AN ACT relating to revenue measures and declaring an emergency.

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AN ACT relating to revenue measures and declaring an emergency. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 139.450 is amended to read as follows: 3
(1) It shall be presumed that: 4
(a) Tangible personal property shipped or brought to this state by the purchaser; [ 5
or] 6
(b) Digital property delivered or transferred electronically into this state; or 7
(c) A service provided to a purchaser in this state; 8
was purchased from a retailer for storage, use, or other consumption in this state. 9
(2) (a) A marketplace provider that makes retail sales on its own behalf or facilitates 10
retail sales of tangible personal property, digital property, or services that are 11
delivered, [or ] transferred electronically , or provided to a purchaser in this 12
state for one (1) or more marketplace retailers that in any sales combination 13
exceeds one hundred thousand dollars ($100,000) [or reaches two hundred 14
(200) or more separate transactions in the immediately preceding calendar 15
year or current calendar year ]shall be subject to this section. 16
(b) The marketplace provider shall: 17
1. Register for a sales and use tax permit number to report and remit the 18
tax due; and 19
2. Collect tax imposed under this chapter; 20
no later than the first day of the calendar month that is at the most sixty (60) 21
days after the[either] threshold in paragraph (a) of this subsection is reached. 22
(c) The marketplace provider may register for: 23
1. A single sales and use tax permit number to report and remit all the tax 24
due on the marketplace provider's direct sales and sales the marketplace 25
provider facilitates for one (1) or more marketplace retailers; or 26
2. a. One (1) sales and use tax permit number to report and remit the tax 27
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due on the marketplace provider's direct sales; and 1
b. One (1) additional sales and use tax permit number to report and 2
remit the tax due on all sales the marketplace provider facilitates 3
for one (1) or more marketplace retailers. 4
(d) 1. If the marketplace provider elects to report and remit the tax due on a 5
single sales and use tax permit number as provided in paragraph (c)1. of 6
this subsection, the marketplace provider shall, upon request of the 7
department, provide a separate breakdown of receipts from the 8
marketplace provider's direct sales and the sales the marketplace 9
provider facilitates for the preceding fiscal year ending June 30. 10
2. The department may request the breakdown of receipts no mo re than 11
once annually. 12
(e) The marketplace provider shall collect Kentucky tax on the entire sales price 13
or purchase price paid by a purchaser on each retail sale subject to tax under 14
this chapter that is made on its own behalf or that is facilitated by th e 15
marketplace provider, regardless of whether the seller would have been 16
required to collect the tax had the retail sale not been facilitated by the 17
marketplace provider. 18
(3) Nothing in this section shall be construed to relieve the marketplace provider of 19
liability for collecting but failing to remit the taxes imposed under this chapter. 20
(4) (a) The marketplace provider shall be subject to audit on all sales made on its 21
own behalf and on all sales facilitated by the marketplace provider. 22
(b) The marketplace retailer shall be relieved of all liability for the collection and 23
remittance of the sales or use tax on sales facilitated by the marketplace 24
provider. 25
(5) No class action may be brought against a marketplace provider on behalf of 26
purchasers arising from or in any way related to an overpayment of tax collected by 27
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the marketplace provider. 1
Section 2. KRS 131.183 is amended to read as follows: 2
(1) (a) Except for the addition to tax required when an underpayment of estimat ed 3
tax occurs under KRS 141.044 and 141.305, all taxes payable to the 4
Commonwealth not paid at the time prescribed by statute shall accrue interest 5
at the tax interest rate. 6
(b) 1. a. Except as provided by subparagraph 2 of this paragraph, the tax 7
interest rate shall be equal to the adjusted prime rate charged by 8
banks rounded to the nearest full percent as adjusted by subsection 9
(2) of this section. 10
b. The commissioner of revenue shall adjust the tax interest rate not 11
later than November 15 of each year if the adjusted prime rate 12
charged by banks during September of that year, rounded to the 13
nearest full percent, is at least one (1) percentage point more or 14
less than the tax interest rate which is then in effect. The adjusted 15
tax interest rate shall become effective on January 1 of the 16
immediately succeeding year. 17
2. For additional tax billed in accordance with KRS 136. 180(2), the tax 18
interest rate shall be equal to the federal short -term rate applicable to 19
each quarter of the period that begins on the date the protest was filed by 20
the taxpayer under KRS 131.110 and ends on the due date of the tax as 21
stated on the final tax bill. The federal short -term rate for each quarter 22
shall be the federal short -term rate determined by the Secretary of the 23
Treasury under Section 6621(b) of the Internal Revenue Code of 1986 24
or equivalent section in case of amendment. The two percent ( 2%) 25
adjustment provided by subsection (2)(a) of this section shall not apply 26
to the interest rate determined under this subparagraph. 27
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(2) (a) [1. All taxes payable to the Commonwealth that have not been paid at the 1
time prescribed by statute shall accrue i nterest at the tax interest rate as 2
determined in accordance with subsection (1) of this section until May 1, 3
2008. 4
2. Beginning on May 1, 2008, ] All taxes payable to the Commonwealth 5
that have not been paid at the time prescribed by statute shall accrue 6
interest at the tax interest rate as determined in accordance with 7
subsection (1) of this section plus two percent (2%). 8
(b) 1. [Interest shall be allowed and paid upon any overpayment as defined in 9
KRS 134.580 in respect of any of the taxes provided for in Chapters 10
131, 132, 134, 136, 137, 138, 139, 140, 141, 142, 143, 143A, and 243 of 11
the Kentucky Revised Statutes and KRS 160.613 and 160.614 at the rate 12
provided in subsection (1) of this section until May 1, 2008. 13
2. Beginning on May 1, 2008, ]Interest shall be allowed and paid upon any 14
overpayment as defined in KRS 134.580 at the rate provided in 15
subsection (1) of this section minus two percent (2%). 16
2.[3.] [Effective for refunds issued after April 24, 2008, ] Except for the 17
provisions of KRS 138.351, 141.0 44(2), and 141.235(3)[,] and 18
subsection (3) of this section, interest authorized under this subsection 19
shall begin to accrue sixty (60) days after the latest of: 20
a. The due date of the return; 21
b. The date the return was filed; 22
c. The date the tax was paid; 23
d. The last day prescribed by law for filing the return; or 24
e. The date an amended return claiming a refund is filed. 25
(c) In no case shall interest be paid in an amount less than five dollars ($5). 26
(d) A[No] refund shall not be made of any estimated tax paid unless: 27
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1. a. An application is made by the taxpayer or officer authorized to 1
make the request on a form prescribed by the department; and 2
b. It is determined that the estimated tax was paid to the department 3
in error; or 4
2. A return is filed as required by KRS Chapter 141. 5
(3) [Effective for refund claims filed on or after July 15, 1992, ] If any overpayment of 6
the tax imposed under KRS Chapter 141 results from a carryback of a [net 7
operating loss or a ] net capital loss, the overpayment shall be deemed to have been 8
made on the date the claim for refund was filed. Interest authorized under 9
subsection (2) of this section shall begin to accrue ninety (90) days from the date 10
the claim for refund was filed. 11
(4) [No ]Interest shall not be allowed or paid on a ny sales tax refund as provided by 12
KRS 139.536. 13
(5) For purposes of this section, any addition to tax provided in KRS 141.044 and 14
141.305 shall be considered a penalty. 15
Section 3. KRS 141.044 is amended to read as follows: 16
(1) For taxable years beginning on or after January 1, 2019, every corporation and 17
limited liability pass -through entity subject to taxation under KRS 141.040 and 18
141.0401 shall make estimated tax payments if the taxes imposed by KRS 141.040 19
and 141.040 1 for the taxable year can reasonably be expected to exceed five 20
thousand dollars ($5,000). 21
(2) Estimated tax payments for the taxes imposed under KRS 141.040 and 141.0401 22
shall be made at the same time and calculated in the same manner as estimated tax 23
payments for federal income tax purposes under 26 U.S.C. sec. 6655, except: 24
(a) The estimated liabilities for the taxes imposed under KRS 141.040 and 25
141.0401 shall be used to make the estimated payments; 26
(b) Any provisions in 26 U.S.C. sec. 6655 that apply for federal tax purposes but 27
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do not apply to the taxes imposed under KRS 141.040 and 141.0401; 1
(c) The addition to tax identified by 26 U.S.C. sec. 6655(a) shall instead be 2
considered a penalty under KRS 131.180; 3
(d) The tax interest rate identified under KRS 131.183 shall be used to determine 4
the underpayment rate instead of the rate under 26 U.S.C. sec. 6621; 5
(e) Any waiver of penalties shall be performed as provided in KRS 131.175; and 6
(f) 1. A refund of taxes collected under this section shall include interest at the 7
tax interest rate as defined in KRS 131.010[(6)]. 8
2. Interest shall not begin to accrue until ninety (90) days after the latest of: 9
a. The due date of the return; 10
b. The date the return was filed; 11
c. The date the tax was paid; 12
d. The last day prescribed by law for filing the return; or 13
e. The date an amended return claiming a refund is filed. 14
3. A[No] refund shall not be made of any estimated tax paid unless: 15
a. i. An application is made by the taxpayer or officer 16
authorized to make the request on a form prescribed by the 17
department; and 18
ii. It is determined that the estimated tax was paid to the 19
department in error; or 20
b. A return is filed as required by this chapter. 21
(3) The department may promulgate administrative regulations in accordance with 22
KRS Chapter 13A to implement this section. 23
Section 4. KRS 96.895 is amended to read as follows: 24
(1) As used in this section, unless the context requires otherwise: 25
(a) "Book value" means original cost unadjusted for depreciation as reflected in 26
the TVA's books of account; 27
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(b) "Fund" means the regional development agency assistance fund establ ished in 1
subsection (4) of this section; 2
(c) "Fund-eligible county" means one (1) of Adair, Allen, Ballard, Barren, Bell, 3
Butler, Caldwell, Calloway, Carlisle, Christian, Clinton, Cumberland, 4
Edmonson, Fulton, Graves, Grayson, Harlan, Hart, Henderson, Hick man, 5
Livingston, Logan, Lyon, Marshall, McCracken, McCreary, Metcalfe, 6
Monroe, Muhlenberg, Ohio, Russell, Simpson, Todd, Trigg, Union, Warren, 7
Wayne, Webster, or Whitley Counties; 8
(d) "Regional development agency" or "agency" means a special purpose 9
governmental entity as defined in KRS 65A.010(9) that is designated by a 10
fiscal court to receive a payment pursuant to this section; 11
(e) "TVA" means the Tennessee Valley Authority; and 12
(f) "TVA property" means land owned by the United States and in the custody of 13
the TVA, together with improvements that have a fixed situs on the land, 14
including work in progress but excluding temporary construction facilities, if 15
these improvements either: 16
1. Were in existence when title to the land on which they are situated was 17
acquired by the United States; or 18
2. Are allocated by the TVA or determined by it to be allocable to power. 19
However, manufacturing machinery as interpreted by the Department of 20
Revenue for franchise tax determination; ash disposal systems; and coal 21
handling facilities, including railroads, cranes and hoists, and crushing 22
and conveying equipment, shall be excluded. 23
(2) Book value shall be determined, for purposes of applying this section, as of the June 24
30 used by the TVA in computing the annual payment to the Commonwealth that is 25
subject to redistribution by the Commonwealth. 26
(3) Except for payments made directly by the TVA to counties, the total fiscal year 27
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payment received by the Commonwealth of Kentucky from the TVA, as authorized 1
by Section 13 of the Tennessee Valley Authority Act, as amended, shall be prorated 2
thirty percent (30%) to the general fund of the Commonwealth and seventy percent 3
(70%) among counties, cities, and school di stricts, as provided in subsections (6) 4
and (7) of this section. 5
(4) (a) The regional development agency assistance fund is hereby established in the 6
State Treasury. 7
(b) The fund shall be administered by the Department for Local Government for 8
the purpose of providing funding to agencies that are designated to receive 9
funding in a given fiscal year by the fiscal court of each fund -eligible county 10
through the Regional Development Agency Assistance Program established in 11
KRS 96.905. 12
(c) The fund shall only re ceive the moneys transferred from the general fund 13
pursuant to subsection (5) of this section. 14
(d) Notwithstanding KRS 45.229, any moneys remaining in the fund at the close 15
of the fiscal year shall not lapse but shall be carried forward into the 16
succeeding fiscal year. Any interest earnings of the fund shall become a part 17
of the fund and shall not lapse. 18
(5) (a) For fiscal years beginning on or after July 1, 2020, a portion of the total fiscal 19
year payment received by the Commonwealth that is allocated to t he general 20
fund shall be transferred from the general fund to the regional development 21
agency assistance fund established in subsection (4) of this section. 22
(b) This portion shall be equal to six million dollars ($6,000,000). 23
(c) Distribution of these mone ys shall be made by dividing the amount in 24
paragraph (b) of this subsection equally among each fund-eligible county. 25
(6) The payment to each county, city, and school district shall be determined by the 26
proportion that the book value of TVA property in such taxing district, multiplied 27
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by the current tax rate, bears to the total of the book values of TVA property in all 1
such taxing districts in the Commonwealth, multiplied by their respective tax rates. 2
However, for purposes of this calculation, each public s chool district shall have its 3
tax rate increased by thirty cents ($0.30). 4
(7) (a) As soon as practicable after the amount of payment to be made to the 5
Commonwealth is finally determined by the TVA, the Department of 6
Revenue shall determine the book value of TVA property in each county, city, 7
and school district and shall prorate the payments allocated to counties, cities, 8
and school districts under subsection (3) of this section among the distributees 9
as provided in subsection (6) of this section. 10
(b) The Department of Revenue shall: 11
1. Certify the payment due each county, city, and school district, including 12
the amount distributed to the county under subsection (5) of this section, 13
to the Finance and Administration Cabinet; and 14
2. Notify the Department for Local Government of that certification. 15
(c) Upon certification by the Department of Revenue, the Finance and 16
Administration Cabinet shall make the payment to such district. 17
(8) In each fiscal year, after the Department of Revenue has calculated the prorate d 18
payment amount that is due to each county, city, and school district under 19
subsections (6) and (7) of this section, the Department for Local Government shall 20
notify in writing the fiscal court of each fund -eligible county regarding the amount 21
that the co unty, city, and school district shall receive for the fiscal year, including 22
the amount distributed to the county under subsection (5) of this section. 23
(9) No amount shall be taken from the fund to pay administrative expenses by the 24
Department for Local Government. 25
(10) All agencies receiving funds under this section shall provide a written report 26
annually, no later than October 1, to the fiscal court that designated it for payment 27
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and to the Department for Local Government [Interim Joint Committee on 1
Appropriations and Revenue] . The report shall describe how the funds were 2
expended and the results of the use of funds in terms of economic development and 3
job creation. 4
(11) No later than December 1 of each year, the Department for Local Government 5
shall report to the Legislative Research Commission for referral to the Interim 6
Joint Committee on Appropriations and Revenue the total amount of funds 7
distributed to each agency for the fiscal year, how each agency expended the 8
funds, and the results of the use of fu nds in terms of economic development and 9
job creation. 10
Section 5. KRS 154.30-030 is amended to read as follows: 11
(1) (a) The Commonwealth shall offer three (3) tax increment financing participation 12
programs. The first pro gram, the criteria and details of which are set forth in 13
KRS 154.30-040, relates to a pledge of state real property ad valorem taxes 14
only. The second program, the criteria and details of which are set forth in 15
KRS 154.30 -050, is the Signature Projects Prog ram. The third program, the 16
criteria and details of which are set forth in KRS 154.30 -060, relates to the 17
pledge of state tax revenues to support mixed -use development in blighted 18
urban areas. 19
(b) 1. The programs under paragraph (a) of this subsection shal l sunset on 20
the effective date of this section of this Act, and new applications shall 21
not be submitted or considered for approval after the effective date of 22
this section of this Act. 23
2. Projects approved prior to the effective date of this section of this Act 24
shall continue to be governed in accordance with the tax incentive 25
agreement's terms and conditions as set forth in KRS 154.30-070. 26
3. Tax incentive agreements related to the programs under paragraph (a) 27
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of this subsection shall not be amended or have activation date 1
extensions approved by the Commonwealth after the effective date of 2
this section of this Act. 3
(2) (a) A city or county that has established a development area pursuant to KRS 4
65.7049, 65.7051, and 65.7053, or an agency designated as the entity 5
managing a development area established pursuant to KRS 65.7049, 65.7051, 6
and 65.7053, may submit an application to the authority requesting that the 7
Commonwealth participate in a pr oject, before the effective date of this 8
section of this Act. 9
1. The application shall identify the specific program under which state 10
participation is being requested and shall include the following 11
attachments, in addition to any requirements developed b y the authority 12
pursuant to paragraph (b) of this subsection: 13
a. A copy of the ordinance adopted by the city or county establishing 14
the development area; 15
b. A copy of the local participation agreement; and 16
c. Data and information supporting the determinati ons and findings 17
required by KRS 65.7049. 18
2. The staff of the authority shall review the application to determine if the 19
applicant has met all of the statutory and regulatory requirements 20
established by this subchapter and shall notify the applicant in writing of 21
its determination. This review shall be preliminary in nature and shall 22
not constitute approval of the request. All applications for participation 23
by the Commonwealth shall be reviewed by the authority for approval. 24
3. a. Applications meeting all s tatutory and regulatory requirements 25
requesting participation by the Commonwealth pursuant to KRS 26
154.30-040, along with any supporting materials, shall be referred 27
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by the staff of the authority to the authority for consideration. 1
b. i. Applicants meeting all statutory and regulatory requirements 2
requesting participation by the Commonwealth pursuant to 3
KRS 154.30 -050(3)(b) or 154.30 -060 shall be required to 4
submit a report prepared by an independent consultant or 5
financial adviser as described in subsection (6) of this section 6
for the application to be complete. The staff of the authority 7
shall notify the applicants of the report requirements and 8
shall provide information regarding the contents and 9
requirements for the report at the same time it notifies the 10
applicant of the results of its preliminary review. 11
ii. Upon receipt and review of the report, the staff of the 12
authority shall refer the application and supporting 13
information to the authority for consideration. 14
(b) Additional standards and requirements for the application process shall be 15
established by the authority through the promulgation of administrative 16
regulations in accordance with KRS Chapter 13A. 17
(3) (a) The authority may request any materials and make any inquiries concerning 18
an application that the authority deems necessary. 19
(b) The authority shall, through the promulgation of administrative regulations in 20
accordance with KRS Chapter 13A, establish commercially reasonable 21
limitations on the financing costs that may be recovered under the prov isions 22
of KRS 154.30-050. 23
(4) Upon review of an application and other information available, the authority may 24
pledge all or a portion of the state real property ad valorem tax incremental revenue 25
of the Commonwealth or state tax revenues attributable to t he footprint of the 26
project, as limited by KRS 154.30 -040, 154.30 -050, or 154.30 -060, whichever is 27
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applicable. 1
(a) If incremental revenues are pledged from less than one hundred percent 2
(100%) of the footprint of the project, a description of the included portion of 3
the development area shall be provided. 4
(b) State tax revenues from the development area that have not been pledged to 5
projects within the development area may be used to support other economic 6
development projects or tourism projects approved u nder KRS 139.536 and 7
148.851 to 148.860, provided that state tax revenues shall not be pledged 8
more than once during the existence of the development area. Thus, state tax 9
revenues pledged to support increment bonds issued for the development area, 10
or a project in the development area shall not be pledged to support any other 11
development area, project, program, development, or undertaking during the 12
life of the development area. If less than one hundred percent (100%) of 13
incremental revenues are pledged pur suant to the provisions of this 14
subchapter, the remaining incremental revenues shall not be used to support 15
other economic development projects or tourism projects approved under 16
KRS 139.536 and 148.851 to 148.860. 17
(5) The pledge of incremental state real property ad valorem tax revenues or state tax 18
revenues of the Commonwealth by the authority shall be implemented through the 19
execution of a tax incentive agreement between the Commonwealth and the agency, 20
city, or county, as the case may be, in accordance with KRS 154.30-070. 21
(6) (a) The authority shall engage the services of a qualified independent outside 22
consultant or financial adviser to analyze the data related to the project and 23
the development area and prepare the report required by subsection (2) of this 24
section. The report shall include the following: 25
1. The estimated approved public infrastructure costs for the project and, if 26
relevant, approved signature project costs, financing costs, and costs 27
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associated with land preparation, demolition, and clearance; 1
2. The feasibility of the project, taking into account the scope and location 2
of the project; 3
3. The estimated amount of local tax revenues and state tax revenues, as 4
applicable, that would be generated by the project over the period, 5
which may be up to twenty (20) years or thirty (30) years, as applicable, 6
from the activation date; 7
4. The estimated a mount of local tax revenues and state tax revenues, as 8
applicable, that would be displaced within the Commonwealth, for the 9
purpose of quantifying economic activity which is being shifted over the 10
same period as that set forth in subparagraph 3. of this pa ragraph. The 11
projections for displaced activity shall include economic activity that is 12
lost to the Commonwealth as a result of the project, as well as economic 13
activity that is diverted to the project that formerly took place at existing 14
establishments wi thin the Commonwealth prior to the commencement 15
date of the project; 16
5. The estimated amount of local and state old revenues that would have 17
been generated in the footprint of the project in the absence of the 18
project, computed over the same time period as set forth in subparagraph 19
3. of this paragraph; 20
6. In the process of estimating the revenues and impacts prescribed in 21
subparagraphs 3. and 4. of this paragraph, the independent outside 22
consultant shall not consider any of the following: 23
a. Revenues or economic impacts associated with any projects within 24
the development area where the new project will be located; and 25
b. Revenues or economic impacts associated with economic 26
development projects and approved Kentucky Tourism 27
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Development Act projects under KRS Chapter 148; 1
7. The relationship of the estimated incremental revenues to the financing 2
needs, including any increment bonds, of the project; 3
8. When estimating the fiscal impact of the project, the consultant shall 4
evaluate the amount of revenue estimat ed in subparagraph 3. of this 5
paragraph and shall deduct the amounts estimated in subparagraphs 4. 6
and 5. of this paragraph. The resulting difference shall be compared to 7
the estimated incremental revenues to determine the presence or absence 8
of a positive fiscal impact; and 9
9. A determination that the project will not occur if not for the designation 10
of the development area, the granting of incremental revenues by the 11
taxing district or districts, other than the Commonwealth, and the 12
granting of the state tax incremental revenues. 13
(b) 1. The independent consultant or financial advisor shall consult with the 14
Office of State Budget Director, and the Finance and Administration 15
Cabinet in the development of the report. 16
2. The Office of State Budget Director and the staff of the authority, in 17
collaboration with the independent consultant or financial advisor, shall 18
agree on a methodology to be used and assumptions to be made by the 19
independent consultant or financial consultant in preparing its report. 20
3. On the basis of the independent consultant's report and the other 21
materials provided, prior to any approval of a project by the authority, 22
the Office of State Budget Director and the Finance and Administration 23
Cabinet shall certify to the authority whether there is a projected net 24
positive economic impact to the Commonwealth and the expected 25
amount of state tax incremental revenues from the project. 26
4. The city, county, or agency making the application shall pay all costs 27
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associated with the independent consultant's or financial advisor's report. 1
Section 6. KRS 141.010 is amended to read as follows: 2
As used in this chapter, for taxable years beginning on or after January 1, 2018: 3
(1) "Adjusted gross income," in the case of taxpay ers other than corporations, means 4
the amount calculated in KRS 141.019; 5
(2) "Captive real estate investment trust" means a real estate investment trust as defined 6
in Section 856 of the Internal Revenue Code that meets the following requirements: 7
(a) 1. The shares or other ownership interests of the real estate investment 8
trust are not regularly traded on an established securities market; or 9
2. The real estate investment trust does not have enough shareholders or 10
owners to be required to register with the S ecurities and Exchange 11
Commission; 12
(b) 1. The maximum amount of stock or other ownership interest that is owned 13
or constructively owned by a corporation equals or exceeds: 14
a. Twenty-five percent (25%), if the corporation does not occupy 15
property owned, con structively owned, or controlled by the real 16
estate investment trust; or 17
b. Ten percent (10%), if the corporation occupies property owned, 18
constructively owned, or controlled by the real estate investment 19
trust. 20
The total ownership interest of a corporati on shall be determined by 21
aggregating all interests owned or constructively owned by a 22
corporation; and 23
2. For the purposes of this paragraph: 24
a. "Corporation" means a corporation taxable under KRS 141.040, 25
and includes an affiliated group as defined in KR S 141.200, that is 26
required to file a consolidated return pursuant to KRS 141.200; 27
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and 1
b. "Owned or constructively owned" means owning shares or having 2
an ownership interest in the real estate investment trust, or owning 3
an interest in an entity that owns shares or has an ownership 4
interest in the real estate investment trust. Constructive owne rship 5
shall be determined by looking across multiple layers of a 6
multilayer pass-through structure; and 7
(c) The real estate investment trust is not owned by another real estate investment 8
trust; 9
(3) "Commissioner" means the commissioner of the department; 10
(4) "Corporation" has the same meaning as in Section 7701(a)(3) of the Internal 11
Revenue Code; 12
(5) "Critical infrastructure" means property and equipment owned or used by 13
communications networks, electric generation, transmission or distribution systems, 14
gas distribution systems, or water or wastewater pipelines that service multiple 15
customers or citizens, including but not limited to real and personal property such 16
as buildings, offices, lines, poles, pipes, structures, or equipment; 17
(6) "Declared state dis aster or emergency" means a disaster or emergency event for 18
which: 19
(a) The Governor has declared a state of emergency pursuant to KRS 39A.100; or 20
(b) A presidential declaration of a federal major disaster or emergency has been 21
issued; 22
(7) "Department" means the Department of Revenue; 23
(8) "Dependent" means those persons defined as dependents in the Internal Revenue 24
Code; 25
(9) "Disaster or emergency -related work" means repairing, renovating, installing, 26
building, or rendering services that are essential to the restoration of critical 27
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infrastructure that has been damaged, impaired, or destroyed by a declared state 1
disaster or emergency; 2
(10) "Disaster response business" means any entity: 3
(a) That has no presence in the state and conducts no business in the state , except 4
for disaster or emergency-related work during a disaster response period; 5
(b) Whose services are requested by a registered business or by a state or local 6
government for purposes of performing disaster or emergency -related work in 7
the state during a disaster response period; and 8
(c) That has no registrations, tax filings, or nexus in this state other than disaster 9
or emergency -related work during the calendar year immediately preceding 10
the declared state disaster or emergency; 11
(11) "Disaster response employee" means an employee who does not work or reside in 12
the state, except for disaster or emergency-related work during the disaster response 13
period; 14
(12) "Disaster response period" means a period that begins ten (10) days prior to the first 15
day of t he Governor's declaration under KRS 39A.100, or the President's 16
declaration of a federal major disaster or emergency, whichever occurs first, and 17
that extends thirty (30) calendar days after the declared state disaster or emergency; 18
(13) "Doing business in this state" includes but is not limited to: 19
(a) Being organized under the laws of this state; 20
(b) Having a commercial domicile in this state; 21
(c) Owning or leasing property in this state; 22
(d) Having one (1) or more individuals performing services in this state; 23
(e) Maintaining an interest in a pass-through entity doing business in this state; 24
(f) Deriving income from or attributable to sources within this state, including 25
deriving income directly or indirectly from a trust doing business in this state, 26
or deriving income directly or indirectly from a single -member limited 27
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liability company that is doing business in this state and is disregarded as an 1
entity separate from its single member for federal income tax purposes; or 2
(g) Directing activities at Kentu cky customers for the purpose of selling them 3
goods or services. 4
Nothing in this subsection shall be interpreted in a manner that goes beyond the 5
limitations imposed and protections provided by the United States Constitution or 6
Pub. L. No. 86-272; 7
(14) "Employee" has the same meaning as in Section 3401(c) of the Internal Revenue 8
Code; 9
(15) "Employer" has the same meaning as in Section 3401(d) of the Internal Revenue 10
Code; 11
(16) "Fiduciary" has the same meaning as in Section 7701(a)(6) of the Internal Revenue 12
Code; 13
(17) "Financial institution" means: 14
(a) A national bank organized as a body corporate and existing or in the process 15
of organizing as a national bank association pursuant to the pro visions of the 16
National Bank Act, 12 U.S.C. secs. 21 et seq., in effect on December 31, 17
1997, exclusive of any amendments made subsequent to that date; 18
(b) Any bank or trust company incorporated or organized under the laws of any 19
state, except a banker's bank organized under KRS 286.3-135; 20
(c) Any corporation organized under the provisions of 12 U.S.C. secs. 611 to 631, 21
in effect on December 31, 1997, exclusive of any amendments made 22
subsequent to that date, or any corporation organized after December 31, 23
1997, that meets the requirements of 12 U.S.C. secs. 611 to 631, in effect on 24
December 31, 1997; or 25
(d) Any agency or branch of a foreign depository as defined in 12 U.S.C. sec. 26
3101, in effect on December 31, 1997, exclusive of any amendments made 27
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subsequent to that date, or any agency or branch of a foreign depository 1
established after December 31, 1997, that meets the requirements of 12 U.S.C. 2
sec. 3101 in effect on December 31, 1997; 3
(18) "Fiscal year" has the same meaning as in Section 7701(a)(24) of th e Internal 4
Revenue Code; 5
(19) "Gross income": 6
(a) In the case of taxpayers other than corporations, has the same meaning as in 7
Section 61 of the Internal Revenue Code; and 8
(b) In the case of corporations, means the amount calculated in KRS 141.039; 9
(20) "Individual" means a natural person; 10
(21) "Internal Revenue Code" means for taxable years beginning on or after January 1, 11
2026[2025], the Internal Revenue Code in effect on December 31, 2025[2024], 12
exclusive of any amendments made subsequent to that date, o ther than amendments 13
that extend provisions in effect on December 31, 2024, that would otherwise 14
terminate; 15
(22) "Limited liability pass -through entity" means any pass -through entity that affords 16
any of its partners, members, shareholders, or owners, throu gh function of the laws 17
of this state or laws recognized by this state, protection from general liability for 18
actions of the entity; 19
(23) "Modified gross income" means the greater of: 20
(a) Adjusted gross income as defined in 26 U.S.C. sec. 62, including any 21
amendments in effect on December 31 of the taxable year, and adjusted as 22
follows: 23
1. Include interest income derived from obligations of sister states and 24
political subdivisions thereof; and 25
2. Include lump -sum pension distributions taxed under the specia l 26
transition rules of Pub. L. No. 104-188, sec. 1401(c)(2); or 27
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(b) Adjusted gross income as defined in subsection (1) of this section and 1
adjusted to include lump -sum pension distributions taxed under the special 2
transition rules of Pub. L. No. 104-188, sec. 1401(c)(2); 3
(24) "Net income": 4
(a) In the case of taxpayers other than corporations, means the amount calculated 5
in KRS 141.019; and 6
(b) In the case of corporations, means the amount calculated in KRS 141.039; 7
(25) "Nonresident" means any individual not a resident of this state; 8
(26) "Number of withholding exemptions claimed" means the number of withholding 9
exemptions claimed in a withholding exemption certificate in effect under KRS 10
141.325, except that if no such certificate is in effect, the number of withholding 11
exemptions claimed shall be considered to be zero; 12
(27) "Part-year resident" means any individual that has established or abandoned 13
Kentucky residency during the calendar year; 14
(28) "Pass-through entity" means any partnership, S corporation, l imited liability 15
company, limited liability partnership, limited partnership, or similar entity 16
recognized by the laws of this state that is not taxed for federal purposes at the 17
entity level, but instead passes to each partner, member, shareholder, or own er their 18
proportionate share of income, deductions, gains, losses, credits, and any other 19
similar attributes; 20
(29) "Payroll period" has the same meaning as in Section 3401(b) of the Internal 21
Revenue Code; 22
(30) "Person" has the same meaning as in Section 77 01(a)(1) of the Internal Revenue 23
Code; 24
(31) "Registered business" means a business entity that owns or otherwise possesses 25
critical infrastructure and that is registered to do business in the state prior to the 26
declared state disaster or emergency; 27
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(32) "Resident" means an individual domiciled withi n this state or an individual who is 1
not domiciled in this state, but maintains a place of abode in this state and spends in 2
the aggregate more than one hundred eighty -three (183) days of the taxable year in 3
this state; 4
(33) "S corporation" has the same meaning as in Section 1361(a) of the Internal Revenue 5
Code; 6
(34) "State" means a state of the United States, the District of Columbia, the 7
Commonwealth of Puerto Rico, or any territory or possession of the United States; 8
(35) "Taxable net income": 9
(a) In the case of corporations that are taxable in this state, means "net income" as 10
defined in subsection (24) of this section; 11
(b) In the case of corporations that are taxable in this state and taxable in another 12
state, means "net income" as defined in subsection (24) of this section and as 13
allocated and apportioned under KRS 141.120; 14
(c) For homeowners' associations as defined in Section 528(c) of the Internal 15
Revenue Code, means "taxable income" as defined in Section 528(d) of the 16
Internal Revenue Code. Notwiths tanding the provisions of subsection (21) of 17
this section, the Internal Revenue Code sections referred to in this paragraph 18
shall be those code sections in effect for the applicable tax year; and 19
(d) For a corporation that meets the requirements establishe d under Section 856 20
of the Internal Revenue Code to be a real estate investment trust, means "real 21
estate investment trust taxable income" as defined in Section 857(b)(2) of the 22
Internal Revenue Code, except that a captive real estate investment trust shal l 23
not be allowed any deduction for dividends paid; 24
(36) "Taxable year" means the calendar year or fiscal year ending during such calendar 25
year, upon the basis of which net income is computed, and in the case of a return 26
made for a fractional part of a year under the provisions of this chapter or under 27
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administrative regulations prescribed by the commissioner, "taxable year" means 1
the period for which the return is made; and 2
(37) "Wages" has the same meaning as in Section 3401(a) of the Internal Revenue Code 3
and includes other income subject to withholding as provided in Section 3401(f) 4
and Section 3402(k), (o), (p), (q), and (s) of the Internal Revenue Code. 5
Section 7. KRS 141.019 is amended to read as follows: 6
In the case of taxpayers other than corporations: 7
(1) Adjusted gross income shall be calculated by subtracting from the gross income of 8
those taxpayers the deductions allowed individuals by Section 62 of the Internal 9
Revenue Code and adjusting as follows: 10
(a) Exclude income that is exempt from state taxation by the Kentucky 11
Constitution and the Constitution and statutory laws of the United States; 12
(b) Exclude income from supplemental annuities provided by the Railroad 13
Retirement Act of 1937 as amended and which are su bject to federal income 14
tax by Pub. L. No. 89-699; 15
(c) Include interest income derived from obligations of sister states and political 16
subdivisions thereof; 17
(d) Exclude employee pension contributions picked up as provided for in KRS 18
6.505, 16.545, 21.360, 61.523, 61.560, 65.155, 67A.320, 67A.510, 78.610, 19
and 161.540 upon a ruling by the Internal Revenue Service or the federal 20
courts that these contributions shall not be included as gross income until such 21
time as the contributions are distributed or made available to the employee; 22
(e) Exclude Social Security and railroad retirement benefits subject to federal 23
income tax; 24
(f) Exclude any money received because of a settlement or judgment in a lawsuit 25
brought against a manufacturer or distributor of "Agent Ora nge" for damages 26
resulting from exposure to Agent Orange by a member or veteran of the 27
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Armed Forces of the United States or any dependent of such person who 1
served in Vietnam; 2
(g) 1. a. For taxable years beginning after December 31, 2005, but before 3
January 1, 2018, exclude up to forty-one thousand one hundred ten 4
dollars ($41,110) of total distributions from pension plans, annuity 5
contracts, profit -sharing plans, retirement plans, or employee 6
savings plans; and 7
b. For taxable years beginning on or after Ja nuary 1, 2018, exclude 8
up to thirty -one thousand one hundred ten dollars ($31,110) of 9
total distributions from pension plans, annuity contracts, profit -10
sharing plans, retirement plans, or employee savings plans. 11
2. As used in this paragraph: 12
a. "Annuity co ntract" has the same meaning as set forth in Section 13
1035 of the Internal Revenue Code; 14
b. "Distributions" includes but is not limited to any lump -sum 15
distribution from pension or profit -sharing plans qualifying for the 16
income tax averaging provisions of S ection 402 of the Internal 17
Revenue Code; any distribution from an individual retirement 18
account as defined in Section 408 of the Internal Revenue Code; 19
and any disability pension distribution; and 20
c. "Pension plans, profit-sharing plans, retirement plans, or employee 21
savings plans" means any trust or other entity created or organized 22
under a written retirement plan and forming part of a stock bonus, 23
pension, or profit-sharing plan of a public or private employer f or 24
the exclusive benefit of employees or their beneficiaries and 25
includes plans qualified or unqualified under Section 401 of the 26
Internal Revenue Code and individual retirement accounts as 27
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defined in Section 408 of the Internal Revenue Code; 1
(h) 1. a. Exclude the portion of the distributive share of a shareholder's net 2
income from an S corporation subject to the franchise tax imposed 3
under KRS 136.505 or the capital stock tax imposed under KRS 4
136.300; and 5
b. Exclude the portion of the distributive share o f a shareholder's net 6
income from an S corporation related to a qualified subchapter S 7
subsidiary subject to the franchise tax imposed under KRS 8
136.505 or the capital stock tax imposed under KRS 136.300. 9
2. The shareholder's basis of stock held in an S co rporation where the S 10
corporation or its qualified subchapter S subsidiary is subject to the 11
franchise tax imposed under KRS 136.505 or the capital stock tax 12
imposed under KRS 136.300 shall be the same as the basis for federal 13
income tax purposes; 14
(i) Exclude income received for services performed as a precinct worker for 15
election training or for working at election booths in state, county, and local 16
primaries or regular or special elections; 17
(j) Exclude any capital gains income attributable to property tak en by eminent 18
domain; 19
(k) 1. Exclude all income from all sources for members of the Armed Forces 20
who are on active duty and who are killed in the line of duty, for the 21
year during which the death occurred and the year prior to the year 22
during which the death occurred. 23
2. For the purposes of this paragraph, "all income from all sources" shall 24
include all federal and state death benefits payable to the estate or any 25
beneficiaries; 26
(l) Exclude all military pay received by members of the Armed Forces while on 27
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active duty; 1
(m) 1. Include the amount deducted for depreciation under 26 U.S.C. sec. 167 2
or 168; and 3
2. Exclude the amounts allowed by KRS 141.0101 for depreciation; 4
(n) Include the amount deducted under 26 U.S.C. sec. 199A; 5
(o) Ignore any change in the cost basis of the surviving spouse's share of property 6
owned by a Kentucky community property trust occurring for federal income 7
tax purposes as a result of the death of the predeceasing spouse; 8
(p) Allow the same treatment allowed under Pub. L. No. 116 -260, secs. 276 and 9
278, related to the tax treatment of forgiven covered loans, deductions 10
attributable to those loans, and tax attributes associated with those loans for 11
taxable years ending on or after March 27, 2020, but before January 1, 2022; [ 12
and] 13
(q) For taxable years beginning on or after January 1, 2020, but before March 11, 14
2023, allow the same treatment of restaurant revitalization grants in 15
accordance with Pub. L. No. 117 -2, sec. 9673 and 15 U.S.C. sec. 9009c, 16
related to the tax treatment of the gra nts, deductions attributable to those 17
grants, and tax attributes associated with those grants;[ and] 18
(r) For taxable years beginning on or after January 1, 2026: 19
1. Include the amount deducted for domestic research or experimental 20
expenditures under 26 U.S.C. sec. 174A; and 21
2. Exclude the amount deducted for domestic research or experimental 22
expenditures under 26 U.S.C. sec. 174, as that section existed on 23
December 31, 2024; 24
(s) Include the amount deducted for any qualified film or television production, 25
any qualified live theatrical production, and any qualified sound recording 26
production under 26 U.S.C. sec. 181; and 27
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(t) Include interest deducted under 26 U.S.C. sec. 139L for amounts paid to a 1
qualified lender on any qualified real estate loan; and 2
(2) Net income shall be calculated by subtracting from adjusted gross income all the 3
deductions allowed individuals by Chapter 1 of the Internal Revenue Code, as 4
modified by KRS 141.0101, except: 5
(a) Any deduction allowed by 26 U.S.C. sec. 164 for taxes; 6
(b) Any deduction allowed by 26 U.S.C. sec. 165 for losses, except wagering 7
losses allowed under Section 165(d) of the Internal Revenue Code; 8
(c) Any deduction allowed by 26 U.S.C. sec. 213 for medical care expenses; 9
(d) Any deduction allowed by 26 U.S.C. sec. 217 for moving expenses; 10
(e) Any deduction allowed by 26 U.S.C. sec. 67 for any other miscellaneous 11
deduction; 12
(f) Any deduction allowed by the Internal Revenue Code for amounts allowable 13
under KRS 140.090(1)(h) in calculating the value of the distributive shares of 14
the estate of a decedent, unless there is filed with the income return a 15
statement that the deduction has not been claimed under KRS 140.090(1)(h); 16
(g) Any deduction allowed by 26 U.S.C. sec. 151 for personal exemptions and 17
any other deductions in lieu thereof; 18
(h) Any deduction allowed for amounts paid to any club, organization, or 19
establishment which has b een determined by the courts or an agency 20
established by the General Assembly and charged with enforcing the civil 21
rights laws of the Commonwealth, not to afford full and equal membership 22
and full and equal enjoyment of its goods, services, facilities, pri vileges, 23
advantages, or accommodations to any person because of race, color, religion, 24
national origin, or sex, except nothing shall be construed to deny a deduction 25
for amounts paid to any religious or denominational club, group, or 26
establishment or any organization operated solely for charitable or educational 27
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purposes which restricts membership to persons of the same religion or 1
denomination in order to promote the religious principles for which it is 2
established and maintained;[ and] 3
(i) A taxpayer may elect to claim the standard deduction allowed by KRS 4
141.081 instead of itemized deductions allowed pursuant to 26 U.S.C. sec. 63 5
and as modified by this section; 6
(j) For taxable years beginning on or after January 1, 2026, any deduction 7
allowed by 26 U.S.C. sec. 163(h)(3) as qualified residence interest shall be 8
limited to the amount of interest paid or accrued during the taxable year on 9
the acquisition indebtedness of the principal residence of the taxpayer and 10
shall not be claimed for more than one (1) qualified residence; 11
(k) Any deduction allowed by 26 U.S.C. sec. 224 for qualified tips; 12
(l) Any deduction allowed by 26 U.S.C. sec. 225 for qualified overtime 13
compensation; and 14
(m) Any deduction allowed by 26 U.S.C. sec. 163(h)(4) for qualif ied passenger 15
vehicle loan interest. 16
Section 8. KRS 141.039 is amended to read as follows: 17
In the case of corporations: 18
(1) Gross income shall be calculated by adjusting federal gross income as defined in 19
Section 61 of the Internal Revenue Code as follows: 20
(a) Exclude income that is exempt from state taxation by the Kentucky 21
Constitution and the Constitution and statutory laws of the United States; 22
(b) Exclude all dividend income; 23
(c) Include interest income derived from obligations of sister states and political 24
subdivisions thereof; 25
(d) Exclude fifty percent (50%) of gross income derived from any disposal of 26
coal covered by Section 631(c) of the Internal Revenue Code if the 27
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corporation does not claim any deduction for pe rcentage depletion, or for 1
expenditures attributable to the making and administering of the contract 2
under which such disposition occurs or to the preservation of the economic 3
interests retained under such contract; 4
(e) Include the amount calculated under KRS 141.205; 5
(f) Ignore the provisions of Section 281 of the Internal Revenue Code in 6
computing gross income; 7
(g) Include the amount of deprecation deduction calculated under 26 U.S.C. sec. 8
167 or 168; 9
(h) Allow the same treatment allowed under Pub. L. No. 116-260, secs. 276 and 10
278, related to the tax treatment of forgiven covered loans, deductions 11
attributable to those loans, and tax attributes associated with those loans for 12
taxable years ending on or after March 27, 2020, but before January 1, 2022; [ 13
and] 14
(i) For taxable years beginning on or after January 1, 2020, but before March 11, 15
