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AN ACT relating to a sales and use tax exemption for veterans' service animals. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 139.010 is amended to read as follows: 3
As used in this chapter, unless the context otherwise provides: 4
(1) (a) "Admissions" means the fees paid for: 5
1. The right of entrance to a display, program, sporting event, music 6
concert, performance, play, show, movie, exhibit, fair, or other 7
entertainment or amusement event or venue; and 8
2. The privilege of using facilities or participating in an event or activity, 9
including but not limited to: 10
a. Bowling centers; 11
b. Skating rinks; 12
c. Health spas; 13
d. Swimming pools; 14
e. Tennis courts; 15
f. Weight training facilities; 16
g. Fitness and recreational sports centers; and 17
h. Golf courses, both public and private; 18
regardless of whether the fee paid is per use or in any other form, 19
including but not limited to an initiation fee, monthly fee, membership 20
fee, or combination thereof. 21
(b) "Admissions" does not include: 22
1. Any fee paid to enter or participate in a fishing tournament; or 23
2. Any fee paid for the use of a boat ramp for the purpose of allowing 24
boats to be launched into or hauled out from the water; 25
(2) "Advertising and promotional direct mail" means direct mail the primary purpose of 26
which is to attract public attention to a product, person, business, or organization, or 27 UNOFFICIAL COPY 24 RS BR 193
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to attempt to sell, popularize, or secure financial support for a product, person, 1
business, or organization. As used in this definition, "product" means tangible 2
personal property, an item transferred electronically, or a service; 3
(3) "Business" includes any activity engaged in by any person or caused to be engaged 4
in by that person with the object of gain, benefit, or advantage, either direct or 5
indirect; 6
(4) "Commonwealth" means the Commonwealth of Kentucky; 7
(5) (a) "Cosmetic surgery services" means modifications to all areas of the head, 8
neck, and body to enhance appearance through surgical and medical 9
techniques. 10
(b) "Cosmetic surgery services" does not include surgery services that are 11
medically necessary to reconstruct or correct dysfunctional areas of the face 12
and body due to birth disorders, trauma, burns, or disease; 13
(6) "Department" means the Department of Revenue; 14
(7) (a) "Digital audio-visual works" means a series of related images which, when 15
shown in succession, impart an impression of motion, with accompanying 16
sounds, if any. 17
(b) "Digital audio-visual works" includes movies, motion pictures, musical 18
videos, news and entertainment programs, and live events. 19
(c) "Digital audio-visual works" shall not include video greeting cards, video 20
games, and electronic games; 21
(8) (a) "Digital audio works" means works that result from the fixation of a series of 22
musical, spoken, or other sounds. 23
(b) "Digital audio works" includes ringtones, recorded or live songs, music, 24
readings of books or other written materials, speeches, or other sound 25
recordings. 26
(c) "Digital audio works" shall not include audio greeting cards sent by electronic 27 UNOFFICIAL COPY 24 RS BR 193
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mail; 1
(9) (a) "Digital books" means works that are generally recognized in the ordinary and 2
usual sense as books, including any literary work expressed in words, 3
numbers, or other verbal or numerical symbols or indicia if the literary work 4
is generally recognized in the ordinary or usual sense as a book. 5
(b) "Digital books" shall not include digital audio-visual works, digital audio 6
works, periodicals, magazines, newspapers, or other news or information 7
products, chat rooms, or weblogs; 8
(10) (a) "Digital code" means a code which provides a purchaser with a right to obtain 9
one (1) or more types of digital property. A "digital code" may be obtained by 10
any means, including electronic mail messaging or by tangible means, 11
regardless of the code's designation as a song code, video code, or book code. 12
(b) "Digital code" shall not include a code that represents: 13
1. A stored monetary value that is deducted from a total as it is used by the 14
purchaser; or 15
2. A redeemable card, gift card, or gift certificate that entitles the holder to 16
select specific types of digital property; 17
(11) (a) "Digital property" means any of the following which is transferred 18
electronically: 19
1. Digital audio works; 20
2. Digital books; 21
3. Finished artwork; 22
4. Digital photographs; 23
5. Periodicals; 24
6. Newspapers; 25
7. Magazines; 26
8. Video greeting cards; 27 UNOFFICIAL COPY 24 RS BR 193
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9. Audio greeting cards; 1
10. Video games; 2
11. Electronic games; or 3
12. Any digital code related to this property. 4
(b) "Digital property" shall not include digital audio-visual works or satellite 5
radio programming; 6
(12) (a) "Direct mail" means printed material delivered or distributed by United States 7
mail or other delivery service to a mass audience or to addressees on a mailing 8
list provided by the purchaser or at the direction of the purchaser when the 9
cost of the items are not billed directly to the recipient. 10
(b) "Direct mail" includes tangible personal property supplied directly or 11
indirectly by the purchaser to the direct mail retailer for inclusion in the 12
package containing the printed material. 13
(c) "Direct mail" does not include multiple items of printed material delivered to 14
a single address; 15
(13) "Directly used in the manufacturing or industrial processing process" means the 16
process that commences with the movement of raw materials from storage into a 17
continuous, unbroken, integrated process and ends when the finished product is 18
packaged and ready for sale; 19
(14) "Disability" means a physical or mental impairment, including a sensory, 20
psychiatric, intellectual, or post-traumatic stress disorder, that substantially limits 21
one (1) or more of the major life activities of an individual; 22
(15) "Disabled veteran" means a person with a disability, if: 23
(a) The disability has been determined by the United States Department of 24
Veterans Affairs to affect a veteran that is an active or retired member of 25
the active duty or reserve components of the Armed Forces of the United 26
States, which include the Army, Marine Corps, Navy, Air Force, Space 27 UNOFFICIAL COPY 24 RS BR 193
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Force, Coast Guard, and National Guard; and 1
(b) The United States Department of Veterans Affairs has used one (1) or more 2
of the veteran's disabilities to assign a disability rating to the veteran; 3
(16)[(14)] (a) "Executive employee recruitment services" means services provided by 4
a person to locate potential candidates to fill open senior-level management 5
positions. 6
(b) "Executive employee recruitment services" includes but is not limited to 7
making a detailed list of client requirements, researching and identifying 8
potential candidates, performing prescreening interviews, and providing 9
contract and salary negotiations; 10
(17)[(15)] (a) "Extended warranty services" means services provided through a service 11
contract agreement between the contract provider and the purchaser where the 12
purchaser agrees to pay compensation for the contract and the provider agrees 13
to repair, replace, support, or maintain tangible personal property, digital 14
property, real property, or prewritten computer software access services 15
according to the terms of the contract. 16
(b) "Extended warranty services" does not include the sale of a service contract 17
agreement for tangible personal property to be used by a small telephone 18
utility as defined in KRS 278.516 or a Tier III CMRS provider as defined in 19
KRS 65.7621 to deliver communications services as defined in KRS 136.602 20
or broadband; 21
(18)[(16)] (a) "Finished artwork" means final art that is used for actual reproduction 22
by photomechanical or other processes or for display purposes. 23
(b) "Finished artwork" includes: 24
1. Assemblies; 25
2. Charts; 26
3. Designs; 27 UNOFFICIAL COPY 24 RS BR 193
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4. Drawings; 1
5. Graphs; 2
6. Illustrative materials; 3
7. Lettering; 4
8. Mechanicals; 5
9. Paintings; and 6
10. Paste-ups; 7
(19)[(17)] (a) "Gross receipts" and "sales price" mean the total amount or 8
consideration, including cash, credit, property, and services, for which 9
tangible personal property, digital property, or services are sold, leased, or 10
rented, valued in money, whether received in money or otherwise, without 11
any deduction for any of the following: 12
1. The retailer's cost of the tangible personal property, digital property, or 13
services sold; 14
2. The cost of the materials used, labor or service cost, interest, losses, all 15
costs of transportation to the retailer, all taxes imposed on the retailer, or 16
any other expense of the retailer; 17
3. Charges by the retailer for any services necessary to complete the sale; 18
4. Delivery charges, which are defined as charges by the retailer for the 19
preparation and delivery to a location designated by the purchaser 20
including transportation, shipping, postage, handling, crating, and 21
packing; 22
5. Any amount for which credit is given to the purchaser by the retailer, 23
other than credit for tangible personal property or digital property traded 24
when the tangible personal property or digital property traded is of like 25
kind and character to the property purchased and the property traded is 26
held by the retailer for resale; and 27 UNOFFICIAL COPY 24 RS BR 193
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6. The amount charged for labor or services rendered in installing or 1
applying the tangible personal property, digital property, or service sold. 2
