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AN ACT relating to an exemption from sales and use tax for certain nonprofit 1
institutions. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
ď˘Section 1. KRS 139.495 is amended to read as follows: 4
(1) As used in this section, "resident nonprofit educational, charitable, or religious 5
institution" means[The taxes imposed by this chapter shall apply to]: 6
(a) A resident[,] nonprofit educational, charitable, or religious institution that 7
has[institutions which have] qualified for exemption from income taxation 8
under Section 501(c)(3) of the Internal Revenue Code; or[and] 9
(b) Any resident, single member limited liability company that is: 10
1. Wholly owned and controlled by a resident or nonresident, nonprofit 11
educational, charitable, or religious institution which has qualified for 12
exemption from income taxation under Section 501(c)(3) of the Internal 13
Revenue Code; and 14
2. Disregarded as an entity separate from the resident or nonresident, 15
nonprofit educational, charitable, or religious institution for federal 16
income tax purposes pursuant to 26 C.F.R. sec. 301.7701-2[; 17
as provided in this section]. 18
(2) (a) For resident nonprofit educational, charitable, or religious institutions, 19
except as provided in paragraph (b) of this subsection, the taxes imposed by 20
this chapter do[Tax does] not apply to: 21
1. Purchases[Sales] of tangible personal property, digital property, or 22
services made by[to] these institutions[ or limited liability companies 23
described in subsection (1) of this section], provided the tangible 24
personal property, digital property, or service is to be used solely in this 25
state within the educational, charitable, or religious function; and 26
2. Sales of tangible personal property, digital property, or services by 27 UNOFFICIAL COPY 25 RS BR 21
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these institutions[Sales of food to students in school cafeterias or 1
lunchrooms; 2
3. Sales by school bookstores of textbooks, workbooks, and other course 3
materials; 4
4. Sales by nonprofit, school sponsored clubs and organizations, provided 5
such sales do not include tickets for athletic events; 6
5. Sales of admissions, including the sales of admissions to a golf course 7
when the admission is the result of a fundraising event, by nonprofit 8
educational, charitable, or religious institutions described in subsection 9
(1) of this section. All other sales of admissions to a golf course by these 10
institutions are not exempt from tax under this section; or 11
6. a. Fundraising event sales made by nonprofit educational, charitable, 12
or religious institutions and limited liability companies described 13
in subsection (1) of this section. 14
b. For the purposes of this subparagraph, "fundraising event sales" 15
does not include sales related to the operation of a retail business, 16
including but not limited to thrift stores, bookstores, surplus 17
property auctions, recycle and reuse stores, or any ongoing 18
operations in competition with for-profit retailers]. 19
(b) The exemptions provided in [subparagraphs 5. and 6. of paragraph (a) of ]this 20
subsection shall not apply to sales: 21
1. Generated by or arising at a tourism development project approved 22
under KRS 148.851 to 148.860; or 23
2. Generated by a resident nonprofit educational, charitable, or religious 24
institution that qualifies for a refund of a portion of the tax collected 25
on its sales of donated goods as provided in subsection (3) of this 26
section. 27 UNOFFICIAL COPY 25 RS BR 21
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(3) A resident nonprofit educational, charitable, or religious[An] institution shall be 1
entitled to a refund equal to twenty-five percent (25%) of the tax collected on its 2
sale of donated goods if the refund is used exclusively as reimbursement for capital 3
construction costs of additional retail locations in this state, provided the institution: 4
(a) Routinely sells donated items; 5
(b) Provides job training and employment to individuals with workplace 6
disadvantages and disabilities; 7
(c) Spends at least seventy-five percent (75%) of its annual revenue on job 8
training, job placement, or other related community services; 9
(d) Submits a refund application to the department within sixty (60) days after the 10
new retail location opens for business; and 11
(e) Provides records of capital construction costs for the new retail location and 12
any other information the department deems necessary to process the refund. 13
The maximum refund allowed for any location shall not exceed one million dollars 14
($1,000,000). As used in this subsection, "capital construction cost" means the cost 15
of construction of any new facilities or the purchase and renovation of any existing 16
facilities, but does not include the cost of real property other than real property 17
designated as a brownfield site as defined in KRS 65.680(4). 18
(4) Notwithstanding any other provision of law to the contrary, refunds under 19
subsection (3) of this section shall be made directly to the institution. Interest shall 20
not be allowed or paid on the refund. The department may examine any refund 21
within four (4) years from the date the refund application is received. Any 22
overpayment shall be subject to the interest provisions of KRS 131.183 and the 23
penalty provisions of KRS 131.180. 24
[(5) All other sales made by nonprofit educational, charitable, or religious institutions or 25
limited liability companies described in subsection (1) of this section are taxable 26
and the tax may be passed on to the purchaser as provided in KRS 139.210.] 27