2023, allow the same treatment of restaurant revitalization grants in 16
accordance with Pub. L. No. 117 -2, sec. 9673 and 15 U.S.C. sec. 9009c, 17
related to the tax treatment o f the grants, deductions attributable to those 18
grants, and tax attributes associated with those grants;[ and 19
] 20
(j) For taxable years beginning on or after January 1, 2026: 21
1. Include the amount deducted for domestic research or experimental 22
expenditures under 26 U.S.C. sec. 174A; and 23
2. Exclude the amount deducted for domestic research or experimental 24
expenditures under 26 U.S.C. sec. 174, as that section existed on 25
December 31, 2024; 26
(k) Include the amount deducted for any qualified film or television production, 27
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any qualified live theatrical production, and any qualified sound recording 1
production under 26 U.S.C. sec. 181; 2
(l) Include interest deducted under 26 U.S.C. sec. 139L for amounts paid to a 3
qualified lender on any qualified real estate loan; and 4
(m) For purposes of determining the limitation on business interest under 26 5
U.S.C. sec. 163(j), the provisions of that sectio n in effect on December 31, 6
2024, exclusive of any amendments made subsequent to that date, shall be 7
used; and 8
(2) Net income shall be calculated by subtracting from gross income: 9
(a) The deduction for depreciation allowed by KRS 141.0101; 10
(b) Any amount p aid for vouchers or similar instruments that provide health 11
insurance coverage to employees or their families; 12
(c) All the deductions from gross income allowed corporations by Chapter 1 of 13
the Internal Revenue Code, as modified by KRS 141.0101, except: 14
1. Any deduction for a state tax which is computed, in whole or in part, by 15
reference to gross or net income and which is paid or accrued to any 16
state of the United States, the District of Columbia, the Commonwealth 17
of Puerto Rico, any territory or possession of the United States, or to any 18
foreign country or political subdivision thereof; 19
2. The deductions contained in Sections 243, 245, and 247 of the Internal 20
Revenue Code; 21
3. The provisions of Section 281 of the Internal Revenue Code shall be 22
ignored in computing net income; 23
4. Any deduction directly or indirectly allocable to income which is either 24
exempt from taxation or otherwise not taxed under the provisions of this 25
chapter, except for deductions allowed under Pub. L. No. 116 -260, secs. 26
276 and 278, rel ated to the tax treatment of forgiven covered loans and 27
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deductions attributable to those loans for taxable years ending on or 1
after March 27, 2020, but before January 1, 2022; and deductions 2
allowed under Pub. L. No. 117 -2, sec. 9673 and 15 U.S.C. sec. 900 9c, 3
related to the tax treatment of restaurant revitalization grants and 4
deductions attributable to those grants for taxable years beginning on or 5
after January 1, 2020, but before March 11, 2023. Nothing in this 6
chapter shall be construed to permit the sa me item to be deducted more 7
than once; 8
5. Any deduction for amounts paid to any club, organization, or 9
establishment which has been determined by the courts or an agency 10
established by the General Assembly and charged with enforcing the 11
civil rights laws o f the Commonwealth, not to afford full and equal 12
membership and full and equal enjoyment of its goods, services, 13
facilities, privileges, advantages, or accommodations to any person 14
because of race, color, religion, national origin, or sex, except nothing 15
shall be construed to deny a deduction for amounts paid to any religious 16
or denominational club, group, or establishment or any organization 17
operated solely for charitable or educational purposes which restricts 18
membership to persons of the same religion or denomination in order to 19
promote the religious principles for which it is established and 20
maintained; 21
6. Any deduction prohibited by KRS 141.205; and 22
7. Any dividends -paid deduction of any captive real estate investment 23
trust; and 24
(d) 1. A deferred tax deduction in an amount computed in accordance with this 25
paragraph. 26
2. For purposes of this paragraph: 27
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a. "Net deferred tax asset" means that deferred tax assets exceed the 1
deferred tax liabilities of the combined group, as computed in 2
accordance with account ing principles generally accepted in the 3
United States of America; and 4
b. "Net deferred tax liability" means deferred tax liabilities that 5
exceed the deferred tax assets of a combined group as defined in 6
KRS 141.202, as computed in accordance with accounti ng 7
principles generally accepted in the United States of America. 8
3. Only publicly traded companies, including affiliated corporations 9
participating in the filing of a publicly traded company's financial 10
statements prepared in accordance with accounting pr inciples generally 11
accepted in the United States of America, as of January 1, 2019, shall be 12
eligible for this deduction. 13
4. If the provisions of KRS 141.202 result in an aggregate increase to the 14
member's net deferred tax liability, an aggregate decrease to the 15
member's net deferred tax asset, or an aggregate change from a net 16
deferred tax asset to a net deferred tax liability, the combined group 17
shall be entitled to a deduction, as determined in this paragraph. 18
5. For ten (10) years beginning with the com bined group's first taxable 19
year beginning on or after January 1, 2028[2026], a combined group 20
shall be entitled to a deduction from the combined group's entire net 21
income equal to one -tenth (1/10) of the amount necessary to offset the 22
increase in the net deferred tax liability, decrease in the net deferred tax 23
asset, or aggregate change from a net deferred tax asset to a net deferred 24
tax liability. The increase in the net deferred tax liability, decrease in the 25
net deferred tax asset, or the aggregate chan ge from a net deferred tax 26
asset to a net deferred tax liability shall be computed based on the 27
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change that would result from the imposition of the combined reporting 1
requirement under KRS 141.202, but for the deduction provided under 2
this paragraph as of June 27, 2019. 3
6. The deferred tax impact determined in subparagraph 5. of this paragraph 4
shall be converted to the annual deferred tax deduction amount, as 5
follows: 6
a. The deferred tax impact determined in subparagraph 5. of this 7
paragraph shall be divide d by the tax rate determined under KRS 8
141.040; 9
b. The resulting amount shall be further divided by the 10
apportionment factor determined by KRS 141.120 or 141.121 that 11
was used by the combined group in the calculation of the deferred 12
tax assets and deferred tax liabilities as described in subparagraph 13
5. of this paragraph; and 14
c. The resulting amount represents the total net deferred tax 15
deduction available over the ten (10) year period as described in 16
subparagraph 5. of this paragraph. 17
7. The deduction calculated under this paragraph shall not be adjusted as a 18
result of any events happening subsequent to the calculation, including 19
but not limited to any disposition or abandonment of assets. The 20
deduction shall be calculated without regard to the federal tax effect and 21
shall not alter the tax basis of any asset. If the deduction under this 22
section is greater than the combined group's entire Kentucky net income, 23
any excess deduction shall be carried forward and applied as a deduction 24
to the combined group's ent ire net income in future taxable years until 25
fully utilized. 26
8. Any combined group intending to claim a deduction under this paragraph shall file 27
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a statement with the department on or before July 1, 2019. The statement shall specify the 1
total amount of the deduction which the combined group claims on the form, includin g 2
calculations and other information supporting the total amounts of the deduction as 3
required by the department. No deduction shall be allowed under this paragraph for any 4
taxable year, except to the extent claimed on the timely filed statement in accorda nce 5
with this paragraph. 6
SECTION 9. A NEW SECTION OF KRS CHAPTER 138 IS CREATED TO 7
READ AS FOLLOWS: 8
(1) As used in this section: 9
(a) "Adjusted gross fantasy contest receipts" means the total sum of entry fees 10
collected b y a fantasy contest service provider from all fantasy contest 11
participants entering a fantasy contest, less winnings paid to fantasy contest 12
participants in the contest; 13
(b) "Athlete": 14
1. Means a professional or amateur competitor in a real -world lawful 15
sporting event or an organized video game competition that is: 16
a. Regulated by a sports governing body; and 17
b. Held between players who play individually or as a team; and 18
2. Includes equine competitors; 19
(c) "Department" means the Department of Revenue; 20
(d) "Fantasy contest": 21
1. Means any online fantasy or simulated game or contest that meets the 22
following conditions: 23
a. There are no fewer than two (2) fantasy contest participants; 24
i. All fantasy contest participants are natural persons; and 25
ii. A fantasy contest service provider shall not be construed to 26
be a participant; 27
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b. i. The values of all prizes offered to winning fantasy contest 1
participants are established and made known to fantasy 2
contest participants in advance of the contest; 3
ii. Multiple winning participants may share a prize; and 4
iii. Prizes may consist of fixed amounts, tiered payouts, or 5
other conditional bonus payouts, provided that all prize 6
structures are disclosed in advance by the fantasy contest 7
service provider; 8
c. All winning outcomes r eflect the relative knowledge and skill of 9
the fantasy contest participant and are determined 10
predominantly by the accumulated statistical performance or 11
finishing position of multiple athletes across one (1) or more 12
real-world sporting events; 13
d. Fantasy contest participants assemble a fictional entry or roster 14
of actual athletes and exercise management or selection control 15
over the roster; 16
e. Fantasy contest participants compete for prizes awarded by a 17
fantasy contest service provider based on terms and c onditions 18
published by the fantasy contest service provider and made 19
known to the fantasy contest participant in advance of the 20
contest; 21
f. Winning outcomes are determined by clearly established scoring 22
criteria based on one (1) or more statistical results of the 23
performance of an individual athlete, including but not limited to 24
a fantasy score; 25
g. A winning outcome is not based: 26
i. On the score, point spread, or outcome of a single real -27
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world team or combination of teams; or 1
ii. Solely on any single performance of an individual athlete 2
or participant in any single actual event; and 3
h. The game or contest does not violate any provision of federal 4
law; 5
2. Includes contests in which fantasy contest participants compete 6
against each other; and 7
3. Does not include any fantasy contest: 8
a. Without a fantasy contest entry fee; or 9
b. Betting against the fantasy contest service provider; 10
(e) "Fantasy contest entry fee" means the cash or cash equivalent that is 11
required to be paid by a fantas y contest participant in advance to a fantasy 12
contest service provider in order to participate in a fantasy contest; 13
(f) "Fantasy contest participant" means a person who is twenty -one (21) years 14
of age or older who is: 15
1. Kentucky resident who participates in a fantasy contest offered by a 16
fantasy contest service provider; and 17
2. Not a Kentucky resident who participates in a fantasy contest offered 18
by a fantasy contest service provider while in Kentucky; and 19
(g) "Fantasy contest service provider": 20
1. Means a person or entity that offers fantasy contests to the general 21
public; and 22
2. Does not include an internet service provider or a provider of mobile 23
data services merely as a result of that provider's transporting of 24
general traffic that may include a fantasy contest. 25
(2) Beginning on January 1, 2027, the Commonwealth shall impose and collect a tax 26
at a rate of twelve percent (12%) of the fantasy contest service provider's adjusted 27
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gross fantasy contest receipts. The accrual method of accounting shall be use d 1
for purposes of calculating the amount of tax owed by the licensee. 2
(3) The tax imposed by subsection (2) of this section is due and payable monthly and 3
shall be remitted to the department on or before the twentieth day of the next 4
succeeding calendar month. 5
(4) The fantasy contest service provider's payment shall be accompanied by a return 6
prescribed by the department indicating the amount of tax due for the previous 7
calendar month as well as any other information the department shall require 8
through an administrative regulation promulgated in accordance with KRS 9
Chapter 13A. 10
(5) Any fantasy contest service provider who violates any provision of this section 11
shall be subject to the uniform civil penalties imposed under KRS 131.180. 12
(6) In every case, any tax not paid on or before the due date shall bear interest at the 13
tax interest rate as defined in KRS 131.010 from the due date until the date of 14
payment. 15
(7) It is the purpose and intent of the General Assembly to levy taxes on persons 16
engaged in the oper ations of fantasy contests. It is not the intent of the General 17
Assembly to legalize these activities. 18
Section 10. KRS 2.015 is amended to read as follows: 19
Persons of the age of eighteen (18) years are of the age of majority for all purposes in this 20
Commonwealth except for: 21
(1) The purchase of alcoholic beverages; 22
(2) Participating in fantasy sports contests; and 23
(3) For purposes of care and treatment of children with disabilities[,]; 24
for which twenty -one (21) years is the age of majority, all other statutes to the contrary 25
notwithstanding. 26
Section 11. KRS 139.010 is amended to read as follows: 27
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As used in this chapter, unless the context otherwise provides: 1
(1) (a) "Admissions" means the fees paid for: 2
1. The right of entrance to a display, program, sporting event, music 3
concert, performance, play, show, movie, exhibit, fair, or other 4
entertainment or amusement event or venue; and 5
2. The privilege of u sing facilities or participating in an event or activity, 6
including but not limited to: 7
a. Bowling centers; 8
b. Skating rinks; 9
c. Health spas; 10
d. Swimming pools; 11
e. Tennis courts; 12
f. Weight training facilities; 13
g. Fitness and recreational sports centers; and 14
h. Golf courses, both public and private; 15
regardless of whether the fee paid is per use or in any other form, 16
including but not limited to an initiation fee, monthly fee, membership 17
fee, or combination thereof. 18
(b) "Admissions" does not include: 19
1. Any fee paid to enter or participate in a fishing tournament; or 20
2. Any fee paid for the use of a boat ramp for the purpose of allowing 21
boats to be launched into or hauled out from the water; 22
(2) "Advertising and promotional direct mail" means direct mail the primary purpose of 23
which is to attract public attention to a product, person, business, or organization, or 24
to attempt to sell, popularize, or secure financial support for a product, person, 25
business, or organization. As used in this definition, "product" means tangible 26
personal property, an item transferred electronically, or a service; 27
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(3) "Business" includes any activity engaged in by any person or caused to be engaged 1
in by that person with the object of gain, benefit, or advantage, either direct or 2
indirect; 3
(4) "Commonwealth" means the Commonwealth of Kentucky; 4
(5) (a) "Cosmetic surgery services" means modifications to all areas of the head, 5
neck, and body to enhance appearance through surgical and medical 6
techniques. 7
(b) "Cosmetic surgery services" do es not include surgery services that are 8
medically necessary to reconstruct or correct dysfunctional areas of the face 9
and body due to birth disorders, trauma, burns, or disease; 10
(6) "Data brokering services" means the act of collecting, aggregating, and 11
analyzing personal data for sale to a third party while possession of the personal 12
data is maintained by the person providing the data brokering services or by the 13
third party, wherever located, regardless of whether the charge for the services 14
provided is on a per use, per user, per license, subscription, or some other basis; 15
(7) "Department" means the Department of Revenue; 16
(8)[(7)] (a) "Digital audio -visual works" means a series of related images which, 17
when shown in succession, impart an impression of motion, with 18
accompanying sounds, if any. 19
(b) "Digital audio -visual works" includes movies, motion pictures, musical 20
videos, news and entertainment programs, and live events. 21
(c) "Digital audio -visual works" does[shall] not include video greeting cards, 22
video games, and electronic games; 23
(9)[(8)] (a) "Digital audio works" means works that result from the fixation of a 24
series of musical, spoken, or other sounds. 25
(b) "Digital audio works" includes ringtones, recorded or live songs, music, 26
readings of books or other written materials, speeches, or other sound 27
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recordings. 1
(c) "Digital audio works" does[shall] not include audio greeting cards sen t by 2
electronic mail; 3
(10)[(9)] (a) "Digital books" means works that are generally recognized in the 4
ordinary and usual sense as books, including any literary work expressed in 5
words, numbers, or other verbal or numerical symbols or indicia if the literary 6
work is generally recognized in the ordinary or usual sense as a book. 7
(b) "Digital books" does[shall] not include digital audio -visual works, digital 8
audio works, periodicals, magazines, newspapers, or other news or 9
information products, chat rooms, or weblogs; 10
(11)[(10)] (a) "Digital code" means a code which provides a purchaser with a right to 11
obtain one (1) or more types of digital property. A "digital code" may be 12
obtained by any means, including electronic mail messaging or by tangible 13
means, regardless of the code's designation as a s ong code, video code, or 14
book code. 15
(b) "Digital code" does[shall] not include a code that represents: 16
1. A stored monetary value that is deducted from a total as it is used by the 17
purchaser; or 18
2. A redeemable card, gift card, or gift certificate that ent itles the holder to 19
select specific types of digital property; 20
(12)[(11)] (a) "Digital property" means any of the following which is transferred 21
electronically: 22
1. Digital audio works; 23
2. Digital books; 24
3. Finished artwork; 25
4. Digital photographs; 26
5. Periodicals; 27
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6. Newspapers; 1
7. Magazines; 2
8. Video greeting cards; 3
9. Audio greeting cards; 4
10. Video games; 5
11. Electronic games; or 6
12. Any digital code related to this property. 7
(b) "Digital property" does[shall] not include digital a udio-visual works or 8
satellite radio programming; 9
(13)[(12)] (a) "Direct mail" means printed material delivered or distributed by United 10
States mail or other delivery service to a mass audience or to addressees on a 11
mailing list provided by the purchaser o r at the direction of the purchaser 12
when the cost of the items are not billed directly to the recipient. 13
(b) "Direct mail" includes tangible personal property supplied directly or 14
indirectly by the purchaser to the direct mail retailer for inclusion in the 15
package containing the printed material. 16
(c) "Direct mail" does not include multiple items of printed material delivered to 17
a single address; 18
(14)[(13)] "Directly used in the manufacturing or industrial processing process" means 19
the process that commences with the movement of raw materials from storage into 20
a continuous, unbroken, integrated process and ends when the finished product is 21
packaged and ready for sale; 22
(15)[(14)] (a) "Executive employee recruitment services" means services provided by 23
a person to locate potential candidates to fill open senior -level management 24
positions. 25
(b) "Executive employee recruitment services" includes but is not limited to 26
making a detailed list of client requirements, researching and identifying 27
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potential candidates, pe rforming prescreening interviews, and providing 1
contract and salary negotiations; 2
(16)[(15)] (a) "Extended warranty services" means services provided through a service 3
contract agreement between the contract provider and the purchaser where the 4
purchaser agrees to pay compensation for the contract and the provider agrees 5
to repair, replace, support, or maintain tangible personal property, digital 6
property, real property, or prewritten computer software access services 7
according to the terms of the contract. 8
(b) "Extended warranty services" does not include the sale of a service contract 9
agreement for tangible personal property to be used by a small telephone 10
utility as defined in KRS 278.516 or a Tier III CMRS provider as defined in 11
KRS 65.7621 to deliver co mmunications services as defined in KRS 136.602 12
or broadband; 13
(17)[(16)] (a) "Finished artwork" means final art that is used for actual reproduction 14
by photomechanical or other processes or for display purposes. 15
(b) "Finished artwork" includes: 16
1. Assemblies; 17
2. Charts; 18
3. Designs; 19
4. Drawings; 20
5. Graphs; 21
6. Illustrative materials; 22
7. Lettering; 23
8. Mechanicals; 24
9. Paintings; and 25
10. Paste-ups; 26
(18)[(17)] (a) "Gross receipts" and "sales price" mean the total amount or 27
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consideration, including cash, credit, p roperty, and services, for which 1
tangible personal property, digital property, or services are sold, leased, or 2
rented, valued in money, whether received in money or otherwise, without 3
any deduction for any of the following: 4
1. The retailer's cost of the t angible personal property, digital property, or 5
services sold; 6
2. The cost of the materials used, labor or service cost, interest, losses, all 7
costs of transportation to the retailer, all taxes imposed on the retailer, or 8
any other expense of the retailer; 9
3. Charges by the retailer for any services necessary to complete the sale; 10
4. Delivery charges, which are defined as charges by t he retailer for the 11
preparation and delivery to a location designated by the purchaser 12
including transportation, shipping, postage, handling, crating, and 13
packing; 14
5. Any amount for which credit is given to the purchaser by the retailer, 15
other than credit for tangible personal property or digital property traded 16
when the tangible personal property or digital property traded is of like 17
kind and character to the property purchased and the property traded is 18
held by the retailer for resale; and 19
6. The amount c harged for labor or services rendered in installing or 20
applying the tangible personal property, digital property, or service sold. 21
(b) "Gross receipts" and "sales price" [ shall] include consideration received by 22
the retailer from a third party if: 23
1. The r etailer actually receives consideration from a third party and the 24
consideration is directly related to a price reduction or discount on the 25
sale to the purchaser; 26
2. The retailer has an obligation to pass the price reduction or discount 27
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through to the purchaser; 1
3. The amount of consideration attributable to the sale is fixed and 2
determinable by the retailer at the time of the sale of the item to the 3
purchaser; and 4
4. One (1) of the following criteria is met: 5
a. The purchaser presents a coupon, certificate , or other 6
documentation to the retailer to claim a price reduction or discount 7
where the coupon, certificate, or documentation is authorized, 8
distributed, or granted by a third party with the understanding that 9
the third party will reimburse any seller to whom the coupon, 10
certificate, or documentation is presented; 11
b. The price reduction or discount is identified as a third -party price 12
reduction or discount on the invoice received by the purchaser or 13
on a coupon, certificate, or other documentation present ed by the 14
purchaser; or 15
c. The purchaser identifies himself or herself to the retailer as a 16
member of a group or organization entitled to a price reduction or 17
discount. A "preferred customer" card that is available to any 18
patron does not constitute membership in such a group. 19
(c) "Gross receipts" and "sales price" do[shall] not include: 20
1. Discounts, including cash, term, or coupons that are not reimbursed by a 21
third party and that are allowed by a retailer and taken by a purchaser on 22
a sale; 23
2. Interest, f inancing, and carrying charges from credit extended on the 24
sale of tangible personal property, digital property, or services, if the 25
amount is separately stated on the invoice, bill of sale, or similar 26
document given to the purchaser; 27
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3. Any taxes legally imposed directly on the purchaser that are separately 1
stated on the invoice, bill of sale, or similar document given to the 2
purchaser; or 3
4. Local alcohol regulatory license fees authorized under KRS 243.075 that 4
are separately stated on the invoice, bill of sale, or similar document 5
given to the purchaser. 6
(d) As used in this subsection, "third party" means a person other than the 7
purchaser; 8
(19)[(18)] "In this state" or "in the state" means within the exterior limits of the 9
Commonwealth and includes all t erritory within these limits owned by or ceded to 10
the United States of America; 11
(20)[(19)] "Industrial processing" includes: 12
(a) Refining; 13
(b) Extraction of minerals, ores, coal, clay, stone, petroleum, or natural gas; 14
(c) Mining, quarrying, fabricating, and industrial assembling; 15
(d) The processing and packaging of raw materials, in -process materials, and 16
finished products; and 17
(e) The processing and packaging of farm and dairy products for sale; 18
(21)[(20)] (a) "Lease or rental" means any transfer of posse ssion or control of tangible 19
personal property for a fixed or indeterminate term for consideration. A lease 20
or rental includes[shall include] future options to: 21
1. Purchase the property; or 22
2. Extend the terms of the agreement and agreements covering trailers 23
where the amount of consideration may be increased or decreased by 24
reference to the amount realized upon sale or disposition of the property 25
as defined in 26 U.S.C. sec. 7701(h)(1). 26
(b) "Lease or rental" does[shall] not include: 27
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1. A transfer of possession or control of property under a security 1
agreement or deferred payment plan that requires the transfer of title 2
upon completion of the required payments; 3
2. A transfer of possession or cont rol of property under an agreement that 4
requires the transfer of title upon completion of the required payments 5
and payment of an option price that does not exceed the greater of one 6
hundred dollars ($100) or one percent (1%) of the total required 7
payments; or 8
3. Providing tangible personal property and an operator for the tangible 9
personal property for a fixed or indeterminate period of time. To qualify 10
for this exclusion, the operator must be necessary for the equipment to 11
perform as designed, and the ope rator must do more than maintain, 12
inspect, or setup the tangible personal property. 13
(c) This definition shall apply regardless of the classification of a transaction 14
under generally accepted accounting principles, the Internal Revenue Code, or 15
other provisions of federal, state, or local law; 16
(22)[(21)] (a) "Lobbying services" means the act of promoting or securing passage of 17
legislation or an attempt to influence or sway a public official or other public 18
servant toward a desired action, including but not l imited to the support of or 19
opposition to a project or the passage, amendment, defeat, approval, or veto of 20
any legislation, regulation, rule, or ordinance.[;] 21
(b) "Lobbying services" includes but is not limited to the performance of 22
activities described as executive agency lobbying activities as defined in KRS 23
11A.201, activities described under the definition of lobby in KRS 6.611, and 24
any similar activities performed at the local, state, or federal levels; 25
(23)[(22)] (a) "Machinery for new and expanded industry" means machinery: 26
1. Directly used in the manufacturing or industrial processing process of: 27
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a. Tangible personal property at a plant facility; 1
b. Distilled spirits or wine at a plant facility or on the premises of a 2
distiller, rectifier, winery, o r small farm winery licensed under 3
KRS 243.030 that includes a retail establishment on the premises; 4
or 5
c. Malt beverages at a plant facility or on the premises of a brewer or 6
microbrewery licensed under KRS 243.040 that includes a retail 7
establishment; 8
2. Which is incorporated for the first time into: 9
a. A plant facility established in this state; or 10
b. Licensed premises located in this state; and 11
3. Which does not replace machinery in the plant facility or licensed 12
premises unless that machinery purchased to replace existing machinery: 13
a. Increases the consumption of recycled materials at the plant 14
facility by not less than ten percent (10%); 15
b. Performs different functions; 16
c. Is used to manufacture a different product; or 17
d. Has a greater productive capa city, as measured in units of 18
production, than the machinery being replaced. 19
(b) "Machinery for new and expanded industry" does not include repair, 20
replacement, or spare parts of any kind, regardless of whether the purchase of 21
repair, replacement, or spare parts is required by the manufacturer or seller as 22
a condition of sale or as a condition of warranty; 23
(24)[(23)] "Manufacturing" means any process through which material having little or 24
no commercial value for its intended use before processing has appre ciable 25
commercial value for its intended use after processing by the machinery; 26
(25)[(24)] "Marketplace" means any physical or electronic means through which one (1) 27
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or more retailers may advertise and sell tangible personal property, digital property, 1
or services, or lease tangible personal property or digital property, such as a catalog, 2
internet website, or television or radio broadcast, regardless of whether the tangible 3
personal property, digital property, or retailer is physically present in this state; 4
(26)[(25)] (a) "Marketplace provider" means a person, including any affiliate of the 5
person, that facilitates a retail sale by satisfying subparagraphs 1. and 2. of 6
this paragraph as follows: 7
1. The person directly or indirectly: 8
a. Lists, makes available, or advertises tangible personal property, 9
digital property, or services for sale by a marketplace retailer in a 10
marketplace owned, operated, or controlled by the person; 11
b. Facilitates the sale of a marketplace retailer's product through a 12
marketplace by transmitting or otherwise communicating an offer 13
or acceptance of a retail sale of tangible personal property, digital 14
property, or services between a marketplace retailer and a 15
purchaser in a forum including a shop, store, booth, catalog, 16
internet site, or similar forum; 17
c. Owns, rents, licenses, makes available, or operates any electronic 18
or physical infrastructure or any property, process, method, 19
copyright, trademark, or patent that connects marketplace retailers 20
to purchasers for the purpose of making retail sales of tangible 21
personal property, digital property, or services; 22
d. Provides a marketplace for making retail sales of tangible personal 23
property, digital property, or services, or otherwise facilitates retail 24
sales of tangible personal property, digital propert y, or services, 25
regardless of ownership or control of the tangible personal 26
property, digital property, or services, that are the subject of the 27
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retail sale; 1
e. Provides software development or research and development 2
activities related to any activity de scribed in this subparagraph, if 3
the software development or research and development activities 4
are directly related to the physical or electronic marketplace 5
provided by a marketplace provider; 6
f. Provides or offers fulfillment or storage services for a marketplace 7
retailer; 8
g. Sets prices for a marketplace retailer's sale of tangible personal 9
property, digital property, or services; 10
h. Provides or offers customer service to a marketplace retailer or a 11
marketplace retailer's customers, or accepts or assis ts with taking 12
orders, returns, or exchanges of tangible personal property, digital 13
property, or services sold by a marketplace retailer; or 14
i. Brands or otherwise identifies sales as those of the marketplace 15
provider; and 16
2. The person directly or indirectly: 17
a. Collects the sales price or purchase price of a retail sale of tangible 18
personal property, digital property, or services; 19
b. Provides payment processing services for a retail sale of tangible 20
personal property, digital property, or services; 21
c. Through terms and conditions, agreements, or arrangements with a 22
third party, collects payment in connection with a retail sale of 23
tangible personal property, digital property, or services from a 24
purchaser and transmits that payment to the marketplace retaile r, 25
regardless of whether the person collecting and transmitting the 26
payment receives compensation or other consideration in exchange 27
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for the service; or 1
d. Provides a virtual currency that purchasers are allowed or required 2
to use to purchase tangible pers onal property, digital property, or 3
services. 4
(b) "Marketplace provider" includes but is not limited to a person that satisfies the 5
requirements of this subsection through the ownership, operation, or control 6
of a digital distribution service, digital dist ribution platform, online portal, or 7
application store; 8
(27)[(26)] "Marketplace retailer" means a seller that makes retail sales through any 9
marketplace owned, operated, or controlled by a marketplace provider; 10
(28)[(27)] (a) "Occasional sale" includes: 11
1. A sale of tangible personal property or digital property not held or used 12
by a seller in the course of an activity for which he or she is required to 13
hold a seller's permit, provided such sale is not one (1) of a series of 14
sales sufficient in number, scop e, and character to constitute an activity 15
requiring the holding of a seller's permit. In the case of the sale of the 16
entire, or a substantial portion of the nonretail assets of the seller, the 17
number of previous sales of similar assets shall be disregarde d in 18
determining whether or not the current sale or sales shall qualify as an 19
occasional sale; or 20
2. Any transfer of all or substantially all the tangible personal property or 21
digital property held or used by a person in the course of such an activity 22
when after such transfer the real or ultimate ownership of such property 23
is substantially similar to that which existed before such transfer. 24
(b) For the purposes of this subsection, stockholders, bondholders, partners, or 25
other persons holding an interest in a corporation or other entity are regarded 26
as having the "real or ultimate ownership" of the tangible personal property or 27
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digital property of such corporation or other entity; 1
(29)[(28)] (a) "Other direct mail" means any direct mail that is not advertisin g and 2
promotional direct mail, regardless of whether advertising and promotional 3
direct mail is included in the same mailing. 4
(b) "Other direct mail" includes but is not limited to: 5
1. Transactional direct mail that contains personal information specific t o 6
the addressee, including but not limited to invoices, bills, statements of 7
account, and payroll advices; 8
2. Any legally required mailings, including but not limited to privacy 9
notices, tax reports, and stockholder reports; and 10
3. Other nonpromotional direct mail delivered to existing or former 11
shareholders, customers, employees, or agents, including but not limi ted 12
to newsletters and informational pieces. 13
(c) "Other direct mail" does not include the development of billing information or 14
the provision of any data processing service that is more than incidental to the 15
production of printed material; 16
(30)[(29)] "Person" includes any individual, firm, copartnership, joint venture, 17
association, social club, fraternal organization, corporation, estate, trust, business 18
trust, receiver, trustee, syndicate, cooperative, assignee, governmental unit or 19
agency, or any other group or combination acting as a unit; 20
(31)[(30)] "Permanent," as the term applies to digital property, means perpetual or for an 21
indefinite or unspecified length of time; 22
(32)[(31)] (a) "Photography and photofinishing services" means: 23
1. The taking, developing, or printing of an original photograph; or 24
2. Image editing, including shadow removal, tone adjustments, vertical and 25
horizontal alignment and cropping, composite image creation, 26
formatting, watermarking printing, and delivery of an original 27
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photograph in the form of tangible personal property, digital property, or 1
other media. 2
(b) "Photography and photofinishing services" does not include photography 3
services necessary for medical or dental health; 4
(33)[(32)] "Plant facility" means a single location that is exclusively dedicated to 5
manufacturing or industrial processing activities. A location shall be deemed to be 6
exclusively dedicated to manufacturing or industrial processing activities even if 7
retail sales ar e made there, provided that the retail sales are incidental to the 8
manufacturing or industrial processing activities occurring at the location. The term 9
"plant facility" does[shall] not include any restaurant, grocery store, shopping 10
center, or other retail establishment; 11
(34)[(33)] (a) "Prewritten computer software" means: 12
1. Computer software, including prewritten upgrades, that are not designed 13
and developed by the author or other creator to the specifications of a 14
specific purchaser; 15
2. Software designed and developed by the author or other creator to the 16
specifications of a specific purchaser when it is sold to a person other 17
than the original purchaser; or 18
3. Any portion of prewritten computer software that is modified or 19
enhanced in any manner, where the modification or enhancement is 20
designed and developed to the specifications of a specific purchaser, 21
unless there is a reasonable, separately stated charge on an invoice or 22
other statement of the price to the purchaser for the modification or 23
enhancement. 24
(b) When a person modifies or enhances computer software of which the person 25
is not the author or creator, the person shall be deemed to be the author or 26
creator only of the modifications or enhancements the person actually made. 27
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(c) The combining of t wo (2) or more prewritten computer software programs or 1
portions thereof does not cause the combination to be other than prewritten 2
computer software; 3
(35)[(34)] "Prewritten computer software access services" means the right of access to 4
prewritten compute r software where the object of the transaction is to use the 5
prewritten computer software while possession of the prewritten computer software 6
is maintained by the seller or a third party, wherever located, regardless of whether 7
the charge for the access or use is on a per use, per user, per license, subscription, or 8
some other basis; 9
(36)[(35)] (a) "Purchase" means any transfer of title or possession, exchange, barter, 10
lease, or rental, conditional or otherwise, in any manner or by any means 11
whatsoever, of: 12
1. Tangible personal property; 13
2. An extended warranty service; 14
3. Digital property transferred electronically; or 15
4. Services included in KRS 139.200; 16
for a consideration. 17
(b) "Purchase" includes: 18
1. When performed outside this state or when the custom er gives a resale 19
certificate, the producing, fabricating, processing, printing, or imprinting 20
of tangible personal property for a consideration for consumers who 21
furnish either directly or indirectly the materials used in the producing, 22
fabricating, processing, printing, or imprinting; 23
2. A transaction whereby the possession of tangible personal property or 24
digital property is transferred but the seller retains the title as security 25
for the payment of the price; and 26
3. A transfer for a consideration of the title or possession of tangible 27
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personal property or digital property which has been produced, 1
fabricated, or printed to the special order of the customer, or of any 2
publication; 3
(37)[(36)] "Recycled materials" means m aterials which have been recovered or diverted 4
from the solid waste stream and reused or returned to use in the form of raw 5
materials or products; 6
(38)[(37)] "Recycling purposes" means those activities undertaken in which materials 7
that would otherwise bec ome solid waste are collected, separated, or processed in 8
order to be reused or returned to use in the form of raw materials or products; 9
(39)[(38)] "Remote retailer" means a retailer with no physical presence in this state; 10
(40)[(39)] (a) "Repair, replace ment, or spare parts" means any tangible personal 11
property used to maintain, restore, mend, or repair machinery or equipment. 12
(b) "Repair, replacement, or spare parts" does not include machine oils, grease, or 13
industrial tools; 14
(41)[(40)] (a) "Retailer" means: 15
1. Every person engaged in the business of making retail sales of tangible 16
personal property, digital property, or furnishing any services in a retail 17
sale included in KRS 139.200; 18
2. Every person engaged in the business of making sales at auction of 19
tangible personal property or digital property owned by the person or 20
others for storage, use or other consumption, except as provided in 21
paragraph (c) of this subsection; 22
3. Every person making more than two (2) retail sales of tangible personal 23
property, digital property, or services included in KRS 139.200 during 24
any twelve (12) month period, including sales made in the capacity of 25
assignee for the benefit of creditors, or receiver or trustee in bankruptcy; 26
4. Any person conducting a race meeting under t he provision of KRS 27
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Chapter 230, with respect to horses which are claimed during the 1
meeting. 2
(b) When the department determines that it is necessary for the efficient 3
administration of this chapter to regard any salesmen, representatives, 4
peddlers, or canvassers as the agents of the dealers, distributors, supervisors or 5
employers under whom they operate or from whom they obtain the tangible 6
personal property, digital property, or services sold by them, irrespective of 7
whether they are making sales on their own behalf or on behalf of the dealers, 8
distributors, supervisors or employers, the department may so regard them and 9
may regard the dealers, distributors, supervisors or employers as retailers for 10
purposes of this chapter. 11
(c) 1. Any person making sales at a charitable auction for a qualifying entity 12
shall not be a retailer for purposes of the sales made at the charitable 13
auction if: 14
a. The qualifying entity, not the person making sales at the auction, is 15
sponsoring the auction; 16
b. The purchaser of tangib le personal property at the auction directly 17
pays the qualifying entity sponsoring the auction for the property 18
and not the person making the sales at the auction; and 19
c. The qualifying entity, not the person making sales at the auction, is 20
responsible for the collection, control, and disbursement of the 21
auction proceeds. 22
2. If the conditions set forth in subparagraph 1. of this paragraph are met, 23
the qualifying entity sponsoring the auction shall be the retailer for 24
purposes of the sales made at the charitable auction. 25
3. For purposes of this paragraph, "qualifying entity" means a resident: 26
a. Church; 27
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b. School; 1
c. Civic club; or 2
d. Any other nonprofit charitable, religious, or educational 3
organization; 4
(42)[(41)] "Retail sale" means any sale, lease, or rental for any purpose other than resale, 5
sublease, or subrent; 6
(43)[(42)] (a) "Ringtones" means digitized sound files that are downloaded onto a 7
device and that may be used to alert the customer with respect to a 8
communication. 9
(b) "Ringtones" does[shall] not include ringback tones or other digital files that 10
are not stored on the purchaser's communications device; 11
(44)[(43)] (a) "Sale" means: 12
1. The furnishing of any services included in KRS 139.200; or 13
2. Any transfer of title or possession, exchange , barter, lease, or rental, 14
conditional or otherwise, in any manner or by any means whatsoever, 15
of: 16
a. Tangible personal property; or 17
b. Digital property transferred electronically; 18
for a consideration. 19
(b) "Sale" includes but is not limited to: 20
1. The pr oducing, fabricating, processing, printing, or imprinting of 21
tangible personal property or digital property for a consideration for 22
purchasers who furnish, either directly or indirectly, the materials used 23
in the producing, fabricating, processing, printing, or imprinting; 24
2. A transaction whereby the possession of tangible personal property or 25
digital property is transferred, but the seller retains the title as security 26
for the payment of the price; and 27
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3. A transfer for a consideration of the title or pos session of tangible 1
personal property or digital property which has been produced, 2
fabricated, or printed to the special order of the purchaser. 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
(45)[(44)] "Seller" includes every person engaged in the business of selling tangible 7
personal property, digital property, or services of a kind, the gross r eceipts from the 8
retail sale of which are required to be included in the measure of the sales tax, and 9
every person engaged in making sales for resale; 10
(46)[(45)] (a) "Storage" includes any keeping or retention in this state for any purpose 11
except sale in the regular course of business or subsequent use solely outside 12
this state of tangible personal property, digital property, or prewritten 13
computer software access services purchased from a retailer. 14
(b) "Storage" does not include the keeping, retaining, or exercising any right or 15
power over tangible personal property for the purpose of subsequently 16
transporting it outside the state for use thereafter solely outside the state, or 17
for the purpose of being processed, fabricated, or manufactured into, attached 18
to, or incorporated into, other tangible personal property to be transported 19
outside the state and thereafter used solely outside the state; 20
(47)[(46)] "Tangible personal property" means personal property which may be seen, 21
weighed, measured, felt, or touc hed, or which is in any other manner perceptible to 22
the senses and includes natural, artificial, and mixed gas, electricity, water, steam, 23
and prewritten computer software; 24
(48)[(47)] "Taxpayer" means any person liable for tax under this chapter; 25
(49)[(48)] "Telemarketing services" means services provided via telephone, facsimile, 26
electronic mail, text messages, or other modes of communications to another 27
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person, which are unsolicited by that person, for the purposes of: 1
(a) 1. Promoting products or services; 2
2. Taking orders; or 3
3. Providing information or assistance regarding the products or services; 4
or 5
(b) Soliciting contributions; 6
(50)[(49)] "Transferred electronically" means accessed or obtained by the purchaser by 7
means other than tangible storage media; and 8
(51)[(50)] (a) "Use" includes the exercise of: 9
1. Any right or power over tangible personal property or digital property 10
incident to the ownership of that property, or by any transaction in 11
which possession is given, or by any transaction involving digital 12
property or tangible personal property where the right of access is 13
granted; or 14
2. Any right or power to benefit from any services subject to tax under 15
KRS 139.200(2)(p) to (ay)[(ax)]. 16
(b) "Use" does not include the keeping, retaining, or exercising any right or 17
power over: 18
1. Tangible personal property or digital property for the purpose of: 19
a. Selling tangible personal property or digital property in the regular 20
course of business; or 21
b. Subsequently transporting tangible personal property outside the 22
state for use thereafter solely outside the state, or for the purpose 23
of being process ed, fabricated, or manufactured into, attached to, 24
or incorporated into, other tangible personal property to be 25
transported outside the state and thereafter used solely outside the 26
state; or 27
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2. Prewritten computer software access services and data brokerin g 1
services purchased for use outside the state and transferred 2
electronically outside the state for use thereafter solely outside the state. 3
Section 12. KRS 139.200 is amended to read as follows: 4
A tax is hereby imposed upon all retailers at the rate of six percent (6%) of the gross 5
receipts derived from: 6
(1) Retail sales of: 7
(a) Tangible personal property, regardless of the method of delivery, made wi thin 8
this Commonwealth; and 9
(b) Digital property regardless of whether: 10
1. The purchaser has the right to permanently use the property; 11
2. The purchaser's right to access or retain the property is not permanent; 12
or 13
3. The purchaser's right of use is conditioned upon continued payment; and 14
(2) The furnishing of the following services: 15
(a) The rental of any room or rooms, lodgings, campsites, or accommodations 16
furnished by any hotel, motel, inn, tourist camp, tourist cabin, campgrounds, 17
recreational vehicle p arks, or any other place in which rooms, lodgings, 18
campsites, or accommodations are regularly furnished to transients for a 19
consideration. The tax shall not apply to rooms, lodgings, campsites, or 20
accommodations supplied for a continuous period of thirty ( 30) days or more 21
to a person; 22
(b) Sewer services; 23
(c) The sale of admissions, except: 24
1. Admissions to enter the grounds or enclosure of any track licensed 25
under KRS Chapter 230 at which live horse racing or historical horse 26
racing is being conducted under the jurisdiction of the Kentucky Horse 27
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Racing and Gaming Corporation; 1
2. Admissions taxed under KRS 229.031; 2
3. Admissions that are charged by nonprofit educational, charitable, or 3
religious institutions and for which an exemption is provided under KRS 4
139.495; and 5
4. Admissions that are charged by nonprofit civic, governmental, or other 6