(b) "Gross receipts" and "sales price" shall include consideration received by the 3
retailer from a third party if: 4
1. The retailer actually receives consideration from a third party and the 5
consideration is directly related to a price reduction or discount on the 6
sale to the purchaser; 7
2. The retailer has an obligation to pass the price reduction or discount 8
through to the purchaser; 9
3. The amount of consideration attributable to the sale is fixed and 10
determinable by the retailer at the time of the sale of the item to the 11
purchaser; and 12
4. One (1) of the following criteria is met: 13
a. The purchaser presents a coupon, certificate, or other 14
documentation to the retailer to claim a price reduction or discount 15
where the coupon, certificate, or documentation is authorized, 16
distributed, or granted by a third party with the understanding that 17
the third party will reimburse any seller to whom the coupon, 18
certificate, or documentation is presented; 19
b. The price reduction or discount is identified as a third-party price 20
reduction or discount on the invoice received by the purchaser or 21
on a coupon, certificate, or other documentation presented by the 22
purchaser; or 23
c. The purchaser identifies himself or herself to the retailer as a 24
member of a group or organization entitled to a price reduction or 25
discount. A "preferred customer" card that is available to any 26
patron does not constitute membership in such a group. 27 UNOFFICIAL COPY 24 RS BR 193
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(c) "Gross receipts" and "sales price" shall not include: 1
1. Discounts, including cash, term, or coupons that are not reimbursed by a 2
third party and that are allowed by a retailer and taken by a purchaser on 3
a sale; 4
2. Interest, financing, and carrying charges from credit extended on the 5
sale of tangible personal property, digital property, or services, if the 6
amount is separately stated on the invoice, bill of sale, or similar 7
document given to the purchaser; 8
3. Any taxes legally imposed directly on the purchaser that are separately 9
stated on the invoice, bill of sale, or similar document given to the 10
purchaser; or 11
4. Local alcohol regulatory license fees authorized under KRS 243.075 that 12
are separately stated on the invoice, bill of sale, or similar document 13
given to the purchaser. 14
(d) As used in this subsection, "third party" means a person other than the 15
purchaser; 16
(20)[(18)] "In this state" or "in the state" means within the exterior limits of the 17
Commonwealth and includes all territory within these limits owned by or ceded to 18
the United States of America; 19
(21)[(19)] "Industrial processing" includes: 20
(a) Refining; 21
(b) Extraction of minerals, ores, coal, clay, stone, petroleum, or natural gas; 22
(c) Mining, quarrying, fabricating, and industrial assembling; 23
(d) The processing and packaging of raw materials, in-process materials, and 24
finished products; and 25
(e) The processing and packaging of farm and dairy products for sale; 26
(22)[(20)] (a) "Lease or rental" means any transfer of possession or control of tangible 27 UNOFFICIAL COPY 24 RS BR 193
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personal property for a fixed or indeterminate term for consideration. A lease 1
or rental shall include future options to: 2
1. Purchase the property; or 3
2. Extend the terms of the agreement and agreements covering trailers 4
where the amount of consideration may be increased or decreased by 5
reference to the amount realized upon sale or disposition of the property 6
as defined in 26 U.S.C. sec. 7701(h)(1). 7
(b) "Lease or rental" shall not include: 8
1. A transfer of possession or control of property under a security 9
agreement or deferred payment plan that requires the transfer of title 10
upon completion of the required payments; 11
2. A transfer of possession or control of property under an agreement that 12
requires the transfer of title upon completion of the required payments 13
and payment of an option price that does not exceed the greater of one 14
hundred dollars ($100) or one percent (1%) of the total required 15
payments; or 16
3. Providing tangible personal property and an operator for the tangible 17
personal property for a fixed or indeterminate period of time. To qualify 18
for this exclusion, the operator must be necessary for the equipment to 19
perform as designed, and the operator must do more than maintain, 20
inspect, or setup the tangible personal property. 21
(c) This definition shall apply regardless of the classification of a transaction 22
under generally accepted accounting principles, the Internal Revenue Code, or 23
other provisions of federal, state, or local law; 24
(23)[(21)] (a) "Lobbying services" means the act of promoting or securing passage of 25
legislation or an attempt to influence or sway a public official or other public 26
servant toward a desired action, including but not limited to the support of or 27 UNOFFICIAL COPY 24 RS BR 193
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opposition to a project or the passage, amendment, defeat, approval, or veto of 1
any legislation, regulation, rule, or ordinance; 2
(b) "Lobbying services" includes but is not limited to the performance of 3
activities described as executive agency lobbying activities as defined in KRS 4
11A.201, activities described under the definition of lobby in KRS 6.611, and 5
any similar activities performed at the local, state, or federal levels; 6
(24)[(22)] (a) "Machinery for new and expanded industry" means machinery: 7
1. Directly used in the manufacturing or industrial processing process of: 8
a. Tangible personal property at a plant facility; 9
b. Distilled spirits or wine at a plant facility or on the premises of a 10
distiller, rectifier, winery, or small farm winery licensed under 11
KRS 243.030 that includes a retail establishment on the premises; 12
or 13
c. Malt beverages at a plant facility or on the premises of a brewer or 14
microbrewery licensed under KRS 243.040 that includes a retail 15
establishment; 16
2. Which is incorporated for the first time into: 17
a. A plant facility established in this state; or 18
b. Licensed premises located in this state; and 19
3. Which does not replace machinery in the plant facility or licensed 20
premises unless that machinery purchased to replace existing machinery: 21
a. Increases the consumption of recycled materials at the plant 22
facility by not less than ten percent (10%); 23
b. Performs different functions; 24
c. Is used to manufacture a different product; or 25
d. Has a greater productive capacity, as measured in units of 26
production, than the machinery being replaced. 27 UNOFFICIAL COPY 24 RS BR 193
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(b) "Machinery for new and expanded industry" does not include repair, 1
replacement, or spare parts of any kind, regardless of whether the purchase of 2
repair, replacement, or spare parts is required by the manufacturer or seller as 3
a condition of sale or as a condition of warranty; 4
(25)[(23)] "Manufacturing" means any process through which material having little or 5
no commercial value for its intended use before processing has appreciable 6
commercial value for its intended use after processing by the machinery; 7
(26)[(24)] "Marketplace" means any physical or electronic means through which one (1) 8
or more retailers may advertise and sell tangible personal property, digital property, 9
or services, or lease tangible personal property or digital property, such as a catalog, 10
Internet website, or television or radio broadcast, regardless of whether the tangible 11
personal property, digital property, or retailer is physically present in this state; 12
(27)[(25)] (a) "Marketplace provider" means a person, including any affiliate of the 13
person, that facilitates a retail sale by satisfying subparagraphs 1. and 2. of 14
this paragraph as follows: 15
1. The person directly or indirectly: 16
a. Lists, makes available, or advertises tangible personal property, 17
digital property, or services for sale by a marketplace retailer in a 18
marketplace owned, operated, or controlled by the person; 19
b. Facilitates the sale of a marketplace retailer's product through a 20
marketplace by transmitting or otherwise communicating an offer 21
or acceptance of a retail sale of tangible personal property, digital 22
property, or services between a marketplace retailer and a 23
purchaser in a forum including a shop, store, booth, catalog, 24
Internet site, or similar forum; 25
c. Owns, rents, licenses, makes available, or operates any electronic 26
or physical infrastructure or any property, process, method, 27 UNOFFICIAL COPY 24 RS BR 193
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copyright, trademark, or patent that connects marketplace retailers 1
to purchasers for the purpose of making retail sales of tangible 2
personal property, digital property, or services; 3
d. Provides a marketplace for making retail sales of tangible personal 4
property, digital property, or services, or otherwise facilitates retail 5
sales of tangible personal property, digital property, or services, 6
regardless of ownership or control of the tangible personal 7
property, digital property, or services, that are the subject of the 8
retail sale; 9
e. Provides software development or research and development 10
activities related to any activity described in this subparagraph, if 11
the software development or research and development activities 12
are directly related to the physical or electronic marketplace 13
provided by a marketplace provider; 14
f. Provides or offers fulfillment or storage services for a marketplace 15
retailer; 16
g. Sets prices for a marketplace retailer's sale of tangible personal 17
property, digital property, or services; 18
h. Provides or offers customer service to a marketplace retailer or a 19
marketplace retailer's customers, or accepts or assists with taking 20
orders, returns, or exchanges of tangible personal property, digital 21
