of the 20
assembled unit, such as cigarette lighters, radios, lighting fixtures not 21
otherwise required by the manufacturer for operation of the vehicle, or tool or 22
utility boxes; 23
(32) Food donated by a retail food establishment or any other entity regulated under 24
KRS 217.127 to a nonprofit organization for distribution to the needy; 25
(33) Drugs and over-the counter drugs, as defined in KRS 139.472, that are purchased 26
by a person regularly engaged in the business of farming and used in the treatment 27 UNOFFICIAL COPY 24 RS BR 266
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of cattle, sheep, goats, swine, poultry, ratite birds, llamas, alpacas, buffalo, aquatic 1
organisms, or cervids; 2
(34) (a) Building materials, fixtures, or supplies purchased by a construction 3
contractor if: 4
1. Fulfilled by a construction contract for a sewer or water project with: 5
a. A municipally owned water utility organized under KRS Chapter 6
96; 7
b. A water district or water commission formed or organized under 8
KRS Chapter 74; 9
c. A sanitation district established under KRS Chapter 220 or formed 10
pursuant to KRS Chapter 65; 11
d. A nonprofit corporation created under KRS 58.180 to act on behalf 12
of a governmental agency in the acquisition and financing of 13
public projects; 14
e. Regional wastewater commissions formed under KRS Chapter 15
278; 16
f. A municipally owned joint sewer agency formed under KRS 17
Chapter 76; or 18
g. Any other governmental agency; and 19
2. The building materials, fixtures, or supplies: 20
a. Will be permanently incorporated into a structure or improvement 21
to real property, or will be completely consumed, in fulfilling a 22
construction contract for the purpose of furnishing water or sewer 23
services to the general public; and 24
b. Would be exempt if purchased directly by the entities listed in 25
subparagraph 1. of this paragraph. 26
(b) As used in this subsection, "construction contract" means a: 27 UNOFFICIAL COPY 24 RS BR 266
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1. Lump sum contract; 1
2. Cost plus contract; 2
3. Materials only contract; 3
4. Labor and materials contract; or 4
5. Any other type of contract. 5
(c) The exemption provided in this subsection shall apply without regard to the 6
payment arrangement between the construction contractor, the retailer, and 7
the entities listed in paragraph (a)1. of this subsection or to the place of 8
delivery for the building materials, fixtures, or supplies; 9
(35) (a) On or after February 25, 2022, the rental of space for meetings, conventions, 10
short-term business uses, entertainment events, weddings, banquets, parties, 11
and other short-term social events, as referenced in KRS 139.200, if the tax 12
established in KRS 139.200 is paid by the primary lessee to the lessor. 13
(b) For the purpose of this subsection, "primary lessee" means the person who 14
leases the space and who has a contract with the lessor of the space only if: 15
1. The contract between the lessor and the lessee specifies that the lessee 16
may sublease, subrent, or otherwise sell the space; and 17
2. The space is then sublet, subrented, or otherwise sold to exhibitors, 18
vendors, sponsors, or other entities and persons who will use the space 19
associated with the event to be conducted under the primary lease; 20
(36) Prewritten computer software access services sold to or purchased by a retailer that 21
develops prewritten computer software for print technology and uses and sells 22
prewritten computer software access services for print technology; [and] 23
(37) Menstrual discharge collection devices sold or purchased; and 24
(38)[(37)] Medicinal cannabis as defined in KRS 218B.010 when sold, used, stored, or 25
consumed in accordance with KRS Chapter 218B. 26
Section 5. There is hereby appropriated General Fund moneys in the amount of 27 UNOFFICIAL COPY 24 RS BR 266
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$2,000,000 in fiscal year 2024-2025 to the Learning and Results Services budget 1
unit within the Department of Education to provide menstrual discharge collection 2
devices for students. 3
Section 6. This Act takes effect August 1, 2024. 4