nonprofit organizations and for which an exemption is provided under 7
KRS 139.498; 8
(d) Prepaid calling service and prepaid wireless calling service; 9
(e) Intrastate, interstate, and international communications services as defined in 10
KRS 139.195, including[except] the furnishing of pay telephone service as 11
defined in KRS 139.195; 12
(f) Distribution, transmission, or transportation services for natural gas that is for 13
storage, u se, or other consumption in this state, excluding those services 14
furnished: 15
1. For natural gas that is classified as residential use as provided in KRS 16
139.470(7); or 17
2. To a seller or reseller of natural gas; 18
(g) Landscaping services, including but not limited to: 19
1. Lawn care and maintenance services; 20
2. Tree trimming, pruning, or removal services; 21
3. Landscape design and installation services; 22
4. Landscape care and maintenance services; and 23
5. Snow plowing or removal services; 24
(h) Janitorial services, including but not limited to residential and commercial 25
cleaning services, and carpet, upholstery, and window cleaning services; 26
(i) Small animal veterinary services, excluding veterinary services for equine, 27
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cattle, poultry, swine, sheep, goats, llamas, alpacas, ratite birds, 1
buffaloes[buffalo], and cervids; 2
(j) Pet care services, including but not limited to grooming and boarding 3
services, pet sitting services, and pet obedience training services; 4
(k) Industrial lau ndry services, including but not limited to industrial uniform 5
supply services, protective apparel supply services, and industrial mat and rug 6
supply services; 7
(l) Non-coin-operated laundry and dry cleaning services; 8
(m) Linen supply services, including bu t not limited to table and bed linen supply 9
services and nonindustrial uniform supply services; 10
(n) Indoor skin tanning services, including but not limited to tanning booth or 11
tanning bed services and spray tanning services; 12
(o) Non-medical diet and weight reducing services; 13
(p) Extended warranty services; 14
(q) Photography and photofinishing services; 15
(r) Telemarketing services; 16
(s) Public opinion and research polling services; 17
(t) Lobbying services; 18
(u) Executive employee recruitment services; 19
(v) Website design and development services; 20
(w) Website hosting services; 21
(x) Facsimile transmission services; 22
(y) Private mailroom services, including: 23
1. Presorting mail and packages by postal code; 24
2. Address barcoding; 25
3. Tracking; 26
4. Delivery to postal service; and 27
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5. Private mailbox rentals; 1
(z) Bodyguard services; 2
(aa) Residential and nonresidential security system monitoring services, excluding 3
separately stated onsite security guard services; 4
(ab) Private investigation services; 5
(ac) Process server services; 6
(ad) Repossession of tangible personal property services; 7
(ae) Personal background check services; 8
(af) Parking services; 9
1. Including: 10
a. Valet services; and 11
b. The use of parking lots and parking structures; but 12
2. Excluding any parking services at an educational institution; 13
(ag) Road and travel services provided by automobile clubs as defined in KRS 14
281.010; 15
(ah) Condominium time-share exchange services; 16
(ai) Rental of space for meetings, conventions, short -term business uses , 17
entertainment events, weddings, banquets, parties, and other short -term social 18
events; 19
(aj) Social event planning and coordination services; 20
(ak) Leisure, recreational, and athletic instructional services; 21
(al) Recreational camp tuition and fees; 22
(am) Personal fitness training services; 23
(an) Massage services, except when medically necessary; 24
(ao) Cosmetic surgery services; 25
(ap) Body modification services, including tattooing, piercing, scarification, 26
branding, tongue splitting, transdermal and subdermal i mplants, ear pointing, 27
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teeth pointing, and any other modifications that are not necessary for medical 1
or dental health; 2
(aq) Laboratory testing services, excluding laboratory testing: 3
1. For medical, educational, or veterinary reasons; or 4
2. Required by a federal, state, or local statute, regulation, court order, or 5
other government-related requirement; 6
(ar) Interior decorating and design services; 7
(as) Household moving services; 8
(at) Specialized design services, including the design of clothing, costumes, 9
fashion, furs, jewelry, shoes, textiles, and lighting; 10
(au) Lapidary services, including cutting, polishing, and engraving precious 11
stones; 12
(av) Labor and services to repair or mainta in commercial refrigeration equipment 13
and systems when no tangible personal property is sold in that transaction 14
including service calls and trip charges; 15
(aw) Labor to repair or alter apparel, footwear, watches, or jewelry when no 16
tangible personal property is sold in that transaction;[ and] 17
(ax) Prewritten computer software access services; and 18
(ay) Data brokering services. 19
Section 13. KRS 139.202 is amended to read as follows: 20
(1) Excluded from the additional taxable s ervices imposed by KRS 139.200(2)(q) to 21
(ax) are gross receipts derived from: 22
(a)[(1)] Sales of the services in fulfillment of a lump-sum, fixed-fee contract or a 23
fixed price sales contract executed on or before February 25, 2022; and 24
(b)[(2)] A lease or rental agreement entered into on or before February 25, 2022. 25
(2) Excluded from the additional taxable services imposed by subsection (2)(ay) of 26
Section 12 of this Act are gross receipts derived from: 27
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(a) Sales of the services in fulfillment of a lump -sum, fixed-fee contract or a 1
fixed price sales contract executed on or before February 25, 2026; and 2
(b) A lease or rental agreement entered into on or before February 25, 2026. 3
Section 14. KRS 139.260 is amended to read as follows: 4
For the purpose of the proper administration of this chapter and to prevent evasion of the 5
duty to collect the taxes imposed by KRS 139.200 and 139.310, it shall be presumed that 6
all gross receipts and all tangible personal property, digital proper ty, and services sold by 7
any person for delivery or access in this state are subject to the tax until the contrary is 8
established. The burden of proving the contrary is upon the person who makes the sale of: 9
(1) (a) Except as provided in paragraph (b) of t his subsection, tangible personal 10
property or digital property unless the person takes from the purchaser a 11
certificate to the effect that the property is either: 12
1. Purchased for resale according to the provisions of KRS 139.270; 13
2. Purchased through a fu lly completed certificate of exemption or fully 14
completed Streamlined Sales and Use Tax Agreement Certificate of 15
Exemption in accordance with KRS 139.270; or 16
3. Purchased according to administrative regulations promulgated by the 17
department governing a direct pay authorization; or 18
(b) Tangible personal property to a purchaser claiming an agriculture exemption 19
under KRS 139.480(4) to (9), (11), (13) to (15), (22) to (29), or (32) [(23) to 20
(30), or (33)] unless the person obtains from the purchaser an agricult ure 21
exemption license number or a fully completed Streamlined Sales and Use 22
Tax Agreement Certificate of Exemption that contains an agriculture 23
exemption license number in accordance with KRS 139.270; 24
(2) A service included in KRS 139.200(2)(a) to (f) unle ss the person takes from the 25
purchaser a certificate to the effect that the service is purchased through a fully 26
completed certificate of exemption or fully completed Streamlined Sales and Use 27
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Tax Agreement Certificate of Exemption in accordance with KRS 139.270; and 1
(3) A service included in KRS 139.200(2)(g) to (ay)[(ax)] unless the person takes from 2
the purchaser a certificate to the effect that the service is: 3
(a) Purchased for resale according to KRS 139.270; 4
(b) Purchased through a fully completed certificate of exemption or fully 5
completed Streamlined Sales and Use Tax Agreement Certificate of 6
Exemption in accordance with KRS 139.270; or 7
(c) Purchased according to administrative regulations promulgated by the 8
department governing a direct pay authorization. 9
Section 15. KRS 139.310 is amended to read as follows: 10
(1) An excise tax is hereby imposed on the storage, use, or other consumption in this 11
state of tangible personal proper ty, digital property, and services listed under KRS 12
139.200(2)(p) to (ay)[(ax)] purchased for storage, use, or other consumption in this 13
state at the rate of six percent (6%) of the sales price. 14
(2) The excise tax applies to the purchase of digital property regardless of whether: 15
(a) The purchaser has the right to permanently use the goods; 16
(b) The purchaser's right to access or retain the digital property is not permanent; 17
or 18
(c) The purchaser's right of use is conditioned upon continued payment. 19
Section 16. KRS 139.340 is amended to read as follows: 20
(1) Except as provided in KRS 139.470 and 139.480, every retailer engaged in business 21
in this state shall collect the tax imposed by KRS 139.310 from the purchaser and 22
give to the purchaser a receipt therefor in the manner and form prescribed by the 23
department. The taxes collected or required to be collected by the retailer under this 24
section shall be deemed to be held in trust for and on account of the 25
Commonwealth. 26
(2) "Retailer engaged in business in this state" as used in KRS 139.330 and this section 27
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includes any of the following: 1
(a) Any retailer maintaining, occupying, or using, permanently or temporarily, 2
directly or indirectly, or through a subsidiary or any other relat ed entity, 3
representative, or agent, by whatever name called, an office, place of 4
distribution, sales or sample room or place, warehouse or storage place, or 5
other place of business. Property owned by a person who has contracted with 6
a printer for printing , which consists of the final printed product, property 7
which becomes a part of the final printed product, or copy from which the 8
printed product is produced, and which is located at the premises of the 9
printer, shall not be deemed to be an office, place o f distribution, sales or 10
sample room or place, warehouse or storage place, or other place of business 11
maintained, occupied, or used by the person; 12
(b) Any retailer having any representative, agent, salesman, canvasser, or solicitor 13
operating in this state under the authority of the retailer or its subsidiary for 14
the purpose of selling, delivering, or the taking of orders for any tangible 15
personal property, digital property, or any services subject to tax under KRS 16
139.200(2)(p) to (ay)[(ax)]. An unrelated p rinter with which a person has 17
contracted for printing shall not be deemed to be a representative, agent, 18
salesman, canvasser, or solicitor for the person; 19
(c) Any retailer soliciting orders for tangible personal property, digital property, 20
or any services subject to tax under KRS 139.200(2)(p) to (ay)[(ax)] from 21
residents of this state on a continuous, regular, or systematic basis in which 22
the solicitation of the order, placement of the order by the customer or the 23
payment for the order utilizes the servic es of any financial institution, 24
telecommunication system, radio or television station, cable television 25
service, print media, or other facility or service located in this state; 26
(d) Any retailer deriving receipts from the lease or rental of tangible perso nal 27
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property situated in this state; 1
(e) Any retailer soliciting orders for tangible personal property, digital property, 2
or any services subject to tax under KRS 139.200(2)(p) to (ay)[(ax)] from 3
residents of this state on a continuous, regular, systematic basis if the retailer 4
benefits from an agent or representative operating in this state under the 5
authority of the retailer to repair or service tangible personal property or 6
digital property sold by the retailer; 7
(f) Any retailer located outside Kentucky that uses a representative in Kentucky, 8
either full-time or part -time, if the representative performs any activities that 9
help establish or maintain a marketplace for the retailer, including receiving or 10
exchanging returned merchandise; or 11
(g) 1. Any remot e retailer selling tangible personal property ,[ or] digital 12
property, or services delivered,[ or] transferred electronically , or 13
provided to a purchaser in this state, including retail sales facilitated by 14
a marketplace provider on behalf of the remote retailer[,] if [: 15
a. The remote retailer sold tangible personal property or digital property that was 16
delivered or transferred electronicall y to a purchaser in this state in two 17
hundred (200) or more separate transactions in the previous calendar 18
year or the current calendar year; or 19
b. ]the remote retailer's gross receipts derived from the sale of tangible personal 20
property,[ or] digital prop erty, or services delivered,[ or] transferred 21
electronically, or provided to a purchaser in this state in the previous 22
calendar year or current calendar year exceeds one hundred thousand 23
dollars ($100,000). 24
2. Any remote retailer that meets the[either] threshold provided in 25
subparagraph 1. of this paragraph shall register for a sales and use tax 26
permit and collect the tax imposed by KRS 139.310 from the purchaser 27
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no later than the first day of the calendar month that is at the most sixty 1
(60) days after the[either] threshold is reached. 2
Section 17. KRS 139.470 is amended to read as follows: 3
There are excluded from the computation of the amount of taxes imposed by this chapter: 4
(1) Gross receipts from the sale of, and the s torage, use, or other consumption in this 5
state of, tangible personal property or digital property which this state is prohibited 6
from taxing under the Constitution or laws of the United States, or under the 7
Constitution of this state; 8
(2) Gross receipts from sales of, and the storage, use, or other consumption in this state 9
of: 10
(a) Nonreturnable and returnable containers when sold without the contents to 11
persons who place the contents in the container and sell the contents together 12
with the container; and 13
(b) Returnable containers when sold with the contents in connection with a reta il 14
sale of the contents or when resold for refilling; 15
As used in this subsection[section] the term "returnable containers" means 16
containers of a kind customarily returned by the buyer of the contents for reuse. All 17
other containers are "nonreturnable containers"; 18
(3) Gross receipts from occasional sales of tangible personal property or digital 19
property and the storage, use, or other consumption in this state of tangible personal 20
property or digital property, the transfer of which to the purchaser is an occ asional 21
sale; 22
(4) Gross receipts from sales of tangible personal property to a common carrier, 23
shipped by the retailer via the purchasing carrier under a bill of lading, whether the 24
freight is paid in advance or the shipment is made freight charges collect , to a point 25
outside this state and the property is actually transported to the out -of-state 26
destination for use by the carrier in the conduct of its business as a common carrier; 27
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(5) Gross receipts from sales of tangible personal property sold through coi n-operated 1
bulk vending machines, if the sale amounts to fifty cents ($0.50) or less, if the 2
retailer is primarily engaged in making the sales and maintains records satisfactory 3
to the department. As used in this subsection, "bulk vending machine" means a 4
vending machine containing unsorted merchandise which, upon insertion of a coin, 5
dispenses the same in approximately equal portions, at random and without 6
selection by the customer; 7
(6) Gross receipts from sales: 8
(a) To any cabinet, department, bureau, com mission, board, or other statutory or 9
constitutional agency of the state and gross receipts from sales to counties, 10
cities, or special districts as defined in KRS 65.005. This exemption shall 11
apply only to purchases of tangible personal property, digital p roperty, or 12
services for use solely in the government function. A purchaser not qualifying 13
as a governmental agency or unit shall not be entitled to the exemption even 14
though the purchaser may be the recipient of public funds or grants; and 15
(b) Of data brokering services by: 16
1. Any cabinet, department, bureau, commission, board, or other 17
statutory or constitutional agency of this state; or 18
2. Counties, cities, or special districts as defined in KRS 65.005; 19
(7) (a) Gross receipts from the sale of sewer ser vices, water, and fuel to Kentucky 20
residents for use in heating, water heating, cooking, lighting, and other 21
residential uses if the sewer services, water, and fuel are purchased and 22
declared by the resident as used in his or her place of domicile. 23
(b) As used in this subsection: 24
1. "Fuel" includes but is not [shall include but not be] limited to natural 25
gas, electricity, fuel oil, bottled gas, coal, coke, and wood; and 26
2. "Place of domicile" means the place where an individual has his or her 27
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legal, true, fixed, and permanent home and principal establishment, and 1
to which, whenever the individual is absent, the individual has the 2
intention of returning. 3
(c) Determinations of eligibility for the exemption shall be made by the 4
department. 5
(d) The exemption shall apply to charges for sewer service, water, and fuel billed 6
to an owner or operator of a multi -unit residential rental facility or mobile 7
home and recreational vehicle park if the owner or operator declares that the 8
sewer services, water, and fuel are pur chased for Kentucky residents to be 9
used in the resident's place of domicile. 10
(e) The exemption shall apply also to residential property which may be held by 11
legal or equitable title, by the entireties, jointly, in common, as a 12
condominium, or indirectly b y the stock ownership or membership 13
representing the owner's or member's proprietary interest in a corporation 14
owning a fee or a leasehold initially in excess of ninety -eight (98) years if the 15
sewer services, water, and fuel are purchased for and declared by the 16
Kentucky resident as used in his or her place of domicile; 17
(8) Gross receipts from sales to an out -of-state agency, organization, or institution 18
exempt from sales and use tax in its state of residence when that agency, 19
organization, or institution gives proof of its tax-exempt status to the retailer and the 20
retailer maintains a file of the proof; 21
(9) (a) Gross receipts derived from the sale of tangible personal property, as provided 22
in paragraph (b) of this subsection, to a manufacturer or industrial processor if 23
the property is to be directly used in the manufacturing or industrial 24
processing process of: 25
1. Tangible personal property at a plant facility; 26
2. Distilled spirits or wine at a plant facility or on the premises of a 27
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distiller, rectifier, wi nery, or small farm winery licensed under KRS 1
243.030 that includes a retail establishment on the premises; or 2
3. Malt beverages at a plant facility or on the premises of a brewer or 3
microbrewery licensed under KRS 243.040 that includes a retail 4
establishment; 5
and which will be for sale. 6
(b) The following tangible personal property shall qualify for exemption under 7
this subsection: 8
1. Materials which enter into and become an ingredient or component part 9
of the manufactured product; 10
2. Other tangible personal property which is directly used in the 11
manufacturing or industrial processing process, if the property has a 12
useful life of less than one (1) year. Specifically, these items are 13
categorized as follows: 14
a. Materials. This refers to t he raw materials which become an 15
ingredient or component part of supplies or industrial tools exempt 16
under subdivisions b. and c. below; 17
b. Supplies. This category includes supplies such as lubricating and 18
compounding oils, grease, machine waste, abrasives , chemicals, 19
solvents, fluxes, anodes, filtering materials, fire brick, catalysts, 20
dyes, refrigerants, and explosives. The supplies indicated above 21
need not come in direct contact with a manufactured product to be 22
exempt. "Supplies" does not include repair , replacement, or spare 23
parts of any kind; and 24
c. Industrial tools. This group is limited to hand tools such as jigs, 25
dies, drills, cutters, rolls, reamers, chucks, saws, and spray guns 26
and to tools attached to a machine such as molds, grinding balls, 27
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grinding wheels, dies, bits, and cutting blades. Normally, for 1
industrial tools to be considered directly used in the manufacturing 2
or industrial processing process, they shall come into direct 3
contact with the product being manufactured or processed; and 4
3. Materials and supplies that are not reusable in the same manufacturing 5
or industrial processing process at the completion of a single 6
manufacturing or processing cycle. A single manufacturing cycle shall 7
be considered to be the period elapsing from the time the raw materials 8
enter into the manufacturing process until the finished product emerges 9
at the end of the manufacturing process. 10
(c) The property described in paragraph (b) of this subsection shall be regarded as 11
having been purchased for resale. 12
(d) For purposes of this subsection, a manufacturer or industrial processor 13
includes an individual or business entity that performs only part of the 14
manufacturing or industrial processing activity, and the person or business 15
entity need not take title to tangibl e personal property that is incorporated 16
into, or becomes the product of, the activity. 17
(e) The exemption provided in this subsection does not include repair, 18
replacement, or spare parts; 19
(10) Any water use fee paid or passed through to the Kentucky River Authority by 20
facilities using water from the Kentucky River basin to the Kentucky River 21
Authority in accordance with KRS 151.700 to 151.730 and administrative 22
regulations promulgated by the authority; 23
(11) (a) 1. Gross receipts from the sale of newspaper i nserts or catalogs purchased 24
for storage, use, or other consumption outside this state and delivered by 25
the retailer's own vehicle to a location outside this state, or delivered to 26
the United States Postal Service, a common carrier, or a contract carrier 27
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for delivery outside this state, regardless of whether the carrier is 1
selected by the purchaser or retailer or an agent or representative of the 2
purchaser or retailer, or whether the F.O.B. is retailer's shipping point or 3
purchaser's destination. 4
2.[(a)] As used in this paragraph[subsection]: 5
a.[1.] "Catalogs" means tangible personal property that is printed to the 6
special order of the purchaser and composed substantially of 7
information regarding goods and services offered for sale; and 8
b.[2.] "Newspaper inserts" means printed materials that are placed in or 9
distributed with a newspaper of general circulation. 10
(b) The retailer shall be responsible for establishing that delivery was made to a 11
non-Kentucky location through shipping documents or other credible 12
evidence as determined by the department; 13
(12) Gross receipts from the sale of water used in the raising of equine as a business; 14
(13) (a) 1. Gross receipts from the sale of metal retail fixtures manufactured in this 15
state and purchased for storage, use, or other consumption outside this 16
state and delivered by the retailer's own vehicle to a location outside this 17
state, or delivered to the United States Postal Service, a common carrier, 18
or a contract carrier for delivery outside this state, regardless of whe ther 19
the carrier is selected by the purchaser or retailer or an agent or 20
representative of the purchaser or retailer, or whether the F.O.B. is the 21
retailer's shipping point or the purchaser's destination. 22
2.[(a)] As used in this paragraph[subsection], "metal retail fixtures" 23
means check stands and belted and nonbelted checkout counters, 24
whether made in bulk or pursuant to specific purchaser specifications, 25
that are to be used directly by the purchaser or to be distributed by the 26
purchaser. 27
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(b) The retailer shall be responsible for establishing that delivery was made to a 1
non-Kentucky location through shipping documents or other credible 2
evidence as determined by the department; 3
(14) Gross receipts from the sale of unenriched or enriched ura nium purchased for 4
ultimate storage, use, or other consumption outside this state and delivered to a 5
common carrier in this state for delivery outside this state, regardless of whether the 6
carrier is selected by the purchaser or retailer, or is an agent or representative of the 7
purchaser or retailer, or whether the F.O.B. is the retailer's shipping point or 8
purchaser's destination; 9
(15) Amounts received from a tobacco buydown. As used in this subsection, "buydown" 10
means an agreement whereby an amount, wheth er paid in money, credit, or 11
otherwise, is received by a retailer from a manufacturer or wholesaler based upon 12
the quantity and unit price of tobacco products sold at retail that requires the retailer 13
to reduce the selling price of the product to the purch aser without the use of a 14
manufacturer's or wholesaler's coupon or redemption certificate; 15
(16) Gross receipts from the sale of tangible personal property or digital property 16
returned by a purchaser when the full sales price is refunded either in cash or c redit. 17
This exclusion shall not apply if the purchaser, in order to obtain the refund, is 18
required to purchase other tangible personal property or digital property at a price 19
greater than the amount charged for the property that is returned; 20
(17) Gross receipts from the sales of gasoline and special fuels subject to tax under KRS 21
Chapter 138; 22
(18) The amount of any tax imposed by the United States upon or with respect to retail 23
sales, whether imposed on the retailer or the consumer, not including any 24
manufacturer's excise or import duty; 25
(19) Gross receipts from the sale of any motor vehicle as defined in KRS 138.450 which 26
is: 27
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(a) Sold to a Kentucky resident, registered for use on the public highways, and 1
upon which any applicable tax levied by KRS 138.460 has been paid; or 2
(b) Sold to a nonresident of Kentucky if the nonresident registers the motor 3
vehicle in a state that: 4
1. Allows residents of Kentucky to purchase motor vehicles without 5
payment of that state's sales tax at the time of sale; or 6
2. Allows residents of Kentucky to remove the vehicle from that state 7
within a specific period for subsequent registration and use in Kentucky 8
without payment of that state's sales tax; 9
(20) Gross receipts from the sale of a semi -trailer as defined in KRS 189.010(12) and 10
trailer as defined in KRS 189.010(17); 11
(21) Gross receipts from the collection of: 12
(a) Any fee or charge levied by a local government pursuant to KRS 65.760; 13
(b) The charge imposed by KRS 65.7629(3); 14
(c) The fee imposed by KRS 65.7634; and 15
(d) The service charge imposed by KRS 65.7636; 16
(22) Gross receipts derived from charges for labor or services to apply, install, repai r, or 17
maintain tangible personal property directly used in manufacturing or industrial 18
processing process of: 19
(a) Tangible personal property at a plant facility; 20
(b) Distilled spirits or wine at a plant facility or on the premises of a distiller, 21
rectifier, winery, or small farm winery licensed under KRS 243.030; or 22
(c) Malt beverages at a plant facility or on the premises of a brewer or 23
microbrewery licensed under KRS 243.040; 24
that is not otherwise exempt under subsection (9) of this section or KRS 25
139.480(10), if the charges for labor or services are separately stated on the invoice, 26
bill of sale, or similar document given to purchaser; 27
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(23) (a) For persons selling services included in KRS 139.200(2)(g) to (ax) prior to 1
January 1, 2025, gross receipts der ived from the sale of those services if the 2
gross receipts were less than twelve thousand dollars ($12,000) during 3
calendar year 2024. When gross receipts from these services exceed twelve 4
thousand dollars ($12,000) in a calendar year: 5
1. All gross receipts over twelve thousand dollars ($12,000) are taxable in 6
that calendar year; and 7
2. All gross receipts are subject to tax in subsequent calendar years. 8
(b) The exemption provided in this subsection shall not apply to a person also 9
engaged in the business of selling tangible personal property, digital property, 10
or services included in KRS 139.200(2)(a) to (f); and 11
(24) (a) For persons that first begin making sales of services included in KRS 12
139.200(2)(g) to (ax) on or after January 1, 2025, gross receipts de rived from 13
the sale of those services if the gross receipts are less than twelve thousand 14
dollars ($12,000) within the first calendar year of operation. When gross 15
receipts from these services exceed twelve thousand dollars ($12,000) in a 16
calendar year: 17
1. All gross receipts over twelve thousand dollars ($12,000) are taxable in 18
that calendar year; and 19
2. All gross receipts are subject to tax in subsequent calendar years. 20
(b) The exemption provided in this subsection shall not apply to a person that is 21
also engaged in the business of selling tangible personal property, digital 22
property, or services included in KRS 139.200(2)(a) to (f). 23
Section 18. KRS 224.50-868 is amended to read as follows: 24
(1) As used in this section: 25
(a) "Motor vehicle" means every vehicle intended primarily for use and operation 26
on the public highways that is self -propelled, including a low -speed motor 27
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vehicle as defined in KRS 186.010; 1
(b) "Semitrailer" means any vehicle: 2
1. Designed: 3
a. As temporary living quarters for recreation, camping, or travel; or 4
b. For carrying persons or property; 5
2. Designed for being drawn by a motor vehicle; and 6
3. Constructed that: 7
a. Some part of its weight; or 8
b. Some part of its load; 9
rests upon or is carried by another vehicle; and 10
(c) "Trailer" means any vehicle: 11
1. Designed: 12
a. As temporary living quarters for recreation, camping, or travel; or 13
b. For carrying persons or property; 14
2. Designed for being drawn by a motor vehicle; and 15
3. Constructed that: 16
a. No part of its weight; and 17
b. No part of its load; 18
rests upon or is carried by another vehicle. 19
(2) (a) 1. Prior to July 1, 2018, a person purchasing a new motor vehicle tire in 20
Kentucky shall pay to the retailer a one dollar ($1) fee at the time of the 21
purchase of that tire. The fee shall not be subject to the Kentucky sales 22
tax. 23
2. Beginning July 1, 2018, but prior to July 1, 2020, a fee is hereby 24
imposed upon a retailer at the rate of two dollars ($2) for each new 25
motor vehicle tire sold in Kentucky. The fee sha ll be subject to the 26
Kentucky sales tax. 27
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3. Beginning July 1, 2020, but prior to July 1, 2034[2026], a fee is hereby 1
imposed upon a retailer at the rate of two dollars ($2) for each new 2
motor vehicle, trailer, or semitrailer tire sold in Kentucky. The fee shall 3
be subject to the Kentucky sales tax. 4
4. A retailer may pass the fee imposed by this paragraph on to the 5
purchaser of the new tire. 6
(b) 1. A new tire is a tire that has never been placed on a motor vehicle, trailer, 7
or semitrailer wheel rim. 8
2. A new tire is not a tire placed on a motor vehicle, trailer, or semitrailer 9
prior to its original retail sale or a recapped tire. 10
(3) When a retailer sells a new motor vehicle tire in Kentucky to replace another tire, 11
the tire that is replaced becomes a waste tire subject to the waste tire program. The 12
retailer shall encourage the purchaser of the new tire to leave the waste tire with th e 13
retailer or meet the following requirements: 14
(a) Dispose of the waste tire in accordance with KRS 224.50-856(1); 15
(b) Deliver the waste tire to a person registered in accordance with the waste tire 16
program; or 17
(c) Reuse the waste tire for its original int ended purpose or an agricultural 18
purpose. 19
(4) (a) A retailer shall report to the Department of Revenue on or before the 20
twentieth day of each month the number of new motor vehicle tires sold 21
during the preceding month and the number of waste tires received from 22
customers that month. 23
(b) The report shall be filed on forms and contain information as the Department 24
of Revenue may require. 25
(c) The retailer shall be allowed to retain an amount equal to five percent (5%) of 26
the fees due, provided the amount due i s not delinquent at the time of 27
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payment. 1
(5) A retailer shall: 2
(a) Accept from the purchaser of a new tire, if offered, for each new motor 3
vehicle tire sold, a waste tire of similar size and type; and 4
(b) Post notice at the place where retail sales are made that state law requires: 5
1. The retailer to accept, if offered, a waste tire for each new motor vehicle 6
tire sold and that a person purchasing a new motor vehicle tire to replace 7
another tire shall comply with subsection (3) of this section; and 8
2. The t wo dollar ($2) new tire fee is used by the state to oversee the 9
management of waste tires, including cleaning up abandoned waste tire 10
piles and preventing illegal dumping of waste tires. 11
(6) A retailer shall comply with the requirements of the recordkeeping system for waste 12
tires established by KRS 224.50-874. 13
(7) A retailer shall transfer waste tires only to a person who presents a letter from the 14
cabinet approving the registration issued under KRS 224.50-858 or a copy of a solid 15
waste disposal facility pe rmit issued by the cabinet, unless the retailer is delivering 16
the waste tires to a destination outside Kentucky and the waste tires will remain in 17
the retailer's possession until they reach that destination. 18
(8) The cabinet shall, in conjunction with the W aste Tire Working Group, develop the 19
informational fact sheet to be made publicly available on the cabinet's website and 20
available in print upon request. The fact sheet shall identify ways to properly 21
dispose of the waste tire and present information on th e problems caused by 22
improper waste tire disposal. 23
Section 19. KRS 224.50-872 is amended to read as follows: 24
(1) The cabinet shall report to the General Assembly no later than January 15 each year 25
on the effectiveness of the waste tire program in developing markets for waste tires, 26
the amount of revenue generated and the effectiveness of the fee established in KRS 27
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224.50-868 in funding the cabinet's implementation of the waste tire program, to 1
include any waste tire amnes ty program established by the cabinet as provided for 2
in KRS 224.50-880(1)(b), whether the fee should be extended, comparative data on 3
the number of waste tires generated each year, the number disposed of, the number 4
of orphan tire piles, and the cost of tire disposal by counties in the Commonwealth. 5
(2) The cabinet shall gather the following information related to the waste tire trust 6
fund in KRS 224.50-880 and submit an annual report to the Legislative Research 7
Commission for referral to the Interim Joint Committee on Appropriations and 8
Revenue by November 1, 2026, and by each November 1 thereafter as long as the 9
new tire fee established in Section 18 of this Act is collected: 10
(a) Total receipts deposited into the fund from the new tire fee during the 11
preceding fiscal year; 12
(b) A detailed accounting of the activities supported by fund moneys, including 13
the amount spent on each activity; 14
(c) A detailed accounting of all administrative expenses; 15
(d) Identification of any unexpended funds and the reason why th e funds were 16
not expended; 17
(e) An explanation of how all expenditures align with program objectives; 18
(f) A list of recipients receiving money from the fund with a detailed 19
accounting of the amount of money received by each recipient and the use 20
of the moneys; and 21
(g) A compilation of the information required to be reported to the cabinet 22
under KRS 224.50-878(4). 23
Section 20. KRS 45.760 is amended to read as follows: 24
The provisions of any other law notwithstanding: 25
(1) During any biennium the amount allotted, from all sources, for expenditure on any 26
project in the State Capital Construction Program for that biennium shall not exceed 27
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the estimated cost of the project du ring that biennium, as shown in any branch 1
budget bill enacted by the General Assembly, except as provided in this section and 2
KRS 45.770 and 45.780;[.] 3
(2) When the General Assembly disapproves a capital project or item of equipment that 4
was previously approved, it shall be eliminated as a capital project or major item of 5
equipment in the Capital Projects Program. General fund moneys appropriated for 6
that project or item of equipment but not allotted, and general fund moneys allotted 7
but not expended to th e project or equipment account, shall be transferred to the 8
capital construction and equipment purchase contingency account in the capital 9
construction fund. Agency or federal funds for a disapproved project or item, that 10
have been appropriated but unallot ted or allotted but unexpended, shall be returned 11
to the appropriate agency fund. Road fund moneys for a disapproved project or item 12
that have been appropriated but unallotted or allotted but unexpended, shall be 13
returned to the Road Fund Surplus Account;[.] 14
(3) Capital projects and major items of equipment disapproved under subsection (2) of 15
this section shall be terminated;[.] 16
(4) During any biennium, the amount allotted from all sources for expenditure for the 17
purchase of any major item of equipment shal l not exceed the estimated cost of the 18
item as shown in any branch budget bill enacted by the General Assembly and 19
authorizing the purchase, except as provided in subsections (5) and (6) of this 20
section and in KRS 45.770 and 45.780;[.] 21
(5) A major item of equipment to be used for medical, scientific, or research purposes, 22
excluding computer equipment and aircraft, may be authorized even though it is not 23
specifically listed in any branch budget bill enacted for the current biennium, 24
subject to the following conditions and procedures: 25
(a) Moneys specifically budgeted and appropriated by the General Assembly for 26
another purpose shall not be reallotted for expenditure on the item; moneys 27
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utilized shall not jeopardize any existing program and shall not require the use 1
of any current general funds specifically dedicated to existing programs; 2
(b) Funds are available for the purchase and the method of financing the purchase 3
will not require an additional appropriation of state funds to acquire the item; 4
and 5
(c) The p urchasing agency shall, within thirty (30) days after making the 6
purchase, report the purchase to the Capital Projects and Bond Oversight 7
Committee. The report shall include a description of the item, the purpose for 8
which it will be used, the necessity for the purchase, and the amount expended 9
for the purchase from each source of funds used;[.] 10
(6) Moneys from any source may be transferred to the allotment account of any capital 11
project authorized by the General Assembly under this section, subject to the 12
following conditions and procedures: 13
(a) The total amount transferred shall not exceed five percent (5%) [fifteen 14
percent (15%)] of the amount authorized by the General Assembly unless: 15
1. The source of funds is private or federal; or 16
2. An unforeseen decis ion by a federal or state court or regulatory agency 17
requires the transfer;[.] 18
(b) Moneys specifically budgeted and appropriated by the General Assembly for 19
another purpose shall not be allotted or reallotted for expenditure on the 20
capital project;[.] 21
(c) Moneys utilized shall not jeopardize any existing program and shall not 22
require the use of any current general funds specifically dedicated to existing 23
programs;[.] 24
(d) The relevant entity head, or his or her designee, shall submit the capital 25
project to t he Capital Projects and Bond Oversight Committee at least 26
fourteen (14) days prior to the committee meeting. The submission shall 27
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include a written certification to the committee that the transfer, in excess of 1
five percent (5%) [fifteen percent (15%)] of t he amount authorized by the 2
General Assembly, is: 3
1. Paid for out of private or federal funds; or 4
2. Required by an unforeseen decision by a federal or state court or 5
regulatory agency; and 6
3. Not allotted or reallotted from moneys specifically budgeted an d 7
appropriated by the General Assembly for another purpose; and 8
4. Not jeopardizing any existing program and not requiring the use of any 9
current general funds specifically dedicated to existing programs; and[.] 10
(e) If a capital project is financed with ro ad funds, the cost overruns or scope 11
increases shall be paid out of the highway contingency account established 12
pursuant to KRS 45.247;[.] 13
(7) A capital construction project or a major item of equipment may be authorized even 14
though it is not specifically listed in any branch budget bill, subject to the following 15
conditions and procedures: 16
(a) Fifty percent (50%) or more of the actual cost shall be funded by federal or 17
private funds, and fifty percent (50%) or less of the actual cost shall be funded 18
by moneys appropriated to the capital construction and equipment purchase 19
contingency account or, if the purpose of the project or equipment is to reduce 20
energy costs, the relevant entity head certifies pro jected energy cost savings 21
associated with the project or equipment are reasonable and sufficient to 22
produce an aggregate simple payback period, as defined by KRS 56.770, of 23
five (5) years or less; 24
(b) Moneys specifically budgeted and appropriated by the G eneral Assembly for 25
another purpose shall not be allotted or reallotted for expenditure on the 26
project or major item of equipment; moneys utilized shall not jeopardize any 27
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existing program and shall not require the use of any current general funds 1
specifically dedicated to existing programs; and 2
(c) The relevant entity head, or his or her designee, shall submit the project or 3
major item of equipment to the committee for review as provided by KRS 4
45.800;[.] 5
(8) The capital construction and equipment purchase contingency fund may be used to 6
advance funds to projects authorized to be financed by bonds, to finance feasibility 7
studies for projects which may be contemplated for future funding, or to audit the 8
capital projects program when authorized by the General Assembly;[.] 9
(9) On or before October 1, each branch of government shall submit to the committee 10
the following information: 11
(a) A complete list and summary description of every capital construction project 12
and major item of equipment not completed as of June 30 of the prior fiscal 13
year;[ and] 14
(b) For each project and major item of equipment, as of July 1, of the current 15
fiscal year: 16
1. The project phase; 17
2. The project account number, project name, and any other term employed 18
to identify the project or major item of equipment; 19
3. The available balance in the project or major item of equipment account, 20
and any sums considered available for that project or major item of 21
equipment; 22
4. A statement of the transfers of funds to or from the project or major item 23
of equipment account; and, any account to which transfers from each 24
project or major item of equipment has been made; 25
5. The year in which the project or major item of equipment was approved, 26
with specific refe rence to the legislation by which the project or item 27
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was approved; 1
6. Total expenditure on the project or major item of equipment; 2
7. The current estimated completion cost, including the amount required 3
for annual inflation; and 4
8. A statement that additi onal funds for the completion of the project or 5
major item of equipment are or are not required; and, if required, why 6
sufficient funds for completion are not available; and 7
(c) The balance in the appropriated, but unallotted account; and the balance in 8
any account, however designated, that contains appropriated, but unallotted 9
funds for capital construction; and[.] 10
(10) When the General Assembly authorizes a capital construction item in the capital 11
construction section of a branch budget bill, the entity h ead charged with executing 12
the branch budget shall construct the capital construction item according to the 13
requirements set forth in the branch budget bill, supporting documentation 14
considered by the General Assembly, and branch budget records. The entity head 15
shall not deviate from these requirements with regard to: 16
(a) Purpose or location to the extent that the capital construction item no longer 17
meets the identified needs; or 18
(b) Configuration for reasons other than practical accommodation to the 19
construction site or specific program to be accommodated within that capital 20
construction item. 21
Section 21. KRS 45.770 is amended to read as follows: 22
(1) There is created within the capital construction fund the capital constr uction and 23
equipment purchase contingency account. The account shall consist of moneys 24
appropriated to the account by the General Assembly. 25
(2) Money in the capital construction and equipment purchase contingency account 26
may be transferred to the allotment account of a capital construction project, 27
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authorized by the General Assembly under KRS 45.760, subject to the following 1
conditions and procedures: 2
(a) Except as provided in paragraphs (b) and (c) of this subsection, during any 3
biennium, the amount that m ay be transferred from the capital construction 4
and equipment purchase contingency account to the allotment account of an 5
authorized project shall not exceed an amount equal to five percent 6
(5%)[fifteen percent (15%)] of the estimated cost of the project, for that 7
biennium, approved by the General Assembly in the manner provided by KRS 8
45.760;[.] 9
(b) Subject to paragraph (c) of this subsection, if the cost of an authorized project 10
exceeds, by more than five percent (5%)[fifteen percent (15%)], its estimated 11
cost, as approved by the General Assembly, due to an unforeseen decision by 12
a federal or state court or regulatory agency, moneys in excess of five percent 13
(5%)[fifteen percent (15%)] of the estimated cost of the project may be 14
transferred from the capital construction and equipment purchase contingency 15
account to the allotment account of the project; and[.] 16
(c) The Finance and Administration Cabinet shall, prior to making any transfer 17
under this subsection, present the proposed transfer to the Capital Projects and 18
Bond Oversight Committee, at least fourteen (14) days prior to the committee 19
meeting, for review as provided by KRS 45.800. Presentation of a proposed 20
transfer under paragraph (b) of this subsection shall include written 21
certification to the comm ittee from the commissioner of the Department for 22
Facilities and Support Services, Finance and Administration Cabinet, that the 23
transfer is necessitated by cost increases resulting from an unforeseen decision 24
by a federal or state court or regulatory agency. 25
(3) Money in the capital construction and equipment purchase contingency account 26
may be transferred to the allotment account of a major item of equipment, 27
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authorized by the General Assembly under KRS 45.760, for expenditure on that 1
item subject to the following conditions and procedures: 2
(a) Except as provided in paragraphs (b) and (c) of this subsection, during any 3
biennium, the amount that may be transferred from the capital construction 4
and equipment purchase contingency account to the allotment accou nt of an 5
authorized major item of equipment shall not exceed an amount equal to five 6
percent (5%)[fifteen percent (15%)] of the estimated cost of the item, for that 7
biennium, approved by the General Assembly in the manner provided by KRS 8
45.760;[.] 9
(b) If the cost of an authorized major item of equipment exceeds, by more than 10
five percent (5%) [fifteen percent (15%)] , its estimated cost, as approved by 11
the General Assembly, due to an unforeseen decision by a federal or state 12
court or regulatory agency, money s in excess of five percent (5%) [fifteen 13
percent (15%)] of the estimated cost may be transferred from the capital 14
construction and equipment purchase contingency account to the allotment 15
account of the item; and[.] 16
(c) The Finance and Administration Cabine t shall, prior to making any transfer 17
under this subsection, present the proposed transfer to the Capital Projects and 18
Bond Oversight Committee, at least fourteen (14) days prior to the committee 19
meeting, for review as provided by KRS 45.800. Presentation of a proposed 20
transfer under paragraph (b) of this subsection shall include written 21
certification to the committee from the secretary of the Finance and 22
Administration Cabinet that the transfer is necessitated by cost increases 23
resulting from an unforeseen decision by a federal or state court or regulatory 24
agency. 25
(4) Money in the capital construction and equipment purchase contingency account 26
may be transferred to a capital project account to be used for nonrecurring moving 27
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expenses of state agencies to address issues of public health and safety or 1
governmental efficiency, subject to the following conditions and procedures: 2
(a) The Finance and Administration Cabinet shall, prior to making any transfer 3
under this subsection, present the proposed transfer to the Capital Projects and 4
Bond Oversight Committee, at least four teen (14) days prior to the committee 5
meeting, for review as provided by KRS 45.800;[.] 6
(b) Presentation of a proposed transfer shall include written certification to the 7
committee from the secretary of the Finance and Administration Cabinet that 8
the movin g costs are nonrecurring, and describing the specific benefits, 9
including but not limited to fiscal and efficiency savings associated with the 10
proposal; and[.] 11
(c) No transfer shall be used for capital improvements. 12
(5) No later than thirty (30) days after a project has been accepted by the 13
Commonwealth of Kentucky and the contracts encumbered against that project 14
have been closed, moneys constituting the available balance in the project or 15
equipment account shall be transferred as follows: 16
(a) If the proje ct was a line item in the budget and not funded with road funds, 17
then the balance shall be transferred to the capital construction surplus 18
account;[.] 19
(b) If the project was a line item in the budget and funded with road funds, then 20