property, or services sold by a marketplace retailer; or 22
i. Brands or otherwise identifies sales as those of the marketplace 23
provider; and 24
2. The person directly or indirectly: 25
a. Collects the sales price or purchase price of a retail sale of tangible 26
personal property, digital property, or services; 27 UNOFFICIAL COPY 24 RS BR 193
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b. Provides payment processing services for a retail sale of tangible 1
personal property, digital property, or services; 2
c. Through terms and conditions, agreements, or arrangements with a 3
third party, collects payment in connection with a retail sale of 4
tangible personal property, digital property, or services from a 5
purchaser and transmits that payment to the marketplace retailer, 6
regardless of whether the person collecting and transmitting the 7
payment receives compensation or other consideration in exchange 8
for the service; or 9
d. Provides a virtual currency that purchasers are allowed or required 10
to use to purchase tangible personal property, digital property, or 11
services. 12
(b) "Marketplace provider" includes but is not limited to a person that satisfies the 13
requirements of this subsection through the ownership, operation, or control 14
of a digital distribution service, digital distribution platform, online portal, or 15
application store; 16
(28)[(26)] "Marketplace retailer" means a seller that makes retail sales through any 17
marketplace owned, operated, or controlled by a marketplace provider; 18
(29)[(27)] (a) "Occasional sale" includes: 19
1. A sale of tangible personal property or digital property not held or used 20
by a seller in the course of an activity for which he or she is required to 21
hold a seller's permit, provided such sale is not one (1) of a series of 22
sales sufficient in number, scope, and character to constitute an activity 23
requiring the holding of a seller's permit. In the case of the sale of the 24
entire, or a substantial portion of the nonretail assets of the seller, the 25
number of previous sales of similar assets shall be disregarded in 26
determining whether or not the current sale or sales shall qualify as an 27 UNOFFICIAL COPY 24 RS BR 193
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occasional sale; or 1
2. Any transfer of all or substantially all the tangible personal property or 2
digital property held or used by a person in the course of such an activity 3
when after such transfer the real or ultimate ownership of such property 4
is substantially similar to that which existed before such transfer. 5
(b) For the purposes of this subsection, stockholders, bondholders, partners, or 6
other persons holding an interest in a corporation or other entity are regarded 7
as having the "real or ultimate ownership" of the tangible personal property or 8
digital property of such corporation or other entity; 9
(30)[(28)] (a) "Other direct mail" means any direct mail that is not advertising and 10
promotional direct mail, regardless of whether advertising and promotional 11
direct mail is included in the same mailing. 12
(b) "Other direct mail" includes but is not limited to: 13
1. Transactional direct mail that contains personal information specific to 14
the addressee, including but not limited to invoices, bills, statements of 15
account, and payroll advices; 16
2. Any legally required mailings, including but not limited to privacy 17
notices, tax reports, and stockholder reports; and 18
3. Other nonpromotional direct mail delivered to existing or former 19
shareholders, customers, employees, or agents, including but not limited 20
to newsletters and informational pieces. 21
(c) "Other direct mail" does not include the development of billing information or 22
the provision of any data processing service that is more than incidental to the 23
production of printed material; 24
(31)[(29)] "Person" includes any individual, firm, copartnership, joint venture, 25
association, social club, fraternal organization, corporation, estate, trust, business 26
trust, receiver, trustee, syndicate, cooperative, assignee, governmental unit or 27 UNOFFICIAL COPY 24 RS BR 193
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agency, or any other group or combination acting as a unit; 1
(32)[(30)] "Permanent," as the term applies to digital property, means perpetual or for an 2
indefinite or unspecified length of time; 3
(33)[(31)] (a) "Photography and photofinishing services" means: 4
1. The taking, developing, or printing of an original photograph; or 5
2. Image editing, including shadow removal, tone adjustments, vertical and 6
horizontal alignment and cropping, composite image creation, 7
formatting, watermarking printing, and delivery of an original 8
photograph in the form of tangible personal property, digital property, or 9
other media. 10
(b) "Photography and photofinishing services" does not include photography 11
services necessary for medical or dental health; 12
(34)[(32)] "Plant facility" means a single location that is exclusively dedicated to 13
manufacturing or industrial processing activities. A location shall be deemed to be 14
exclusively dedicated to manufacturing or industrial processing activities even if 15
retail sales are made there, provided that the retail sales are incidental to the 16
manufacturing or industrial processing activities occurring at the location. The term 17
"plant facility" shall not include any restaurant, grocery store, shopping center, or 18
other retail establishment; 19
(35)[(33)] (a) "Prewritten computer software" means: 20
1. Computer software, including prewritten upgrades, that are not designed 21
and developed by the author or other creator to the specifications of a 22
specific purchaser; 23
2. Software designed and developed by the author or other creator to the 24
specifications of a specific purchaser when it is sold to a person other 25
than the original purchaser; or 26
3. Any portion of prewritten computer software that is modified or 27 UNOFFICIAL COPY 24 RS BR 193
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enhanced in any manner, where the modification or enhancement is 1
designed and developed to the specifications of a specific purchaser, 2
unless there is a reasonable, separately stated charge on an invoice or 3
other statement of the price to the purchaser for the modification or 4
enhancement. 5
(b) When a person modifies or enhances computer software of which the person 6
is not the author or creator, the person shall be deemed to be the author or 7
creator only of the modifications or enhancements the person actually made. 8
(c) The combining of two (2) or more prewritten computer software programs or 9
portions thereof does not cause the combination to be other than prewritten 10
computer software; 11
(36)[(34)] "Prewritten computer software access services" means the right of access to 12
prewritten computer software where the object of the transaction is to use the 13
prewritten computer software while possession of the prewritten computer software 14
is maintained by the seller or a third party, wherever located, regardless of whether 15
the charge for the access or use is on a per use, per user, per license, subscription, or 16
some other basis; 17
(37)[(35)] (a) "Purchase" means any transfer of title or possession, exchange, barter, 18
lease, or rental, conditional or otherwise, in any manner or by any means 19
whatsoever, of: 20
1. Tangible personal property; 21
2. An extended warranty service; 22
3. Digital property transferred electronically; or 23
4. Services included in KRS 139.200; 24
for a consideration. 25
(b) "Purchase" includes: 26
1. When performed outside this state or when the customer gives a resale 27 UNOFFICIAL COPY 24 RS BR 193
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certificate, the producing, fabricating, processing, printing, or imprinting 1
of tangible personal property for a consideration for consumers who 2
furnish either directly or indirectly the materials used in the producing, 3
fabricating, processing, printing, or imprinting; 4
2. A transaction whereby the possession of tangible personal property or 5
digital property is transferred but the seller retains the title as security 6
for the payment of the price; and 7
3. A transfer for a consideration of the title or possession of tangible 8
personal property or digital property which has been produced, 9
fabricated, or printed to the special order of the customer, or of any 10
publication; 11
(38)[(36)] "Recycled materials" means materials which have been recovered or diverted 12
from the solid waste stream and reused or returned to use in the form of raw 13
materials or products; 14
(39)[(37)] "Recycling purposes" means those activities undertaken in which materials 15
that would otherwise become solid waste are collected, separated, or processed in 16
order to be reused or returned to use in the form of raw materials or products; 17
(40)[(38)] "Remote retailer" means a retailer with no physical presence in this state; 18
(41)[(39)] (a) "Repair, replacement, or spare parts" means any tangible personal 19
property used to maintain, restore, mend, or repair machinery or equipment. 20
(b) "Repair, replacement, or spare parts" does not include machine oils, grease, or 21
industrial tools; 22
(42)[(40)] (a) "Retailer" means: 23
1. Every person engaged in the business of making retail sales of tangible 24
personal property, digital property, or furnishing any services in a retail 25
sale included in KRS 139.200; 26
2. Every person engaged in the business of making sales at auction of 27 UNOFFICIAL COPY 24 RS BR 193
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tangible personal property or digital property owned by the person or 1
others for storage, use or other consumption, except as provided in 2
paragraph (c) of this subsection; 3
3. Every person making more than two (2) retail sales of tangible personal 4
property, digital property, or services included in KRS 139.200 during 5