the balance shall be transferred to the road fund surplus account;[.] 21
(c) If the project was completed within the biennium in which it was authorized, 22
and if the project was funded from a major maintenance pool, then the balance 23
shall be transferred to that major maintenance pool; or[.] 24
(d) If the project was not completed withi n the biennium in which it was 25
authorized, without being expressly reauthorized by a succeeding session of 26
the General Assembly, then the balance shall be transferred to the capital 27
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construction surplus account. 1
Section 22. KRS 45.345 is amended to read as follows: 2
(1) (a) In addition to any payment method authorized by law, and notwithstanding 3
any statute to the contrary, any state agency may accept the following 4
methods of payment to secure funds for deposit into the State Treasury: 5
1.[(a)] Credit card; 6
2.[(b)] Debit card; 7
3.[(c)] Electronic check; 8
4.[(d)] Automated clearinghouse (ACH) debit; or 9
5.[(e)] Any other electronic payment method upon the prior written 10
approval of both the Finance and Administration Cabinet and the Office 11
of the State Treasurer. 12
(b)[(2)] Any fees charged to a state agency by the provider of the payment 13
services listed in paragraph (a) of this subsection[ (1) of this section] shall be 14
deemed to represent collection expenses and may be considered n ormal 15
operating expenses of the agency, or the agency may collect convenience fees 16
from users to supplement agency costs of delivering services. 17
(2) (a) In satisfaction of debts owed to the Commonwealth: 18
1. Rounding cash transactions to the nearest five ce nt ($0.05) increment 19
shall occur: 20
a. When pennies are not available to complete resolution of a 21
transaction; and 22
b. On settlement of the final bill of sale, invoice, or fee after all 23
individual items, duties, fees, taxes, and charges are calculated to 24
the exact cent; and 25
2. Noncash transactions shall continue to be settled to the cent without 26
rounding. 27
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(b) As used in this subsection, "the nearest five cent ($0.05) increment" means: 1
1. Amounts ending in one cent ($0.01) and two cents ($0.02) are rounded 2
down to the nearest ten ($0.10) cents; 3
2. Amounts ending in three cents ($0.03) and four cents ($0.04) are 4
rounded up to the nearest five ($0.05) cents; 5
3. Amounts ending in six cents ($0.06) and seven cents ($0.07) are 6
rounded down to the nearest five ($0.05) cents; 7
4. Amounts ending in eight cents ($0.08) and nine cents ($0.09) are 8
rounded up to the nearest ten ($0.10) cents; and 9
5. Amounts ending in zero ( $0.00) cents and five ($0.05) cents remain 10
unchanged. 11
(c) Notwithstanding any other statute to the contrary, any person selling goods 12
or services shall not be in violation of any requirements, laws, 13
administrative regulations, or standards of this state or political subdivision 14
of this state based on any action taken in compliance with this section. 15
SECTION 23. A NEW SECTION OF KRS CHAPTER 65 IS CREATED TO 16
READ AS FOLLOWS: 17
(1) In satisfaction of debts owed to cities, counties, and local government entities: 18
(a) Rounding cash transactions to the nearest five cent ($0.05) increment shall 19
occur: 20
1. When pennies are not available to complete resolution of a 21
transaction; and 22
2. On settlement of the final bill of sale, invoice, or fee after all 23
individual items, duties, fees, taxes, and charges are calculated to the 24
exact cent; and 25
(b) Noncash transactions shall continue to be settled to the cent without 26
rounding. 27
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(2) As used in this section, "the nearest five cent ($0.05) increment" means: 1
(a) Amounts ending in one cent ($0.01) and two cents ($0.02) are rounded 2
down to the nearest ten ($0.10) cents; 3
(b) Amounts ending in three cents ($0.03) and four cents ($0.04) are rounded 4
up to the nearest five ($0.05) cents; 5
(c) Amounts endi ng in six cents ($0.06) and seven cents ($0.07) are rounded 6
down to the nearest five ($0.05) cents; 7
(d) Amounts ending in eight cents ($0.08) and nine cents ($0.09) are rounded 8
up to the nearest ten ($0.10) cents; and 9
(e) Amounts ending in zero ($0.00) cen ts and five ($0.05) cents remain 10
unchanged. 11
(3) Notwithstanding any other statute to the contrary, any person selling goods or 12
services shall not be in violation of any requirements, laws, administrative 13
regulations, or standards of this state or political subdivision of this state based 14
on any action taken in compliance with this section. 15
Section 24. KRS 139.210 is amended to read as follows: 16
(1) Except as provided in subsections (2) and (3) of this section, the tax shal l be 17
required to be collected by the retailer from the purchaser. The tax shall be 18
displayed separately from the sales price, the price advertised in the premises, the 19
marked price, or other price on the sales receipt or other proof of sales. 20
(2) The department may relieve certain retailers from the requirement in subsection (1) 21
of this section of separate display of the tax when the circumstances of the retailer 22
make compliance impracticable. If the retailer establishes to the satisfaction of the 23
department that the sales tax has been added to the total amount of the sales price 24
and has not been absorbed by the retailer, the amount of the sales price shall be the 25
amount received exclusive of the tax imposed. 26
(3) Retailers that provide road and travel servic es that are taxable under KRS 139.200 27
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shall not be required to state the tax separately from the sales price if the retailer can 1
establish and provide evidence that the sales tax has been added to the total amount 2
of the sales price charged to the purchaser and has not been absorbed by the retailer. 3
The amount of the sales price shall be the amount received exclusive of the tax 4
imposed. 5
(4) The taxes collected under this section shall be deemed to be held in trust by the 6
retailer for and on account of the Commonwealth. 7
(5) The taxes to be collected under this section shall constitute a debt of the retailer to 8
the Commonwealth. 9
(6) Regardless of a purchaser's method of payment, a retailer shall not be relieved of 10
the retailer's responsibility to collect and remit the correct amount of tax due. 11
SECTION 25. A NEW SECTION OF KRS CHAPTER 160 IS CREATED TO 12
READ AS FOLLOWS: 13
(1) In satisfaction of debts owed to a school district: 14
(a) Rounding cash transactions to the nearest five cent ($0.05) increment shall 15
occur: 16
1. When pennies are not available to complete resolution of a 17
transaction; and 18
2. On settlement of the final bill of sale, invoice, or fee after all 19
individual items, duties , fees, taxes, and charges are calculated to the 20
exact cent; and 21
(b) Noncash transactions shall continue to be settled to the cent without 22
rounding. 23
(2) As used in this section, "the nearest five cent ($0.05) increment" means: 24
(a) Amounts ending in one ce nt ($0.01) and two cents ($0.02) are rounded 25
down to the nearest ten ($0.10) cents; 26
(b) Amounts ending in three cents ($0.03) and four cents ($0.04) are rounded 27
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up to the nearest five ($0.05) cents; 1
(c) Amounts ending in six cents ($0.06) and seven cents ( $0.07) are rounded 2
down to the nearest five ($0.05) cents; 3
(d) Amounts ending in eight cents ($0.08) and nine cents ($0.09) are rounded 4
up to the nearest ten ($0.10) cents; and 5
(e) Amounts ending in zero ($0.00) cents and five ($0.05) cents remain 6
unchanged. 7
(3) Notwithstanding any other statute to the contrary, any person selling goods or 8
services shall not be in violation of any requirements, laws, administrative 9
regulations, or standards of this state or political subdivision of this state based 10
on any action taken in compliance with this section. 11
SECTION 26. A NEW SECTION OF KRS CHAPTER 367 IS CREATED TO 12
READ AS FOLLOWS: 13
(1) In satisfaction of debts owed in buying or selling goods or services or related to 14
transactions occurring in accordance with KRS Chapters 154A, 230, and 238: 15
(a) Rounding cash transactions to the nearest five cent ($0.05) increment may 16
occur: 17
1. When pennies are not available to complete resolution of a 18
transaction; and 19
2. On settlement of the fina l bill of sale, invoice, or fee after all 20
individual items, duties, fees, taxes, and charges are calculated to the 21
exact cent; and 22
(b) Noncash transactions shall continue to be settled to the cent without 23
rounding. 24
(2) As used in this section, "the nearest five cent ($0.05) increment" means: 25
(a) Amounts ending in one cent ($0.01) and two cents ($0.02) are rounded 26
down to the nearest ten ($0.10) cents; 27
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(b) Amounts ending in three cents ($0.03) and four cents ($0.04) are rounded 1
up to the nearest five ($0.05) cents; 2
(c) Amounts ending in six cents ($0.06) and seven cents ($0.07) are rounded 3
down to the nearest five ($0.05) cents; 4
(d) Amounts ending in eight cents ($0.08) and nine cents ($0.09) are rounded 5
up to the nearest ten ($0.10) cents; and 6
(e) Amounts e nding in zero ($0.00) cents and five ($0.05) cents remain 7
unchanged. 8
(3) Notwithstanding any other statute to the contrary, any person selling goods or 9
services and any person making transactions in accordance with KRS Chapters 10
154A, 230, and 238 shall not be in violation of any requirements, laws, 11
administrative regulations, or standards of this state or political subdivision of 12
this state based on any action taken in compliance with this section. 13
SECTION 27. A NEW SECTION OF KRS CHAPTER 65 IS CREATED TO 14
READ AS FOLLOWS: 15
As used in Sections 27 to 30 of this Act: 16
(1) "Board" means the board of trustees of a district established under Section 29 of 17
this Act; 18
(2) "District" means a regional industrial taxing district established by an interlocal 19
agreement as permitted under Section 28 of this Act; 20
(3) "Infrastructure development" means the construction or improvement, within a 21
district, of roads and facilities necessary or desirable for improvements of the real 22
estate, including: 23
(a) Surveys; 24
(b) Site tests and inspections; 25
(c) Environmental remediation; 26
(d) Subsurface site work; 27
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(e) Excavation; 1
(f) Removal of structures, roadways, cemeteries, and other underground and 2
surface obstructions; 3
(g) Filling, grading, and the provision of drainage, storm water retention, 4
utility installation, including but not limited to water, sewer, sewage 5
treatment, gas, electricity, and communications; and 6
(h) Utility extensions to the boundaries of a district; 7
(4) "Local government" means a city, county, urban -county government, charter 8
county government, consolidated local government, or un ified local government 9
located within the Commonwealth; 10
(5) "Multicounty region" means multiple counties, multiple cities not located in the 11
same county, or a combination of counties and cities with at least two (2) local 12
governments from different counties; and 13
(6) "Trustee" means an individual appointed to the board that collectively holds 14
overall responsibility for managing and controlling the affairs of a district in 15
accordance with KRS Chapter 65A. 16
Section 28. KRS 65.302 is amended to read as follows: 17
(1) [As used in this section: 18
(a) "Board" means the board of trustees of a district; 19
(b) "District" means a taxing district established under subsection (2)(b) of this 20
section; 21
(c) "Local government" means a city, county , urban-county government, charter 22
county government, consolidated local government, or unified local 23
government located within the Commonwealth; and 24
(d) "Multicounty region" means multiple counties, multiple cities not located in 25
the same county, or a com bination of counties and cities with at least two (2) 26
local governments from different counties. 27
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(2) ](a) 1. After providing notice in accordance with Section 30 of this Act, two 1
(2) or more governing bodies of local governments constituting a 2
multicounty region may join together by entering into an interlocal 3
agreement under KRS 65.210 to 65.300 to develop real estate as part of 4
a regional economic development project. The interlocal agreement 5
shall specify the investment dollars contributed to the regional economic 6
development project by each local government, the use of those 7
investment dollars for the project, and the provision of services provided 8
by each local government. 9
2. The regional economic development project shall: 10
a. Consist of three hundred (300) or more contiguous acres located in 11
the jurisdiction of a local government that is a party to the 12
interlocal agreement; and 13
b. Result in the creation of at least five hundred (500) new jobs. 14
(b) 1. The territory that will be used in a regional economic development 15
project may be organized into a taxing district for the purpose of levying 16
taxes to: 17
a. Provide for the establishment, operation, and maintenance of the 18
district and governmental services for the district;[ and] 19
b. Pay the debt service on bonds issued to finance the cost of [ 20
building] infrastructure development in the district; 21
c. Pay the Commonwealth for funds appropriated for the 22
development of the district; and 23
d. Invest in future regiona l economic development projects located 24
in the jurisdiction of any local government that is a party to the 25
interlocal agreement. 26
2. A taxing district created under this paragraph shall comply with KRS 27
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65.182 to 65.190, including the petition requirements, but not the 1
percentage of registered voter signature requirements under KRS 2
65.182(1)(a).[ 3
2. The territory located within the district shall not be subject to annexation 4
without the consent of the governing bodies of all of the local 5
governments that are a party to the interlocal agreement.] 6
(2)[(3)] (a) Once created, the district shall constitute a taxing district within the 7
meaning of Section 157 of the Constitution of Kentucky and is authorized to 8
levy a special ad valorem tax on property located within the jurisdictional 9
boundaries of the district. 10
(b) The special ad valorem tax rate shall not exceed ten cents ($0.10) per one 11
hundred dollars ($100) of the assessed value of the property. 12
(c) The special ad valorem tax shall be: 13
1. In addition to all other ad valorem taxes; and 14
2. Administered and collected in the same manner as the county ad 15
valorem taxes, except the revenues shall be turned over to the board. 16
(3)[(4)] (a) In addition to the special ad valorem tax levied under subsection (2)[(3)] 17
of this section, the governing body of a local government in which the district 18
is located may, with agreement of the governing bodies of all of the local 19
governments that are a party to the interlocal agreement, impose and collect 20
an occupational license fee on b usinesses, trades, professions, or occupations 21
performed, rendered, or conducted within the district, at a percentage rate not 22
to exceed three percent (3%) of: 23
1. Salaries, wages, commissions, and other compensation earned by 24
persons within the district f or work done and services performed, 25
rendered, or conducted within the district; 26
2. The net profits of self -employed individuals, partnerships, professional 27
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associations, or joint ventures resulting from businesses, trades, 1
professions, occupations, or activities conducted in the district; and 2
3. The net profits of corporations resulting from businesses, trades, 3
professions, occupations, or activities conducted in the district. 4
(b) Once an occupational license fee is imposed under this subsection, the rate of 5
the occupational license fee shall never increase. 6
(c) [Except for an occupational license fee imposed under KRS Chapter 160, an 7
occupational license fee imposed under this subsection shall be the only 8
occupational license fee imposed on businesses, tra des, professions, or 9
occupations performed, rendered, or conducted within the district. 10
(d) ]The occupational license fee shall not apply to businesses, trades, 11
professions, or occupations exempt under KRS 68.180, 68.197, or 91.200. 12
(d)[(e)] Each local gov ernment that is a party to the interlocal agreement shall 13
receive a portion of the revenues collected from the occupational license fee 14
as specified by the agreement. The revenues may be deposited into the general 15
fund of the local government pursuant to the interlocal agreement[to be used 16
in accordance with the purposes set out in subsection (2)(b) of this section]. 17
(4) (a) If a district is located within the jurisdiction of a city, the city may impose a 18
license fee. The city shall not impose an occupation al license fee until all 19
cities that are a party to the interlocal agreement approve of the imposition 20
of the occupational license fee and the rate that is to be imposed. 21
(b) Persons who pay a county license fee and a license fee to a city under 22
paragraph (a) of this subsection shall be allowed to credit their city license 23
fee against their county license fee in accordance with KRS 68.197. 24
(5) Wage assessments may be imposed upon salaries, wages, commissions, and other 25
compensation earned by persons within the district for work done and services 26
performed, rendered, or conducted within the district. Any wage assessments 27
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imposed within the district shall expire and no longer be imposed upon the earlier 1
of: 2
(a) Twenty (20) years after the date of imposition; 3
(b) The date bonds for the district supported by the wage assessments are 4
retired; or 5
(c) All financial assistance received from the Commonwealth for infrastructure 6
are repaid[ 7
(f) An occupational license fee imposed under this subsection shall expire twen ty (20) 8
years after the year of imposition. After the occupational license fee has expired, an 9
additional occupational license fee shall not be imposed under this subsection. 10
(5) (a) A board shall be established to control and manage the affairs of the district. 11
(b) The board shall: 12
1. Represent a multicounty region; 13
2. Comply with the provisions of KRS Chapter 65A; 14
3. Agree, in writing, to the use or distribution of the revenue generated from a special 15
ad valorem tax levied under subsection (3) of this section; 16
4. Agree, in writing, to the collection and distribution of the revenue generated from 17
an occupational license fee imposed under subsection (4) of this section; 18
5. Operate in accordance with the following: 19
a. The board membership shall consist of at least one (1) trustee from each local 20
government that is a party to the interlocal agreement; 21
b. The trustees shall serve staggered terms of four (4) years; 22
c. The chair of the board shall be elected by the trustees from among its membership; 23
d. The board may appoint a secretary, an executive director, and other officials and 24
employees who need not be members of the board; 25
e. A quorum for the transacting of the business of the board shall consist of a majority 26
of its membership; 27
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f. A trustee of the board may be removed as provided by KRS 65.007; and 1
g. Vacancies of the board shall be filled in the same manner as the original 2
appointments; and 3
6. Provide an annual report by August 1 of each year to the Department for Local 4
Government containing: 5
a. A description of the regional economic development project, including the location, 6
specific boundaries, and the total number of acres; 7
b. A description of each business located in the district; 8
c. The total number of jobs created by the regional economic development project; 9
d. The total number of people employed within the boundaries of the district; 10
e. The name of each local government that is a party to the interlocal agreement; 11
f. The total amount of money contributed by each local government for the regional 12
economic development project and a description of how the money was used; 13
g. The rate of a special ad valorem tax levied under this section, the total revenues 14
collected from the tax for each year, and a breakdown of how the revenues were 15
used; and 16
h. The r ate of an occupational license fee imposed under this section, the total 17
revenues collected from the fee for each year, and a breakdown of how the revenues 18
were used. 19
(6) No later than October 1 of each year, the Department for Local Government shall 20
compile the information reported under subsection (5)(b)6. of this section and 21
report the compiled information to the Interim Joint Committee on Appropriations 22
and Revenue]. 23
SECTION 29. A NEW SECTION OF KRS CHAPTER 65 IS CREATED TO 24
READ AS FOLLOWS: 25
(1) A board shall be established to control and manage the affairs of the district. The 26
board shall: 27
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(a) Represent a multicounty region; 1
(b) Comply with the provisions of KRS Chapter 65A; 2
(c) Agree, in writing, to the use or distribution of the revenue generat ed from a 3
special ad valorem tax levied under Section 28 of this Act; 4
(d) Agree, in writing, to the collection and distribution of the revenue generated 5
from an occupational license fee imposed under Section 28 of this Act; and 6
(e) Operate in accordance with the following: 7
1. The board membership shall consist of at least one (1) trustee from 8
each local government that is a party to the interlocal agreement; 9
2. The trustees shall serve staggered terms of four (4) years; 10
3. The chair of the board shall be e lected by the trustees from among its 11
membership; 12
4. The board may appoint a secretary, an executive director, and other 13
officials and employees who need not be members of the board; 14
5. A quorum for the transacting of the business of the board shall consist 15
of a majority of its membership; 16
6. A trustee of the board may be removed as provided by KRS 65.007; 17
and 18
7. Vacancies of the board shall be filled in the same manner as the 19
original appointments. 20
(2) No later than October 1 of each year, the Department for Local Government shall 21
compile the information received by the board pursuant to KRS Chapter 65A and 22
report it to the Legislative Research Commission for referral to the Interim Joint 23
Committee on Appropriations and Revenue. 24
SECTION 30. A NEW SECTION OF KRS CHAPTER 65 IS CREATED TO 25
READ AS FOLLOWS: 26
(1) (a) Before the execution of an interlocal agreement to create a district, all local 27
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governments with territory wholly or partially within the boundaries of the 1
multicounty region shall be provided written notice of the intent to create 2
the district by the governing body of the local governments seeking to create 3
the district. 4
(b) The written notice shall: 5
1. Be delivered no less than thirty (30) days prior to the execut ion of the 6
agreement to the chief executive officer of each local government with 7
territory wholly or partially within the boundaries of the multicounty 8
region, by certified mail or official electronic delivery; 9
2. Identify the proposed participating entities; 10
3. Describe the proposed boundaries of the district; 11
4. Include a summary of the anticipated tax structure; and 12
5. Specify the infrastructure development projects that will be supported 13
by the revenues generated from the tax structure. 14
(2) (a) Notwithstanding any provision of law to the contrary, a city shall not be 15
required to participate in a district unless the city has adopted an ordinance 16
or resolution authorizing participation. 17
(b) A district shall not include any portion of a city located withi n its 18
geographic boundaries that has not consented to participation under 19
paragraph (a) of this subsection. 20
(c) Sections 27 to 30 of this Act shall not be construed to limit a city’s authority 21
to levy and collect an occupational license tax under KRS 91.20 0 or 91.280 22
unless the city has voluntarily joined a district and agreed to the imposition 23
of an occupational tax by the district under subsection (3) of Section 28 of 24
this Act. 25
(d) Notwithstanding KRS 81A.534(1), a district created pursuant to Sections 27 26
to 30 of this Act that is wholly located within unincorporated territory of one 27
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(1) or more counties and meets the requirements of KRS 81A.534(2) shall 1
qualify automatically as a co unty industrial district under the provisions of 2
KRS 81A.532 to 81A.536 upon the enactment of a single, final ordinance 3
designating the district as a county industrial district by the fiscal court of 4
any county or counties in which the district is physical ly located. Except for 5
the county or counties in which the district is physically located that enact 6
an ordinance designating the county industrial district, any county 7
industrial district created in the manner authorized by this paragraph shall 8
not be dee med to constitute a county industrial district under KRS 9
81A.534(4) for any other counties participating in the district. 10
Section 31. KRS 143A.030 is amended to read as follows: 11
The taxes imposed in KRS 143A.020 do not a pply to [fluorspar, ]lead, zinc, and barite 12
severed for any purposes or to rock, limestone, or gravel used for privately maintained 13
but publicly dedicated roads or limestone when sold or used by the taxpayer for 14
agricultural purposes so as to qualify for e xemption from sales and use taxes as provided 15
in KRS 139.480. 16
Section 32. KRS 143A.010 is amended to read as follows: 17
As used in this chapter: 18
(1) "Department" means the Department of Revenue; 19
(2) "Natural resource" mean s all forms of minerals , including but not limited to rock, 20
stone, limestone, shale, gravel, sand, clay, fluorspar, natural gas, and natural gas 21
liquids, which are contained in or on the soils or waters of this state. For purposes 22
of this chapter, "natural resource" does not include coal and oil which are taxed 23
under KRS 143.020 and 137.120; 24
(3) "Severing" or "severed" means the physical removal of the natural resource from 25
the earth or waters of this state by any means; however, "severing" or "severed" 26
shall not include the removal of natural gas from underground storage facilities into 27
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which the natural gas has been mechanically injected following its initial removal 1
from the earth; 2
(4) (a) "Taxpayer" means and includes any individual, partnership, joint v enture, 3
association, corporation, receiver, trustee, guardian, executor, administrator, 4
fiduciary, or representative of any kind engaged in the business of severing 5
and/or processing natural resources in this state for sale or use. In instances 6
where contr acts, either oral or written, are entered into whereby persons, 7
organizations, or businesses are engaged in the business of severing and/or 8
processing a natural resource but do not obtain title to or do not have an 9
economic interest therein, the party who owns the natural resource or has an 10
economic interest is the taxpayer. 11
(b) For purposes of this chapter, a taxpayer possesses an economic interest in a 12
natural resource where the taxpayer has acquired by investment any interest in 13
a natural resource and se cures, by any form of legal relationship, income 14
derived from the severance or processing of the natural resource, to which the 15
taxpayer[he] must look for a return of the taxpayer's [his ] capital. A party 16
who has no capital investment in the natural resour ce or who only receives an 17
arm's length royalty shall not be considered as having an economic interest; 18
(5) "Gross value" is defined as follows: 19
(a) For natural resources severed and/or processed and sold during a reporting 20
period, gross value is the amount received or receivable by the taxpayer; 21
(b) For natural resources severed and/or processed, but not sold during a reporting 22
period, gross value shall be determined as follows: 23
1. If the natural resource is to be sold under the terms of an existing 24
contract, the contract price shall be used in computing gross value; and 25
2. If there is no existing contract, the fair market value for that grade and 26
quality of the natural resource shall be used in computing gross value; 27
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(c) In a transaction involving related parties, gross value shall not be less than the 1
fair market value for natural resources of similar grade and quality; 2
(d) In the absence of a sale, gross value shall be the fair market value for natural 3
resources of similar grade and quality; 4
(e) If severed natural resources are purchased for the purpose of processing and 5
resale, the gross value is the amount received or receivable during the 6
reporting period reduced by the amount paid or payable to the taxpayer 7
actually severing the natural resource; 8
(f) If severed natural resources are purchased for the purpose of processing and 9
consumption, the gross value is the fair market value of processed natural 10
resources of similar grade and quality reduced by the amount paid or payable 11
to the taxpayer actually severing the natural resource; 12
(g) In all instances, the gross value shall not be reduced by any taxes including 13
the tax levied in KRS 143A.020, royalties, sales commissions, or any other 14
expense; and 15
(h) In all instances, transportation expense incurred in t ransporting a natural 16
resource shall not be considered as gross income from the property; 17
(6) "Processing" includes but is not limited to breaking, crushing, cleaning, drying, 18
sizing, or loading or unloading for any purpose. "Processing" shall not include the 19
act of unloading or loading for shipment natural resources that have not been 20
severed, cleaned, broken, crushed, dried, sized or otherwise treated in Kentucky; 21
(7) "Related parties" means two (2) or more persons, organizations , or businesses 22
owned or controlled directly or indirectly by the same interests; and 23
(8) (a) "Transportation expense" means: 24
1. The amount paid by a taxpayer to a third party for transporting natural 25
resources; and 26
2. The expenses incurred by a taxpayer using the taxpayer's [his] own 27
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facilities in transporting natural resources from the point of extraction to 1
a processing plant, tipple, or loading dock. 2
(b) "Transportation expense" shall not include: 3
1. The cost of acqui sition, improvements, and maintenance of real 4
property; 5
2. The cost of acquisition and operating expenses of mining and nonmining 6
loading or unloading facilities; or 7
3. The cost of acquisition and operating expenses of equipment used to 8
load or unload the natural resource at the point of extraction, processing 9
facility, or mining and nonmining loading facility. 10
Section 33. KRS 140.160 is amended to read as follows: 11
(1) The Department of Revenue shall have full supervision of the collection of all taxes 12
due under the provisions of this chapter, including the power to institute suit in this 13
and other states. It may employ attorneys and other persons necessary to carry out 14
the full intent and purpose of this chapter. The depa rtment shall furnish, upon 15
application, blank forms covering information as may be necessary to determine the 16
amount of tax due the state on the transfer of all property subject to tax. 17
(2) The department may cause personal representatives or beneficiaries to file all 18
statements required by this chapter with the clerks of the proper courts and with the 19
department, and may require them to furnish any additional information deemed 20
necessary to support the computation of the amount of tax that should be paid b y 21
the estate. The personal representative, or the beneficiaries in the absence of a 22
personal representative, shall compute the taxes imposed by this chapter on the tax 23
return provided by the department when: 24
(a) 1. A United States estate tax return is required to be filed under federal law 25
and applicable regulations; and 26
2. The estate includes property over which Kentucky has jurisdiction for 27
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purposes of the taxes imposed by this chapter; or 1
(b) Any assets from the estate subject to the taxes imposed by thi s chapter pass to 2
a beneficiary taxable under KRS 140.070. 3
(3) (a) For deaths prior to July 1, 2026, the tax return, when required, shall be filed 4
with the department within eighteen (18) months after the death of the 5
decedent or at the time payment of the tax is made pursuant to KRS 140.210. 6
(b) For deaths on or after July 1, 2026, the tax return, when required, shall be 7
filed with the department within twenty -four (24) months after the death of 8
the decedent or at the time payment of the tax is made pursua nt to Section 9
34 of this Act. 10
(4)[(3)] Except as herein provided, no action to enforce the collection of the tax 11
imposed by this chapter shall be commenced more than ten (10) years after the 12
cause of action first accrued. In case the settlement of an estat e is delayed because 13
of litigation or other unavoidable cause, the delay shall suspend the limitation, 14
prescribed by this subsection, until the cause of delay is removed. In the case of a 15
fraudulent return or any other fraudulent representation affecting t he amount of or 16
the liability for the tax imposed by this chapter notwithstanding any provision of 17
limitation provided elsewhere, the tax due by reason thereof may at any time be 18
assessed and collected by the methods set out in this chapter, including acti on in a 19
court of competent jurisdiction. 20
Section 34. KRS 140.210 is amended to read as follows: 21
(1) (a) For deaths prior to July 1, 2026, all taxes imposed by this chapter, unless 22
otherwise provided in this chapter, shall be due at the death of the decedent 23
and shall be payable to the Department of Revenue within eighteen (18) 24
months thereafter. If they are paid within nine (9) months, a di scount of five 25
percent (5%) shall be allowed, and if they are paid within eighteen (18) 26
months, no interest shall be charged and collected thereon. If the taxes due are 27
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not paid within eighteen (18) months, interest at the tax interest rate as defined 1
in K RS 131.010 [(6)] shall be paid from the expiration of the eighteen (18) 2
months until payment is actually made to the department. 3
(b) For deaths on or after July 1, 2026, all taxes imposed by this chapter, unless 4
otherwise provided in this chapter, shall be due at the death of the decedent 5
and shall be payable to the Department of Revenue within twenty -four (24) 6
months thereafter. If they are paid within fourteen (14) months, a discount 7
of five percent (5%) shall be allowed, and if they are paid within twenty-four 8
(24) months, no interest shall be charged and collected thereon. If the taxes 9
due are not paid within twenty -four (24) months, interest at the tax interest 10
rate as defined in KRS 131.010 shall be paid from the expiration of the 11
twenty-four (24) months until payment is actually made to the department. 12
(2) In all cases where the personal representatives or trustees do not pay the taxes by 13
the applicable eighteen (18) month or twenty -four (24) month deadline 14
established in subsection (1) of this section [within eighteen (18) months from the 15
death of the decedent] , they shall be required to give bond, in the form and to the 16
effect prescribed by the department, for the payment of the taxes and interest. 17
Section 35. KRS 140.222 is amended to read as follows: 18
(1) When the net tax due from a beneficiary's distributive share exceeds five thousand 19
dollars ($5,000), the beneficiary may elect to pay the inheritance tax in ten (10) 20
equal installments. The first installment shall be due at the time the return is filed 21
with succeeding payments due in annual installments beginning one (1) year after 22
the return is filed. 23
(2) (a) For deaths prior to July 1, 2026, the portion of the tax deferred under this 24
section shall be charged with interest at the tax interest rate as defined in KRS 25
131.010[(6)] commencing eighteen (18) months after the date of death. 26
(b) For deaths on or after July 1, 2026, the portion of the tax deferred under 27
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this section shall be charged with interest at the tax in terest rate as defined 1
in KRS 131.010 commencing twenty -four (24) months after the date of 2
death. 3
(3) When the beneficiary elects to pay the tax on the beneficiary's [his] share as 4
provided in this section, such election must be made in writing and signed b y the 5
beneficiary and must be filed with the Department of Revenue at the time of filing 6
the tax return for the decedent's estate under KRS 140.160 (3)[(2)]. The filing of the 7
election together with payment of the first installment shall relieve the persona l 8
representative or trustee of the estate from further liability for the tax payments 9
deferred under this section and the bond requirements of KRS 140.210, subject to 10
the final approval by the Department of Revenue of all other taxes due under this 11
chapter. 12
(4) A beneficiary electing to defer the payment of taxes under this section shall be 13
personally liable for the amount of deferred taxes until paid. 14
(5) The period of limitations for actions to enforce the collection of taxes imposed by 15
this chapter as provided by KRS 140.160 (4)[(3)] shall be suspended for the period 16
of time for deferred payment granted by this section. 17
Section 36. KRS 134.490 is amended to read as follows: 18
(1) (a) Within fifty (50) days after the delivery of a certificate of delinquency by the 19
clerk to a third-party purchaser, the third-party purchaser shall send a notice to 20
the delinquent taxpayer infor ming the delinquent taxpayer that the certificate 21
of delinquency has been purchased by the third-party purchaser. 22
(b) The third -party purchaser shall send this notice once every six (6) 23
months[At least annually thereafter,] until the notice required by sub section 24
(2) of this section is sent [, the third-party purchaser shall send a notice to the 25
delinquent taxpayer]. 26
(c) The notices included in this subsection shall be sent by certified mail with 27
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proof of mailing and include the information required by subse ction (3)(d) of 1
this section. A copy of each notice shall be sent to each mortgagee who holds 2
a mortgage on the property that is the subject of the certificate of delinquency. 3
(2) Anytime after the expiration of the one (1) year tolling period established by KRS 4
134.546, the third-party purchaser may institute an action to collect the amount due 5
on a certificate of delinquency. At least forty -five (45) days before instituting a 6
legal action, the third-party purchaser shall send a notice to the taxpayer and a copy 7
of the notice to each mortgagee who holds a mortgage on the property by certified 8
mail with proof of mailing. The notice shall: 9
(a) Inform the taxpayer that enforcement action will be taken; 10
(b) Include a statement advising the taxpayer that substan tial additional 11
administrative costs and fees associated with collection in addition to the 12
amount due on the certificate of delinquency may be imposed and that 13
collection actions may include foreclosure; and 14
(c) Include the information required by subsection (3) of this section. 15
The notice shall be in addition to any notice sent under subsection (1) of this 16
section. 17
(3) (a) 1. For certificates of delinquency for all property except property described 18
in paragraph (b) of this subsection, third -party purcha sers or their 19
designees shall obtain from the office of the property valuation 20
administrator of the county in which the real property is located the 21
most recent address for the property owner. 22
2. To obtain information from the office of the property valuat ion 23
administrator, the third -party purchaser shall, at the option of the 24
property valuation administrator, either: 25
a. Obtain information from an up -to-date public access list or 26
website[Web site] offered by the property valuation administrator; 27
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or 1
b. Submit a list of addresses, map identification numbers, or parcel 2
numbers for which updated information is requested to the 3
property valuation administrator, who shall update his or her 4
records with regard to the properties for which information is 5
requested an d provide the updated information to the third -party 6
purchaser within ten (10) days. 7
3. For this service, the property valuation administrator may charge a fee 8
not to exceed two dollars ($2) for each address provided or obtained. 9
4. Except as provided in p aragraph (b) of this subsection, the third -party 10
purchaser shall send the notices required by subsections (1) and (2) of 11
this section to the address provided by the property valuation 12
administrator. Unless the provisions of subparagraph 7. of this 13
paragraph apply, the third-party purchaser shall not be required to send a 14
notice to any party other than the owner of record as provided by the 15
property valuation administrator at the time the notice is sent and the 16
mortgagee as required by subsections (1) and (2) of this section. 17
5. If, due to insufficient staffing, the property valuation administrator is 18
unable to provide the requested information to the third -party purchaser 19
within ten (10) days of submission, the property valuation administrator 20
shall immediat ely notify the third -party purchaser, and the third -party 21
purchaser may send the notices required by subsections (1) and (2) of 22
this section to the address reflected in the public records of the property 23
valuation administrator. 24
6. Any notices sent pursuan t to information obtained under this paragraph 25
that are returned as undeliverable shall be re -sent by certified mail with 26
proof of mailing addressed to the "Occupant" at the address of the 27
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property that is the subject of the certificate of delinquency. The se 1
notices shall be sent within twenty (20) days of receipt of the returned 2
notice. 3
7. If a third -party purchaser becomes aware of a more recent or more 4
accurate address for a delinquent taxpayer that is different from the 5
address reflected in the records of the property valuation administrator, 6
the third-party purchaser shall send notices to the updated address in the 7
manner required by this subsection, and shall notify the property 8
valuation administrator of the updated address. 9
8. If a third -party purcha ser receives an address from the property 10
valuation administrator during an address check after a first notice is 11
sent and returned as undeliverable, and the address is the same as was 12
originally provided, the third -party purchaser shall send the notice 13
addressed to "Occupant" at the address of the property that is the subject 14
of the certificate of delinquency in the manner required by this 15
subsection. 16
(b) 1. For certificates of delinquency relating to unmined coal, oil or gas 17
reserves, or any other mineral or energy resources assessed separately 18
from the surface real property pursuant to KRS 132.820, third -party 19
purchasers or their designees shall obtain from the department the most 20
recent address for the property owner. 21
2. To obtain information about a par ticular property, the third -party 22
purchaser shall submit to the department a list of addresses, map 23
identification numbers, parcel numbers, and any other information the 24
department may require. The department shall: 25
a. Update its records with regard to the properties for which 26
information is requested; and 27
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b. Provide the updated information to the third -party purchaser 1
within ten (10) business days. 2
3. For this service, the department may charge a fee not to exceed two 3
dollars ($2) for each address provided. 4
4. The third-party purchaser shall send the notices required by subsections 5
(1) and (2) of this section relating to unmined coal, oil or gas reserves, 6
or any other mineral or energy resources assessed separately from the 7
surface real property pursuant to KRS 132.820 to the address provided 8
by the department. Unless the provisions of subparagraph 5.f. of this 9
paragraph apply, the third-party purchaser shall not be required to send a 10
notice to any party other than the ow ner of record as provided by the 11
department at the time the notice is sent and the mortgagee as required 12
by subsections (1) and (2) of this section. 13
5. a. Any notice sent pursuant to subsections (1) and (2) of this section 14
based on information obtained pur suant to this paragraph and 15
returned as undeliverable shall be submitted to the department 16
within ten (10) days of receipt of the returned notice. 17
b. The department shall attempt to obtain an updated address for the 18
owner of the property subject to the cer tificate of delinquency 19
from the individual or entity filing the property tax return for the 20
property. 21
c. The individual or entity filing the property tax return shall provide 22
an address of the property owner upon request of the department. 23
d. The department shall provide any updated address information to 24
the third-party purchaser. 25
e. If updated information is provided, the notices shall be re -sent by 26
certified mail with proof of mailing to the updated address of the 27
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owner within ten (10) days of the recei pt of the updated 1
information from the department. 2
f. If a third-party purchaser becomes aware of a more recent or more 3
accurate address for a delinquent taxpayer that is different from the 4
address reflected in the records of the department, the third -party 5
purchaser shall send notices to the updated address in the manner 6
required by this subsection, and shall notify the department of the 7
updated address. 8
(c) The third-party purchaser shall maintain complete and accurate records of all 9
notices sent pursuant to this section. 10
(d) The notices required by this section shall include the following information: 11
1. A statement that the certificate of delinquency is a lien of record against 12
the property for which delinquent taxes are owed; 13
2. A statement that the certificate bears interest at the rate provided in KRS 14
134.125; 15
3. A statement that if the certificate is not paid, it will be subject to 16
collection as provided by law, and that collection actions may include 17
foreclosure. The notice required by subsection (2) of this section shall 18
also include a statement of the intent to institute legal action to collect 19
the amount due; 20
4. A complete listing of the amount due, as of the date of the notice, 21
broken down as follows: 22
a. The purchase price of the certificate of delinquency; 23
b. Interest accrued subsequent to the purchase of the certificate of 24
delinquency; and 25
c. Fees imposed by the third-party purchaser; 26
5. If the third-party purchaser is required to register with the department as 27
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provided in KRS 134.128(3), for ce rtificates of delinquency purchased 1
after June 1, 2012, a statement informing the taxpayer that upon written 2
request and the payment of a processing fee, the third -party purchaser 3
will offer a payment plan; and 4
6. Information, in a format and with content as determined by the 5
department, detailing the provisions of the law relating to third -party 6
purchaser fees and charges. 7
(e) In addition, the notice shall provide the following information to the taxpayer: 8
1. The legal name of the third-party purchaser; 9
2. The third-party purchaser's physical address; 10
3. The third -party purchaser's mailing address for payments, if different 11
from the physical address; and 12
4. The third-party purchaser's telephone number. 13
If the information required by this paragraph changes, the third -party 14
purchaser shall, within thirty (30) days of the change becoming effective, send 15
a notice to each taxpayer by certified mail with proof of mailing with the 16
corrected information. The thi rd-party purchaser shall also update contact 17
information included in the records of the county clerk within ten (10) days of 18
the change becoming effective. Failure to send the original notice or any 19
correction notices shall result in the suspension of the accrual of all interest 20
and any fees incurred by the third -party purchaser after that date until proper 21
notice is given as required by this subsection. 22
(4) If a person entitled to pay a certificate of delinquency to a third -party purchaser 23
makes payment on the certificate of delinquency to the county clerk under the 24
conditions described in KRS 134.127(3)(d), the payment shall constitute payment in 25
full, and no other amounts may be collected by the third -party purchaser from the 26
person. 27
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(5) (a) For certifica tes of delinquency purchased after June 1, 2012, at the written 1
request of a delinquent taxpayer, a third -party purchaser required to register 2
with the department as provided in KRS 134.128(3) shall provide a monthly 3
installment payment plan to a taxpayer. 4
(b) The taxpayer and third -party purchaser shall sign an agreement detailing the 5
terms of the installment payment plan. 6
(c) The third-party purchaser may impose a processing fee, not to exceed eight 7
dollars ($8) per month to offset the administrative cost of providing the 8
payment plan. No other fees, charges, interest, or other amounts not expressly 9
authorized by this chapter shall be charged, assessed, or collected by the third-10
party purchaser. 11
(d) The existence of an agreement to provide a payment plan s hall not impact the 12
right of the third -party purchaser to pursue legal action if the delinquent 13
taxpayer fails to follow the terms of the installment payment agreement. 14
(e) Upon default of a delinquent taxpayer: 15
1. The third-party purchaser shall retain al l amounts paid, which shall be 16
applied to the outstanding balance due; and 17
2. The third -party purchaser shall not be required to offer the delinquent 18
taxpayer another opportunity for an installment payment plan. 19
(f) If a third-party purchaser who was required to offer payment plans pursuant to 20
paragraph (a) of this subsection, subsequently does not purchase a sufficient 21
number of certificates of delinquency to require registration with the 22
department, the third -party purchaser shall continue to offer paymen t plans 23
under the conditions established by this subsection for all delinquent 24
taxpayers whose certificates of delinquency were purchased during a period in 25
which the third-party purchaser was required to register with the department. 26
(g) A third-party purchaser who is not required to register with the department as 27
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provided in KRS 134.128(3), or who holds certificates of delinquency 1
purchased prior to June 1, 2012, may voluntarily offer installment payment 2
plans to delinquent taxpayers in accordance with t he provisions of this 3
subsection. 4
(h) The department may establish additional terms and conditions for installment 5
payment plans in an administrative regulation. 6
(6) Any person to whom a third -party purchaser transfers or assigns a 7