any twelve (12) month period, including sales made in the capacity of 6
assignee for the benefit of creditors, or receiver or trustee in bankruptcy; 7
4. Any person conducting a race meeting under the provision of KRS 8
Chapter 230, with respect to horses which are claimed during the 9
meeting. 10
(b) When the department determines that it is necessary for the efficient 11
administration of this chapter to regard any salesmen, representatives, 12
peddlers, or canvassers as the agents of the dealers, distributors, supervisors or 13
employers under whom they operate or from whom they obtain the tangible 14
personal property, digital property, or services sold by them, irrespective of 15
whether they are making sales on their own behalf or on behalf of the dealers, 16
distributors, supervisors or employers, the department may so regard them and 17
may regard the dealers, distributors, supervisors or employers as retailers for 18
purposes of this chapter. 19
(c) 1. Any person making sales at a charitable auction for a qualifying entity 20
shall not be a retailer for purposes of the sales made at the charitable 21
auction if: 22
a. The qualifying entity, not the person making sales at the auction, is 23
sponsoring the auction; 24
b. The purchaser of tangible personal property at the auction directly 25
pays the qualifying entity sponsoring the auction for the property 26
and not the person making the sales at the auction; and 27 UNOFFICIAL COPY 24 RS BR 193
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c. The qualifying entity, not the person making sales at the auction, is 1
responsible for the collection, control, and disbursement of the 2
auction proceeds. 3
2. If the conditions set forth in subparagraph 1. of this paragraph are met, 4
the qualifying entity sponsoring the auction shall be the retailer for 5
purposes of the sales made at the charitable auction. 6
3. For purposes of this paragraph, "qualifying entity" means a resident: 7
a. Church; 8
b. School; 9
c. Civic club; or 10
d. Any other nonprofit charitable, religious, or educational 11
organization; 12
(43)[(41)] "Retail sale" means any sale, lease, or rental for any purpose other than resale, 13
sublease, or subrent; 14
(44)[(42)] (a) "Ringtones" means digitized sound files that are downloaded onto a 15
device and that may be used to alert the customer with respect to a 16
communication. 17
(b) "Ringtones" shall not include ringback tones or other digital files that are not 18
stored on the purchaser's communications device; 19
(45)[(43)] (a) "Sale" means: 20
1. The furnishing of any services included in KRS 139.200; 21
2. Any transfer of title or possession, exchange, barter, lease, or rental, 22
conditional or otherwise, in any manner or by any means whatsoever, 23
of: 24
a. Tangible personal property; or 25
b. Digital property transferred electronically; 26
for a consideration. 27 UNOFFICIAL COPY 24 RS BR 193
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(b) "Sale" includes but is not limited to: 1
1. The producing, fabricating, processing, printing, or imprinting of 2
tangible personal property or digital property for a consideration for 3
purchasers who furnish, either directly or indirectly, the materials used 4
in the producing, fabricating, processing, printing, or imprinting; 5
2. A transaction whereby the possession of tangible personal property or 6
digital property is transferred, but the seller retains the title as security 7
for the payment of the price; and 8
3. A transfer for a consideration of the title or possession of tangible 9
personal property or digital property which has been produced, 10
fabricated, or printed to the special order of the purchaser. 11
(c) This definition shall apply regardless of the classification of a transaction 12
under generally accepted accounting principles, the Internal Revenue Code, or 13
other provisions of federal, state, or local law; 14
(46)[(44)] "Seller" includes every person engaged in the business of selling tangible 15
personal property, digital property, or services of a kind, the gross receipts from the 16
retail sale of which are required to be included in the measure of the sales tax, and 17
every person engaged in making sales for resale; 18
(47) (a) "Service animal" means any dog or miniature horse that is individually 19
trained to do work or perform tasks for the benefit of an individual with a 20
disability. 21
(b) Other species of animals, whether wild or domestic, trained or untrained, 22
are not service animals for the purposes of this definition. 23
(c) The work or tasks performed by a service animal must be directly related to 24
the individual's disability. 25
(d) Examples of work or tasks include but are not limited to: 26
1. Assisting individuals who are blind or have low vision with navigation 27 UNOFFICIAL COPY 24 RS BR 193
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and other tasks; 1
2. Alerting individuals who are deaf or hard of hearing to the presence 2
of people or sounds; 3
3. Providing nonviolent protection or rescue work; 4
4. Pulling a wheelchair; 5
5. Assisting an individual during a seizure; 6
6. Alerting individuals to the presence of allergens; 7
7. Retrieving items such as medicine or the telephone; 8
8. Providing physical support and assistance with balance and stability to 9
individuals with mobility disabilities; and 10
9. Helping persons with psychiatric and neurological disabilities by 11
preventing or interrupting impulsive or destructive behaviors. 12
(e) The crime deterrent effects of an animal's presence and the provision of 13
emotional support, well-being, comfort, or companionship do not constitute 14
work or tasks for the purposes of this definition; 15
(48)[(45)] (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, 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
(49)[(46)] "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 24 RS BR 193
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the senses and includes natural, artificial, and mixed gas, electricity, water, steam, 1
and prewritten computer software; 2
(50)[(47)] "Taxpayer" means any person liable for tax under this chapter; 3
(51)[(48)] "Telemarketing services" means services provided via telephone, facsimile, 4
electronic mail, text messages, or other modes of communications to another 5
person, which are unsolicited by that person, for the purposes of: 6
(a) 1. Promoting products or services; 7
2. Taking orders; or 8
3. Providing information or assistance regarding the products or services; 9
or 10
(b) Soliciting contributions; 11
(52)[(49)] "Transferred electronically" means accessed or obtained by the purchaser by 12
means other than tangible storage media; and 13
(53)[(50)] (a) "Use" includes the exercise of: 14
1. Any right or power over tangible personal property or digital property 15
incident to the ownership of that property, or by any transaction in 16
which possession is given, or by any transaction involving digital 17
property or tangible personal property where the right of access is 18
granted; or 19
2. Any right or power to benefit from any services subject to tax under 20
KRS 139.200(2)(p) to (ax). 21
(b) "Use" does not include the keeping, retaining, or exercising any right or 22
power over: 23
1. Tangible personal property or digital property for the purpose of: 24
a. Selling tangible personal property or digital property in the regular 25
course of business; or 26
b. Subsequently transporting tangible personal property outside the 27 UNOFFICIAL COPY 24 RS BR 193
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state for use thereafter solely outside the state, or for the purpose 1
of being processed, fabricated, or manufactured into, attached to, 2
or incorporated into, other tangible personal property to be 3
transported outside the state and thereafter used solely outside the 4
state; or 5
2. Prewritten computer software access services purchased for use outside 6
the state and transferred electronically outside the state for use thereafter 7
solely outside the state. 8
Section 2. KRS 139.480 (Effective until January 1, 2025) is amended to read as 9
follows: 10
Any other provision of this chapter to the contrary notwithstanding, the terms "sale at 11
retail," "retail sale," "use," "storage," and "consumption," as used in this chapter, shall not 12
include the sale, use, storage, or other consumption of: 13
(1) Locomotives or rolling stock, including materials for the construction, repair, or 14
modification thereof, or fuel or supplies for the direct operation of locomotives and 15
trains, used or to be used in interstate commerce; 16
(2) Coal for the manufacture of electricity; 17
(3) (a) All energy or energy-producing fuels used in the course of manufacturing, 18
processing, mining, or refining and any related distribution, transmission, and 19
transportation services for this energy that are billed to the user, to the extent 20
that the cost of the energy or energy-producing fuels used, and related 21
distribution, transmission, and transportation services for this energy that are 22
billed to the user exceed three percent (3%) of the cost of production. 23
(b) Cost of production shall be computed on the basis of a plant facility, which 24
shall include all operations within the continuous, unbroken, integrated 25
manufacturing or industrial processing process that ends with a product 26
packaged and ready for sale. 27 UNOFFICIAL COPY 24 RS BR 193
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(c) A person who performs a manufacturing or industrial processing activity for a 1
fee and does not take ownership of the tangible personal property that is 2
incorporated into, or becomes the product of, the manufacturing or industrial 3
processing activity is a toller. For periods on or after July 1, 2018, the costs of 4
the tangible personal property shall be excluded from the toller's cost of 5
production at a plant facility with tolling operations in place as of July 1, 6
2018. 7
(d) For plant facilities that begin tolling operations after July 1, 2018, the costs of 8
tangible personal property shall be excluded from the toller's cost of 9
production if the toller: 10
1. Maintains a binding contract for periods after July 1, 2018, that governs 11
the terms, conditions, and responsibilities with a separate legal entity, 12
which holds title to the tangible personal property that is incorporated 13
into, or becomes the product of, the manufacturing or industrial 14
processing activity; 15
2. Maintains accounting records that show the expenses it incurs to fulfill 16
the binding contract that include but are not limited to energy or energy-17
producing fuels, materials, labor, procurement, depreciation, 18
maintenance, taxes, administration, and office expenses; 19
3. Maintains separate payroll, bank accounts, tax returns, and other records 20
that demonstrate its independent operations in the performance of its 21
tolling responsibilities; 22
4. Demonstrates one (1) or more substantial business purposes for the 23
tolling operations germane to the overall manufacturing, industrial 24
processing activities, or corporate structure at the plant facility. A 25
business purpose is a purpose other than the reduction of sales tax 26
liability for the purchases of energy and energy-producing fuels; and 27 UNOFFICIAL COPY 24 RS BR 193
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5. Provides information to the department upon request that documents 1
fulfillment of the requirements in subparagraphs 1. to 4. of this 2
paragraph and gives an overview of its tolling operations with an 3
explanation of how the tolling operations relate and connect with all 4
other manufacturing or industrial processing activities occurring at the 5
plant facility; 6
(4) Livestock of a kind the products of which ordinarily constitute food for human 7
consumption, provided the sales are made for breeding or dairy purposes and by or 8
to a person regularly engaged in the business of farming; 9
(5) Poultry for use in breeding or egg production; 10
(6) Farm work stock for use in farming operations; 11
(7) Seeds, the products of which ordinarily constitute food for human consumption or 12
are to be sold in the regular course of business, and commercial fertilizer to be 13
applied on land, the products from which are to be used for food for human 14
consumption or are to be sold in the regular course of business; provided such sales 15
are made to farmers who are regularly engaged in the occupation of tilling and 16
cultivating the soil for the production of crops as a business, or who are regularly 17
engaged in the occupation of raising and feeding livestock or poultry or producing 18
milk for sale; and provided further that tangible personal property so sold is to be 19
used only by those persons designated above who are so purchasing; 20
(8) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals to be 21
used in the production of crops as a business, or in the raising and feeding of 22
livestock or poultry, the products of which ordinarily constitute food for human 23
consumption; 24
(9) Feed, including pre-mixes and feed additives, for livestock or poultry of a kind the 25
products of which ordinarily constitute food for human consumption; 26
(10) Machinery for new and expanded industry; 27 UNOFFICIAL COPY 24 RS BR 193
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(11) Farm machinery. As used in this section, the term "farm machinery": 1
(a) Means machinery used exclusively and directly in the occupation of: 2
1. Tilling the soil for the production of crops as a business; 3
2. Raising and feeding livestock or poultry for sale; or 4
3. Producing milk for sale; 5
(b) Includes machinery, attachments, and replacements therefor, repair parts, and 6
replacement parts which are used or manufactured for use on, or in the 7
operation of farm machinery and which are necessary to the operation of the 8
machinery, and are customarily so used, including but not limited to combine 9
header wagons, combine header trailers, or any other implements specifically 10
designed and used to move or transport a combine head; and 11
(c) Does not include: 12
1. Automobiles; 13
2. Trucks; 14
3. Trailers, except combine header trailers; or 15
4. Truck-trailer combinations; 16
(12) Tombstones and other memorial grave markers; 17
(13) On-farm facilities used exclusively for grain or soybean storing, drying, processing, 18
or handling. The exemption applies to the equipment, machinery, attachments, 19
repair and replacement parts, and any materials incorporated into the construction, 20
renovation, or repair of the facilities; 21
(14) On-farm facilities used exclusively for raising poultry or livestock. The exemption 22
shall apply to the equipment, machinery, attachments, repair and replacement parts, 23
and any materials incorporated into the construction, renovation, or repair of the 24
facilities. The exemption shall apply but not be limited to vent board equipment, 25
waterer and feeding systems, brooding systems, ventilation systems, alarm systems, 26
and curtain systems. In addition, the exemption shall apply whether or not the seller 27 UNOFFICIAL COPY 24 RS BR 193
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is under contract to deliver, assemble, and incorporate into real estate the 1
equipment, machinery, attachments, repair and replacement parts, and any materials 2
incorporated into the construction, renovation, or repair of the facilities; 3
(15) Gasoline, special fuels, liquefied petroleum gas, and natural gas used exclusively 4
and directly to: 5
(a) Operate farm machinery as defined in subsection (11) of this section; 6
(b) Operate on-farm grain or soybean drying facilities as defined in subsection 7
(13) of this section; 8
(c) Operate on-farm poultry or livestock facilities defined in subsection (14) of 9
this section; 10
(d) Operate on-farm ratite facilities defined in subsection (23) of this section; 11
(e) Operate on-farm llama or alpaca facilities as defined in subsection (25) of this 12
section; or 13
(f) Operate on-farm dairy facilities; 14
(16) Textbooks, including related workbooks and other course materials, purchased for 15
use in a course of study conducted by an institution which qualifies as a nonprofit 16
educational institution under KRS 139.495. The term "course materials" means only 17
those items specifically required of all students for a particular course but shall not 18
include notebooks, paper, pencils, calculators, tape recorders, or similar student 19
aids; 20
(17) Any property which has been certified as an alcohol production facility as defined 21
in KRS 247.910; 22
(18) Aircraft, repair and replacement parts therefor, and supplies, except fuel, for the 23
direct operation of aircraft in interstate commerce and used exclusively for the 24
conveyance of property or passengers for hire. Nominal intrastate use shall not 25
subject the property to the taxes imposed by this chapter; 26
(19) Any property which has been certified as a fluidized bed energy production facility 27 UNOFFICIAL COPY 24 RS BR 193
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as defined in KRS 211.390; 1
(20) (a) 1. Any property to be incorporated into the construction, rebuilding, 2
modification, or expansion of a blast furnace or any of its components or 3
appurtenant equipment or structures as part of an approved supplemental 4
project, as defined by KRS 154.26-010; and 5
2. Materials, supplies, and repair or replacement parts purchased for use in 6
the operation and maintenance of a blast furnace and related carbon 7
steel-making operations as part of an approved supplemental project, as 8
defined by KRS 154.26-010. 9
(b) The exemptions provided in this subsection shall be effective for sales made: 10
1. On and after July 1, 2018; and 11
2. During the term of a supplemental project agreement entered into 12
pursuant to KRS 154.26-090; 13
(21) Beginning on October 1, 1986, food or food products purchased for human 14
consumption with food coupons issued by the United States Department of 15
Agriculture pursuant to the Food Stamp Act of 1977, as amended, and required to 16
be exempted by the Food Security Act of 1985 in order for the Commonwealth to 17
continue participation in the federal food stamp program; 18
(22) Machinery or equipment purchased or leased by a business, industry, or 19
organization in order to collect, source separate, compress, bale, shred, or otherwise 20
handle waste materials if the machinery or equipment is primarily used for 21
recycling purposes; 22
(23) Ratite birds and eggs to be used in an agricultural pursuit for the breeding and 23
production of ratite birds, feathers, hides, breeding stock, eggs, meat, and ratite by-24
products, and the following items used in this agricultural pursuit: 25
(a) Feed and feed additives; 26
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 27 UNOFFICIAL COPY 24 RS BR 193
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and 1
(c) On-farm facilities, including equipment, machinery, attachments, repair and 2
replacement parts, and any materials incorporated into the construction, 3
renovation, or repair of the facilities. The exemption shall apply to incubation 4
systems, egg processing equipment, waterer and feeding systems, brooding 5
systems, ventilation systems, alarm systems, and curtain systems. In addition, 6
the exemption shall apply whether or not the seller is under contract to 7
deliver, 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
(24) Embryos and semen that are used in the reproduction of livestock, if the products of 11
these embryos and semen ordinarily constitute food for human consumption, and if 12
the sale is made to a person engaged in the business of farming; 13
(25) Llamas and alpacas to be used as beasts of burden or in an agricultural pursuit for 14
the breeding and production of hides, breeding stock, fiber and wool products, 15
meat, and llama and alpaca by-products, and the following items used in this 16
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 waterer 23