certificate of delinquen cy shall be considered a third -party purchaser 8
under this chapter. 9
Section 37. KRS 138.130 is amended to read as follows: 10
As used in KRS 138.130 to 138.205: 11
(1) [(a) ]"Chewing tobacco": 12
(a) Means any leaf tobacco that is not intended to be smoked;[ and ] 13
(b) Includes loose leaf chewing tobacco, plug chewing tobacco, and twist 14
chewing tobacco; and[. 15
(b) "Chewing tobacco"] 16
(c) Does not include snuff; 17
(2) "Cigarettes" means any roll for smoking made wholly or in part of tobacco, or any 18
substitute for tobacco, irrespective of size or shape and whether or not the tobacco 19
is flavored, adulterated, or mixed with any other ingredient, the wrapper or cover of 20
which is made of paper or any other substance or material, except tobacco; 21
(3) "Cigarette tax" means the group of taxes consisting of: 22
(a) The tax imposed by KRS 138.140(1)(a); 23
(b) The surtax imposed by KRS 138.140(1)(b); and 24
(c) The surtax imposed by KRS 138.140(1)(c); 25
(4) [(a) ]"Closed vapor cartridge": 26
(a) Means a pre-filled disposable cartridge that: 27
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1. Is intended to be used with or in a noncombustible product that employs 1
a heating element, battery, power source, electronic circuit, or other 2
electronic, chemical, or mechanical means, regardless of shape or size, 3
to deliver vaporized or aerosolized nicotine, non -nicotine substances, or 4
other materials to users that may be inhaling from the product, including 5
but not limited to [ such as] any electronic cigarette, electronic cigar, 6
electronic cigarillo, electronic pipe, or other similar product or device 7
and every variation thereof, regardle ss of whether marketed as one of 8
these products[such]; and 9
2. Contains nicotine or non-nicotine substances or other material consumed 10
during the process of vaporization or aerosolization; and[.] 11
(b) ["Closed vapor cartridge" ] Does not include any product r egulated as a drug 12
or device by the United States Food and Drug Administration under Chapter 13
V of the Food, Drug, and Cosmetic Act; 14
(5) "Department" means the Department of Revenue; 15
(6) "Distributor" means any person located: 16
(a) In this state or outside [within] this state in possession of tobacco products or 17
vapor products for resale within this state; or 18
(b) Outside this state selling tobacco products or vapor products to consumers 19
in this state; 20
on which the tobacco products tax imposed under KRS 138.14 0(2) has not been 21
paid; 22
(7) "Half-pound unit" means a consumer-sized container, pouch, or package: 23
(a) Containing at least four (4) ounces but not more than eight (8) ounces of 24
chewing tobacco by net weight; 25
(b) Produced by the manufacturer to be sold to c onsumers as a half -pound unit 26
and not produced to be divided or sold separately; and 27
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(c) Containing one (1) individual container, pouch, or package; 1
(8) "Manufacturer" means any person who manufactures or produces cigarettes or 2
tobacco products within or without this state; 3
(9) "Nonresident wholesaler" means any person who purchases cigarettes directly from 4
the manufacturer and maintains a permanent location outside this state where 5
Kentucky cigarette tax evidence is attached or from where Kentucky cigarett e tax is 6
reported and paid; 7
(10) [(a) ]"Open vaping system": 8
(a) Means: 9
1. Any noncombustible product that employs a heating element, battery, 10
power source, electronic circuit, or other electronic, chemical, or 11
mechanical means, regardless of shape or size [ and including the 12
component parts and accessories thereto] , that uses a refillable liquid 13
solution to deliver vaporized or aerosolized nicotine, non -nicotine 14
substances, or other materials to users that may be inhaling from the 15
product; and 16
2. Any liquid solution that is intended to be used with the product 17
described in subparagraph 1. of this paragraph; 18
(b) Includes:[ such as] 19
1. Any electronic cigarette, electronic cigar, electronic cigarillo, electronic 20
pipe, or similar product or device and every var iation thereof, regardless 21
of whether marketed as one of those products[such]; and 22
2. Any component parts to or accessories for a product described in 23
paragraph (a)1. of this subsection; and [liquid solution that is intended 24
to be used with the product desc ribed in subparagraph 1. of this 25
paragraph.] 26
(c)[(b)] ["Open vaping system"] Does not include any product regulated as a 27
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drug or device by the United States Food and Drug Administration under 1
Chapter V of the Food, Drug, and Cosmetic Act; 2
(11) "Person" means: 3
(a) Any individual, firm, copartnership, joint venture, association, municipal 4
corporation, or private corporation, whether organized for profit or not;[,] 5
(b) The Commonwealth of Kentucky or any of its political subdivisions; and[,] 6
(c) An estate, trust, or any other group or combination acting as a unit; 7
(12) "Pound unit" means a consumer-sized container, pouch, or package: 8
(a) Containing more than eight (8) o unces but not more than sixteen (16) ounces 9
of chewing tobacco by net weight; 10
(b) Produced by the manufacturer to be sold to consumers as a pound unit and not 11
produced to be divided or sold separately; and 12
(c) Containing one (1) individual container, pouch, or package; 13
(13) "Premium cigar" means a cigar that: 14
(a) Is wrapped in whole leaf tobacco; 15
(b) Contains one hundred percent (100%) leaf tobacco binder; 16
(c) Is made manually combining the wrapper, filler, and binder; 17
(d) Has no filter, tip, or nontobacco mouthpiece and is capped by hand; and 18
(e) Weighs more than six (6) pounds per one thousand (1,000) units; 19
(14) "Reference products" means tobacco products, vapor products, or cigarettes made 20
by a manufacturer specifically for an accredited state college or university to be 21
held by the college or university until sale or transfer to a laboratory, hospital, 22
medical center, institute, college or university, manufacturer, or other institution; 23
(15)[(14)] "Resident wholesaler" means any person who purchases at l east seventy-five 24
percent (75%) of all cigarettes purchased by the wholesaler directly from the 25
manufacturer on which the cigarette tax is unpaid, and who maintains an 26
established place of business in this state where the wholesaler attaches cigarette tax 27
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evidence or receives untax-paid cigarettes; 1
(16)[(15)] "Retail distributor" means a retailer who has obtained a retail distributor's 2
license under KRS 138.195; 3
(17)[(16)] "Retailer" means any person who sells to a consumer or to any person for any 4
purpose other than resale; 5
(18)[(17)] "Sale" or "sell" means any transfer for a consideration, exchange, barter, gift, 6
offer for sale, advertising for sale, soliciting an order for cigarettes [or ] tobacco 7
products, or vapor products, and distribution in any manner or by any means 8
whatsoever; 9
(19)[(18)] "Sale at retail" means a sale to any person for any other purpose other than 10
resale; 11
(20)[(19)] "Single unit" means a consumer-sized container, pouch, or package: 12
(a) Containing less than four (4) ounces of chewing tobacco by net weight; 13
(b) Produced by the manufacturer to be sold to consumers as a single unit and not 14
produced to be divided or sold separately; and 15
(c) Containing one (1) individual container, pouch, or package; 16
(21)[(20) (a)] "Snuff": 17
(a) Means tobacco that: 18
1. Is finely cut, ground, or powdered; and 19
2. Is not for smoking; and[.] 20
(b) ["Snuff" ]Includes snus; 21
(22)[(21)] "Subjobber"["Sub-jobber"] means any person who purchases c igarettes from 22
a resident wholesaler, nonresident wholesaler, or unclassified acquirer licensed 23
under KRS 138.195 on which the cigarette tax has been paid and makes them 24
available to retailers for resale. A[No] person shall not make cigarettes available to 25
retailers for resale unless the person certifies and establishes to the satisfaction of 26
the department that firm arrangements have been made to regularly supply at least 27
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five (5) retail locations with Kentucky tax -paid cigarettes for resale in the regular 1
course of business; 2
(23)[(22)] "Tax evidence" means any stamps, metered impressions, or other indicia 3
prescribed by the department within an[by] administrative regulation promulgated 4
in accordance with KRS Chapter 13A as a means of denoting the payment of 5
cigarette taxes; 6
(24)[(23)] "Tobacco products" means any smokeless tobacco products, smoking tobacco, 7
chewing tobacco, and any kind or form of tobacco prepared in a manner suitable for 8
chewing or smoking, or both, or any kind or form of tobacco that is su itable to be 9
placed in an individual's oral cavity, except cigarettes; 10
(25)[(24)] "Tobacco products tax" means the tax imposed by KRS 138.140(2)(a)1. to 11
4.[3.]; 12
(26)[(25)] "Transporter" means any person transporting untax -paid cigarettes obtained 13
from any source to any destination within this state, other than cigarettes 14
transported by the manufacturer thereof; 15
(27)[(26)] "Unclassified acquirer" means any person in this state who acquires cigarettes 16
from any source on which the cigarette tax has not been pa id, and who is not a 17
person otherwise required to be licensed under KRS 138.195; 18
(28)[(27)] "Untax-paid cigarettes" means any cigarettes on which the cigarette tax 19
imposed by KRS 138.140 has not been paid; 20
(29)[(28)] "Untax-paid tobacco or vapor products" means any tobacco products or vapor 21
products on which the tax imposed by KRS 138.140(2) has not been paid; 22
(30)[(29)] "Vapor products" means a closed vapor cartridge or an open vaping system; 23
(31)[(30)] "Vapor products tax" means tax imposed under KRS 138. 140(2)(a)[4. and ]5. 24
and 6.; and 25
(32)[(31)] "Vending machine operator" means any person that[who] operates one (1) or 26
more vending machines containing cigarettes, tobacco products, vapor products, 27
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or a combination thereof[cigarette vending machines]. 1
Section 38. KRS 138.140 is amended to read as follows: 2
(1) (a) A tax shall be paid on the sale of cigarettes within the state at a proportionate 3
rate of three cents ($0.03) on each twenty (20) cigarettes. 4
(b) Effective July 1, 2018, a surtax shall be paid in addition to the tax levied in 5
paragraph (a) of this subsecti on at a proportionate rate of one dollar and six 6
cents ($1.06) on each twenty (20) cigarettes. 7
(c) A surtax shall be paid in addition to the tax levied in paragraph (a) of this 8
subsection and in addition to the surtax levied by paragraph (b) of this 9
subsection, at a proportionate rate of one cent ($0.01) on each twenty (20) 10
cigarettes. The revenues from this surtax shall be deposited in the cancer 11
research institutions matching fund created in KRS 164.043. 12
(d) The surtaxes imposed by paragraphs (b) and (c) of this subsection shall be 13
paid at the time that the tax imposed by paragraph (a) of this subsection is 14
paid. 15
(2) (a) An excise tax is hereby imposed upon every distributor for the privilege of 16
selling tobacco products in this state at the following rates: 17
1. Upon snuff at the rate of nineteen cents ($0.19) per each one and one -18
half (1-1/2) ounces or portion thereof by net weight sold; 19
2. Upon chewing tobacco at the rate of: 20
a. Nineteen cents ($0.19) per each single unit sold; 21
b. Forty cents ($0.40) per each half-pound unit sold; or 22
c. Sixty-five cents ($0.65) per each pound unit sold. 23
If the container, pouch, or package on which the tax is levied contains 24
more than sixteen (16) ounces by net weight, the rate that shall be 25
applied to the unit shall equal t he sum of sixty -five cents ($0.65) plus 26
nineteen cents ($0.19) for each increment of four (4) ounces or portion 27
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thereof exceeding sixteen (16) ounces sold; 1
3. Beginning July 1, 2026, upon premium cigars sold, at the rate of six 2
percent (6%) of the actual p rice for which the distributor sells 3
premium cigars; 4
4. a. Prior to July 1, 2026, upon tobacco products sold, at the rate of 5
fifteen percent (15%) of the actual price for which the distributor 6
sells tobacco products, except snuff and chewing tobacco, withi n 7
the Commonwealth; and 8
b. On or after July 1, 2026, upon tobacco products sold, at the rate 9
of fifteen percent (15%) of the actual price for which the 10
distributor sells tobacco products, except snuff, chewing tobacco, 11
and premium cigars, within the Commonwealth; 12
5.[4.] Upon closed vapor cartridges, one dollar and fifty cents ($1.50) per 13
cartridge; and 14
6.[5.] Upon open vaping systems, fifteen percent (15%) of the actual price for 15
which the distributor sells: 16
a. The open vaping system when the actual price includes the items 17
described in both KRS 138.130(10)(a)1. and 2.; or 18
b. The liquid solution described in KRS 138.130(10)(a)2. when the 19
solution is sold separately. 20
(b) The net weight posted by the manufacturer on the container, pouch, or 21
package or on the manufacturer's invoice shall be used to calculate the tax due 22
on snuff or chewing tobacco. 23
(c) 1. A retailer located in this state shall not purchase tobacco products for 24
resale to consumers from any person within or outside this state unless 25
that person is a distributor licensed un der KRS 138.195(7)(a) or the 26
retailer applies for and is granted a retail distributor's license under KRS 27
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138.195(7)(b) for the privilege of purchasing untax -paid tobacco 1
products and remitting the tax as provided in this paragraph. 2
2. A licensed retail di stributor of tobacco products shall be subject to the 3
excise tax as follows: 4
a. On purchases of untax -paid snuff, at the same rate levied by 5
paragraph (a)1. of this subsection; 6
b. On purchases of untax -paid chewing tobacco, at the same rates 7
levied by paragraph (a)2. of this subsection; 8
c. On purchases of untax -paid premium cigars, at the same rate 9
levied by paragraph (a)3. of this subsection; 10
d. On purchases of untax -paid tobacco products, except snuff , 11
premium cigars, and chewing tobacco, fifteen percent (15%) of 12
the total purchase price as invoiced by the retail distributor's 13
supplier; 14
e.[d.] On purchases of untax -paid closed vapor cartridges, at the same 15
rate levied by paragraph (a)5.[4.] of this subsection; and 16
f.[e.] On purchases of untax -paid open vap ing systems, fifteen percent 17
(15%) of the total purchase price as invoiced by the retail 18
distributor's supplier as described in paragraph (a) 6.[5.] of this 19
subsection. 20
(d) 1. The licensed distributor that first possesses tobacco products or vapor 21
products for sale to a retailer in this state or for sale to a person who is 22
not licensed under KRS 138.195(7) shall be the distributor liable for the 23
tax imposed by this subsection except as provided in subparagraph 2. of 24
this paragraph. 25
2. A distributor licensed under KRS 138.195(7)(a) may sell tobacco 26
products or vapor products to another distributor licensed under KRS 27
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138.195(7)(a) without payment of the excise tax. In such case, the 1
purchasing licensed distributor shall be the distributor liable for the tax. 2
3. A licensed distributor or licensed retail distributor shall: 3
a. Identify and display the distributor's or retail distributor's license 4
number on the invoice to the retailer; and 5
b. Identify and display the excise tax separately on the invoice to the 6
retailer. If the excise tax is included as part of the product's sales 7
price, the licensed distributor or licensed retail distributor shall list 8
the total excise tax in summary form by tax type with invoice 9
totals. 10
4. It shall be presumed that the excise tax ha s not been paid if the licensed 11
distributor or licensed retail distributor does not comply with 12
subparagraph 3. of this paragraph. 13
(e) A[No] tax shall not be imposed on tobacco products or vapor products under 14
this subsection that are outside[not within] the taxing power of this state under 15
the Commerce Clause of the United States Constitution. 16
(3) (a) The taxes imposed by subsections (1) and (2) of this section: 17
1. Shall not apply to reference products; and 18
2. Shall be paid only once, regardless of the num ber of times the cigarettes 19
or tobacco products may be sold. 20
(b) The taxes imposed by subsection (1)(a) and (b) and subsection (2) of this 21
section shall be reduced by: 22
1. Fifty percent (50%) on any product as to which a modified risk tobacco 23
product order is issued under 21 U.S.C. sec. 387k(g)(1); or 24
2. Twenty-five percent (25%) for any product as to which a modified risk 25
tobacco product order is issued under 21 U.S.C. sec. 387k(g)(2). 26
(4) A reference product shall carry a marking labeling the contents as a research 27
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cigarette, research vapor product, or a research tobacc o product to be used only for 1
tobacco-health research and experimental purposes and shall not be offered for sale, 2
sold, or distributed to consumers. 3
(5) The department may prescribe forms and promulgate administrative regulations to 4
execute and administer the provisions of this section. 5
(6) The General Assembly recognizes that increasing taxes on tobacco products should 6
reduce consumption, and therefore result in healthier lifestyles for Kentuckians. The 7
relative taxes on tobacco products proposed in this section reflect the growing data 8
from scientific studies suggesting that although smokeless tobacco poses some 9
risks, those health risks are significantly less than the risks posed by other forms of 10
tobacco products. Moreover, the General Assembly acknowle dges that some in the 11
public health community recognize that tobacco harm reduction should be a 12
complementary public health strategy regarding tobacco products. Taxing tobacco 13
products according to relative risk is a rational tax policy and may well serve the 14
public health goal of reducing smoking -related mortality and morbidity and 15
lowering health care costs associated with tobacco-related disease. 16
(7) Any person subject to the taxes imposed under subsections (1) and (2) of this 17
section that: 18
(a) Files an application related to a modified risk tobacco product shall report to 19
the department that an application has been filed within thirty (30) days of 20
that filing; and 21
(b) Receives an order authorizing the marketing of a modified risk tobacco 22
product shall re port to the department that an authorizing order has been 23
received. 24
(8) Upon receipt of the information required by subsection (7)(b) of this section, the 25
department shall reduce the tax imposed on the modified risk tobacco product as 26
required by subsectio n (3)(b) of this section on the first day of the calendar month 27
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following the expiration of forty-five (45) days following receipt of the information 1
required by subsection (7)(b) of this section. 2
Section 39. KRS 138.143 is amended to read as follows: 3
(1) Every retailer, subjobber[sub-jobber], resident wholesaler, nonresident wholesaler, 4
and unclassified acquirer shall: 5
(a) Take a physical inventory of all cigarettes in packages bearing Kentucky tax 6
stamps, and all unaffixed Kentucky cigarette tax stamps possessed by them or 7
in their control at 11:59 p.m. on June 30, 2018. Inventory of cigarettes in 8
vending machines may be accomplished by: 9
1. Taking an actual physical inventory; 10
2. Estimating the cigarettes in vending mach ines by reporting one -half 11
(1/2) of the normal fill capacity of the machines, as reflected in 12
individual inventory records maintained for vending machines; or 13
3. Using a combination of the methods prescribed in subparagraphs 1. and 14
2. of this paragraph; 15
(b) File a return with the department on or before July 10, 2018, showing the 16
entire wholesale and retail inventories of cigarettes in packages bearing 17
Kentucky tax stamps, and all unaffixed Kentucky cigarette tax stamps 18
possessed by them or in their control at 11:59 p.m. on June 30, 2018; and 19
(c) Pay a floor stock tax at a proportionate rate equal to fifty cents ($0.50) on 20
each twenty (20) cigarettes in packages bearing a Kentucky tax stamp and 21
unaffixed Kentucky tax stamps in their possession or control at 11:59 p.m. on 22
June 30, 2018. 23
(2) Every retailer and subjobber[ sub-jobber] shall: 24
(a) 1. Take a physical inventory of all units of snuff possessed by them or in 25
their control at 11:59 p.m. on March 31, 2009; 26
2. File a return with the department on or befor e April 10, 2009, showing 27
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the entire inventory of snuff possessed by them or in their control at 1
11:59 p.m. on March 31, 2009; and 2
3. Pay a floor stock tax at a proportionate rate equal to nine and one -half 3
cents ($0.095) on each unit of snuff in their pos session or control at 4
11:59 p.m. on March 31, 2009; and 5
(b) 1. a. Take a physical inventory of all other tobacco products possessed 6
by them or in their control at 11:59 p.m. on March 31, 2009; 7
b. File a return with the department on or before April 10, 200 9, 8
showing the entire inventories of other tobacco products possessed 9
by them or in their control at 11:59 p.m. on March 31, 2009; and 10
c. Pay a floor stock tax at a proportionate rate equal to seven and 11
one-half percent (7.5%) on the purchase price of other tobacco 12
products in their possession or control at 11:59 p.m. on March 31, 13
2009. 14
2. a. As used in this paragraph, "purchase price" means the actual 15
amount paid for the other tobacco products subject to the tax 16
imposed by this paragraph. 17
b. If the retailer or subjobber[ sub -jobber] cannot determine the 18
actual amount paid for each item of other tobacco product, the 19
retailer or subjobber[ sub -jobber] may use as the purchase price 20
the amount per unit paid as reflected on the most recent invoice 21
received prior to April 1, 2009,[ ] for the same category of other 22
tobacco product. 23
c. To prevent double taxation, if the invoice used by the retailer o r 24
subjobber[ sub -jobber] to determine the purchase price of the 25
other tobacco product does not separately state the tax paid by the 26
wholesaler, the retailer or subjobber[ sub-jobber] may reduce the 27
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amount paid per unit by seven and one-half percent (7.5%). 1
(3) (a) The taxes imposed by this section may be paid in three (3) installments. The 2
first installment, in an amount equal to at least one -third (1/3) of the total 3
amount due, shall be remitted with the return provided by the department on 4
or before July 10, 2018. The second installment, in an amount that brings the 5
total amount paid to at least two -thirds (2/3) of the total amount due, shall be 6
remitted on or before August 10, 2018. The third installment, in an amount 7
equal to the remaining balance, shall be remitted on or before September 10, 8
2018. 9
(b) Interest shall not be imposed against any outstanding installment payment not 10
yet due from any retailer, subjobber[ sub -jobber], resident wholesaler, 11
nonresident wholesaler, or unclassified acquirer who fil es the return and 12
makes payments as required under this section. 13
(c) Any retailer, subjobber[ sub -jobber], resident wholesaler, nonresident 14
wholesaler, or unclassified acquirer who fails to file a return or make a 15
payment on or before the dates provided in this section shall, in addition to the 16
tax, pay interest at the tax interest rate as defined in KRS 131. 010(6) from the 17
date on which the return was required to be filed. 18
Section 40. KRS 138.146 is amended to read as follows: 19
(1) The cigarette tax shall be due when any licensed wholesaler or unclassified acquirer 20
takes possession within this state of untax-paid cigarettes. 21
(2) (a) The cigarette tax shall be paid by the purchase of stamps by a resident 22
wholesaler within forty -eight (48) hours after the wholesaler receives the 23
cigarettes. 24
(b) A stamp shall be affixed to each package of an aggregate denomination not 25
less than the amount of the cigarette tax on the package. 26
(c) The affixed stamp shall be prima facie evidence of payment of the cigarette 27
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tax. 1
(d) Unless stamps have been previously affixed, they shall be affixed by each 2
resident wholesaler prior to the delivery of any cigarettes to a retail location or 3
any person in this state. 4
(e) The evidence of cigarette tax payment shall be affixed to each individual 5
package of cigarettes by a nonresident wholesaler prior to the introduction or 6
importation of the cigarettes into the territorial limits of this state. 7
(f) The evidence of cigarette tax payment shall be affixed by an unclassified 8
acquirer within twenty-four (24) hours after the cigarettes are received by the 9
unclassified acquirer. 10
(3) (a) The department shall , by an administrative regulation promulgated in 11
accordance with KRS Chapter 13A, prescribe the form of cigarette tax 12
evidence, the method and manner of the sale and distribution of cigarette tax 13
evidence, and the method and manner that tax evidence shall be affixed to the 14
cigarettes. 15
(b) All cigarette tax evidence prescribed by the department shall be designed and 16
furnished in a fashion to permit identification of the person that affixed the 17
cigarette tax evidence to the particular package of cigarettes, by means of 18
numerical rolls or other mark on the cigarette tax evidence. 19
(c) The department shall maintain for at least three (3) years information 20
identifying the person that affixed the cigarette tax evidence to each package 21
of cigarettes. This information shall not be kept confidential or exempt from 22
disclosure to the public through open records. 23
(4) (a) Units of cigarette tax evidence shall be sold at their face value, but the 24
department shall allow as compensation to any licensed wholesaler an amount 25
of tax evidence equal to a proportionate rate of one and one -half cents 26
($0.015) on each twenty (20) cigarettes. 27
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(b) The department shall have the power to withhold compensation as provided in 1
paragraph (a) of this subsection from any licensed wholesaler for failure to 2
abide by any provisions of KRS 138.130 to 138.205 or any administrative 3
regulations promulgated thereunder. Any refund or credit for unused cigarette 4
tax evidence shall be reduced by the amount allowed as compensation at the 5
time of purchase. 6
(5) (a) Payment for units of cigarette tax evidence shall be made at the time the units 7
are sold, unless the licensed wholesaler: 8
1. Has filed with the department a bond, issued by a corporation authorized 9
to do surety business in Kentucky, in an amount: 10
a. Determined by the department; or 11
b. i. Not less than the monthly average of payments by the 12
wholesaler for the units of cigarette tax evidence purchased 13
in the immediately preceding calendar year, which may be 14
delayed under paragraph (b) of this subsection; and 15
ii. No greater than ten million dollars ($10,000,000); and 16
2. Has registered and agrees to make the payment of tax to the department 17
electronically. 18
[At no time shall ] The licensed wholesaler shall not be allowed to delay any 19
payment for units of cigarette tax evidence, including tax, penalty, interest, or 20
collection fees, which would exceed the amount of bond filed with the 21
department. 22
(b) Except as provided in paragraph (c) of this subsection, if the licensed 23
wholesaler qualifies under paragraph (a) of this subsection, the licensed 24
wholesaler shall have ten (10) da ys from the date of purchase to remit 25
payment of cigarette tax, without the assessment of civil penalties under KRS 26
131.180 or interest under KRS 131.183 during the ten (10) day period. 27
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(c) 1. The ten (10) day payment period under paragraph (b) of this sub section 1
shall not apply to the payment for units of cigarette tax evidence during 2
the last ten (10) days of the month of June during each fiscal year. 3
2. All payments for units of cigarette tax evidence made under paragraph 4
(b) of this subsection during th e month of June shall be made the earlier 5
of: 6
a. The ten (10) day period; or 7
b. June 25. 8
(d) If the licensed wholesaler does not make the payment of cigarette tax within 9
the ten (10) day period, or within the period of time under paragraph (c) of 10
this subsection, the department shall: 11
1. Revoke the license required under KRS 138.195; 12
2. Issue a demand for payment in an amount equal to the cigarette tax 13
evidence purchased, plus all penalties, interest, and collection fees 14
applicable, up to the amount of the required bond; and 15
3. Require immediate payment of the bond. 16
(6) (a) The bond required under subsection (5) of this section shall be on a form and 17
with a surety approved by the department. 18
(b) The licensed wholesaler shall be named as the principal obligor and the 19
department shall be named as the obligee within the bond. 20
(c) The bond shall be conditioned upon the payment by the licensed wholesaler of 21
all cigarette tax imposed by the Commonwealth. 22
(d) The provisions of KRS 131.110 shall not apply to the dema nd for payment 23
required under subsection (5)(c)2. of this section. 24
(7) (a) [No ]Tax evidence shall not[may] be affixed[,] or used in any way [,] by any 25
person other than the person purchasing the tax evidence from the department. 26
(b) Tax evidence shall[may] not be transferred or negotiated, and shall[may] not, 27
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by any scheme or device, be given, bartered, sold, traded, or loaned to any 1
other person. 2
(c) Unaffixed tax evidence may be returned to the department for credit or refund 3
for any reason satisfactory to the department. 4
(8) (a) In the event any retailer takes[receives into his] possession of cigarettes to 5
which evidence of Kentucky tax payment is not properly affixed, the retailer 6
shall, within twenty-four (24) hours, notify the department of the receipt. 7
(b) The notification to the department shall be in writing, stating the name of the 8
person from whom the cigarettes were received and the quantity of those 9
cigarettes. 10
(c) The written notice may be: 11
1. Given to any field agent of the department; or 12
2. Directed to the commissioner of the Department of Revenue, Frankfort, 13
Kentucky. 14
(d) If the notice is given by means of the United States mail, it shall be sent by 15
certified mail. 16
(e) Any[ such] cigarettes to which evidence of Kentucky tax payment is not 17
properly affixed shall be retained by the retailer, and not sold, for a period of 18
fifteen (15) days after giving the notice provided in this subsection. 19
(f) The retailer may, at the retailer's [his] option, pay the tax due on those 20
cigarettes according to adm inistrative regulations prescribed by the 21
department, and proceed to sell those cigarettes after the payment. 22
(9) (a) Cigarettes stamped with the cigarette tax evidence of another state shall at no 23
time be commingled with cigarettes on which the Kentucky c igarette tax 24
evidence has been affixed. 25
(b) Any licensed wholesaler, licensed subjobber[sub-jobber], or licensed vending 26
machine operator may hold cigarettes stamped with the tax evidence of 27
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another state for any period of time, subsection (2) of this sect ion 1
notwithstanding. 2
Section 41. KRS 138.195 is amended to read as follows: 3
(1) (a) A[No] person other than a manufacturer shall not acquire cigarettes in this 4
state on which the Kentucky cigarette tax has not been paid, nor act as a 5
resident wholesaler, nonresident wholesaler, vending machine operator, 6
subjobber[sub-jobber], transporter or unclassified acquirer of such cigarettes 7
without first obtaining a license from the department as provided[set out] in 8
this section. 9
(b) A[No] person shall not act as a distributor of tobacco products or vapor 10
products without first obtaining a license from the department as provided[set 11
out] in this section. 12
(c) An[For licenses effective for periods beginning on or af ter July 1, 2015, no] 13
individual, entity, or any other group or combination acting as a unit shall 14
not[may] be eligible to obtain a license under this section if the individual, or 15
any partner, director, principal officer, or manager of the entity or any o ther 16
group or combination acting as a unit has been convicted of or entered a plea 17
of guilty or nolo contendere to: 18
1. A crime relating to the reporting, distribution, sale, or taxation of 19
cigarettes, tobacco products, or vapor products; or 20
2. A crime invo lving fraud, falsification of records, improper business 21
transactions or reporting; 22
for ten (10) years from the expiration of probation or final discharge from 23
parole or maximum expiration of sentence. 24
(2) (a) Each resident wholesaler shall secure a separ ate license for each place of 25
business at which cigarette tax evidence is affixed or at which cigarettes on 26
which the Kentucky cigarette tax has not been paid are received. 27
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(b) Each nonresident wholesaler shall secure a separate license for each place of 1
business at which evidence of Kentucky cigarette tax is affixed or from where 2
Kentucky cigarette tax is reported and paid. 3
(c) Each license shall be secured on or before July 1 of each year. 4
(d) Each licensee shall pay the sum of five hundred dollars ($500) for each year, 5
or portion thereof, for which each license is secured. 6
(3) (a) Each subjobber[sub-jobber] shall secure a separate license for each place of 7
business from which cigarettes, upon which the cigarette tax has been paid, 8
are made available to retailers, whether the place of business is located within 9
or without this state. 10
(b) Each license shall be secured on or before July 1 of each year. 11
(c) Each licensee shall pay the sum of five hundred dollars ($500) for each year, 12
or portion thereof, for which each license is secured. 13
(4) (a) Each vending machine operator shall secure a license for the privilege of 14
dispensing cigarettes, tobacco products, or vapor products by vending 15
machines on which the [ cigarette] tax imposed by Section 38 of this Act is 16
required to be[has been] paid[, by vending machines]. 17
(b) Each license shall be secured on or before July 1 of each year. 18
(c) Each licensee shall pay the sum of twenty -five dollars ($25) for each year, or 19
portion thereof, for which each license is secured. 20
(d) A[No] vending machine shall not be operated within this Commonwealth 21
without having prominently affixed thereto the name of its operator and the 22
license number assigned to that operator by the department. 23
(e) The department shall prescribe by administ rative regulation the manner in 24
which the information shall be affixed to the vending machine. 25
(5) (a) Each transporter shall secure a license for the privilege of transporting 26
cigarettes within this state. 27
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(b) Each license shall be secured on or before July 1 of each year. 1
(c) Each licensee shall pay the sum of fifty dollars ($50) for each year, or portion 2
thereof, for which each license is secured. 3
(d) A[No] transporter shall not transport any cigarettes withou t having in actual 4
possession an invoice or bill of lading therefor, showing: 5
1. The name and address of the consignor and consignee; 6
2. The date acquired by the transporter; 7
3. The name and address of the transporter; 8
4. The quantity of cigarettes being transported; and 9
5. The license number assigned to the transporter by the department. 10
(6) (a) Each unclassified acquirer shall secure a license for the privilege of acquiring 11
cigarettes on which the cigarette tax has not been paid. 12
(b) Each[The] license shall be secured on or before July 1 of each year. 13
(c) Each licensee shall pay the sum of fifty dollars ($50) for each year, or portion 14
thereof, for which the license is secured. 15
(7) (a) 1. Each distributor shall secure a license for the privilege of selling tobacco 16
products or vapor products in this state. Each license shall be secured on 17
or before July 1 of each year, and each licensee shall pay the sum of five 18
hundred dollars ($500) for each year, or portion thereof, for which the 19
license is secured. 20
2. a. A resident wholesaler, nonresident wholesaler, or subjobber 21
licensed under this section may also obtain and maintain a 22
distributor's license at each place of business at no additional cost 23
each year. 24
b. An unclassified acquirer licensed under this sectio n may also 25
obtain and maintain a distributor's license for the privilege of 26
selling tobacco products or vapor products in this state. The 27
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license shall be secured on or before July 1 of each year, and each 1
licensee shall pay the sum of four hundred fifty d ollars ($450) for 2
each year, or portion thereof, for which the license is secured. 3
3. The department may, upon application, grant a distributor's license to a 4
person other than a retailer and who is not otherwise required to hold a 5
distributor's license un der this paragraph. If the department grants the 6
license, the licensee shall pay the sum of five hundred dollars ($500) for 7
each year, or portion thereof, for which the license is secured, and the 8
licensee shall be subject to the excise tax in the same man ner and 9
subject to the same requirements as a distributor required to be licensed 10
under this paragraph. 11
(b) The department may, upon application, grant a retail distributor's license to a 12
retailer for the privilege of purchasing tobacco products or vapor p roducts 13
from a distributor not licensed by the department. If the department grants the 14
license, the licensee shall pay the sum of one hundred dollars ($100) for each 15
year, or portion thereof, for which the license is secured. 16
(8) [Nothing in ] KRS 138.130 to 138.205 shall not be construed to prevent the 17
department from requiring a person to purchase more than one (1) license if the 18
nature of that person's business is so diversified as to justify the requirement. 19
(9) (a) The department may , by administrative regulation promulgated in 20
accordance with KRS Chapter 13A, require any person requesting a license 21
or holding a license under this section to supply such information concerning 22
his or her business, sales or any privilege exercised, as is deemed reasonably 23
necessary for the regulation of the licensees, and to protect the revenues of the 24
state. 25
(b) Failure on the part of the applicant or licensee to: 26
1. Comply with KRS 131.600 to 131.630, 138.130 to 138.205, 248.752, or 27
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248.754 or any administrative regulations promulgated thereunder; or 1
2. Permit an inspection of premises, machines, or vehicles by an authorized 2
agent of the department at any reasonable time; 3
shall be grounds for the denial or revocation of any license issued by the 4
department, after due notice and a hearing by the department. 5
(c) The commissioner may assign a time and place for the hearing and may 6
appoint a conferee who shall conduct a hearing, receive evidence, and hear 7
arguments. 8
(d) The conferee shall thereupon file a report with the commissioner together 9
with a recommendation as to the denial or revocation of the license. 10
(e) From any denial or revocation made by the commissioner on the report, the 11
licensee may prosecute an appeal to the Board of Tax Appeals pursuant to 12
KRS 49.220. 13
(f) Any person whose license has been revoked for the willful violation of any 14
provision of KRS 131.600 to 131.630, 138.130 to 138.205, 248.752, or 15
248.754 or any administrative regulations promulgated thereunder shall not be 16
entitled to any license provided for in this section, or have any interest in any 17
license, either disclosed or undisclosed, either as an individual, partnership, 18
corporation or otherwise, for a period of two (2) years after the revocation. 19
(10) A[No] license issued under[pursuant to] this section shall not be transferable or 20
negotiable, except that a license may be transferred between an individual and a 21
corporation if that individual is the exclusive owner of that corporation, or betwee n 22
a subsidiary corporation and its parent corporation. 23
(11) Every manufacturer located or doing business in this state and the first person to 24
import cigarettes into this state shall keep written records of all shipments of 25
cigarettes to persons within thi s state, and shall submit to the department monthly 26
reports of the[such] shipments. All books, records, invoices, and documents 27
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required by this section shall be preserved in a form prescribed by the department 1
for not less than four (4) years from the mak ing of the records unless the 2
department authorizes, in writing, the destruction of the records. 3
(12) A[No] person licensed under this section other than a [except] nonresident 4
wholesaler[wholesalers] shall either sell to or purchase from any other such 5
licensee untax-paid cigarettes. 6
(13) (a) Licensed distributors of tobacco products or vapor products shall pay and 7
report the tobacco products tax or vapor products tax on or before the 8
twentieth day of the calendar month following the month in which the 9
possession or title of the tobacco products or vapor products are transferred 10
from the licensed distributor to retailers or consumers in this state, as the case 11
may be. 12
(b) Retailers who have applied for and been granted a retail distributor's license 13
for the privilege of purchasing tobacco products or vapor products from a 14
person who is not a distributor licensed under KRS 138.195(7)(a) shall report 15
and pay the tobacco products tax or vapor products tax on or before the 16
twentieth day of the calendar month foll owing the month in which the 17
products are acquired by the licensed retail distributors. 18
(c) If the distributor or retail distributor timely reports and pays the tax due, the 19
distributor or retail distributor may deduct an amount equal to one percent 20
(1%) of the tax due. 21
(d) The department shall promulgate administrative regulations in accordance 22
with KRS Chapter 13A to prescribe [setting forth] the details of the reporting 23
requirements. 24
(14) A tax return shall be filed for each reporting period whether or not tax is due. 25
(15) Any license issued by the department under this section shall not be construed to 26
waive or condone any violation that occurred or may have occurred prior to the 27
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issuance of the license and shall not prevent subsequent proceedings against the 1
licensee. 2
(16) (a) The department may deny the issuance of a license under this section if: 3
1. The applicant has made any material false statement on the application 4
for the license; or 5
2. The applicant has violated any provision of KRS 131.600 to 131 .630, 6
138.130 to 138.205, 248.754, or 248.756 or any administrative 7
regulations promulgated thereunder. 8
(b) If the department denies the applicant a license under this section, the 9
department shall notify the applicant of the grounds for the denial, and 10
the applicant may request a hearing and appeal the denial as provided in 11
subsection (9) of this section. 12
Section 42. KRS 138.349 is amended to read as follows: 13
No person shall execute a gasoline or special fuel refund invoice, as described in KRS 14
138.351, who is not a dealer, as defined in KRS 138.210 or a subjobber[sub-jobber] duly 15
authorized by a licensed dealer, to execute refund invoices as his agent. In no i nstance 16
shall refund invoices be executed for purchases from retail filling stations. 17
Section 43. KRS 141.0205 is amended to read as follows: 18
If a taxpayer is entitled to more than one (1) of the tax credits allowed agai nst the tax 19
imposed by KRS 141.020, 141.040, and 141.0401, the priority of application and use of 20
the credits shall be determined as follows: 21
(1) The nonrefundable business incentive credits against the tax imposed by KRS 22
141.020 shall be taken in the following order: 23
(a) The limited liability entity tax credit permitted by KRS 141.0401; 24
(b) The economic development credits computed under KRS 141.347, 141.381, 25
141.384, 141.3841, 141.400, 141.403, 141.407, 141.415, 154.12 -207, and 26
154.12-2088; 27
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(c) The qualified farming operation credit permitted by KRS 141.412; 1
(d) The certified rehabilitation credit permitted by KRS 171.397(1)(a) and 2
Section 59 of this Act; 3
(e) The health insurance credit permitted by KRS 141.062; 4
(f) The tax paid to other states credit permitted by KRS 141.070; 5
(g) The credit for hiring the unemployed permitted by KRS 141.065; 6
(h) The recycling or composting equipment credit permitted by KRS 141.390; 7
(i) The [tax ]credit for cash contributions in investment funds permitted by KRS 8
154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 9
154.20-258; 10
(j) The research facilities credit permitted by KRS 141.395; 11
(k) The employer Hi gh School Equivalency Diploma program incentive credit 12
permitted under KRS 151B.402; 13
(l) The voluntary environmental remediation credit permitted by KRS 141.418; 14
(m) The biodiesel and renewable diesel credit permitted by KRS 141.423; 15
(n) The clean coal incentive credit permitted by KRS 141.428; 16
(o) The ethanol credit permitted by KRS 141.4242; 17
(p) The cellulosic ethanol credit permitted by KRS 141.4244; 18
(q) The energy efficiency credits permitted by KRS 141.436; 19
(r) The railroad maintenance and improvement credit permitted by KRS 141.385; 20
(s) The Endow Kentucky credit permitted by KRS 141.438; 21
(t) The New Markets Development Program credit permitted by KRS 141.434; 22
(u) The distilled spirits credit permitted by KRS 141.389; 23
(v) The angel investor credit permitted by KRS 141.396; 24
(w) The film industry credit permitted by KRS 141.383 for applications approved 25
on or after April 27, 2018, but before January 1, 2022; 26
(x) The inventory credit permitted by KRS 141.408; 27
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(y) The renewable chemical production credit permitted by KRS 141.4231; and 1
(z) The qualified broadband investment [tax ]credit permitted by KRS 141.391; 2
(2) After the application of the nonrefundable credits in subsection (1) of this section, 3
the nonrefundable personal tax credits against the tax impos ed by KRS 141.020 4
shall be taken in the following order: 5
(a) The individual credits permitted by KRS 141.020(3); 6
(b) The credit permitted by KRS 141.066; 7
(c) The tuition credit permitted by KRS 141.069; 8
(d) The household and dependent care credit permitted by KRS 141.067; 9
(e) The income gap credit permitted by KRS 141.066; and 10
(f) The Education Opportunity Account Program [tax ]credit permitted by KRS 11
141.522; 12
(3) After the application of the nonrefundable credits provided for in subsection (2) of 13
this section, the refundable credits against the tax imposed by KRS 141.020 shall be 14
taken in the following order: 15
(a) The individual withholding tax credit permitted by KRS 141.350; 16
(b) The individual estimated tax payment credit permitted by KRS 141.305; 17
(c) The certified rehabilitation credit permitted by KRS 171.3961, 171.3963, and 18
171.397(1)(b) and Section 59 of this Act; 19
(d) The film industry [tax ] credit permitted by KRS 141.383 for applications 20
approved prior to April 27, 2018, or on or after January 1, 2022; 21
(e) The development area [tax ]credit permitted by KRS 141.398; 22
(f) The decontamination [tax ]credit permitted by KRS 141.419; and 23
(g) The pass-through entity tax credit permitted by KRS 141.209; 24
(4) The nonrefundable credit permitted by KRS 141.0401 shall be applied against the 25
tax imposed by KRS 141.040; 26
(5) The following nonrefundable credits shall be applied against the sum of the tax 27
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imposed by KRS 141.040 a fter subtracting the credit provided for in subsection (4) 1
of this section, and the tax imposed by KRS 141.0401 in the following order: 2
(a) The economic development credits computed under KRS 141.347, 141.381, 3
141.384, 141.3841, 141.400, 141.403, 141.407, 141.415, 154.12 -207, and 4
154.12-2088; 5
(b) The qualified farming operation credit permitted by KRS 141.412; 6
(c) The certified rehabilitation credit permitted by KRS 171.397(1)(a) and 7
Section 59 of this Act; 8
(d) The health insurance credit permitted by KRS 141.062; 9
(e) The unemployment credit permitted by KRS 141.065; 10
(f) The recycling or composting equipment credit permitted by KRS 141.390; 11
(g) The coal conversion credit permitted by KRS 141.041; 12
(h) The enterprise zone credit permitted by KRS 154.45 -090, for taxable periods 13
ending prior to January 1, 2008; 14
(i) The [tax ]credit for cash contributions to investment funds permitted by KRS 15
154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 16
154.20-258; 17
(j) The research facilities credit permitted by KRS 141.395; 18
(k) The employer High School Equivalency Diploma program incentive credit 19
permitted by KRS 151B.402; 20
(l) The voluntary environmental remediation credit permitted by KRS 141.418; 21
(m) The biodiesel and renewable diesel credit permitted by KRS 141.423; 22
(n) The clean coal incentive credit permitted by KRS 141.428; 23
(o) The ethanol credit permitted by KRS 141.4242; 24
(p) The cellulosic ethanol credit permitted by KRS 141.4244; 25
(q) The energy efficiency credits permitted by KRS 141.436; 26
(r) The ENERGY STAR home or ENERGY STAR manufactured home credit 27
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permitted by KRS 141.437; 1
(s) The railroad maintenance and improvement credit permitted by KRS 141.385; 2
(t) The railroad expansion credit permitted by KRS 141.386; 3
(u) The Endow Kentucky credit permitted by KRS 141.438; 4
(v) The New Markets Development Program credit permitted by KRS 141.434; 5
(w) The distilled spirits credit permitted by KRS 141.389; 6
(x) The film industry credit permitted by KRS 141.383 for applications approved 7
on or after April 27, 2018, but before January 1, 2022; 8
(y) The inventory credit permitted by KRS 141.408; 9
(z) The renewable chemical production [tax ]credit permitted by KRS 141.4231; 10
(aa) The Education Opportunity Account Program [tax ]credit permitted by KRS 11
141.522; and 12
(ab) The qualified broadband investment [tax ]credit permitted by KRS 141.391; 13
and 14
(6) After the application of the nonrefundable credits in subsection (5) of this section, 15
the refundable credits shall be taken in the following order: 16
(a) The corporation estimated tax payment credit permitted by KRS 141.044; 17
(b) The certified rehabilitation credit permitted by KRS 171.3961, 171.3963, and 18
171.397(1)(b) and Section 59 of this Act; 19
(c) The film indust ry [tax ] credit permitted by KRS 141.383 for applications 20
approved prior to April 27, 2018, or on or after January 1, 2022; 21
(d) The decontamination [tax ]credit permitted by KRS 141.419; and 22
(e) The pass-through entity tax credit permitted by KRS 141.209. 23
Section 44. KRS 131.190 is amended to read as follows: 24
(1) No present or former commissioner or employee of the department, present or 25
former member of a county board of assessment appeals, present or former property 26
valuation administrator or employee, present or former secretary or employee of the 27
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Finance and Administration Cabinet, former secretary or employee of the Revenue 1