and feeding systems, ventilation systems, and alarm systems. In addition, the 24
exemption shall apply whether or not the seller is under contract to deliver, 25
assemble, and incorporate into real estate the equipment, machinery, 26
attachments, repair and replacement parts, and any materials incorporated into 27 UNOFFICIAL COPY 24 RS BR 193
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the construction, renovation, or repair of the facilities; 1
(26) Baling twine and baling wire for the baling of hay and straw; 2
(27) Water sold to a person regularly engaged in the business of farming and used in the: 3
(a) Production of crops; 4
(b) Production of milk for sale; or 5
(c) Raising and feeding of: 6
1. Livestock or poultry, the products of which ordinarily constitute food 7
for human consumption; or 8
2. Ratites, llamas, alpacas, buffalo, cervids or aquatic organisms; 9
(28) Buffalos to be used as beasts of burden or in an agricultural pursuit for the 10
production of hides, breeding stock, meat, and buffalo by-products, and the 11
following items used in this pursuit: 12
(a) Feed and feed additives; 13
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 14
and 15
(c) On-farm facilities, including equipment, machinery, attachments, repair and 16
replacement parts, and any materials incorporated into the construction, 17
renovation, or repair of the facilities. The exemption shall apply to waterer 18
and feeding systems, ventilation systems, and alarm systems. In addition, the 19
exemption shall apply whether or not the seller is under contract to deliver, 20
assemble, and incorporate into real estate the equipment, machinery, 21
attachments, repair and replacement parts, and any materials incorporated into 22
the construction, renovation, or repair of the facilities; 23
(29) Aquatic organisms sold directly to or raised by a person regularly engaged in the 24
business of producing products of aquaculture, as defined in KRS 260.960, for sale, 25
and the following items used in this pursuit: 26
(a) Feed and feed additives; 27 UNOFFICIAL COPY 24 RS BR 193
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(b) Water; 1
(c) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 2
and 3
(d) On-farm facilities, including equipment, machinery, attachments, repair and 4
replacement parts, and any materials incorporated into the construction, 5
renovation, or repair of the facilities and, any gasoline, special fuels, liquefied 6
petroleum gas, or natural gas used to operate the facilities. The exemption 7
shall apply, but not be limited to: waterer and feeding systems; ventilation, 8
aeration, and heating systems; processing and storage systems; production 9
systems such as ponds, tanks, and raceways; harvest and transport equipment 10
and systems; and alarm systems. In addition, the exemption shall apply 11
whether or not the seller is under contract to deliver, assemble, and 12
incorporate into real estate the equipment, machinery, attachments, repair and 13
replacement parts, and any materials incorporated into the construction, 14
renovation, or repair of the facilities; 15
(30) Members of the genus cervidae permitted by KRS Chapter 150 that are used for the 16
production of hides, breeding stock, meat, and cervid by-products, and the 17
following items used in this pursuit: 18
(a) Feed and feed additives; 19
(b) Insecticides, fungicides, herbicides, rodenticides, and other chemicals; and 20
(c) On-site facilities, including equipment, machinery, attachments, repair and 21
replacement parts, and any materials incorporated into the construction, 22
renovation, or repair of the facilities. In addition, the exemption shall apply 23
whether or not the seller is under contract to deliver, assemble, and 24
incorporate into real estate the equipment, machinery, attachments, repair and 25
replacement parts, and any materials incorporated into the construction, 26
renovation, or repair of the facilities; 27 UNOFFICIAL COPY 24 RS BR 193
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(31) (a) Repair or replacement parts for the direct operation or maintenance of a motor 1
vehicle, including any towed unit, used exclusively in interstate commerce for 2
the conveyance of property or passengers for hire, provided the motor vehicle 3
is licensed for use on the highway and its declared gross vehicle weight with 4
any towed unit is forty-four thousand and one (44,001) pounds or greater. 5
Nominal intrastate use shall not subject the property to the taxes imposed by 6
this chapter; and 7
(b) Repair or replacement parts for the direct operation and maintenance of a 8
motor vehicle operating under a charter bus certificate issued by the 9
Transportation Cabinet under KRS Chapter 281, or under similar authority 10
granted by the United States Department of Transportation. 11
(c) For the purposes of this subsection, "repair or replacement parts" means tires, 12
brakes, engines, transmissions, drive trains, chassis, body parts, and their 13
components. "Repair or replacement parts" shall not include fuel, machine 14
oils, hydraulic fluid, brake fluid, grease, supplies, or accessories not essential 15
to the operation of the motor vehicle itself, except when sold as part of the 16
assembled unit, such as cigarette lighters, radios, lighting fixtures not 17
otherwise required by the manufacturer for operation of the vehicle, or tool or 18
utility boxes; 19
(32) Food donated by a retail food establishment or any other entity regulated under 20
KRS 217.127 to a nonprofit organization for distribution to the needy; 21
(33) Drugs and over-the counter drugs, as defined in KRS 139.472, that are purchased 22
by a person regularly engaged in the business of farming and used in the treatment 23
of cattle, sheep, goats, swine, poultry, ratite birds, llamas, alpacas, buffalo, aquatic 24
organisms, or cervids; 25
(34) (a) Building materials, fixtures, or supplies purchased by a construction 26
contractor if: 27 UNOFFICIAL COPY 24 RS BR 193
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1. Fulfilled by a construction contract for a sewer or water project with: 1
a. A municipally owned water utility organized under KRS Chapter 2
96; 3
b. A water district or water commission formed or organized under 4
KRS Chapter 74; 5
c. A sanitation district established under KRS Chapter 220 or formed 6
pursuant to KRS Chapter 65; 7
d. A nonprofit corporation created under KRS 58.180 to act on behalf 8
of a governmental agency in the acquisition and financing of 9
public projects; 10
e. Regional wastewater commissions formed under KRS Chapter 11
278; 12
f. A municipally owned joint sewer agency formed under KRS 13
Chapter 76; or 14
g. Any other governmental agency; and 15
2. The building materials, fixtures, or supplies: 16
a. Will be permanently incorporated into a structure or improvement 17
to real property, or will be completely consumed, in fulfilling a 18
construction contract for the purpose of furnishing water or sewer 19
services to the general public; and 20
b. Would be exempt if purchased directly by the entities listed in 21
subparagraph 1. of this paragraph. 22
(b) As used in this subsection, "construction contract" means a: 23
1. Lump sum contract; 24
2. Cost plus contract; 25
3. Materials only contract; 26
4. Labor and materials contract; or 27 UNOFFICIAL COPY 24 RS BR 193
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5. Any other type of contract. 1
(c) The exemption provided in this subsection shall apply without regard to the 2
payment arrangement between the construction contractor, the retailer, and 3
the entities listed in paragraph (a)1. of this subsection or to the place of 4
delivery for the building materials, fixtures, or supplies; 5
(35) (a) On or after February 25, 2022, the rental of space for meetings, conventions, 6
short-term business uses, entertainment events, weddings, banquets, parties, 7
and other short-term social events, as referenced in KRS 139.200, if the tax 8
established in KRS 139.200 is paid by the primary lessee to the lessor. 9
(b) For the purpose of this subsection, "primary lessee" means the person who 10
leases the space and who has a contract with the lessor of the space only if: 11
1. The contract between the lessor and the lessee specifies that the lessee 12
may sublease, subrent, or otherwise sell the space; and 13
2. The space is then sublet, subrented, or otherwise sold to exhibitors, 14
vendors, sponsors, or other entities and persons who will use the space 15
associated with the event to be conducted under the primary lease; [and] 16
(36) Prewritten computer software access services sold to or purchased by a retailer that 17
develops prewritten computer software for print technology and uses and sells 18
prewritten computer software access services for print technology; and 19
(37) Veterinarian services and charges sold to or purchased by a disabled veteran in 20
relation to the veteran's service animal. 21
Section 3. KRS 139.480 (Effective January 1, 2025) is amended to read as 22
follows: 23
Any other provision of this chapter to the contrary notwithstanding, the terms "sale at 24
retail," "retail sale," "use," "storage," and "consumption," as used in this chapter, shall not 25
include the sale, use, storage, or other consumption of: 26
(1) Locomotives or rolling stock, including materials for the construction, repair, or 27 UNOFFICIAL COPY 24 RS BR 193
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modification thereof, or fuel or supplies for the direct operation of locomotives and 1
trains, used or to be used in interstate commerce; 2
(2) Coal for the manufacture of electricity; 3
(3) (a) All energy or energy-producing fuels used in the course of manufacturing, 4
processing, mining, or refining and any related distribution, transmission, and 5
transportation services for this energy that are billed to the user, to the extent 6
that the cost of the energy or energy-producing fuels used, and related 7
distribution, transmission, and transportation services for this energy that are 8
billed to the user exceed three percent (3%) of the cost of production. 9