Cabinet, or any other person, shall intentionally and without authorization inspect 2
or divulge any information acquired by him or her of the affairs of any person, or 3
information regarding the tax schedules, returns, or reports required to be filed with 4
the department or other proper officer, or any information produced by a hearing or 5
investigation, insofar as the information may have to do with the affairs of the 6
person's business. 7
(2) The prohibition established by subsection (1) of this section shall not extend to: 8
(a) Information required in prosecutions for making false reports or returns of 9
property for taxation, or any other infraction of the tax laws; 10
(b) Any matter properly entered upon any assessment record, or in any way made 11
a matter of public record; 12
(c) Furnishing any taxpayer or his or her properly authorized agent with 13
information respecting his or her own return; 14
(d) Testimony provided by the commissioner or any employee of the department 15
in any court, or the introduction as evidence of returns or reports filed with the 16
department, in an action for violation of state or federal tax la ws or in any 17
action challenging state or federal tax laws; 18
(e) Providing an owner of unmined coal, oil or gas reserves, and other mineral or 19
energy resources assessed under KRS 132.820, or owners of surface land 20
under which the unmined minerals lie, factua l information about the owner's 21
property derived from third-party returns filed for that owner's property, under 22
the provisions of KRS 132.820, that is used to determine the owner's 23
assessment. This information shall be provided to the owner on a confident ial 24
basis, and the owner shall be subject to the penalties provided in KRS 25
131.990(2). The third -party filer shall be given prior notice of any disclosure 26
of information to the owner that was provided by the third-party filer; 27
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(f) Providing to a third -party purchaser pursuant to an order entered in a 1
foreclosure action filed in a court of competent jurisdiction, factual 2
information related to the owner or lessee of coal, oil, gas reserves, or any 3
other mineral resources assessed under KRS 132.820. The depar tment may 4
promulgate an administrative regulation establishing a fee schedule for the 5
provision of the information described in this paragraph. Any fee imposed 6
shall not exceed the greater of the actual cost of providing the information or 7
ten dollars ($10); 8
(g) Providing information to a licensing agency, the Transportation Cabinet, or 9
the Kentucky Supreme Court under KRS 131.1817; 10
(h) Statistics of gasoline and special fuels gallonage reported to the department 11
under KRS 138.210 to 138.448; 12
(i) Providing any utility gross receipts license tax return information that is 13
necessary to administer the provisions of KRS 160.613 to 160.617 to 14
applicable school districts on a confidential basis; 15
(j) Providing documents, data, or other information to a third party pursuant to an 16
order issued by a court of competent jurisdiction; 17
(k) Publishing administrative writings on its official website in ac cordance with 18
KRS 131.020(1)(b); or 19
(l) Providing information to the Legislative Research Commission under: 20
1. KRS 139.519 for purposes of the sales and use tax refund on building 21
materials used for disaster recovery; 22
2. KRS 141.436 for purposes of the energy efficiency products credits; 23
3. KRS 141.437 for purposes of the ENERGY STAR home and the 24
ENERGY STAR manufactured home credits; 25
4. KRS 141.383 for purposes of the film industry incentives; 26
5. KRS 154.26-095 for purposes of the Kentucky industrial revit alization 27
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credit and the job assessment fees; 1
6. KRS 141.068 for purposes of the Kentucky investment fund; 2
7. KRS 141.396 for purposes of the angel investor credit; 3
8. KRS 141.389 for purposes of the distilled spirits credit; 4
9. KRS 141.408 for purposes of the inventory credit; 5
10. KRS 141.390 for purposes of the recycling and composting credits; 6
11. KRS 141.3841 for purposes of the selling farmer credit; 7
12. KRS 141.4231 for purposes of the renewable chemical production 8
credit; 9
13. KRS 141.524 for purposes of the Education Opportunity Account 10
Program credit; 11
14. KRS 141.398 for purposes of the development area credit; 12
15. KRS 139.516 for purposes of the sales and use tax exemptions for the 13
commercial mining of cryptocurrency; 14
16. KRS 141.419 for purposes of the decontamination credit; 15
17. KRS 141.391 for purposes of the qualified broadband investment credit; 16
18. KRS 139.499 for purposes of the sales and use tax exemptions for a 17
qualified data center project;[ and] 18
19. KRS 139.5325 for purposes of the sales a nd use tax incentive for a 19
qualifying attraction; 20
20. Section 46 of this Act for purposes of the film and motion picture sales 21
tax exemption; 22
21. Section 53 of this Act for purposes of the hiring of unemployed 23
persons credit; 24
22. Section 54 of this Act for the purposes of the qualified farming 25
operations credit; 26
23. Section 56 of this Act for purposes of the High School Equivalency 27
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Diploma Incentives credit; and 1
24. Section 103 of this Act for purposes of refunds issued for coal 2
transported directly to a market outside of the United States, but 3
within North America and for coal transported directly to a market 4
outside of North America. 5
(3) The commissioner shall make available any information for official use only and on 6
a confidential basis to the proper officer, agency, board or commission of this state, 7
any Kentucky county, any Kentucky city, any other state, or the federal 8
government, under reciprocal agreements wh ereby the department shall receive 9
similar or useful information in return. 10
(4) Access to and inspection of information received from the Internal Revenue Service 11
is for department use only, and is restricted to tax administration purposes. 12
Information received from the Internal Revenue Service shall not be made available 13
to any other agency of state government, or any county, city, or other state, and 14
shall not be inspected intentionally and without authorization by any present 15
secretary or employee of the Finance and Administration Cabinet, commissioner or 16
employee of the department, or any other person. 17
(5) Statistics of crude oil as reported to the department under the crude oil excise tax 18
requirements of KRS Chapter 137 and statistics of natural gas pro duction as 19
reported to the department under the natural resources severance tax requirements 20
of KRS Chapter 143A may be made public by the department by release to the 21
Energy and Environment Cabinet, Department for Natural Resources. 22
(6) Notwithstanding an y provision of law to the contrary, beginning with mine -map 23
submissions for the 1989 tax year, the department may make public or divulge only 24
those portions of mine maps submitted by taxpayers to the department pursuant to 25
KRS Chapter 132 for ad valorem ta x purposes that depict the boundaries of mined -26
out parcel areas. These electronic maps shall not be relied upon to determine actual 27
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boundaries of mined-out parcel areas. Property boundaries contained in mine maps 1
required under KRS Chapters 350 and 352 sha ll not be construed to constitute land 2
surveying or boundary surveys as defined by KRS 322.010 and any administrative 3
regulations promulgated thereto. 4
Section 45. KRS 160.6131 is amended to read as follows: 5
As used in KRS 160.613 to 160.617: 6
(1) "Department" means the Department of Revenue; 7
(2) "Communications service" means the provision, transmission, conveyance, or 8
routing, for consideration, of voice, data, video, or any other information signals of 9
the purchaser's choosing to a point or between or among points specified by the 10
purchaser, by or through any electronic, radio, light, fiber optic, or similar medium 11
or method now in existence or later devised. 12
(a) "Communications service" includes but is not limited to: 13
1. Local and long-distance telephone services; 14
2. Telegraph and teletypewriter services; 15
3. Postpaid calling services; 16
4. Private communications services involving a direct channel specifically 17
dedicated to a customer's use between specific points; 18
5. Channel services involving a path of communications between two (2) 19
or more points; 20
6. Data transport services involving the movement of encoded information 21
between points by means of any electronic, r adio, or other medium or 22
method; 23
7. Caller ID services, ring tones, voice mail, and other electronic 24
messaging services; 25
8. Mobile wireless telecommunications service and fixed wireless service 26
as defined in KRS 139.195; and 27
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9. Voice over Internet Protocol (VOIP). 1
(b) "Communications service" does not include any of the following if the 2
charges are separately itemized on the bill provided to the purchaser: 3
1. Information services; 4
2. Internet access as defined in 47 U.S.C. sec. 151; 5
3. Installation, reinstallation, or maintenance of wiring or equipment on a 6
customer's premises. This exclusion does not apply to any charge 7
attributable to the connection, movement, change, or termination of a 8
communications service; 9
4. The sale of directory and other advertising and listing services; 10
5. Billing and collection services provided to another communications 11
service provider; 12
6. Cable service, satellite broadcast, satellite master antenna television, 13
wireless cable service, including direct -to-home satellite service a s 14
defined in Section 602 of the federal Telecommunications Act of 1996, 15
and Internet protocol television provided through wireline facilities 16
without regard to delivery technology; 17
7. The sale of communications service to a communications provider that 18
is buying the communications service for sale or incorporation into a 19
communications service for sale, including: 20
a. Carrier access charges, excluding user access fees; 21
b. Right of access charges; 22
c. Interconnection charges paid by the provider of mobile 23
telecommunications services or other communications providers; 24
d. Charges for the sale of unbundled network elements as defined in 25
47 U.S.C. sec. 153(29) on January 1, 2001, to which acces s is 26
provided on an unbundled basis in accordance with 47 U.S.C. sec. 27
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251(c)(3); and 1
e. Charges for use of facilities for providing or receiving 2
communications service; 3
8. [The sale of communications services provided to the public by means 4
of a pay phone; 5
9. ]Prepaid calling services and prepaid wireless calling service; 6
9.[10.] Interstate telephone service, if the interstate charge is separately 7
itemized for each call; and 8
10.[11.] If the interstate calls are not itemized, the portion of telephone 9
charges identified and set out on the customer's bill as interstate as 10
supported by the provider's books and records; 11
(3) "Gross cost" means the total cost of utility services including the cost of the 12
tangible personal property and any services associated with o btaining the utility 13
services regardless from whom purchased; 14
(4) "Gross receipts" means all amounts received in money, credits, property, or other 15
money's worth in any form, as consideration for the furnishing of utility services; 16
(5) "Utility services" means the furnishing of communications services, electric power, 17
water, and natural, artificial, and mixed gas; 18
(6) "Cable service" has the same meaning as in KRS 136.602; 19
(7) "Satellite broadcast and wireless cable service" has the same meaning as in KRS 20
136.602; 21
(8) "Ring tones" has the same meaning as in KRS 136.602; 22
(9) "Multichannel video programming service" has the same meaning as in KRS 23
136.602; 24
(10) "Industrial processing" has the same meaning as in KRS 139.010; 25
(11) "Manufacturing" has the same meaning as in KRS 139.010; 26
(12) "Plant facility" has the same meaning as in KRS 139.010; 27
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(13) "Commercial mining of cryptocurrency" has the same meaning as in KRS 139.516; 1
and 2
(14) "Colocation facility" has the same meaning as in KRS 139.516. 3
Section 46. KRS 139.538 is amended to read as follows: 4
(1) It is the intent and purpose of the General Assembly in enacting this section and 5
KRS 139.990(5), to encourage the motion picture industry to choose locations in 6
the Commonwealth for the filming or producing of motion pictures, by providing 7
an exemption from sales and use taxes. The exemption is accomplished by granting 8
a refundable credit for sales and use taxes paid on purchases made in connection 9
with the filming or producing of motion pictures in Kentucky. 10
(2) (a) On or after July 1, 2030 [April 27, 2018, and until July 1, 2022] , the 11
department shall not accept any new applications as provided by subsection 12
(4) of this section. 13
(b) On or before November 1, 2026, and each November 1, thereafter as long as 14
this refundable credit is available [June 1, 2019], the department shall report 15
to the Legislative Research Commission for referral [provide the following 16
information ]to the Interim Joint Committ ee on Appropriations and Revenue 17
for all fiscal years data is available: 18
1. The name and address of the motion picture company; 19
2. By county, the filming location or locations in this state; 20
3. A brief description of the production or productions; 21
4. The a mount of sales and use tax refunded to the motion picture 22
company;[ and] 23
5. The total number of motion picture companies claiming the credit; 24
and 25
6. The total amount of all sales and use tax refunded to motion picture 26
production companies during each fiscal year reported. 27
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(c) The information required to be reported under this section shall not be 1
considered confidential taxpayer information and shall not be subject to 2
KRS Chapter 131 or any other provisions of the Kentucky Revised Statutes 3
prohibiting disclosure or reporting of information. 4
(3) As used in this section and KRS 139.990(5): 5
(a) "Financial institution" means any bank or savings and loan institution in the 6
Commonwealth which carries FDIC or FSLIC insurance; 7
(b) "Motion picture production company" means a company engaged in the 8
business of producing motion pictures intended for a theatrical release or for 9
exhibition on national television either by a network or for national 10
syndication, or television programs which will serve as a pilot for or a 11
segment of a nationally televised dramatic series, either by a network or for 12
national syndication; and 13
(c) "Secretary" means the secretary of the Kentucky Finance and Administration 14
Cabinet. 15
(4) Any motion picture production company that intends to film all or parts of a motion 16
picture in the Commonwealth and desires to receive the credit provided for in 17
subsection (7) of this section shall, prior to the commencement of filming: 18
(a) Provide the department with the address of a Kentucky location at which 19
records of expenditures qualifying for the tax credit will be maintained, and 20
with the name of the individual maintaining these records; and 21
(b) File an application for the tax credit within sixty (60) days after the 22
completion of filming or production in Kent ucky. The application shall 23
include a final expenditure report providing documentation for expenditures 24
in accordance with administrative regulations promulgated by the department. 25
(5) To qualify as a basis for the financial incentive, expenditures must be made by 26
check drawn upon any Kentucky financial institution. 27
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(6) The twelve (12) month period during which expenditures may qualify for the tax 1
credit shall begin on the date of the earliest expenditure reported. 2
(7) Any motion picture production company which films or produces one (1) or more 3
motion pictures in the Commonwealth during any twelve (12) month period shall, 4
upon making application therefor and meeting the other requirements prescribed in 5
this section, be entitled to a refundable tax credit eq ual to the amount of Kentucky 6
sales and use tax paid for purchases made in connection with the filming or 7
production of a motion picture. 8
(8) The department shall, within sixty (60) days following the receipt of an application 9
for a credit for sales and us e tax paid, calculate the total expenditures of the motion 10
picture production company for which there is documentation for funds expended 11
in the Commonwealth, calculate the amount of credit to which the applicant is 12
entitled, and certify the amount of the credit to the secretary. In the case of an audit, 13
as provided for in subsection (13) of this section, the department shall certify the 14
amount of the credit due to the secretary within one hundred eighty (180) days 15
following the receipt of the motion picture production company's application. 16
(9) Upon receipt of the certification of the amount of credit from the department, the 17
secretary shall cause the refund of sales taxes paid to be remitted to the motion 18
picture production company. For purposes of payment and funding thereof, the 19
credit shall be paid in the same manner as other claims on the State Treasury are 20
paid. They shall not be charged against any appropriation but shall be deducted 21
from tax receipts for the current fiscal year. 22
(10) The sales and use taxes paid by the motion picture production company for which a 23
refundable tax credit is granted shall be deemed not to have been legally paid into 24
the State Treasury, and the refund of the credit shall not be in violation of Section 25
59 of the Kentucky Constitution. 26
(11) Any tax credit or part thereof paid to a motion picture production company as a 27
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result of error by the department shall be repaid by such company to the secretary. 1
(12) Any tax credit or part thereof paid to a motion picture production co mpany as a 2
result of error or fraudulent statements made by the motion picture production 3
company shall be repaid by such company to the secretary, together with interest, at 4
the tax interest rate provided for in KRS 131.010(6). 5
(13) The department may req uire that reported expenditures and the application for the 6
tax credit from a motion picture production company be subjected to an audit by the 7
department auditors to verify expenditures. 8
(14) For companies in the business of producing films or television shows other than 9
those which would qualify them for the credit under the definition of "motion 10
picture production company," the department may require separate accounting 11
records for the reporting of expenditures made in connection with the application 12
for a refundable tax credit. 13
(15) The department may promulgate appropriate administrative regulations to carry out 14
the intent and purposes of this section. 15
Section 47. KRS 132.096 is amended to read as follows: 16
The following classes of property shall be exempt from state and local ad valorem taxes, 17
including the county, city, school, and other taxing district in which it has a taxable situs: 18
(1) Farm implements and f arm machinery owned by or leased to a person actually 19
engaged in farming and used in his or her farm operations; 20
(2) Livestock, ratite birds, and domestic fowl; 21
(3) Tangible personal property located in a foreign trade zone established pursuant to 22
19 U.S.C. secs. 81a to 81u, provided that the zone is activated in accordance with 23
the regulations of the United States Customs Service and the Foreign Trade Zones 24
Board; 25
(4) Property that is certified as an alcohol production facility as defined in KRS 26
247.910; 27
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(5) [Property that is certified as a fluidized bed energy production facility as defined in 1
KRS 211.390; 2
(6) ]Computer software, except prewritten computer software as defined in KRS 3
139.010; 4
(6)[(7)] Trucks, tractors, and buses used on routes or in systems that are partly within 5
and partly outside this state, and that are subject to the fee imposed by KRS 6
136.188; 7
(7)[(8)] Semitrailers and trailers, as defined in KRS 189.010, if the semitrailers or 8
trailers are used on a route or in a system that is partly within and partly outside this 9
state. Semitrailers or trailers required to be registered under KRS 186.655 that are 10
used only in this state shall be subject to the ad valorem tax imposed by KRS 11
132.487; 12
(8)[(9)] All intangible personal property, except int angible personal property assessed 13
under KRS 132.030 or KRS Chapter 136. Nothing in this subsection shall prohibit 14
local taxation of franchises of: 15
(a) Corporations; 16
(b) Financial institutions as provided in KRS 136.575; or 17
(c) Domestic life insurance companies; 18
(9)[(10)] All real and personal property owned by another state or a political 19
subdivision of another state that is used exclusively for public purposes, if a 20
comparable exemption is provided in that state or political subdivision for property 21
owned by the Commonwealth of Kentucky or its political subdivisions; 22
(10)[(11)] Every fraternal benefit society organized or licensed under Subtitle 29 of KRS 23
Chapter 304 that is a charitable and benevolent institution, and its funds shall be 24
exempt from all st ate, county, district, city, and school taxes, other than taxes on 25
real property and office equipment; and 26
(11)[(12)] (a) Any bridge built by an adjoining state, by the government of the United 27
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States, or by any commission created by an Act of Congress, over a boundary 1
line stream between this state and an adjoining state, which is: 2
1. Not operated for profit and, if it connects with a primary highway of this 3
state, is declared to be public property used for public purposes; and 4
2. Exempt from taxation unless the adjoining state, or other public body 5
constructing the bridge, taxes similar bridges built by this 6
Commonwealth in like manner. 7
(b) The issuance of bonds for the purpose of amortizing the cost of construction 8
of the bridges, as described in paragraph (a) of this subsection, shall not affect 9
the tax exemption granted. 10
Section 48. KRS 139.480 is amended to read as follows: 11
Any other provision of this chapter to the contrary notwithstanding, the terms "sale at 12
retail," "retail sale," "use," "storage," and "consumption," as used in this chapter, 13
do[shall] not include the sale, use, storage, or other consumption of: 14
(1) Locomotives or rolling stock, including materials for the construction, repair, or 15
modification thereof, or fuel or supplies for the direct operation of locomotives and 16
trains, used or to be used in interstate commerce; 17
(2) Coal for the manufacture of electricity; 18
(3) (a) All energy or energy -producing fuels used in the course of manufacturing, 19
processing, mining, or refining and any related distribution, transmission, and 20
transportation services for this energy that are bill ed to the user, to the extent 21
that the cost of the energy or energy -producing fuels used, and related 22
distribution, transmission, and transportation services for this energy that are 23
billed to the user exceed three percent (3%) of the cost of production. 24
(b) Cost of production shall be computed on the basis of a plant facility, which 25
includes[shall include] all operations within the continuous, unbroken, 26
integrated manufacturing or industrial processing process that ends with a 27
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product packaged and ready for sale. 1
(c) A person who performs a manufacturing or industrial processing activity for a 2
fee and does not take ownership of the tangible personal property that is 3
incorporated into, or becomes the product of, the manufacturing or industrial 4
processing activity is a toller. For periods on or after July 1, 2018, the costs of 5
the tangible personal property shall be excluded from the toller's cost of 6
production at a plant facility with tolling operations in place as of July 1, 7
2018. 8
(d) For plant facilities that begin tolling operations after July 1, 2018, the costs of 9
tangible personal property shall be excluded from the toller's cost of 10
production if the toller: 11
1. Maintains a binding contract for periods after July 1, 2018, that governs 12
the terms, condition s, and responsibilities with a separate legal entity, 13
which holds title to the tangible personal property that is incorporated 14
into, or becomes the product of, the manufacturing or industrial 15
processing activity; 16
2. Maintains accounting records that show t he expenses it incurs to fulfill 17
the binding contract that include but are not limited to energy or energy -18
producing fuels, materials, labor, procurement, depreciation, 19
maintenance, taxes, administration, and office expenses; 20
3. Maintains separate payroll, bank accounts, tax returns, and other records 21
that demonstrate its independent operations in the performance of its 22
tolling responsibilities; 23
4. Demonstrates one (1) or more substantial business purposes for the 24
tolling operations germane to the overall m anufacturing, industrial 25
processing activities, or corporate structure at the plant facility. A 26
business purpose is a purpose other than the reduction of sales tax 27
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liability for the purchases of energy and energy-producing fuels; and 1
5. Provides informatio n to the department upon request that documents 2
fulfillment of the requirements in subparagraphs 1. to 4. of this 3
paragraph and gives an overview of its tolling operations with an 4
explanation of how the tolling operations relate and connect with all 5
other manufacturing or industrial processing activities occurring at the 6
plant facility; 7
(4) Livestock of a kind the products of which ordinarily constitute food for human 8
consumption, provided the sales are made for breeding or dairy purposes and by or 9
to a person regularly engaged in the business of farming; 10
(5) Poultry for use in breeding or egg production; 11
(6) Farm work stock for use in farming operations; 12
(7) Seeds, the products of which ordinarily constitute food for human consumption or 13
are to be sold in t he regular course of business, and commercial fertilizer to be 14
applied on land, the products from which are to be used for food for human 15
consumption or are to be sold in the regular course of business; provided the sales 16
are made to farmers who are regula rly engaged in the occupation of tilling and 17
cultivating the soil for the production of crops as a business, or who are regularly 18
engaged in the occupation of raising and feeding livestock or poultry or producing 19
milk for sale; and provided further that ta ngible personal property so sold is to be 20
used only by those persons designated above who are so purchasing; 21
(8) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals to be 22
used in the production of crops as a business, or in the rai sing and feeding of 23
livestock or poultry, the products of which ordinarily constitute food for human 24
consumption; 25
(9) Feed, including pre-mixes and feed additives, for livestock or poultry of a kind the 26
products of which ordinarily constitute food for human consumption; 27
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(10) Machinery for new and expanded industry; 1
(11) Farm machinery. As used in this section, the term "farm machinery": 2
(a) Means machinery used exclusively and directly in the occupation of: 3
1. Tilling the soil for the production of crops as a business; 4
2. Raising and feeding livestock or poultry for sale; or 5
3. Producing milk for sale; 6
(b) Includes machinery, attachments, and replacements therefor, repair parts, and 7
replacement parts which are used or manufactured for use on, or in the 8
operation of farm machinery and which are necessary to the operation of the 9
machinery, and are customarily so used, including but not limited to combine 10
header wagons, combine header trailers, or any other implements specifically 11
designed and used to move or transport a combine head; and 12
(c) Does not include: 13
1. Automobiles; 14
2. Trucks; 15
3. Trailers, except combine header trailers; or 16
4. Truck-trailer combinations; 17
(12) Tombstones and other memorial grave markers; 18
(13) On-farm facilities used exclusively for grain or soybean storing, drying, processing, 19
or handling. The exemption applies to the equipment, machinery, attachments, 20
repair and replacement parts, and any materials incorporated into the construction, 21
renovation, or repair of the facilities; 22
(14) On-farm facilities used exclusively for raising poultry or livestock. The exemption 23
shall apply to the equipment, machinery, attachments, repair and replacement parts, 24
and any materials incorporated into the construction, renovat ion, or repair of the 25
facilities. The exemption shall apply but not be limited to vent board equipment, 26
waterer and feeding systems, brooding systems, ventilation systems, alarm systems, 27
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and curtain systems. In addition, the exemption shall apply whether o r not the seller 1
is under contract to deliver, assemble, and incorporate into real estate the 2
equipment, machinery, attachments, repair and replacement parts, and any materials 3
incorporated into the construction, renovation, or repair of the facilities; 4
(15) Gasoline, special fuels, liquefied petroleum gas, and natural gas used exclusively 5
and directly to: 6
(a) Operate farm machinery as defined in subsection (11) of this section; 7
(b) Operate on -farm grain or soybean drying facilities as defined in subsection 8
(13) of this section; 9
(c) Operate on -farm poultry or livestock facilities defined in subsection (14) of 10
this section; 11
(d) Operate on-farm ratite facilities defined in subsection (23) of this section; 12
(e) Operate on-farm llama or alpaca facilities as defined in subsection (25) of this 13
section; or 14
(f) Operate on-farm dairy facilities; 15
(16) Textbooks, including related workbooks and other course materials, purchased for 16
use in a course of study conducted by an institution which qualifies as a nonprofit 17
educational institution under KRS 139.495. The term "course materials" means only 18
those items specifically required of all students for a particular course but 19
does[shall] not include notebooks, paper, pencils, calculators, tape recorders, or 20
similar student aids; 21
(17) Any property which has been certified as an alcohol production facility as defined 22
in KRS 247.910; 23
(18) Aircraft, repair and replacement parts therefor, and supplies, except fuel, for the 24
direct operation of aircraft in interstate commerce and used exclusively for the 25
conveyance of property or passengers for hire. Nominal intrastate use shall not 26
subject the property to the taxes imposed by this chapter; 27
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(19) [Any property which has been certified as a fluidized bed energy production facility 1
as defined in KRS 211.390; 2
(20) ](a) 1. Any property to be incorporated into the construction, rebuilding, 3
modification, or expansion of a blast furnace or any of its components or 4
appurtenant equipment or structures as part of an approved supplemental 5
project, as defined in[by] KRS 154.26-010; and 6
2. Materials, supplies, and repair or replacement parts purchased for use in 7
the operation and maintenance of a blast furnace and related carbon 8
steel-making operations as part of an approved supplemental project, as 9
defined in[by] KRS 154.26-010. 10
(b) The exemptions provided in this subsection shall be effective for sales made: 11
1. On and after July 1, 2018; and 12
2. During the term of a supplemental project agreement entered into 13
pursuant to KRS 154.26-090; 14
(20)[(21)] Beginning on October 1, 1986, food or food products purchased for human 15
consumption with food coupons issued by the United States Department of 16
Agriculture pursuant to the Food Stamp Act of 1977, as amended, and required to 17
be exempted by the Food Security Ac t of 1985 in order for the Commonwealth to 18
continue participation in the federal food stamp program; 19
(21)[(22)] Machinery or equipment purchased or leased by a business, industry, or 20
organization in order to collect, source separate, compress, bale, shred, or otherwise 21
handle waste materials if the machinery or equipment is primarily used for 22
recycling purposes; 23
(22)[(23)] Ratite birds and eggs to be used in an agricultural pursuit for the breeding and 24
production of ratite birds, feathers, hides, breeding s tock, eggs, meat, and ratite by -25
products, and the following items used in this agricultural pursuit: 26
(a) Feed and feed additives; 27
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(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 1
and 2
(c) On-farm facilities, including equipm ent, machinery, attachments, repair and 3
replacement parts, and any materials incorporated into the construction, 4
renovation, or repair of the facilities. The exemption shall apply to incubation 5
systems, egg processing equipment, waterer and feeding systems , brooding 6
systems, ventilation systems, alarm systems, and curtain systems. In addition, 7
the exemption shall apply whether or not the seller is under contract to 8
deliver, assemble, and incorporate into real estate the equipment, machinery, 9
attachments, repair and replacement parts, and any materials incorporated into 10
the construction, renovation, or repair of the facilities; 11
(23)[(24)] Embryos and semen that are used in the reproduction of livestock, if the 12
products of these embryos and semen ordinarily co nstitute food for human 13
consumption, and if the sale is made to a person engaged in the business of farming; 14
(24)[(25)] Llamas and alpacas to be used as beasts of burden or in an agricultural pursuit 15
for the breeding and production of hides, breeding stock, fiber and wool products, 16
meat, and llama and alpaca by -products, and the following items used in this 17
pursuit: 18
(a) Feed and feed additives; 19
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 20
and 21
(c) On-farm facilities, including equipment, machinery, attachments, repair and 22
replacement parts, and any materials incorporated into the construct ion, 23
renovation, or repair of the facilities. The exemption shall apply to waterer 24
and feeding systems, ventilation systems, and alarm systems. In addition, the 25
exemption shall apply whether or not the seller is under contract to deliver, 26
assemble, and inc orporate into real estate the equipment, machinery, 27
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attachments, repair and replacement parts, and any materials incorporated into 1
the construction, renovation, or repair of the facilities; 2
(25)[(26)] Baling twine and baling wire for the baling of hay and straw; 3
(26)[(27)] Water sold to a person regularly engaged in the business of farming and used 4
in the: 5
(a) Production of crops; 6
(b) Production of milk for sale; or 7
(c) Raising and feeding of: 8
1. Livestock or poultry, the products of which ordinarily consti tute food 9
for human consumption; or 10
2. Ratites, llamas, alpacas, buffaloes[buffalo], cervids or aquatic 11
organisms; 12
(27)[(28)] Buffaloes[Buffalos] to be used as beasts of burden or in an agricultural 13
pursuit for the production of hides, breeding stock, meat , and buffalo by -products, 14
and the following items used in this pursuit: 15
(a) Feed and feed additives; 16
(b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 17
and 18
(c) On-farm facilities, including equipment, machinery, attachments, repair and 19
replacement parts, and any materials incorporated into the construction, 20
renovation, or repair of the facilities. The exemption shall apply to waterer 21
and feeding systems, ventilation systems, and alarm systems. In addition, the 22
exemption shall apply whether or not the seller is under contract to deliver, 23
assemble, and incorporate into real estate the equipment, machinery, 24
attachments, repair and replacement parts, and any materials incorporated into 25
the construction, renovation, or repair of the facilities; 26
(28)[(29)] Aquatic organisms sold directly to or raised by a person regularly engaged in 27
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the business of producing products of aquaculture, as defined in KRS 260.960, for 1
sale, and the following items used in this pursuit: 2
(a) Feed and feed additives; 3
(b) Water; 4
(c) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals; 5
and 6
(d) On-farm facilities, including equipment, machinery, attachments, repair and 7
replacement parts, and any materials incorporated into the constructi on, 8
renovation, or repair of the facilities and, any gasoline, special fuels, liquefied 9
petroleum gas, or natural gas used to operate the facilities. The exemption 10
shall apply, but not be limited to: waterer and feeding systems; ventilation, 11
aeration, and heating systems; processing and storage systems; production 12
systems such as ponds, tanks, and raceways; harvest and transport equipment 13
and systems; and alarm systems. In addition, the exemption shall apply 14
whether or not the seller is under contract to de liver, assemble, and 15
incorporate into real estate the equipment, machinery, attachments, repair and 16
replacement parts, and any materials incorporated into the construction, 17
renovation, or repair of the facilities; 18
(29)[(30)] Members of the genus cervidae p ermitted by KRS Chapter 150 that are used 19
for the production of hides, breeding stock, meat, and cervid by -products, and the 20
following items used in this pursuit: 21
(a) Feed and feed additives; 22
(b) Insecticides, fungicides, herbicides, rodenticides, and other chemicals; and 23
(c) On-site facilities, including equipment, machinery, attachments, repair and 24
replacement parts, and any materials incorporated into the construction, 25
renovation, or repair of the facilities. In addition, the exemption shall apply 26
whether or not the seller is under contract to deliver, assemble, and 27
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incorporate into real estate the equipment, machinery, attachments, repair and 1
replacement parts, and any materials incorporated into the construction, 2
renovation, or repair of the facilities; 3
(30)[(31)] (a) Repair or replacement parts for the direct operat ion or maintenance of a 4
motor vehicle, including any towed unit, used exclusively in interstate 5
commerce for the conveyance of property or passengers for hire, provided the 6
motor vehicle is licensed for use on the highway and its declared gross vehicle 7
weight with any towed unit is forty -four thousand and one (44,001) pounds or 8
greater. Nominal intrastate use shall not subject the property to the taxes 9
imposed by this chapter; and 10
(b) Repair or replacement parts for the direct operation and maintenance of a 11
motor vehicle operating under a charter bus certificate issued by the 12
Transportation Cabinet under KRS Chapter 281, or under similar authority 13
granted by the United States Department of Transportation. 14
(c) For the purposes of this subsection, "repair or replacement parts" means tires, 15
brakes, engines, transmissions, drive trains, chassis, body parts, and their 16
components. "Repair or replacement parts" does[shall] not include fuel, 17
machine oils, hydraulic flu id, brake fluid, grease, supplies, or accessories not 18
essential to the operation of the motor vehicle itself, except when sold as part 19
of the assembled unit, such as cigarette lighters, radios, lighting fixtures not 20
otherwise required by the manufacturer f or operation of the vehicle, or tool or 21
utility boxes; 22
(31)[(32)] Food donated by a retail food establishment or any other entity regulated 23
under KRS 217.127 to a nonprofit organization for distribution to the needy; 24
(32)[(33)] Drugs and over -the-counter d rugs, as defined in KRS 139.472, that are 25
purchased by a person regularly engaged in the business of farming and used in the 26
treatment of cattle, sheep, goats, swine, poultry, ratite birds, llamas, alpacas, 27
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buffaloes[buffalo], aquatic organisms, or cervids; 1
(33)[(34)] (a) Building materials, fixtures, or supplies purchased by a construction 2
contractor if: 3
1. Fulfilled by a construction contract for a sewer or water project with: 4
a. A municipally owned water utility organized under KRS Chapter 5
96; 6
b. A water district or water commission formed or organized under 7
KRS Chapter 74; 8
c. A sanitation district established under KRS Chapter 220 or formed 9
pursuant to KRS Chapter 65; 10
d. A nonprofit corporation created under KRS 58.180 to act on behalf 11
of a governmental agency in the acquisition and financing of 12
public projects; 13
e. Regional wastewater commissions formed under KRS Chapter 14
278; 15
f. A municipally owned joint sewer agency formed under KRS 16
Chapter 76; or 17
g. Any other governmental agency; and 18
2. The building materials, fixtures, or supplies: 19
a. Will be permanently incorporated into a structure or improvement 20
to real property, or will be completely consumed, in fulfilling a 21
construction contract for the purpose of furnishing water or sewer 22
services to the general public; and 23
b. Would be exempt if purchased directly by the entities listed in 24
subparagraph 1. of this paragraph. 25
(b) As used in this subsection, "construction contract" means a: 26
1. Lump sum contract; 27
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2. Cost plus contract; 1
3. Materials only contract; 2
4. Labor and materials contract; or 3
5. Any other type of contract. 4
(c) The exemption provided in this subsection shall apply without regard to the 5
payment arrangement between the construction contractor, the retailer, and 6
the entities listed in paragraph (a) 1. of this subsection or to the place of 7
delivery for the building materials, fixtures, or supplies; 8
(34)[(35)] (a) On or after February 25, 2022, the rental of space for meetings, 9
conventions, short -term business uses, entertainment events, weddings, 10
banquets, parties, and other short -term social events, as referenced in KRS 11
139.200, if the tax established in KRS 139.200 is paid by the primary lessee to 12
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
(35)[(36)] Prewritten computer software access services sold to or purchased by a 21
retailer that develops prewritten computer software for print technology and uses 22
and sells prewritten computer software access services for print technology; 23
(36)[(37)] (a) Currency or bullion. 24
(b) As used in this subsection: 25
1. "Bullion": 26
a. Means bars, ingots, or coins, which are: 27
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i. Made of gold, silver, platinum, palladium, or a combination 1
of these metals; 2
ii. Valued based on the content of the metal and not its form; 3
and 4
iii. Used, or have been used, as a medium of exchange, security, 5
or commodity by any state, the United States government, or 6
a foreign nation; and 7
b. Does not include medallions or coins that are incorporated into a 8
pendant or other jewelry; and 9
2. "Currency": 10
a. Means a coin or currency made of gol d, silver, platinum, 11
palladium, or other metal or paper money that is or has been used 12
as legal tender and is sold based on its value as a collectible item 13
rather than the value as a medium of exchange; and 14
b. Does not include a coin or currency that has been incorporated into 15
jewelry; and 16
(37)[(38)] Medicinal cannabis as defined in KRS 218B.010 when sold, used, stored, or 17
consumed in accordance with KRS Chapter 218B. 18
Section 49. KRS 139.4802 is amended to read as follows: 19
(1) (a) On or after March 27, 2025, a violation shall occur when an official notice 20
published by the secretary of the Finance and Administration Cabinet or the 21
commissioner of the department instructs that taxpayers should continue to 22
collect and remit sales and use tax on the sale, use, storage, or other 23
consumption of currency or bullion currency under this chapter. 24
(b) Any notice or instruction, published at any time, that states that on or after 25
August 1, 2024, the sale, use, storage, or other consum ption of currency or 26
bullion currency under this chapter is taxable is void and unenforceable. 27
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(2) Notwithstanding KRS 49.220 and 139.770, on and after August 1, 2024, any person 1
who paid sales tax under KRS 139.200 or use tax under KRS 139.310 on currency 2
or bullion currency that is exempt from sales and use tax under KRS 139.480 3
(36)[(37)] may maintain an action for a refund of the tax paid, as an individual or 4
by seeking certification as a class under Rule 23 of the Kentucky Rules of Civil 5
Procedure, for a refund on behalf of the person and other persons similarly situated 6
against the Commonwealth. 7
(3) An action for a refund pursuant to subsection (2) of this section, or alleging a 8
violation under subsection (1) of this section, may be brought in the Circ uit Court 9
of any county where the named plaintiff resides or where the currency or bullion 10
currency transaction took place. 11
(4) In addition to a refund of the sales or use tax, persons seeking a refund pursuant to 12
subsection (2) of this section or alleging a violation under subsection (1) of this 13
section who prevail shall be entitled to: 14
(a) Prejudgment and post-judgment interest; 15
(b) Temporary or permanent injunctive relief; 16
(c) Reasonable attorney's fees and costs; and 17
(d) For allegations of a violation u nder subsection (1) of this section, liquidated 18
damages of one thousand dollars ($1,000) for each day that the violation 19
occurred, which shall be paid from the administrative budget of the Finance 20
and Administration Cabinet, the department, or the Office of the Governor. 21
(5) It is the intent of the General Assembly to waiv e sovereign, governmental, and 22
qualified immunity for claims under this section, including immunity afforded to 23
the Commonwealth pursuant to the Eleventh Amendment to the Constitution of the 24
United States. 25
(6) Any person who directs, instructs, or causes a violation of any provision of this 26
section shall be personally, jointly, and severally liable for any awarded damages. 27
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Section 50. KRS 139.481 is amended to read as follows: 1
(1) On and after January 1, 2023, every perso n claiming an exemption provided under 2
KRS 139.480(4) to (9), (11), (13) to (15), (22) to (29), and (32) [(23) to (30), and 3
(33)] shall provide to the seller or retailer a valid agriculture exemption license 4
number issued by the department. 5
(2) A person is eligible to apply for an agriculture exemption license number if the 6
person is: 7
(a) Regularly engaged in the occupation of tilling and cultivating the soil for the 8
production of crops as a business; 9
(b) Regularly engaged in the occupation of raising and feeding livestock of a kind 10
the products of which ordinarily constitute food for human consumption; 11
(c) Raising and feeding poultry; 12
(d) Producing milk for sale; or 13
(e) Regularly engaged in raising ratite birds, llamas, alpacas, buffaloes[buffalos], 14
cervids, or aquatic organisms as an agricultural pursuit. 15
(3) (a) On and after January 1, 2023, persons that receive an agriculture exemption 16
license number and choose to claim the exemptions outlined in subsection (1) 17
of this section shall, at least one (1) time, provide the seller or retailer from 18
whom they purchase exempt tangible personal property with one (1) of the 19
following: 20
1. The agriculture exemption license number issued by the department; or 21
2. A fully completed Streamlined Sales Tax Certificate of Exem ption 22
which shall include the agriculture exemption license number. 23
(b) A purchaser that has met the requirements of paragraph (a) of this subsection 24
may issue the agriculture exemption license number to the seller or retailer for 25
subsequent purchases as e vidence of an exempt purchase for as long as the 26
agriculture exemption license number is valid. 27
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(c) Persons that meet the requirements of subsection (2) of this section but have 1
not yet received an agriculture exemption license number from the department 2
prior to January 1, 2023, may issue a fully completed exemption certificate or 3
a fully completed Streamlined Sales Tax Certificate of Exemption without the 4
agriculture exemption license number prior to January 1, 2023. 5
(4) (a) The department, by administrat ive regulation, shall develop an application 6
form for the agriculture exemption license number and procedures by which 7
the application form may also be submitted either electronically or by paper 8
filing. 9
(b) The application shall include: 10
1. The person's name and mailing address; 11
2. The farm address, if different from the person's mailing address; 12
3. An affirmation that the person meets at least one (1) of the criteria 13
outlined in subsection (2) of this section; 14
4. The person's driver's license number; and 15
5. One (1) of the following forms of documentation: 16
a. IRS Schedule F, Profit or Loss from Farming; 17
b. IRS Form 4835, Farm Rental Income and Expenses; 18
c. The farm service agency number or numbers assigned by the 19
United States Department of Agriculture pert aining to the parcels 20
of land on which agriculture activity will take place; or 21
d. Any other type of information that may establish to the satisfaction 22
of the Commissioner that the applicant qualifies for the agriculture 23
exemption license number. 24
(5) (a) The agriculture exemption license number shall expire: 25
1. On December 31, 2026, and every four (4) years thereafter;[,] or 26
2. When the person ceases to engage in the agriculture activity for which 27
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the agriculture exemption license number was granted;[,] 1
whichever comes first. 2
(b) The department shall extend the December 31, 2026, deadlin e for a period 3
not to exceed six (6) months, as needed to allow persons with agriculture 4
exemption license numbers to renew before expiration. 5
(c) When a person ceases to engage in the agriculture activity for which the 6
license number was granted, the pers on shall notify the department within 7
sixty (60) days. 8
(d)[(c)] The person may apply for a renewal of the agriculture exemption license 9
number prior to the expiration date if the person continues to meet the 10
requirements of subsection (2) of this section and provides documentation 11
required by subsection (4)(b)5. of this section. The department shal l, by 12
administrative regulation, prescribe the electronic process for renewing an 13
agriculture exemption license number. 14
(6) (a) On or before January 1, 2023, the department shall develop and provide an 15
online searchable database on the department's website that the seller or 16
retailer may use to confirm the agriculture exemption license number if the 17
purchaser cannot produce documentation of the agriculture exemption license 18
number at the time of sale. 19
(b) To search the database, the seller or retailer shall provide the name of the 20
person assigned the agriculture exemption license number and one (1) of the 21
following: 22
1. The agriculture exemption license number; 23
2. The agriculture exemption license number expiration date; 24
3. The person's driver's license number; 25
4. The farm service agency parcel number; or 26
5. Any other unique identifier that may be accepted by the department. 27
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(c) The seller or retailer shall be relieved of the liability for collecting and 1
remitting the sales and use tax if the seller or retaile r meets the requirements 2
of KRS 139.260 and 139.270. 3
Section 51. KRS 141.0401 is amended to read as follows: 4
(1) As used in this section: 5
(a) "Kentucky gross receipts" means an amount equal to the computation of the 6
numerator of the apportionment fraction under KRS 141.120, any 7
administrative regulations related to the computation of the sales factor, and 8
KRS 141.121 and includes the proportionate share of Kentucky gross receipts 9
of all wholly or partially owned limited l iability pass -through entities, 10
including all layers of a multi-layered pass-through structure; 11
(b) "Gross receipts from all sources" means an amount equal to the computation 12
of the denominator of the apportionment fraction under KRS 141.120, any 13
administrative regulations related to the computation of the sales factor, and 14
KRS 141.121 and includes the proportionate share of gross receipts from all 15
sources of all wholly or partially owned limited liability pass -through entities, 16
including all layers of a multi-layered pass-through structure; 17
(c) "Affiliated group" has the same meaning as in KRS 141.201; 18
(d) "Cost of goods sold" means: 19
1. Amounts that are: 20
a. Allowable as cost of goods sold pursuant to the Internal Revenue 21
Code and any guidelines issued by th e Internal Revenue Service 22
relating to cost of goods sold, unless modified by this paragraph; 23
and 24
b. Incurred in acquiring or producing the tangible product generating 25
the Kentucky gross receipts. 26
2. For manufacturing, producing, reselling, retailing, or wholesaling 27
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activities, cost of goods sold shall only include costs directly incurred in 1
acquiring or producing the tangible product. In determining cost of 2
goods sold: 3
a. Labor costs shall be limited to direct labor costs as defined in 4
paragraph (f) of this subsection; 5
b. Bulk delivery costs as defined in paragraph (g) of this subsection 6
may be included; and 7
c. Costs allowable under Section 263A of the Internal Revenue Code 8
may be included only to the extent the costs are incurred in 9
acquiring or producing the tangible product generating the 10
Kentucky gross receipts. Notwithstanding the foregoing, indirect 11
labor costs allowable under Section 263A shall not be included; 12
3. For any activity other than manu facturing, producing, reselling, 13
retailing, or wholesaling, no costs shall be included in cost of goods 14
sold. 15
As used in this paragraph, "guidelines issued by the Internal Revenue Service" 16
includes regulations, private letter rulings, or any other guidance issued by the 17
Internal Revenue Service that may be relied upon by taxpayers under reliance 18
standards established by the Internal Revenue Service; 19
(e) 1. "Kentucky gross profits" means Kentucky gross receipts reduced by 20
returns and allowances attributable to Kentucky gross receipts, less the 21
cost of goods sold attributable to Kentucky gross receipts. If the amount 22
of returns and allowances attributable to Kentucky gross receipts and the 23
cost of goods sold attributable to Kentucky gross receipts is zero, th en 24
"Kentucky gross profits" means Kentucky gross receipts; and 25
2. "Gross profits from all sources" means gross receipts from all sources 26
reduced by returns and allowances attributable to gross receipts from all 27
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sources, less the cost of goods sold attribut able to gross receipts from all 1
sources. If the amount of returns and allowances attributable to gross 2
receipts from all sources and the cost of goods sold attributable to gross 3
receipts from all sources is zero, then gross profits from all sources 4
means gross receipts from all sources; 5
(f) "Direct labor" means labor that is incorporated into the tangible product sold 6
or is an integral part of the manufacturing process; 7
(g) "Bulk delivery costs" means the cost of delivering the product to the 8
consumer if: 9
1. The tangible product is delivered in bulk and requires specialized 10
equipment that generally precludes commercial shipping; and 11
2. The tangible product is taxable under KRS 138.220; 12
(h) "Manufacturing" and "producing" means: 13
1. Manufacturing, producing, c onstructing, or assembling components to 14
produce a significantly different or enhanced end tangible product; 15
2. Mining or severing natural resources from the earth; or 16
3. Growing or raising agricultural or horticultural products or animals; 17
(i) "Real property" means land and anything growing on, attached to, or erected 18
on it, excluding anything that may be severed without injury to the land; 19
(j) "Reselling," "retailing," and "wholesaling" mean the sale of a tangible 20
product; 21
(k) "Tangible personal property" means property, other than real property, that 22
has physical form and characteristics; and 23
(l) "Tangible product" means real property and tangible personal property; 24
(2) (a) For taxable years beginning on or after January 1, 2007, an annual limited 25
liability entity tax shall be paid by every corporation and every limited 26
liability pass-through entity doing business in Kentucky on all Kentucky gross 27
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receipts or Kentucky gross profits except as provided in this subsection. A 1
small business exclusion from this tax shall be provided based on the 2
reduction contained in this subsection. The tax shall be the greater of the 3
amount computed under paragraph (b) of this subsection or one hundred 4
seventy-five dollars ($175), regardless of the application of any tax cred its 5
provided under this chapter or any other provisions of the Kentucky Revised 6
Statutes for which the business entity may qualify. 7
(b) The limited liability entity tax shall be the lesser of subparagraph 1. or 2. of 8
this paragraph: 9
1. a. If the corporatio n's or limited liability pass -through entity's gross 10
receipts from all sources are three million dollars ($3,000,000) or 11
less, the limited liability entity tax shall be one hundred seventy -12
five dollars ($175); 13
b. If the corporation's or limited liability p ass-through entity's gross 14
receipts from all sources are greater than three million dollars 15
($3,000,000) but less than six million dollars ($6,000,000), the 16
limited liability entity tax shall be nine and one-half cents ($0.095) 17
per one hundred dollars ($10 0) of the corporation's or limited 18
liability pass-through entity's Kentucky gross receipts reduced by 19
an amount equal to two thousand eight hundred fifty dollars 20
($2,850) multiplied by a fraction, the numerator of which is six 21
million dollars ($6,000,000) less the amount of the corporation's or 22
limited liability pass -through entity's Kentucky gross receipts for 23
the taxable year, and the denominator of which is three million 24
dollars ($3,000,000), but in no case shall the result be less than one 25
hundred seventy-five dollars ($175); 26
c. If the corporation's or limited liability pass -through entity's gross 27
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receipts from all sources are equal to or greater than six million 1
dollars ($6,000,000), the limited liability entity tax shall be nine 2
and one-half cents ($0.095) per one hundred dollar s ($100) of the 3
corporation's or limited liability pass -through entity's Kentucky 4
gross receipts. 5
2. a. If the corporation's or limited liability pass -through entity's gross 6
profits from all sources are three million dollars ($3,000,000) or 7
less, the limit ed liability entity tax shall be one hundred seventy -8
five dollars ($175); 9
b. If the corporation's or limited liability pass -through entity's gross 10
profits from all sources are at least three million dollars 11
($3,000,000) but less than six million dollars ($ 6,000,000), the 12
limited liability entity tax shall be seventy -five cents ($0.75) per 13
one hundred dollars ($100) of the corporation's or limited liability 14
pass-through entity's Kentucky gross profits, reduced by an 15
amount equal to twenty -two thousand five h undred dollars 16
($22,500) multiplied by a fraction, the numerator of which is six 17
million dollars ($6,000,000) less the amount of the corporation's or 18
limited liability pass -through entity's Kentucky gross profits, and 19
the denominator of which is three million dollars ($3,000,000), but 20
in no case shall the result be less than one hundred seventy -five 21
dollars ($175); 22
c. If the corporation's or limited liability pass -through entity's gross 23
profits from all sources are equal to or greater than six million 24
dollars ($6,000,000), the limited liability entity tax shall be 25
seventy-five cents ($0.75) per one hundred dollars ($100) of all of 26
the corporation's or limited liability pass-through entity's Kentucky 27
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gross profits. 1
In determining eligibility for the reductio ns contained in this paragraph, a 2
member of an affiliated group shall consider the total gross receipts and the 3
total gross profits from all sources of the entire affiliated group, including 4
eliminating entries for transactions among the group. 5
(c) A credit shall be allowed against the tax imposed under paragraph (a) of this 6
subsection for the current year to a corporation or limited liability pass -7
through entity that owns an interest in a limited liability pass -through entity. 8
The credit shall be the propo rtionate share of tax calculated under this 9
subsection by the lower -level pass -through entity, as determined after the 10
amount of tax calculated by the pass -through entity has been reduced by the 11
minimum tax of one hundred seventy -five dollars ($175). The c redit shall 12
apply across multiple layers of a multi -layered pass-through entity structure. 13
The credit at each layer shall include the credit from each lower layer, after 14
reduction for the minimum tax of one hundred seventy -five dollars ($175) at 15
each layer. 16
(d) The department may promulgate administrative regulations to establish a 17
method for calculating the cost of goods sold attributable to Kentucky. 18
(3) A nonrefundable credit based on the tax calculated under subsection (2) of this 19
section shall be allow ed against the tax imposed by KRS 141.020 or 141.040. The 20
credit amount shall be determined as follows: 21
(a) The credit allowed a corporation subject to the tax imposed by KRS 141.040 22
shall be equal to the amount of tax calculated under subsection (2) of th is 23
section for the current year after subtraction of any credits identified in KRS 24
141.0205, reduced by the minimum tax of one hundred seventy -five dollars 25
($175), plus any credit determined in paragraph (b) of this subsection for tax 26
paid by wholly or par tially owned limited liability pass -through entities. The 27
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amount of credit allowed to a corporation based on the amount of tax paid 1
under subsection (2) of this section for the current year shall be applied to the 2
income tax due from the corporation's acti vities in this state. Any remaining 3
credit from the corporation shall be disallowed. 4
(b) The credit allowed members, shareholders, or partners of a limited liability 5
pass-through entity shall be the members', shareholders', or partners' 6
proportionate share of the tax calculated under subsection (2) of this section 7
for the current year after subtraction of any credits identified in KRS 8
141.0205, as determined after the amount of tax paid has been reduced by the 9
minimum tax of one hundred seventy -five dollars ($175). The credit allowed 10
to members, shareholders, or partners of a limited liability pass -through entity 11
shall be applied to income tax assessed on income from the limited liability 12
pass-through entity. Any remaining credit from the limited liability p ass-13
through entity shall be disallowed. 14
(4) Each taxpayer subject to the tax imposed in this section shall file a return, on forms 15
prepared by the department, on or before the fifteenth day of the fourth month 16
following the close of the taxpayer's taxable year. Any tax remaining due after 17
making the payments required in KRS 141.044 shall be paid by the original due 18
date of the return. 19
(5) The department shall prescribe forms and promulgate administrative regulations as 20
needed to administer the provisions of this section. 21
(6) The tax imposed by subsection (2) of this section shall not apply to: 22
(a) For taxable years beginning prior to January 1, 2021: 23
1. Financial institutions, as defined in KRS 136.500, except banker's banks 24
organized under KRS 287.135 or 286.3-135; 25
2. Savings and loan associations organized under the laws of this state and 26
under the laws of the United States and making loans to members only; 27
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3. Banks for cooperatives; 1
4. Production credit associations; 2
5. Insurance companies, including farme rs' or other mutual hail, cyclone, 3
windstorm, or fire insurance companies, insurers, and reciprocal 4
underwriters; 5
6. Corporations or other entities exempt under Section 501 of the Internal 6
Revenue Code; 7
7. Religious, educational, charitable, or like corpor ations not organized or 8
conducted for pecuniary profit; 9
8. Corporations whose only owned or leased property located in this state 10
is located at the premises of a printer with which it has contracted for 11
printing, provided that: 12
a. The property consists of the final printed product, or copy from 13
which the printed product is produced; and 14
b. The corporation has no individuals receiving compensation in this 15
state as provided in KRS 141.901; 16
9. Public service corporations subject to tax under KRS 136.120; 17
10. Open-end registered investment companies organized under the laws of 18
this state and registered under the Investment Company Act of 1940; 19
11. Any property or facility which has been certified as a fluidized bed 20
energy production facility[ as defined in KRS 211.390]; 21
12. An alcohol production facility as defined in KRS 247.910; 22
13. Real estate investment trusts as defined in Section 856 of the Internal 23
Revenue Code; 24
14. Regulated investment companies as defined in Section 851 of the 25
Internal Revenue Code; 26
15. Real estate mortgage investment conduits as defined in Section 860D of 27
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the Internal Revenue Code; 1
16. Personal service corporations as defined in Section 269A(b)(1) of the 2
Internal Revenue Code; 3
17. Cooperatives described in Sections 521 and 1381 of t he Internal 4
Revenue Code, including farmers' agricultural and other cooperatives 5
organized or recognized under KRS Chapter 272, advertising 6
cooperatives, purchasing cooperatives, homeowners associations 7
including those described in Section 528 of the Inter nal Revenue Code, 8
political organizations as defined in Section 527 of the Internal Revenue 9
Code, and rural electric and rural telephone cooperatives; or 10
18. Publicly traded partnerships as defined by Section 7704(b) of the 11
Internal Revenue Code that are t reated as partnerships for federal tax 12
purposes under Section 7704(c) of the Internal Revenue Code, or their 13
publicly traded partnership affiliates. "Publicly traded partnership 14
affiliates" shall include any limited liability company or limited 15
partnership for which at least eighty percent (80%) of the limited 16
liability company member interests or limited partner interests are 17
owned directly or indirectly by the publicly traded partnership; and 18
(b) For taxable years beginning on or after January 1, 2021: 19
1. Insurance companies, including farmers' or other mutual hail, cyclone, 20
windstorm, or fire insurance companies, insurers, and reciprocal 21
underwriters; 22
2. Corporations or other entities exempt under Section 501 of the Internal 23
Revenue Code; 24
3. Religious, educational, charitable, or like corporations not organized or 25
conducted for pecuniary profit; 26
4. Corporations whose only owned or leased property located in this state 27
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is located at the premises of a printer with which it has contracted for 1
printing, provided that: 2
a. The property consists of the final printed product, or copy from 3
which the printed product is produced; and 4
b. The corporation has no individuals receiving compensation in this 5
state as provided in KRS 141.901; 6
5. Public service corporations subject to tax under KRS 136.120; 7
6. Open-end registered investment companies organized under the laws of 8
this state and registered under the Investment Company Act of 1940; 9
7. [Any property or facility which has been certified as a fluidized bed 10
energy production facility as defined in KRS 211.390; 11
8. ]An alcohol production facility as defined in KRS 247.910; 12
8.[9.] Real estate investment trusts as defined in Section 856 of the Internal 13
Revenue Code; 14
9.[10.] Regulated investment companies as defined in Secti on 851 of the 15
Internal Revenue Code; 16
10.[11.] Real estate mortgage investment conduits as defined in Section 17
860D of the Internal Revenue Code; 18
11.[12.] Personal service corporations as defined in Section 269A(b)(1) of 19
the Internal Revenue Code; 20
12.[13.] Cooperatives described in Sections 521 and 1381 of the Internal 21
Revenue Code, including farmers' agricultural and other cooperatives 22
organized or recognized under KRS Chapter 272, advertising 23
cooperatives, purchasing cooperatives, homeowners associations 24
including those described in Section 528 of the Internal Revenue Code, 25
political organizations as defined in Section 527 of the Internal Revenue 26
Code, and rural electric and rural telephone cooperatives; or 27
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13.[14.] Publicly traded partnerships as defined by Section 7704(b) of the 1
Internal Revenue Code that are treated as partnerships for federal tax 2
purposes under Section 7704(c) of the Internal Revenue Code, or their 3
publicly traded partnership affiliates. "Publicly traded partnership 4
affiliates" shall incl ude any limited liability company or limited 5
partnership for which at least eighty percent (80%) of the limited 6
liability company member interests or limited partner interests are 7
owned directly or indirectly by the publicly traded partnership. 8
(7) (a) As used in this subsection, "qualified exempt organization" means an entity 9
listed in subsection (6)(a) and (b) of this section and shall not include any 10
entity whose exempt status has been disallowed by the Internal Revenue 11
Service. 12
(b) Notwithstanding any other provisions of this section, any limited liability 13
pass-through entity that is owned in whole or in part by a qualified exempt 14
organization shall, in calculating its Kentucky gross receipts or Kentucky 15
gross profits, exclude the proportionate share of its Kentucky gross receipts or 16
Kentucky gross profits attributable to the ownership interest of the qualified 17
exempt organization. 18
(c) Any limited liability pass -through entity that reduces Kentucky gross receipts 19
or Kentucky gross pro fits in accordance with paragraph (b) of this subsection 20
shall disregard the ownership interest of the qualified exempt organization in 21
determining the amount of credit available under subsection (3) of this 22
section. 23
(d) The Department of Revenue may promu lgate an administrative regulation to 24
further define "qualified exempt organization" to include an entity for which 25
exemption is constitutionally or legally required, or to exclude any entity 26
created primarily for tax avoidance purposes with no legitimate business 27
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purpose. 1
(8) The credit permitted by subsection (3) of this section shall flow through multiple 2
layers of limited liability pass-through entities and shall be claimed by the taxpayer 3
who ultimately pays the tax on the income of the limited liabili ty pass -through 4
entity. 5
Section 52. KRS 141.206 is amended to read as follows: 6
(1) Every pass -through entity doing business in this state shall, on or before the 7
fifteenth day of the fourth month following the close of i ts annual accounting 8
period, file a copy of its federal tax return with the form prescribed and furnished 9
by the department. 10
(2) (a) Pass-through entities shall calculate net income in the same manner as in the 11
case of an individual under KRS 141.019 and t he adjustment required under 12
Sections 703(a) and 1363(b) of the Internal Revenue Code. 13
(b) Computation of net income under this section and the computation of the 14
partner's, member's, or shareholder's distributive share shall be computed as 15
nearly as pract icable identical with those required for federal income tax 16
purposes except to the extent required by differences between this chapter and 17
the federal income tax law and regulations. 18
(3) Individuals, estates, trusts, or corporations doing business in this state as a partner, 19
member, or shareholder in a pass -through entity shall be liable for income tax only 20
in their individual, fiduciary, or corporate capacities, and no income tax shall be 21
assessed against the net income of any pass-through entity, except as required: 22
(a) For S corporations under KRS 141.040; 23
(b) For a partnership level audit under KRS 141.211; and 24
(c) For a pass-through entity making an election under KRS 141.209. 25
(4) (a) Every pass-through entity required to file a return under subsection (1) of this 26
section, except publicly traded partnerships as described in KRS 27
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141.0401(6)(a)18. and (b)13.[14.], shall withhold Kentucky income tax on the 1
distributive share, whether distributed or undistributed, of each nonresident 2
individual partner, member, or shareholder. 3
(b) Withholding shall be at the maximum rate provided in KRS 141.020. 4
(5) (a) Every pass -through entity required to withhold Kentucky income tax as 5
provided by subsection (4) of this section shall pay estimated tax for the 6
taxable year, if for a nonresident individual partner, member, or shareholder, 7
the estimated tax liability can reasonably be expected to exceed five hundred 8
dollars ($500). 9
(b) The payment of estimated tax shall contain the information and shall be filed 10
as provided in KRS 141.207. 11
(6) (a) If a pass -through entity demonstrates to the department that a partner, 12
member, or shareholder has filed an appropriate tax return for the prior year 13
with the department, then the pass -through entity shall not be required to 14
withhold on that partner, member, or shareholder for the current year unless 15
the exemption from withholding has been revoked pursuant to paragraph (b) 16
of this subsection. 17
(b) 1. An exemption from withholding shall be considered revoked if the 18
partner, member, or sh areholder does not file and pay all taxes due in a 19
timely manner. 20
2. An exemption so revoked shall be reinstated only with permission of the 21
department. 22
3. If a partner, member, or shareholder who has been exempted from 23
withholding does not file a return o r pay the tax due, the department 24
may require the pass-through entity to pay to the department the amount 25
that should have been withheld, up to the amount of the partner's, 26
member's, or shareholder's ownership interest in the entity. 27
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4. The pass -through en tity shall be entitled to recover a payment made 1
pursuant to this paragraph from the partner, member, or shareholder on 2
whose behalf the payment was made. 3
(7) In determining the tax under this chapter, a resident individual, estate, or trust that 4
is a partner, member, or shareholder in a pass -through entity shall take into account 5
the partner's, member's, or shareholder's total distributive share of the pass -through 6
entity's items of income, loss, deduction, and credit. 7
(8) In determining the tax under this chapter, a nonresident individual, estate, or trust 8
that is a partner, member, or shareholder in a pass -through entity required to file a 9
return under subsection (1) of this section shall take into account: 10
(a) 1. If the pass -through entity is doing busin ess only in this state, the 11
partner's, member's, or shareholder's total distributive share of the pass -12
through entity's items of income, loss, and deduction; or 13
2. If the pass-through entity is doing business both within and without this 14
state, the partner's, member's, or shareholder's distributive share of the 15
pass-through entity's items of income, loss, and deduction multiplied by 16
the apportionment fraction of the pass-through entity as prescribed in 17
subsection (11) of this section; and 18
(b) The partner's, member's, or shareholder's total distributive share of credits of 19
the pass-through entity. 20
(9) A corporation that is subject to tax under KRS 141.040 and is a part ner or member 21
in a pass -through entity shall take into account the corporation's distributive share 22
of the pass-through entity's items of income, loss, and deduction and: 23
(a) 1. For taxable years beginning on or after January 1, 2007, but prior to 24
January 1, 2018, shall include the proportionate share of the sales, 25
property, and payroll of the limited liability pass -through entity or 26
general partnership in computing its own apportionment factor; and 27
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2. For taxable years beginning on or after January 1, 2018 , shall include 1
the proportionate share of the sales of the limited liability pass -through 2
entity or general partnership in computing its own apportionment factor; 3
and 4
(b) Credits from the partnership. 5
(10) (a) If a pass -through entity is doing business bo th within and without this state, 6
the pass-through entity shall compute and furnish to each partner, member, or 7
shareholder the numerator and denominator of each factor of the 8
apportionment fraction determined in accordance with subsection (11) of this 9
section. 10
(b) For purposes of determining an apportionment fraction under paragraph (a) of 11
this subsection, if the pass-through entity is: 12
1. Doing business both within and without this state; and 13
2. A partner or member in another pass-through entity; 14
then the pass-through entity shall be deemed to own the pro rata share of the 15
property owned or leased by the other pass -through entity, and shall also 16
include its pro rata share of the other pass-through entity's payroll and sales. 17
(c) The phrases "a partner or member in another pass -through entity" and "doing 18
business both within and without this state" shall extend to each level of 19
multiple-tiered pass-through entities. 20
(d) The attribution to the pass -through entity of the pro rata share of property, 21
payroll and sales from its role as a partner or member in another pass -through 22
entity will also apply when determining the pass -through entity's ultimate 23
apportionment factor for property, payroll and sales as required under 24
subsection (11) of this section. 25
(11) (a) For taxable years beginning prior to January 1, 2018, a pass -through entity 26
doing business within and without the state shall compute an apportionment 27
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fraction, the numerator of which is the property factor, representing twenty -1
five percent (25%) of the f raction, plus the payroll factor, representing 2
twenty-five percent (25%) of the fraction, plus the sales factor, representing 3
fifty percent (50%) of the fraction, with each factor determined in the same 4
manner as provided in KRS 141.901, and the denominato r of which is four 5
(4), reduced by the number of factors, if any, having no denominator, 6
provided that if the sales factor has no denominator, then the denominator 7
shall be reduced by two (2). 8
(b) For taxable years beginning on or after January 1, 2018, a pass-through entity 9
doing business within and without the state shall compute an apportionment 10
fraction as provided in KRS 141.120. 11
(12) Resident individuals, estates, or trusts that are partners in a partnership, members of 12
a limited liability company electing partnership tax treatment for federal income tax 13
purposes, owners of single member limited liability companies, or shareholders in 14
an S corporation which does not do business in this state are subject to tax under 15
KRS 141.020 on federal net income, g ain, deduction, or loss passed through the 16
partnership, limited liability company, or S corporation. 17
(13) An S corporation election made in accordance with Section 1362 of the Internal 18
Revenue Code for federal tax purposes is a binding election for Kentuck y tax 19
purposes. 20
(14) (a) Nonresident individuals shall not be taxable on investment income distributed 21
by a qualified investment partnership. For purposes of this subsection, a 22
"qualified investment partnership" means a pass -through entity that, during 23
the taxable year, holds only investments that produce income that would not 24
be taxable to a nonresident individual if held or owned individually. 25
(b) A qualified investment partnership shall be subject to all other provisions 26
relating to a pass -through entity under this section and shall not be subject to 27
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the tax imposed under KRS 141.040 or 141.0401. 1
(15) (a) A pass -through entity shall deliver to the department a return upon a form 2
prescribed by the department showing the total amounts paid or credited to it s 3
nonresident individual partners, members, or shareholders, the amount paid in 4
accordance with this subsection, and any other information the department 5
may require. 6
(b) A pass -through entity shall furnish to its nonresident partner, member, or 7
shareholder annually, but not later than the fifteenth day of the fourth month 8
after the end of its taxable year, a record of the amount of tax paid on behalf 9
of the partner, member, or shareholder on a form prescribed by the 10
department. 11
Section 53. KRS 141.065 is amended to read as follows: 12
(1) For the purposes of this section, "code" or "Internal Revenue Code" means the 13
Internal Revenue Code in effect as of December 31, 1981. 14
(2) For taxable years beginning before January 1, 2028 , there shall be allowed as a 15
credit for any taxpayer against the tax imposed by KRS 141.020 or 141.040 and 16
141.0401 for any taxable year, with the ordering of the credits as provided in KRS 17
141.0205, an amount equal to one hundred dollars ($100) for each person hired by 18
the taxpayer, if that person has been classified as unemployed by the Office of 19
Unemployment Insurance in the Education and Labor Cabinet and has been so 20
classified for at least sixty (60) days prior to his employment by the taxpayer, and i f 21
further that person has remained in the employ of the taxpayer for at least one 22
hundred eighty (180) consecutive days during the taxable year in which the 23
taxpayer claims the credit. 24
(3) No credit shall be all owed to any taxpayer for any person hired under any of the 25
following circumstances: 26
(a) A person for whom the taxpayer receives federally funded payments for on -27
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the-job training; 1
(b) For any person who bears any of the relationships to the taxpayer describ ed in 2
paragraphs (1) through (8) of Section 152(a) of the Internal Revenue Code, or, 3
if the taxpayer is a corporation, to an individual who owns, directly or 4
indirectly, more than fifty percent (50%) in value of the outstanding stock of 5
the corporation as determined with the application of Section 267(c) of the 6
code; 7
(c) If the taxpayer is an estate or trust, to any person who is a grantor, beneficiary, 8
or fiduciary of the estate or trust, or is an individual who bears any of the 9
relationships described in paragraphs (1) through (8) of Section 152(a) of the 10
code to a grantor, beneficiary, or fiduciary of the estate or trust; or 11
(d) To any person who is a dependent of the taxpayer as described in code 12
Section 152(a)(9), or, if the taxpayer is an estate or tru st, of a grantor, 13
beneficiary, or fiduciary of the estate or trust. 14
(4) For purposes of this section, all employees of all corporations which are members 15
of the same controlled group of corporations shall be treated as employed by a 16
single employer. In no instance shall the credit, if any, allowable by subsection (2) 17
of this section for any employee qualified thereunder be claimed more than once for 18
any taxable year by such a controlled group of corporations. For purposes of this 19
subsection, the term "contr olled group of corporations" has the meaning given to 20
that term by code Section 1563(a), except that "more than fifty percent (50%)" shall 21
be substituted for "at least eighty percent (80%)" each place it appears in code 22
Section 1563(a)(1), and the determin ation shall be made without regard to 23
subsections (a)(4) and (e)(3)(c) of code Section 1563. 24
(5) For purposes of this section, all employees of trades or businesses (whether or not 25
incorporated) which are under common control shall be treated as employed b y a 26
single employer, and in no instance shall the credit, if any, allowable by subsection 27
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(2) of this section for any employee qualified thereunder be claimed more than once 1
for any taxable year. 2
(6) No credit shall be allowed under subsection (2) of this section to any organization 3
which is exempt from income tax by this chapter. 4
(7) In the case of a pass -through entity, the amount of the credit determined under this 5
section for any taxable year shall be applied at the entity level against the limited 6
liability entity tax imposed by KRS 141.0401 and shall also be apportioned pro rata 7
among the members, partners, or shareholders of the limited liability entity on the 8
last day of the taxable year, and any person to whom an amount is so apportioned 9
shall be al lowed, subject to code Section 53, a credit under subsection (2) of this 10
section for that amount. 11
(8) In the case of an estate or trust, the amount of the credit determined under this 12
section for any taxable year shall be apportioned between the estate or trust and the 13
beneficiaries on the basis of income of the estate or trust allocable to each, and any 14
beneficiary to whom any amount has been apportioned under this subsection shall 15
be allowed, subject to code Section 53, a credit under subsection (2) of th is section 16
for that amount. 17
(9) In no event shall the credit allowed, pursuant to this section, for any taxable year 18
exceed the tax liability of the taxpayer for the taxable year. 19
(10) (a) By November 1, 2026, and each November 1 thereafter as long as cred it is 20
claimed under this section, the department shall report to the Legislative 21
Research Commission for referral to the Interim Joint Committee on 22
Appropriations and Revenue: 23
1. The total number of returns claiming the credit for the taxable year; 24
2. The total amount of credit claimed for the taxable year; 25
3. By county, the total number of unemployed persons hired for which 26
credit is claimed for the taxable year; 27
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4. By taxpayer: 1
a. The name and location of the taxpayer claiming the credit as 2
listed on the tax return; 3
b. The total number of tax credits claimed for the taxable year; 4
c. The total amount of credit claimed for the taxable year; and 5
d. The total number of unemployed persons hired in which credit is 6
claimed for the taxable year; and 7
5. a. In the c ase of taxpayers other than corporations, based on 8
ranges of adjusted gross income of no larger than five thousand 9
dollars ($5,000) for the taxable year, the total amount of credit 10
claimed and the total number of returns claiming this credit for 11
each adjusted gross income range. 12
b. In the case of corporations, based on ranges of net income of no 13
larger than fifty thousand dollars ($50,000) for the taxable year, 14
the total amount of credit claimed and the total number of 15
returns claiming this credit for each net income range. 16
(b) The Office of Unemployment Insurance shall assist by providing the 17
department with the information necessary to help fulfill the requirements 18
under this subsection. 19
(c) The information required to be reported under this subsection sha ll not be 20
considered confidential taxpayer information and shall not be subject to 21
KRS Chapter 131 or any other provisions of the Kentucky Revised Statutes 22
prohibiting disclosure or reporting of information. 23
Section 54. KRS 141.412 is amended to read as follows: 24
(1) For taxable years beginning before January 1, 2028, a qualified farming operation 25
shall be entitled to a nonrefundable credit against the Kentucky income tax liability 26
established pursuant to the provisions of this chapter on any income of the qualified 27
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farming operation generated by or arising out of the qualified farming operation's 1
participation in a networking project, and against the limited liability entity tax 2
imposed by KRS 141.040 1 on any Kentucky gross profits or Kentucky gross 3
receipts of the qualified farming operation generated by or arising out of the 4
qualified farming operation's participation in a networking project. The credits shall 5
be applied as provided in KRS 141.0205. The annual credit shall be available for 6
the first five (5) years that the farming operation is involved in the networking 7
project. The annual credit shall be equal to the approved costs incurred by the 8
qualified farming operation during the tax year and s hall not exceed the income, 9
Kentucky gross profits or Kentucky gross receipts, as the case may be, of the 10
qualified farming operation generated by or arising out of the qualified farming 11
operation's participation in a networking project. 12
(2) Any credit not used in the tax year in which it first becomes available may be 13
carried forward to the next succeeding five (5) tax years until the credit has been 14
fully used. The aggregate credit used in any tax year shall not exceed the income, 15
Kentucky gross profits o r Kentucky gross receipts, as the case may be, of the 16
qualified farming operation generated by or arising out of the qualified farming 17
operation's participation in a networking project in that tax year. 18
(3) (a) By November 1, 2026, and each November 1 ther eafter as long as a 19
qualified farming operation credit is claimed under this section, the 20
department shall report to the Legislative Research Commission for referral 21
to the Interim Joint Committee on Appropriations and Revenue: 22
1. The total number of returns claiming the credit for the taxable year; 23
2. The total amount of credit claimed for the taxable year; 24
3. By taxpayer: 25
a. The name and location of the taxpayer claiming the credit as 26
listed on the tax return; 27
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b. The total number of tax credits claimed for the taxable year; 1
c. The total amount of credit claimed for the taxable year; 2
d. The name and location, by county, of the networking project; 3
e. Type of food or product produced; and 4
f. Type of raw materials provided for food -producing facilities in 5
this state; and 6
4. a. In the case of taxpayers other than corporations, based on 7
ranges of adjusted gross income of no larger than five thousand 8
dollars ($5,000) for the taxable year, the total amount of credit 9
claimed and the total number of returns claiming this credit for 10
each adjusted gross income range. 11
b. In the case of corporations, based on ranges of net income of no 12
larger than fifty thousand dollars ($50,000) for the taxable year, 13
the total amount of credit claimed and the total number of 14
returns claiming this credit for each net income range. 15
(b) The Cabinet for Economic Development shall assist by providing the 16
department with information on the approved farming operations or 17
networking projects to help fulfill the requirements under this subsection. 18
(c) The information required to be reported under this subsection shall not be 19
considered confidential taxpayer information and shall not be subject to 20
KRS Chapter 131 or any other provisions of the Kentucky Revised Statutes 21
prohibiting disclosure or reporting of information. 22
Section 55. KRS 141.0101 is amended to read as follows: 23
(1) (a) The provisions of subsections (2) to (11) of this section shall apply to taxable 24
years beginning before January 1, 1994. 25
(b) The provisions of subsections (12) to (15) of this section shall apply to taxable 26
years beginning after December 31, 1993. 27
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(c) The provisions of subsection (16) of this section apply to property placed in 1
service after September 10, 2001. 2
(2) For property placed in service prior to January 1, 1990, in lieu of the depreciation 3
and expense deductions allowed under Internal Revenue Code Sections 168 and 4
179, a deduction for a reasonable allowance for depreciation, exhaustion, wear and 5
tear, and obsolescence of property used in a trade or business shall be allowed and 6
computed as set out in subsections (3) to (11) of this section. For property placed in 7
service after December 31, 1989, the depreciation and expense deductions allowed 8
under Sections 168 and 179 of the Internal Revenue Code shall be allowed. 9
(3) Effective August 1, 1985, "reasonable allowance" as used in subsection (2) of this 10
section shall mean depreciation computed in accordance with Section 167 of the 11
Internal Revenue Code and related regulations in effec t on December 31, 1980, for 12
all property placed in service on or after January 1, 1981, except as provided in 13
subsections (6) to (8) of this section. 14
(4) Depreciation of property placed in service prior to January 1, 1981, shall be 15
computed under Section 167 of the Internal Revenue Code, and the method elected 16
thereunder at the time the property was first placed in service or as changed with 17
the approval of the Commissioner of Internal Revenue Service or as required by 18
changes in federal regulations. 19
(5) Taxpayers other than corporations shall be allowed to deduct as depreciation on 20
recovery property placed in service before August 1, 1985, an amount calculated 21
under Section 168 of the Internal Revenue Code subject to the provisions of 22
subsections (6) and (8) of this section. Corporations with a taxable year beginning 23
on or after July 1, 1984, and before August 1, 1985, shall calculate a deduction for 24
depreciation on recovery property placed in service prior to August 1, 1985, using 25
either of the following alternative methods: 26
(a) Dividing the total of the deductions allowed under Internal Revenue Code 27
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Section 168 by one and four tenths (1.4); and 1
(b) Calculating the deduction that would be allowed or allowable under the 2
provisions of Section 167 of the Internal Revenue Code. 3
(6) Recovery property placed in service on or after January 1, 1981, and before August 4
1, 1985, and subject to transition under subsection (8) of this section, shall be 5
subject to depreciation under Section 167 of the Internal Revenue Co de, restricted 6
to the straight line method therein provided over the remaining useful life of such 7
assets. 8
(7) Depreciation of property placed in service on or after August 1, 1985, shall be 9
computed under Section 167 of the Internal Revenue Code. 10
(8) Transition from Section 168 of the Internal Revenue Code, Accelerated Cost 11
Recovery System (ACRS) depreciation, to the depreciation allowed or allowable 12
under this section shall be reported in the first taxable year beginning on or after 13
August 1, 1985. To imp lement the transition, the following adjustments shall be 14
made: 15
(a) Taxpayers other than corporations shall use the adjusted Kentucky basis for 16
property placed in service on or after January 1, 1981. "Adjusted Kentucky 17
basis" means the basis used for determining depreciation under Section 168 of 18
the Internal Revenue Code less the allowed or allowable depreciation and 19
adjustment for election to expense an asset (Section 179 of the Internal 20
Revenue Code); 21
(b) Corporations shall adjust the federal unadjusted basis by increasing such basis 22
by the ACRS depreciation not allowed as a deduction in determining 23
Kentucky net income for tax years beginning after June 30, 1984, less allowed 24
or allowable ACRS depreciation for federal income tax purposes. 25
Corporations will not be permitted to adjust the basis by the ACRS 26
depreciation not allowed for Kentucky income tax purposes in tax years 27
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beginning on or before June 30, 1984. 1
(9) A taxpayer may elect to treat the cost of property placed in service on or before July 2
31, 1985, as an expense as provided in Section 179 of the Internal Revenue Code in 3
effect on December 31, 1981, except that the aggregate cost which may be 4
expensed for corporations shall not exceed five thousand dollars ($5,000). A 5
taxpayer may elect to treat t he cost of property placed in service on or after August 6
1, 1985, as an expense as provided in Section 179 of the Internal Revenue Code in 7
effect on December 31, 1980. Computations, limitations, definitions, exceptions, 8
and other provisions of Section 179 of the Internal Revenue Code and related 9
regulations shall be construed to govern the computation of the allowable 10
deduction. 11
(10) Upon the sale, exchange, or disposition of any depreciable property placed in 12
service on or after January 1, 1981, capital ga ins or losses and the amount of 13
ordinary income determined under the provisions of the Internal Revenue Code 14
shall be computed for Kentucky income tax purposes as follows: 15
(a) Compute the Kentucky unadjusted basis which is the cost of the asset reduced 16
by any basis adjustment made by the taxpayer under Section 48(q)(1) of the 17
Internal Revenue Code and any expense allowed and utilized under Section 18
179 of the Internal Revenue Code (First Year Expense) in determining 19
Kentucky net income in prior years, and 20
(b) Compute the adjusted basis by subtracting the depreciation allowed or 21
allowable for Kentucky income tax purposes from the unadjusted basis, 22
except corporations will not be permitted to adjust the basis of assets by the 23
ACRS depreciation not allowed for K entucky income tax purposes in the tax 24
years beginning on or before June 30, 1984, and 25
(c) Compute the gain or loss by subtracting the adjusted basis from the value 26
received from the disposition of the depreciable property, and 27
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(d) Compute the recapture of depreciation required under Sections 1245 through 1
1256 of the Internal Revenue Code and related regulations, and 2
(e) Unless otherwise provided in this subsection the provisions of the Internal 3
Revenue Code and related regulations governing the determinati on of capital 4
gains or losses shall apply for Kentucky income tax purposes. 5
(11) Unless otherwise provided by this chapter, the basis of property placed in service 6
prior to January 1, 1990, for purposes of Kentucky income tax shall be the basis, 7
adjusted o r unadjusted, required to be used under Section 167 of the Internal 8
Revenue Code in effect on December 31, 1980. 9
(12) As used in this subsection to subsection (14) of this section: 10
(a) "Transition property" means any property placed in service before the f irst 11
day of the first taxable year beginning after December 31, 1993, and owned 12
by the taxpayer on the first day of the first taxable year beginning after 13
December 31, 1993. 14
(b) "Adjusted Kentucky basis" means the amount computed in accordance with 15
the provisions of paragraph (b) of subsection (10) of this section for transition 16
property. 17
(c) "Adjusted federal basis" means the original cost, or, in the case of Section 338 18
property, the adjusted grossed-up basis of transition property less: 19
1. Any basis adju stments required by the Internal Revenue Code for 20
credits; and 21
2. The total accumulated depreciation and election to expense deductions 22
allowed or allowable for federal income tax purposes. 23
(d) "Section 338 property" means property to which an adjusted gro ssed-up basis 24
has been allocated pursuant to a valid election made by a purchasing 25
corporation under the provisions of Section 338 of the Internal Revenue Code. 26
(e) "Transition amount" means the net difference between the adjusted Kentucky 27
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basis and the adjusted federal basis of all transition property determined as of 1
the first day of the first taxable year beginning after December 31, 1993. 2
(13) For taxable years beginning after December 31, 1993, the amounts of depreciation 3
and election to expense deduct ions, allowed or allowable, the basis of assets, 4
adjusted or unadjusted, and the gain or loss from the sale or other disposition of 5
assets shall be the same for Kentucky income tax purposes as determined under 6
Chapter 1 of the Internal Revenue Code. 7
(14) For taxable years beginning after December 31, 1993, the transition amount 8
computed in accordance with the provisions of paragraph (e) of subsection (12) of 9
this section shall be reported by the taxpayer as follows: 10
(a) In the first taxable year beginning a fter December 31, 1993, and the eleven 11
(11) succeeding taxable years, the taxpayer shall include in gross income one -12
twelfth (1/12) of the transition amount if: 13
1. The adjusted federal basis of transition property exceeds the adjusted 14
Kentucky basis of transition property; 15
2. The transition amount exceeds five million dollars ($5,000,000); 16
3. The transition amount includes property for which an election was made 17
under Section 338 of the Internal Revenue Code; and 18
4. The taxpayer elects the provisions of this paragraph with the filing of an 19
amended income tax return for the first taxable year beginning after 20
December 31, 1993. 21
(b) In the first taxable year beginning af ter December 31, 1993 and the three (3) 22
succeeding taxable years, if the transition amount exceeds one hundred 23
thousand dollars ($100,000), or if the transition amount does not exceed one 24
hundred thousand dollars ($100,000) and the taxpayer elects the prov ision of 25
this paragraph with the filing of the income tax return for the first taxable year 26
beginning after December 31, 1993, the taxpayer shall: 27
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1. Deduct from gross income twenty -five percent (25%) of the transition 1
amount if the adjusted Kentucky basis of transition property exceeds the 2
adjusted federal basis of transition property; or 3
2. Add to gross income twenty-five percent (25%) of the transition amount 4
if the adjusted federal basis of transition property exceeds the adjusted 5
Kentucky basis of transition property. 6
(c) In the first taxable year beginning after December 31, 1993, if the transition 7
amount does not exceed one hundred thousand dollars ($100,000) and the 8
taxpayer does not elect the provisions of paragraph (b) of this subsection, the 9
taxpayer shall: 10
1. Deduct from gross income the total transition amount if the adjusted 11
Kentucky basis of transition property exceeds the adjusted federal basis 12
of transition property; or 13
2. Add to gross income the total transition amount if the adjusted federa l 14
basis of transition property exceeds the adjusted Kentucky basis of 15
transition property. 16
(15) For taxable years beginning before January 1, 2028, notwithstanding any other 17
provision of this section to the contrary, any qualified farming operation, as defined 18