(b) Cost of production shall be computed on the basis of a plant facility, which 10
shall include all operations within the continuous, unbroken, integrated 11
manufacturing or industrial processing process that ends with a product 12
packaged and ready for sale. 13
(c) A person who performs a manufacturing or industrial processing activity for a 14
fee and does not take ownership of the tangible personal property that is 15
incorporated into, or becomes the product of, the manufacturing or industrial 16
processing activity is a toller. For periods on or after July 1, 2018, the costs of 17
the tangible personal property shall be excluded from the toller's cost of 18
production at a plant facility with tolling operations in place as of July 1, 19
2018. 20
(d) For plant facilities that begin tolling operations after July 1, 2018, the costs of 21
tangible personal property shall be excluded from the toller's cost of 22
production if the toller: 23
1. Maintains a binding contract for periods after July 1, 2018, that governs 24
the terms, conditions, and responsibilities with a separate legal entity, 25
which holds title to the tangible personal property that is incorporated 26
into, or becomes the product of, the manufacturing or industrial 27 UNOFFICIAL COPY 24 RS BR 193
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processing activity; 1
2. Maintains accounting records that show the expenses it incurs to fulfill 2
the binding contract that include but are not limited to energy or energy-3
producing fuels, materials, labor, procurement, depreciation, 4
maintenance, taxes, administration, and office expenses; 5
3. Maintains separate payroll, bank accounts, tax returns, and other records 6
that demonstrate its independent operations in the performance of its 7
tolling responsibilities; 8
4. Demonstrates one (1) or more substantial business purposes for the 9
tolling operations germane to the overall manufacturing, industrial 10
processing activities, or corporate structure at the plant facility. A 11
business purpose is a purpose other than the reduction of sales tax 12
liability for the purchases of energy and energy-producing fuels; and 13
5. Provides information to the department upon request that documents 14
fulfillment of the requirements in subparagraphs 1. to 4. of this 15
paragraph and gives an overview of its tolling operations with an 16
explanation of how the tolling operations relate and connect with all 17
other manufacturing or industrial processing activities occurring at the 18
plant facility; 19
(4) Livestock of a kind the products of which ordinarily constitute food for human 20
consumption, provided the sales are made for breeding or dairy purposes and by or 21
to a person regularly engaged in the business of farming; 22
(5) Poultry for use in breeding or egg production; 23
(6) Farm work stock for use in farming operations; 24
(7) Seeds, the products of which ordinarily constitute food for human consumption or 25
are to be sold in the regular course of business, and commercial fertilizer to be 26
applied on land, the products from which are to be used for food for human 27 UNOFFICIAL COPY 24 RS BR 193
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consumption or are to be sold in the regular course of business; provided such sales 1
are made to farmers who are regularly engaged in the occupation of tilling and 2
cultivating the soil for the production of crops as a business, or who are regularly 3
engaged in the occupation of raising and feeding livestock or poultry or producing 4
milk for sale; and provided further that tangible personal property so sold is to be 5
used only by those persons designated above who are so purchasing; 6
(8) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals to be 7
used in the production of crops as a business, or in the raising and feeding of 8
livestock or poultry, the products of which ordinarily constitute food for human 9
consumption; 10
(9) Feed, including pre-mixes and feed additives, for livestock or poultry of a kind the 11
products of which ordinarily constitute food for human consumption; 12
(10) Machinery for new and expanded industry; 13
(11) Farm machinery. As used in this section, the term "farm machinery": 14
(a) Means machinery used exclusively and directly in the occupation of: 15
1. Tilling the soil for the production of crops as a business; 16
2. Raising and feeding livestock or poultry for sale; or 17
3. Producing milk for sale; 18
(b) Includes machinery, attachments, and replacements therefor, repair parts, and 19
replacement parts which are used or manufactured for use on, or in the 20
operation of farm machinery and which are necessary to the operation of the 21
machinery, and are customarily so used, including but not limited to combine 22
header wagons, combine header trailers, or any other implements specifically 23
designed and used to move or transport a combine head; and 24
(c) Does not include: 25
1. Automobiles; 26
2. Trucks; 27 UNOFFICIAL COPY 24 RS BR 193
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3. Trailers, except combine header trailers; or 1
4. Truck-trailer combinations; 2
(12) Tombstones and other memorial grave markers; 3
(13) On-farm facilities used exclusively for grain or soybean storing, drying, processing, 4
or handling. The exemption applies to the equipment, machinery, attachments, 5
repair and replacement parts, and any materials incorporated into the construction, 6
renovation, or repair of the facilities; 7
(14) On-farm facilities used exclusively for raising poultry or livestock. The exemption 8
shall apply to the equipment, machinery, attachments, repair and replacement parts, 9
and any materials incorporated into the construction, renovation, or repair of the 10
facilities. The exemption shall apply but not be limited to vent board equipment, 11
waterer and feeding systems, brooding systems, ventilation systems, alarm systems, 12
and curtain systems. In addition, the exemption shall apply whether or not the seller 13
is under contract to deliver, assemble, and incorporate into real estate the 14
equipment, machinery, attachments, repair and replacement parts, and any materials 15
incorporated into the construction, renovation, or repair of the facilities; 16
(15) Gasoline, special fuels, liquefied petroleum gas, and natural gas used exclusively 17
and directly to: 18
(a) Operate farm machinery as defined in subsection (11) of this section; 19
(b) Operate on-farm grain or soybean drying facilities as defined in subsection 20
(13) of this section; 21
(c) Operate on-farm poultry or livestock facilities defined in subsection (14) of 22
this section; 23
(d) Operate on-farm ratite facilities defined in subsection (23) of this section; 24
(e) Operate on-farm llama or alpaca facilities as defined in subsection (25) of this 25
section; or 26
(f) Operate on-farm dairy facilities; 27 UNOFFICIAL COPY 24 RS BR 193
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(16) Textbooks, including related workbooks and other course materials, purchased for 1
use in a course of study conducted by an institution which qualifies as a nonprofit 2
educational institution under KRS 139.495. The term "course materials" means only 3
those items specifically required of all students for a particular course but shall not 4
include notebooks, paper, pencils, calculators, tape recorders, or similar student 5
aids; 6
(17) Any property which has been certified as an alcohol production facility as defined 7
in KRS 247.910; 8
(18) Aircraft, repair and replacement parts therefor, and supplies, except fuel, for the 9
direct operation of aircraft in interstate commerce and used exclusively for the 10
conveyance of property or passengers for hire. Nominal intrastate use shall not 11
subject the property to the taxes imposed by this chapter; 12
(19) Any property which has been certified as a fluidized bed energy production facility 13
as defined in KRS 211.390; 14
(20) (a) 1. Any property to be incorporated into the construction, rebuilding, 15
modification, or expansion of a blast furnace or any of its components or 16
appurtenant equipment or structures as part of an approved supplemental 17
project, as defined by KRS 154.26-010; and 18
2. Materials, supplies, and repair or replacement parts purchased for use in 19
the operation and maintenance of a blast furnace and related carbon 20
steel-making operations as part of an approved supplemental project, as 21
defined by KRS 154.26-010. 22
(b) The exemptions provided in this subsection shall be effective for sales made: 23
1. On and after July 1, 2018; and 24
2. During the term of a supplemental project agreement entered into 25
pursuant to KRS 154.26-090; 26
(21) Beginning on October 1, 1986, food or food products purchased for human 27 UNOFFICIAL COPY 24 RS BR 193
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consumption with food coupons issued by the United States Department of 1
Agriculture pursuant to the Food Stamp Act of 1977, as amended, and required to 2
be exempted by the Food Security Act of 1985 in order for the Commonwealth to 3
continue participation in the federal food stamp program; 4
(22) Machinery or equipment purchased or leased by a business, industry, or 5
organization in order to collect, source separate, compress, bale, shred, or otherwise 6
handle waste materials if the machinery or equipment is primarily used for 7
recycling purposes; 8
(23) Ratite birds and eggs to be used in an agricultural pursuit for the breeding and 9
production of ratite birds, feathers, hides, breeding stock, eggs, meat, and ratite by-10
products, and the following items used in this agricultural pursuit: 11
(a) Feed and feed additives; 12
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 13
and 14
(c) On-farm facilities, including equipment, machinery, attachments, repair and 15
replacement parts, and any materials incorporated into the construction, 16
renovation, or repair of the facilities. The exemption shall apply to incubation 17
systems, egg processing equipment, waterer and feeding systems, brooding 18
systems, ventilation systems, alarm systems, and curtain systems. In addition, 19
the exemption shall apply whether or not the seller is under contract to 20
deliver, assemble, and incorporate into real estate the equipment, machinery, 21
attachments, repair and replacement parts, and any materials incorporated into 22
the construction, renovation, or repair of the facilities; 23
(24) Embryos and semen that are used in the reproduction of livestock, if the products of 24
these embryos and semen ordinarily constitute food for human consumption, and if 25
the sale is made to a person engaged in the business of farming; 26
(25) Llamas and alpacas to be used as beasts of burden or in an agricultural pursuit for 27 UNOFFICIAL COPY 24 RS BR 193
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the breeding and production of hides, breeding stock, fiber and wool products, 1
meat, and llama and alpaca by-products, and the following items used in this 2
pursuit: 3
(a) Feed and feed additives; 4
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 5
and 6
(c) On-farm facilities, including equipment, machinery, attachments, repair and 7
replacement parts, and any materials incorporated into the construction, 8
renovation, or repair of the facilities. The exemption shall apply to waterer 9
and feeding systems, ventilation systems, and alarm systems. In addition, the 10
exemption shall apply whether or not the seller is under contract to deliver, 11
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
(26) Baling twine and baling wire for the baling of hay and straw; 15
(27) Water sold to a person regularly engaged in the business of farming and used in the: 16
(a) Production of crops; 17
(b) Production of milk for sale; or 18
(c) Raising and feeding of: 19
1. Livestock or poultry, the products of which ordinarily constitute food 20
for human consumption; or 21
2. Ratites, llamas, alpacas, buffalo, cervids or aquatic organisms; 22
(28) Buffalos to be used as beasts of burden or in an agricultural pursuit for the 23
production of hides, breeding stock, meat, and buffalo by-products, and the 24
following items used in this pursuit: 25
(a) Feed and feed additives; 26
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 27 UNOFFICIAL COPY 24 RS BR 193
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and 1
(c) On-farm facilities, including equipment, machinery, attachments, repair and 2
replacement parts, and any materials incorporated into the construction, 3
renovation, or repair of the facilities. The exemption shall apply to waterer 4
and feeding systems, ventilation systems, and alarm systems. In addition, the 5
exemption shall apply whether or not the seller is under contract to deliver, 6
assemble, and incorporate into real estate the equipment, machinery, 7
attachments, repair and replacement parts, and any materials incorporated into 8
the construction, renovation, or repair of the facilities; 9
(29) Aquatic organisms sold directly to or raised by a person regularly engaged in the 10
business of producing products of aquaculture, as defined in KRS 260.960, for sale, 11
and the following items used in this pursuit: 12
(a) Feed and feed additives; 13
(b) Water; 14
(c) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 15
and 16
(d) 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 and, any gasoline, special fuels, liquefied 19
petroleum gas, or natural gas used to operate the facilities. The exemption 20
shall apply, but not be limited to: waterer and feeding systems; ventilation, 21
aeration, and heating systems; processing and storage systems; production 22
systems such as ponds, tanks, and raceways; harvest and transport equipment 23
and systems; and alarm systems. In addition, the exemption shall apply 24
whether or not the seller is under contract to deliver, assemble, and 25
incorporate into real estate the equipment, machinery, attachments, repair and 26
replacement parts, and any materials incorporated into the construction, 27 UNOFFICIAL COPY 24 RS BR 193
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renovation, or repair of the facilities; 1
(30) Members of the genus cervidae permitted by KRS Chapter 150 that are used for the 2
production of hides, breeding stock, meat, and cervid 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 chemicals; and 6
(c) On-site facilities, including equipment, machinery, attachments, repair and 7
replacement parts, and any materials incorporated into the construction, 8
renovation, or repair of the facilities. In addition, the exemption shall apply 9
whether or not the seller is under contract to deliver, assemble, and 10
incorporate into real estate the equipment, machinery, attachments, repair and 11
replacement parts, and any materials incorporated into the construction, 12
renovation, or repair of the facilities; 13
(31) (a) Repair or replacement parts for the direct operation or maintenance of a motor 14
vehicle, including any towed unit, used exclusively in interstate commerce for 15
the conveyance of property or passengers for hire, provided the motor vehicle 16
is licensed for use on the highway and its declared gross vehicle weight with 17
any towed unit is forty-four thousand and one (44,001) pounds or greater. 18
Nominal intrastate use shall not subject the property to the taxes imposed by 19
this chapter; and 20
(b) Repair or replacement parts for the direct operation and maintenance of a 21
motor vehicle operating under a charter bus certificate issued by the 22
Transportation Cabinet under KRS Chapter 281, or under similar authority 23
granted by the United States Department of Transportation. 24
(c) For the purposes of this subsection, "repair or replacement parts" means tires, 25
brakes, engines, transmissions, drive trains, chassis, body parts, and their 26
components. "Repair or replacement parts" shall not include fuel, machine 27 UNOFFICIAL COPY 24 RS BR 193
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oils, hydraulic fluid, brake fluid, grease, supplies, or accessories not essential 1
to the operation of the motor vehicle itself, except when sold as part of the 2
assembled unit, such as cigarette lighters, radios, lighting fixtures not 3
otherwise required by the manufacturer for operation of the vehicle, or tool or 4
utility boxes; 5
(32) Food donated by a retail food establishment or any other entity regulated under 6
KRS 217.127 to a nonprofit organization for distribution to the needy; 7
(33) Drugs and over-the counter drugs, as defined in KRS 139.472, that are purchased 8
by a person regularly engaged in the business of farming and used in the treatment 9
of cattle, sheep, goats, swine, poultry, ratite birds, llamas, alpacas, buffalo, aquatic 10
organisms, or cervids; 11
(34) (a) Building materials, fixtures, or supplies purchased by a construction 12
contractor if: 13
1. Fulfilled by a construction contract for a sewer or water project with: 14
a. A municipally owned water utility organized under KRS Chapter 15
96; 16
b. A water district or water commission formed or organized under 17
KRS Chapter 74; 18
c. A sanitation district established under KRS Chapter 220 or formed 19
pursuant to KRS Chapter 65; 20
d. A nonprofit corporation created under KRS 58.180 to act on behalf 21
of a governmental agency in the acquisition and financing of 22
public projects; 23
e. Regional wastewater commissions formed under KRS Chapter 24
278; 25
f. A municipally owned joint sewer agency formed under KRS 26
Chapter 76; or 27 UNOFFICIAL COPY 24 RS BR 193
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g. Any other governmental agency; and 1
2. The building materials, fixtures, or supplies: 2
a. Will be permanently incorporated into a structure or improvement 3
to real property, or will be completely consumed, in fulfilling a 4
construction contract for the purpose of furnishing water or sewer 5
services to the general public; and 6
b. Would be exempt if purchased directly by the entities listed in 7
subparagraph 1. of this paragraph. 8
(b) As used in this subsection, "construction contract" means a: 9
1. Lump sum contract; 10
2. Cost plus contract; 11
3. Materials only contract; 12
4. Labor and materials contract; or 13
5. Any other type of contract. 14
(c) The exemption provided in this subsection shall apply without regard to the 15
payment arrangement between the construction contractor, the retailer, and 16
the entities listed in paragraph (a)1. of this subsection or to the place of 17
delivery for the building materials, fixtures, or supplies; 18
(35) (a) On or after February 25, 2022, the rental of space for meetings, conventions, 19
short-term business uses, entertainment events, weddings, banquets, parties, 20
and other short-term social events, as referenced in KRS 139.200, if the tax 21
established in KRS 139.200 is paid by the primary lessee to the lessor. 22
(b) For the purpose of this subsection, "primary lessee" means the person who 23
leases the space and who has a contract with the lessor of the space only if: 24
1. The contract between the lessor and the lessee specifies that the lessee 25
may sublease, subrent, or otherwise sell the space; and 26
2. The space is then sublet, subrented, or otherwise sold to exhibitors, 27 UNOFFICIAL COPY 24 RS BR 193
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vendors, sponsors, or other entities and persons who will use the space 1
associated with the event to be conducted under the primary lease; 2
(36) Prewritten computer software access services sold to or purchased by a retailer that 3
develops prewritten computer software for print technology and uses and sells 4
prewritten computer software access services for print technology;[ and] 5
(37) Veterinarian services and charges sold to or purchased by a disabled veteran in 6
relation to the veteran's service animal; and 7
(38) Medicinal cannabis as defined in KRS 218B.010 when sold, used, stored, or 8
consumed in accordance with KRS Chapter 218B. 9
Section 4. This Act shall take effect on August 1, 2024. 10