in KRS 141.410, shall be allowed to compute the depreciation deduction for new 19
buildings and equipment purchased to enable participation in a networking pro ject, 20
as defined in KRS 141.410, on an accelerated basis at two (2) times the rate that 21
would otherwise be permitted under the provisions of this section. The accumulated 22
depreciation allowed under this subsection shall not exceed the taxpayer's basis in 23
such property. 24
(16) (a) For property placed in service after September 10, 2001, only the depreciation 25
deduction allowed under Section 168 of the Internal Revenue Code in effect 26
on December 31, 2001, exclusive of any amendments made subsequent to that 27
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date, shall be allowed. 1
(b) For property placed in service after September 10, 2001, but prior to January 2
1, 2020, only the expense deduction allowed under Section 179 of the Internal 3
Revenue Code in effect on December 31, 2001, exclusive of any amendments 4
made subsequent to that date, shall be allowed. 5
(c) For property placed in service on or after January 1, 2020, only the expense 6
deduction allowed under Section 179 of the Internal Revenue Code in effect 7
on December 31, 2003, exclusive of any amendments made subsequent to that 8
date, shall be allowed, except that the phase -out provisions of Section 179 of 9
the Internal Revenue Code, limiting the qualifying investment in property, 10
shall not apply. 11
Section 56. KRS 151B.402 is amended to read as follows: 12
(1) The General Assembly recognizes the critical condition of the educational level of 13
Kentucky's adult population and seeks to stimulate the attendance at, and successful 14
completion of, programs that provide a High School Equivale ncy Diploma. 15
Incentives shall be provided to full -time employees who complete a High School 16
Equivalency Diploma program within one (1) year and their employers. 17
(2) The Office of Adult Education within the Department of Workforce Development 18
in the Educati on and Labor Cabinet shall promulgate administrative regulations to 19
establish the operational procedures for this section. The administrative regulations 20
shall include but not be limited to the criteria for: 21
(a) A learning contract that includes the proces s to develop a learning contract 22
between the student and the adult education instructor with the employer's 23
agreement to participate and support the student; 24
(b) Attendance reports that validate that the student is enrolled and studying for 25
the High School Equivalency Diploma during the release time from work; and 26
(c) Final reports that qualify the student for the tuition discounts under subsection 27
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(3)(a) of this section and that qualify the employer for tax credits under 1
subsection (4) of the section. 2
(3) (a) An individual who has been out of secondary school for at least three (3) 3
years, develops and successfully completes a learning contract that requires a 4
minimum of five (5) hours per week to study for the High School Equivalency 5
Diploma program, and su ccessfully earns a High School Equivalency 6
Diploma shall earn a tuition discount of two hundred fifty dollars ($250) per 7
semester for a maximum of four (4) semesters at one (1) of Kentucky's public 8
postsecondary institutions. 9
(b) The program shall work wit h the postsecondary institutions to establish 10
notification procedures for students who qualify for the tuition discount. 11
(4) For taxable years beginning before January 1, 2028, an employer who assists an 12
individual to complete his or her learning contract under the provisions of this 13
section shall receive a state tax credit against the income tax imposed by KRS 14
141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, 15
with credit ordering as provided in KRS 141.0205 for a portion of the released time 16
given to the employee to study for the tests. The application for the tax credit shall 17
be supported with attendance documentation provided by the Office of Adult 18
Education and calculated by multiplying fifty percent (50%) of the hours rel eased 19
for study by the student's hourly salary, and not to exceed a credit of one thousand 20
two hundred fifty dollars ($1250). 21
(5) (a) By November 1, 2026, and each November 1 thereafter as long as the 22
employer High School Equivalency Diploma program incent ive credit is 23
claimed under this section, the department shall report to the Legislative 24
Research Commission for referral to the Interim Joint Committee on 25
Appropriations and Revenue: 26
1. The total number of returns claiming the credit for the taxable year; 27
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2. The total amount of credit claimed for the taxable year; 1
3. By county, the total: 2
a. Number of employers participating in the High School 3
Equivalency Diploma program; 4
b. Amount of High School Equivalency Diploma program incentive 5
credit claimed; and 6
c. Number of full -time employees who complete the High School 7
Equivalency Diploma program; 8
4. By taxpayer: 9
a. The name and location of the taxpayer claiming the credit as 10
listed on the tax return; 11
b. The total number of tax credits claimed for the taxable year; 12
c. The total amount of credit claimed for the taxable year; and 13
d. The number of individuals assisted with completion of the High 14
School Equivalency Diploma for the taxable year; and 15
5. a. In the case of taxpayers other than corporations, based on 16
ranges of adjusted gross income of no larger than five thousand 17
dollars ($5,000) for the taxable year, the total amount of credit 18
claimed and the total number of returns claiming this credit for 19
each adjusted gross income range. 20
b. In the case of corporations, based on ranges of net income of no 21
larger than fifty thousand dollars ($50,000) for the taxable year, 22
the total amount of credit claimed and the total number of 23
returns claiming this credit for each net income range. 24
(b) The Office of Adult Education shall assist by providing the department with 25
the information necessary to help fulfill the requirements under this 26
subsection. 27
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(c) The information required to be reported under this subsec tion shall not be 1
considered confidential taxpayer information and shall not be subject to 2
KRS Chapter 131 or any other provisions of the Kentucky Revised Statutes 3
prohibiting disclosure or reporting of information. 4
Section 57. KRS 171.396 is amended to read as follows: 5
As used in this section and KRS 171.3961 and 171.397 and Section 59 of this Act: 6
(1) "Affordable" means the occupant's housing costs, including utilities, total thirty 7
percent (30%) or less of the occupant's gross income; 8
(2) "Certified historic structure" means a structure that is located within the 9
Commonwealth of Kentucky that is: 10
(a) Listed individually on the National Register of Historic Places; or 11
(b) Located in a historic district listed on the Nati onal Register of Historic Places 12
and is certified by the council as contributing to the historic significance of 13
the district; 14
(3)[(2)] "Certified rehabilitation" means a completed substantial rehabilitation of a 15
certified historic structure that the counc il certifies meets the United States 16
Secretary of the Interior's Standards for Rehabilitation; 17
(4)[(3)] "Certified rehabilitation credit cap" means an annual amount of [: 18
(a) Three million dollars ($3,000,000) for applications received prior to April 30, 19
2010; 20
(b) Five million dollars ($5,000,000) for applications received on or after April 21
30, 2010, but before April 30, 2022; and 22
(c) ]one hundred million dollars ($100,000,000) for applications received on or after: 23
(a) April 30, 2022, but before April 30, 2026, allocated with: 24
1. Twenty-five percent (25%) of the credit cap awarded to owner -occupied 25
residential property; and 26
2. Seventy-five percent (75%) of the credit cap awarded to property other 27
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than owner -occupied residential property, which includes the major 1
certified rehabilitation allowed under KRS 171.3963; and 2
(b) April 30, 2026, but before April 15, 2027, and on or before each April 15 3
thereafter, allocated with: 4
1. Fifteen percent (15%) of the credit cap awarded to owner -occupied 5
residential property; and 6
2. Eighty-five percent (85%) of the credit cap awarded to property other 7
than owner -occupied residential property, including commercial 8
residential property; 9
plus any amounts[amount] added to the certified rehabilitation credit cap pursuant 10
to KRS 171.397(2)(c) and Section 59 of this Act; 11
(5)[(4)] "Commercial residential property" means a certified historic structure that: 12
(a) Is not owner-occupied residential property; 13
(b) Has a minimum of fifty percent (50%) of its square footage designated 14
to residential space which shall be available for lease, rent, or sale 15
upon completion of the rehabilitation; and 16
(c) Is affordable to individuals earning eighty percent (80%) or less of the 17
median family income for a minimum of five (5) years after the 18
building is placed in service; 19
(6) "Council" means the Kentucky Heritage Council; 20
(7)[(5)] "Disqualifying work" means work that is performe d within three (3) years of 21
the completion of the certified rehabilitation that, if performed as part of the 22
rehabilitation certified under KRS 171.397 and Section 59 of this Act , would have 23
made the rehabilitation ineligible for certification; 24
(8)[(6)] "Exempt entity" means any tax exempt organization pursuant to sec. 501(c)(3) 25
of the Internal Revenue Code, any political subdivision of the Commonwealth, any 26
state or local agency, board, or commission, or any quasi-governmental entity; 27
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(9)[(7)] "Local gover nment" means a city, county, urban -county, charter county, or 1
consolidated local government; 2
(10)[(8)] "Median family income" means the median family income for the county in 3
which the residence is located as determined by the most recent American 4
Community Survey Five-Year Estimate; 5
(11) "Owner-occupied residential property" means a building or portion thereof, 6
condominium, or cooperative occupied by the owner as his or her principal 7
residence; 8
(12)[(9)] "Qualified rehabilitation expense" means any amount that is properly 9
chargeable to a capital account, whether or not depreciation is allowed under 10
Section 168 of the Internal Revenue Code, and is expended at any time in 11
connection with the certified rehabi litation of a certified historic structure. It shall 12
include the cost of restoring landscaping and fencing that contributes to the historic 13
significance of this structure, but shall not include the cost of acquisition of a 14
certified historic structure, enl argement of or additions to an existing building, or 15
the purchase of personal property; 16
(13)[(10)] "Substantial rehabilitation" means rehabilitation of a certified historic 17
structure for which the qualified rehabilitation expenses, during a twenty -four (24) 18
month period selected by the taxpayer or exempt entity, ending with or within the 19
taxable year, exceed: 20
(a) Twenty thousand dollars ($20,000) for an owner -occupied residential 21
property; or 22
(b) For all other property, the greater of: 23
1. The adjusted basis of the structure; or 24
2. Twenty thousand dollars ($20,000); 25
(14)[(11)] "Taxpayer" means any individual, corporation, limited liability company, 26
business development corporation, partnership, limited partnership, sole 27
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proprietorship, association, joint stoc k company, receivership, trust, professional 1
service organization, or other legal entity through which business is conducted that: 2
(a) Elects to claim the credit on a return and receive a refund as provided in KRS 3
171.397(2)(b)2.a. and Section 59 of this Act; or 4
(b) Is the recipient of a credit which is transferred as provided in KRS 5
171.397(2)(b)2.b. and Section 59 of this Act; and 6
(15)[(12)] "Qualified purchased historic home" means any substantially rehabilitated 7
certified historic structure if: 8
(a) The taxpayer claiming the credit authorized under KRS 171.397 and Section 9
59 of this Act is the first purchaser of the structure after the date o f 10
completion of the substantial rehabilitation; 11
(b) The structure or a portion thereof will be the principal residence of the 12
taxpayer; and 13
(c) No credit was allowed to the seller under this section. 14
A qualified purchased historic home shall be deemed own er-occupied residential 15
property for purposes of this section. 16
Section 58. KRS 171.397 is amended to read as follows: 17
(1) (a) For all applications for a preliminary approval received prior to April 30, 18
2010, there shall be allowed as a credit against the taxes imposed by KRS 19
141.020, 141.040, 141.0401, or 136.505, an amount equal to: 20
1. Thirty percent (30%) of the qualified rehabilitation expenses, in the case 21
of owner-occupied residential property; and 22
2. Twenty percent (20%) of the qualified rehabilitation expenses, in the 23
case of all other property. 24
In the case of an exempt entity that has incurred qualified rehabilitation 25
expenses, the credit provided in this subsection shall be available to transfer 26
or assign as provided under subsection (8) or (9) of this section. 27
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(b) For applications for preliminary approval received on or after April 30, 2010, 1
the credit shall be refundable if the taxpayer makes an election under 2
subsection (2)(b) of this section. 3
(2) (a) A taxpaye r seeking the credit provided under subsection (1) of this section 4
shall file an application for a preliminary determination of maximum credit 5
eligibility before April 30 of the year in which the proposed project will 6
begin. The application shall describe the project and shall include 7
documentation supporting the qualification of the project for the credit, the 8
proposed start date, the proposed completion date, the projected qualified 9
rehabilitation expenses, and any other information the council may requir e. 10
The council shall determine the preliminary maximum credit available for 11
each taxpayer and shall notify the taxpayer of that amount by June 30 of the 12
year in which the application was filed. If total credits applied for in any year 13
exceed the certified rehabilitation credit cap, plus any amounts added to the 14
cap pursuant to paragraph (c) of this subsection, the provisions of subsection 15
(5) of this section shall be applied to reduce the approved credits for all 16
taxpayers with qualifying applications for that year. 17
(b) 1. An application for a final determination of credit shall be submitted to 18
the council upon completion of the project. 19
2. The application shall include an irrevocable election by the taxpayer to: 20
a. Use the credit, in which case, the credit shall be refundable; or 21
b. Transfer the credit. 22
3. The council shall determine the final amount of credit approved for each 23
taxpayer based upon the actual expenditures, preliminary determination 24
of maximum credit, and a determination that the expenditures are 25
qualified rehabilitation expenses. 26
4. The council shall notify the taxpayer and Department of Revenue of the 27
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final approved credit amount within sixty (60) days of the receipt of a 1
completed application from the taxpayer. 2
(c) 1. If the total amount of credits finally approved for a taxpayer under 3
paragraph (b) of this subsection are less than the credits initially 4
approved for a taxpayer under paragraph (a) of this subsection, the 5
difference between the two (2) amounts shall be added to the certified 6
rehabilitation credit cap for the next calendar year. 7
2. If the total amount of credits approved under paragraph (a) of this 8
subsection in any calendar year is less than the certified rehabilitation 9
credit cap, the difference between the credits actually awa rded and the 10
certified rehabilitation credit cap shall be added to the certified 11
rehabilitation credit cap for the next calendar year. 12
(3) (a) The maximum credit which may be claimed with regard to owner -occupied 13
residential property shall be one hundred t wenty thousand dollars ($120,000) 14
subject to subsection (5) of this section. The credit in this section shall be 15
claimed for the taxable year in which the certified rehabilitation is completed. 16
(b) The maximum credit which may be claimed with regard to all other property 17
that is not owner -occupied residential shall be ten million dollars 18
($10,000,000) subject to subsection (5) of this section. The credit in this 19
section shall be claimed for the taxable year in which the certified 20
rehabilitation is completed. 21
(4) In the case of a husband and wife filing separate returns or filing separately on a 22
joint return, the credit may be taken by either or divided equally, but the combined 23
credit shall not exceed one hundred twenty thousand dollars ($120,000) if subject to 24
the limitation in subsection (3)(a) of this section, or ten million dollars 25
($10,000,000) if subject to the limitation in subsection (3)(b) of this section, subject 26
to the provisions of subsection (5) of this section. 27
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(5) The credit amount approved for a calendar year for all taxpayers under subsection 1
(2)(a) of this section shall be limited to the certified rehabilitation credit cap. When 2
the total credits applied for and approved in any year under subsection (2)(a) of this 3
section exceed the certified rehabilitation credit cap, the council shall apportion the 4
certified rehabilitation credit cap as follows: The certified rehabilitation credit cap 5
for the year under consideration shall be multiplied by a fraction, the numerator 6
which is the approved cred it amount for an individual taxpayer for a calendar year 7
and the denominator which is the total approved credits for all taxpayers for a 8
calendar year. 9
(6) (a) For all applications received prior to April 30, 2010, if the credit amount that 10
may be claimed in any tax year as determined under subsections (3) to (5) of 11
this section exceeds the taxpayer's total tax liabilities under KRS 136.505, 12
141.020, or 141.040 a nd 141.0401, the taxpayer may carry the excess tax 13
credit forward until the tax credit is used, provided that any tax credits not 14
used within seven (7) years of the taxable year the certified rehabilitation was 15
complete shall be lost. 16
(b) For all applicati ons received on or after April 30, 2010, if the credit amount 17
that may be claimed in any tax year as determined under subsections (3) to (5) 18
of this section exceeds the taxpayer's total tax liabilities under KRS 136.505, 19
141.020, or 141.040 and 141.0401, t he taxpayer may receive a refund, if the 20
taxpayer elected to take the credit as required by subsection (2)(b) of this 21
section. 22
(7) (a) The credit shall apply against both the tax imposed by KRS 141.020 or 23
141.040 and the limited liability entity tax impose d by KRS 141.0401, with 24
the ordering of credits as provided in KRS 141.0205. 25
(b) 1. For applications received prior to April 30, 2010, if the taxpayer is a 26
pass-through entity not subject to the tax imposed by KRS 141.040, the 27
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taxpayer shall apply the cred it at the entity level against the limited 1
liability tax entity imposed by KRS 141.0401, and shall also pass the 2
credit through in the same proportion as the distributive share of income 3
or loss is passed through. 4
2. For applications received on or after A pril 30, 2010, if the taxpayer is a 5
pass-through entity not subject to the tax imposed by KRS 141.040, the 6
taxpayer shall apply the credit at the entity level against the limited 7
liability tax entity imposed by KRS 141.0401, and may receive a refund 8
if the taxpayer elected to take the credit as required by subsection 9
(2)(b)2.a. of this section. 10
(8) Credits received under this section may be transferred or assigned if an election is 11
made under subsection (2)(b) of this section, for some or no consideration, along 12
with any related benefits, rights, responsibilities, and liabilities to a financial 13
institution as defined in KRS 141.010 subject to the taxes imposed by KRS 14
136.505, 141.040, or 141.0401. Within thirty (30) days of the date of any transfer of 15
credits, the party transferring the credits shall notify the Department of Revenue of: 16
(a) The name, address, employer identification number, and bank routing and 17
transfer number, of the party to which the credits are transferred; 18
(b) The amount of credits transferred; and 19
(c) Any additional information the Department of Revenue deems necessary. 20
The provisions of this subsection shall apply to any credits that pass through to a 21
successor or beneficiary of a taxpayer. 22
(9) For purposes of this section, a lessee of a certified historic structure shall be treated 23
as the owner of the structure if the remaining term of the lease is not less than the 24
minimum period promulgated by administrative regulation by the council. 25
(10) The taxes imposed in KRS 141.020, 141.040, a nd 141.0401 shall not apply to any 26
consideration received for the transfer, sale, assignment, or use of a tax credit 27
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approved under this section. 1
(11) The Department of Revenue shall assess a penalty on any taxpayer or exempt entity 2
that performs disqualifying work, as determined by the Kentucky Heritage Council, 3
on a certified historic structure for which a rehabilitation has been certified under 4
this section in an amount equal to one hundred percent (100%) of the tax credit 5
allowed on the rehabilitation. Any penalties shall be assessed against the property 6
owner who performs the disqualifying work and not against any transferee of the 7
credits. 8
(12) The council may impose fees for processing applications for tax credits, not to 9
exceed the actual cost associated with processing the applications. 10
(13) The council may authorize a local government to perform an initial review of 11
applications for the credit allowed under this section and forward the applications to 12
the council with its recommendations. 13
(14) The c ouncil and the Department of Revenue may promulgate administrative 14
regulations in accordance with the provisions of KRS Chapter 13A to establish 15
policies and procedures to implement the provisions of subsections (1) to (13) of 16
this section. 17
(15) The tax cr edit authorized by this section shall apply to tax periods ending on or 18
after December 31, 2005. 19
(16) This section applies to applications received before April 30, 2026. 20
SECTION 59. A NEW SECTION OF KRS CHAPTER 171 IS C REATED TO 21
READ AS FOLLOWS: 22
(1) This section applies to applications received on or after April 30, 2026, but before 23
April 15, 2027, and on or after each April 15 thereafter. 24
(2) (a) There shall be allowed as a credit against the taxes imposed in KRS 25
136.320, 136.330, 136.340, 136.350, 136.370, 136.390, 304.3 -270, 141.020 26
or 141.040 and 141.0401. 27
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(b) The amount of the credit shall be equal to: 1
1. Thirty percent (30%) of the qualified rehabilitation expenses, in the 2
case of owner-occupied residential property; 3
2. Thirty percent (30%) of the qualified rehabilitation expenses if the 4
commercial residential property is affordable to households earning 5
eighty percent (80%) of the median family income or less; or 6
3. Twenty percent (20%) of the qualified rehabilitation expenses, in the 7
case of all other property. 8
(b) In the case of an exempt entity that has incurred qualified rehabilitation 9
expenses, the credit provided in this subsection shall be available to transfer 10
or assign as provided under subsection (8) of this section. 11
(c) The credit shall be refundable if the taxpayer makes an election under 12
subsection (3)(b) of this section. 13
(d) An insurance company claiming a tax credit against the insurance 14
premiums tax is not required to pay additional retaliatory tax levied 15
pursuant to KRS 304.3-270. 16
(3) (a) 1. A taxpayer seeking the credit provided under subsection (2) of this 17
section shall file an application for a preliminary determination of 18
maximum credit eligibility before: 19
a. April 15; or 20
b. August 15 21
of the year in which the proposed project will begin. 22
2. The certified rehabilitation credit cap shall be allocated as follows, 23
including any amounts added to the certified rehabilitation credit cap 24
pursuant to paragraph (c) of this subsection: 25
a. Fifty million dollars ($50,000,000) for applications received 26
before the date established in subparagraph 1.a. of this 27
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paragraph, except that the amount shall not exceed one hundred 1
million dollars ($100,000,000), including a ny amounts added 2
under paragraph (c) of this subsection from a prior allocation 3
period; and 4
b. Fifty million dollars ($50,000,000) for applications received 5
before the date established in subparagraph 1.b. .of this 6
paragraph, except that the amount shall n ot exceed one hundred 7
million dollars ($100,000,000), including any amounts added 8
under paragraph (c) of this subsection from a prior allocation 9
period. 10
3. In the event the full allocation in subparagraph (a)2.a. of this 11
paragraph is not utilized for appli cations received by April 15, the 12
remainder shall be made available for applications received in 13
accordance with subparagraph 1.b. of this paragraph, not to exceed 14
fifty percent (50%) of the total credit cap allocated in each application 15
round under subparagraph 2. of this paragraph. 16
4. If the total amount of preliminary approvals for all applications 17
received in a single application round under subparagraph 1.a. or 2.a. 18
of this paragraph exceeds the cap of fifty million dollars ($50,000,000) 19
plus any amoun ts added to the credit cap, the council shall apportion 20
the certified rehabilitation credit cap as follows: 21
a. The certified rehabilitation credit cap for the application round 22
under consideration shall be multiplied by a fraction, the 23
numerator which is the approved credit amount for an individual 24
taxpayer for an application round and the denominator which is 25
the total approved credits for all taxpayers for an application 26
round; and 27
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b. Each taxpayer shall receive no more than their pro rata share of 1
the ce rtified rehabilitation credit cap allocated for the 2
corresponding application round. 3
5. Applications submitted for preliminary approval shall be reviewed in 4
the order in which they are received based on the date of the 5
application. 6
6. The application shall describe the project and shall include 7
documentation supporting the qualification of the project for the 8
credit, the proposed start date, the proposed completion date, the 9
projected qualified rehabilitation expenses, and any other information 10
the council may require. 11
7. The council shall determine the preliminary maximum credit available 12
for each taxpayer and shall notify the taxpayer of that amount by: 13
a. June 30 for applications received on or before April 15 of the 14
year in which the application was filed; or 15
b. October 30 for applications received on or before August 15 of 16
the year in which the application was filed. 17
(b) 1. An application for a final determination of credit shall be submitted to 18
the council upon completion of the project. A taxpayer wh o is no 19
longer the owner of the certified historic structure may apply for final 20
determination of credit as long as the taxpayer received preliminary 21
approval under paragraph (a)7. of this subsection and substantially 22
rehabilitated the certified historic structure. 23
2. The application shall include an irrevocable election by the taxpayer 24
to: 25
a. Use the credit, in which case, the credit shall be refundable; or 26
b. Transfer the credit in accordance with subsection (8) of this 27
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section, in which case the credit shall be nonrefundable. 1
3. The council shall determine the final amount of credit approved for 2
each taxpayer based upon the actual expenditures, preliminary 3
determination of maximum credit, and a determination that the 4
expenditures are qualified rehabilitation expenses. 5
4. The council shall notify the taxpayer and Department of Revenue of 6
the final approved credit amount within sixty (60) days of the receipt 7
of a completed application from the taxpayer. 8
(c) 1. If the total amount of credits finally approved for a taxpayer under 9
paragraph (b) of this subsection is less than the amount of the credi ts 10
initially approved for a taxpayer under paragraph (a) of this 11
subsection, the difference between the two (2) amounts shall be added 12
to the certified rehabilitation credit cap for the next calendar year, 13
except that in no case shall the amount allocated under paragraph 14
(a)2.a. or b. of this subsection exceed one hundred million dollars 15
($100,000,000), including any amounts added to the certified 16
rehabilitation credit cap from prior calendar years. Any amount 17
exceeding the one hundred million dollars ($100 ,000,000) threshold is 18
null and void as a carryover to any other allocation period. 19
2. If the total amount of credits approved under paragraph (a) of this 20
subsection in any calendar year is less than the certified rehabilitation 21
credit cap, the difference between the credits actually awarded and the 22
certified rehabilitation credit cap shall be added to the certified 23
rehabilitation credit cap for the next calendar year. 24
3. If the entire credit cap allocated for applications in paragraph (b) of 25
this subsectio n is not entirely utilized for preliminary applications 26
received under paragraph (a) of this subsection, the remaining portion 27
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shall be made available for all other properties having submitted 1
preliminary applications within the same application round rega rdless 2
of property type. 3
(4) (a) The maximum credit which may be claimed with regard to owner -occupied 4
residential property shall be one hundred twenty thousand dollars 5
($120,000) subject to subsection (6) of this section. The credit in this section 6
shall be claimed for the taxable year in which the certified rehabilitation is 7
completed. 8
(b) The maximum credit which may be claimed with regard to all other 9
property that is not owner -occupied residential shall be ten million dollars 10
($10,000,000) subject to s ubsection (6) of this section. The credit in this 11
section shall be claimed for the taxable year in which the certified 12
rehabilitation is completed. 13
(5) In the case of two (2) spouses filing separate returns or filing separately on a 14
joint return, the credi t may be taken by either or divided equally, but the 15
combined credit shall not exceed one hundred twenty thousand dollars ($120,000) 16
if subject to the limitation in subsection (4)(a) of this section, or ten million 17
dollars ($10,000,000) if subject to the l imitation in subsection (4)(b) of this 18
section, subject to the provisions of subsection (6) of this section. 19
(6) The credit amount approved for a calendar year for all taxpayers under 20
subsection (3)(a) of this section shall be limited to the certified reha bilitation 21
credit cap. 22
(7) (a) The credit shall apply against the tax imposed by: 23
1. KRS 141.020 or 141.040 and the limited liability entity tax imposed by 24
KRS 141.0401, with the ordering of the credits as provided in KRS 25
141.0205; and 26
2. KRS 136.320, 136.330, 136.40, 136.350, 136.360, 136.370, 136.390, or 27
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304.3-270. 1
(b) If the taxpayer is a pass -through entity not subject to the tax imposed by 2
KRS 141.040, the taxpayer shall apply the credit at the entity level against 3
the limited liability the credit at t he entity level against the limited liability 4
entity tax imposed by KRS 141.0401, and shall also pass the credit through 5
in the same proportion as the distributive share of income or loss is passed 6
through. 7
(8) (a) Credits received under this section may b e transferred or assigned if an 8
election is made under subsection (3)(b) of this section, for some or no 9
consideration, along with any related benefits, rights, responsibilities, and 10
liabilities to any person or entity subject to the taxes imposed in: 11
1. KRS 141.020, or 141.040 and 141.0401; or 12
2. KRS 136.320, 136.330, 136.340, 136.350, 136.360, 136.370, 136.390, 13
or 304.3-270. 14
(b) Within thirty (30) days of the date of any transfer of credits, the party 15
transferring the credits shall notify the Department of Revenue of: 16
1. The name, address, employer identification number, and bank routing 17
and transfer number, of the party to which the credits are transferred; 18
2. The amount of credits transferred; and 19
3. Any additional information the Department of Revenue deems 20
necessary. 21
(b) Any taxpayer receiving transferred credit under this subsection may carry 22
forward unused credit for a period not to exceed seven (7) taxable years 23
from which the certified rehabilitation was complete. 24
The provisions of this subsection shall apply to any credits that pass through to a 25
successor or beneficiary of a taxpayer. 26
(9) For purposes of this section, a lessee of a certified historic structure shall be 27
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treated as the owner of the structure if the remaining term of the lease is not less 1
than the minimum period promulgated by administrative regulation by the 2
council. 3
(10) The taxes imposed in KRS 141.020, 141.040, and 141.0401 shall not apply to any 4
consideration received for the transfer, sale, assignment, or use of a tax credit 5
approved under this section. 6
(11) (a) The Department of Revenue shall assess a penalty in an amount equal to 7
one hundred percent (100%) of the tax credit allowed on the rehabilitation 8
on any taxpayer or exempt entity that: 9
1. Performs disqualifying work, as d etermined by the Kentucky Heritage 10
Council, on a certified historic structure for which a rehabilitation has 11
been certified; and 12
2. If credit allowed based on affordability, fails to maintain compliance 13
with the commercial residential property requirement established in 14
subsection (5) of Section 56 of this Act, as determined by the council 15
and the Kentucky Housing Corporation. 16
(b) Any penalties shall be assessed under paragraph (a) of this subsection shall 17
be assessed against the property owner and not against any transferee of the 18
credits. 19
(12) The council may impose fees for processing applications for tax credits, not to 20
exceed the actual cost associated with processing the applications. 21
(13) The council may authorize a local government to perform an initial review of 22
applications for the credit allowed under this section and forward the applications 23
to the council with its recommendations. 24
(14) The council and the Department of Revenue may promulgate administrative 25
regulations in accordance with the provisions of KRS Chapter 13A to implement 26
this section. 27
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Section 60. KRS 141.382 is amended to read as follows: 1
(1) As used in this section: 2
(a) "Certified historic structure" means the same as defined in KRS 171.396; 3
(b) "Qualified rehabilitation expense" means the same as defined in KRS 4
171.396; and 5
(c) "Substantial rehabilitation" means the same as defined in KRS 171.396. 6
(2) A refundable or transferable credit in the amount determined in KRS 171.397 and 7
Section 59 of this Act shall be allowed against the taxes imposed by KRS 136.505 8
or 141.020 or 141.040 and 141.0401, with the ordering of credits provi ded in KRS 9
141.0205, for qualified rehabilitation expenses incurred by the taxpayer and used 10
for substantial rehabilitation to a certified historic structure. 11
Section 61. KRS 171.3961 is amended to read as follows: 12
(1) For taxable years beginning on or after January 1, 2014, a taxpayer completing a 13
certified rehabilitation to a certified historic structure shall be allowed a credit 14
against the taxes imposed by KRS 141.020 or 141.040 and 141.0401, with the 15
ordering of credits as provided in KRS 141.0205, or KRS 136.505 if: 16
(a) The certified historic structure is located within the jurisdiction of a 17
consolidated local government or urban-county government; 18
(b) The amount of qualified rehabilitation expenses exceeds fifteen m illion 19
dollars ($15,000,000); 20
(c) The certified historic structure is located within one -half (1/2) mile of a tax 21
increment financing development area which has received at least preliminary 22
approval under KRS 65.490 or 154.30-050; and 23
(d) Substantial rehabilitation of the certified historic structure begins prior to July 24
1, 2015. 25
(2) (a) The credit shall: 26
1. Equal the percentage of qualified rehabilitation expenses as provided in 27
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KRS 171.397(1)(a) and Section 59 of this Act; 1
2. Only apply to the first thir ty million dollars ($30,000,000) of qualified 2
rehabilitation expenses; and 3
3. Be refundable and transferable. 4
(b) Any projects approved for a credit under this section shall not be subject to 5
any caps established by KRS 171.397 and shall not be considered in 6
determining whether the certified rehabilitation credit cap has been met in any 7
year. 8
(3) The taxpayer seeking the credit shall file the applications for preliminary 9
determination and final determination as provided by KRS 171.397(2) and Section 10
59 of this Act. 11
(4) The total approved credit shall be available over a four (4) year period and the 12
maximum credit which may be claimed in a taxable year shall not exceed twenty -13
five percent (25%) of the total approved credit. 14
(5) The provisions of KRS 171.397(9 ) to (14) and Section 59 of this Act shall also 15
apply to this section. 16
SECTION 62. A NEW SECTION OF KRS CHAPTER 198A IS CREATED 17
TO READ AS FOLLOWS: 18
(1) The corporation shall work with the Kentucky Heritage Council to administer the 19
certified rehabilitation credit permitted by Section 59 of this Act. 20
(2) For commercial residential property that is granted credit based on thirty percent 21
(30%) of qualified r ehabilitation expenses for providing housing that is 22
affordable to households earning eighty percent (80%) or less of the median 23
family income, the corporation shall ensure that the commercial residential 24
property remain compliant with this requirement for a minimum of five (5) years 25
within the completion of the certified rehabilitation. 26
(3) The corporation, in conjunction with the Kentucky Heritage Council and the 27
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Department of Revenue, may promulgate administrative regulations in 1
accordance with KRS Chapter 13A to establish policies and procedures to ensure 2
compliance with this section. 3
Section 63. KRS 441.135 is amended to read as follows: 4
(1) The jailer may maintain a canteen for the benefit of prisoners lodged in the jail and 5
may assign such jail employees and prisoners to operate the canteen as are 6
necessary for efficient operation. 7
(2) All profits from the canteen shall be used: 8
(a) For the benefit and to enhance the well-being of the prisoners; or 9
(b) To enhance safety and security within the jail. 10
The jailer shall keep books of accounts of all receipts and disbursements from the 11
canteen and shall annually report to the county treasurer on the canteen account. 12
(3) Allowable expenditures from a canteen account shal l include but not be limited to 13
recreational, vocational, and medical purposes. 14
(4) Except in counties containing an urban -county government or a consolidated local 15
government, in order to ensure adequate, ongoing funding of jail canteen accounts, 16
beginning July 1, 2007, and on the first day of each fiscal year thereafter, the jail 17
canteen account balance shall at least equal the following amounts based on the 18
average daily inmate population of the jail: 19
(a) 300 prisoners or more ...............................................................................$6,000 20
(b) 200 to 299 prisoners..................................................................................$4,000 21
(c) 100 to 199 prisoners..................................................................................$2,000 22
(d) 99 or fewer prisoners.................................................................................$1,000 23
(5) For purposes of calculating the amount to be transferred to the jail canteen account, 24
the aver age daily number of inmates shall be equal to the average daily inmate 25
population of the jail in the immediately preceding fiscal year. 26
(6) Notwithstanding KRS 67.0802(6)(a), compensation resulting from the disposal of 27
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real or personal property that was pu rchased from a canteen account shall be 1
returned to the canteen account from which the real or personal property was 2
originally purchased. The jailer shall report all proceeds received from the 3
disposal of property for the year to the Legislative Research Commission for 4
referral to the Interim Joint Committee on Appropriations and Revenue by 5
December 1 of each year. 6
SECTION 64. A NEW SECTION OF KRS CHAPTER 224A IS CREATED 7
TO READ AS FOLLOWS: 8
A one -half of one percent (0.5 %) administrative fee shall be paid to the Kentucky 9
Infrastructure Authority for the administration of each project funded by the 10
infrastructure for economic development fund for coal -producing counties and the 11
infrastructure for economic development fund for tobacco counties. These 12
administrative fees shall be paid, upon inception of the project, out of the fund from 13
which the project was allocated. 14
Section 65. KRS 43.050 is amended to read as follows: 15
(1) The Auditor co nstitutes an agency independent of the administrative departments 16
enumerated in KRS 12.020, it being the policy of the General Assembly to provide 17
for the independent auditing of the accounts, financial transactions, and 18
performance of all spending agencie s of the state through a disinterested auditor, 19
who is entirely independent of the state administration whose affairs he is called 20
upon to audit. 21
(2) The Auditor may: 22
(a) Audit annually, and at such other times as may be deemed expedient, the 23
accounts of a ll state agencies, all private and semiprivate agencies receiving 24
state aid or having responsibility for the handling of any state funds, the 25
accounts, records, and transactions of the budget units, and the general 26
accounts of the state; 27
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(b) Make a complete audit and verification of all moneys handled for the account 1
of the state government by local officials charged with the collection of fees 2
or other money for or on behalf of the state, when an audit is demanded in 3
writing by the Legislative Research Com mission, the secretary of the Finance 4
and Administration Cabinet, or the Governor, and may make an audit when it 5
is not so demanded; 6
(c) Examine periodically the performance, management, conduct, and condition 7
of all asylums, prisons, institutions for the intellectually disabled, and 8
eleemosynary institutions; public works owned, operated, or partly owned by 9
the state, or in the conduct or management of which the state has any financial 10
interest or legal power; and state agencies. The examinations shall giv e 11
special attention to the faithful and economical application of any money 12
appropriated by the state to the institution, public works, or state agency 13
examined, or of any money in which the state has an interest; 14
(d) Examine annually the management and condition of the offices of the Finance 15
and Administration Cabinet, the State Treasurer, and the chief state school 16
officer, to determine whether the laws regulating their duties are being fully 17
complied with, and all mo ney received by them for the state fully accounted 18
for; 19
(e) Examine, at least biennially, the Finance and Administration Cabinet's 20
compliance with this section and KRS 48.111 and 56.800 to 56.823. Within 21
sixty (60) days of the completion of each examinatio n, the Auditor shall 22
report his findings and recommendations to the Capital Projects and Bond 23
Oversight Committee; 24
(f) Audit periodically all state revenue collections, and, if he finds that 25
collections are not being satisfactorily made, report that fact t o the authority 26
whose duty it is to make the collections; 27
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(g) Make special audits and investigations when required by the Governor; 1
(h) Investigate the means of accounting for, controlling, and insuring the safe 2
custody of all property of the state, and ve rify the existence and condition of 3
such property charged to, or held in the custody of any state agency; 4
(i) Audit the statements of financial condition and operations of the state 5
government, and certify in writing the results of the audit and examinatio n 6
with the comments he deems necessary for the information of the General 7
Assembly; 8
(j) Report immediately in writing to the Governor, the Legislative Research 9
Commission, and the secretary of the Finance and Administration Cabinet, 10
any unauthorized, illegal, irregular, or unsafe handling or expenditure of state 11
funds, or other improper practice of financial administration, or evidence that 12
any such handling, expenditure, or practice is contemplated, and any 13
obstruction of the Auditor or his agents during t he conduct of any audit or 14
investigation of a state agency; and 15
(k) Assist the Legislative Research Commission at hearings and investigations 16
conducted by it and cooperate with the Legislative Research Commission in 17
the preparation of its reports to the General Assembly. 18
(3) The Auditor may investigate and examine into the conduct of all state and county 19
officers who are authorized to receive, collect, or disburse any money for the state, 20
or who manage or control any property belonging to the state or in wh ich the state 21
is interested, or who make estimates or records that are used as a basis by any state 22
agency in the disbursement of public funds. 23
(4) The Auditor may conduct a special audit or examination of a city government or 24
any of its agencies or departments. 25
(5) The Auditor may receive appropriations from the general fund for audits of the 26
statewide systems of personnel and payroll, cash and investments, revenue 27
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collection, and the state accounting system. Except where otherwise provided, any 1
expenses incurred by the Auditor for any other audit, examination, investigation, 2
or review, including a required audit of federal funds, [audits, examinations, 3
investigations, or reviews] shall be charged to the entity that is the subject of the 4
audit, examination, investigation, or review. The Auditor shall maintain a record of 5
all time expenses for each audit, examination, investigation, or review. 6
(6) The Auditor may provide consulting services, in accordance with auditing standards 7
generally accepted in the Unite d States and government auditing standards, to state 8
or local government entities and associations of such entities, including special 9
purpose governmental entities, and may charge a mutually agreed upon rate for 10
those services, including: 11
(a) Providing training and technical presentations; 12
(b) Developing audit guides applicable to those entities; 13
(c) Developing question and answer documents to promote understanding of 14
technical issues or standards; and 15
(d) Collaborating with other professional organization s to advance auditing of 16
government entities and programs. 17
(7) The Auditor shall not be responsible for the keeping of any accounts of the state, 18
except accounts relating to his own operations. The Auditor shall not be responsible 19
for the collection of any money due the state, or for the handling or custody of any 20
state funds or property except in the process of counting and verifying the amounts 21
of the funds or property in the course of the audits provided for in this section. 22
Section 66. KRS 18A.080 is amended to read as follows: 23
(1) (a) Except as provided in KRS 18A.200, members of the board shall receive 24
compensation of one hundred dollars ($100) per diem for each meeting of the 25
board and reimbursement for actual and n ecessary expenses in accordance 26
with state regulations and standards applicable to state employees. 27
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(b)[(2)] In addition to payments for attendance at board meetings all board 1
members may also be paid one hundred dollars ($100) for each day spent in 2
the pr eparation of recommended orders, the review of transcripts or other 3
matters related to appeals before the board. 4
(c)[(3)] Any board member missing three (3) consecutive regular meetings shall 5
be deemed to have vacated his office. Replacements to the board shall be 6
made as provided in KRS 18A.050(2) and 18A.060. 7
(2) Each agency of the executive branch of state government with employees covered 8
by this chapter shall be annually assessed for the amount required for the 9
operation of the Personnel Board. The age ncy assessment shall be determined by 10
the secretary of the Finance and Administration Cabinet based on the authorized 11
full-time positions of each agency on July 1 of each year of the biennium. The 12
Finance and Administration Cabinet shall collect the assessment. 13
Section 67. KRS 151.723 is amended to read as follows: 14
(1) The rate of the water use fees collected by the authority shall be set for each year of 15
the biennium based upon a total amount of funds necessary to carry out only those 16
functions, projects, and expenses authorized by the General Assembly in the 17
authority's biennial budget. 18
(2) At the time the authority submits its budget to the Governor's Office of Policy and 19
Management, it shall certify to the General Asse mbly the total amount of water use 20
reported for the preceding biennium by users subject to the water use fees. At least 21
thirty (30) days prior to the effective date of the authority's budget, the authority 22
shall establish a rate for each water use fee base d upon an amount of water use 23
projected for each year of the biennium from the amount reported, calculated to 24
generate the amount of funds necessary to carry out the functions, projects, and 25
expenses which have been authorized by the General Assembly to be funded by the 26
fees. The rate shall be an amount for each one thousand (1,000) gallons of water use 27
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and shall be effective for at least one (1) year. 1
(3) The authority shall define by administrative regulation those uses of the Kentucky 2
River or the waters of the Kentucky River basin subject to a water use fee. Water 3
use fees shall not apply to facilities using water for agricultural purposes. The 4
authority shall collect the fees on a quarterly basis and pay the collected fees into 5
the State Treasury to the credit of a restricted fund for use by the authority. 6
(4) Water withdrawal fees imposed by the authority shall not be subject to state and 7
local taxes. Notwithstanding KRS 151.710(10), Tier 1 water withdrawal fees shall 8
be used to support the operations of the authority and for contractual services for 9
water supply and quality studies. 10
Section 68. KRS 304.17B-021 is amended to read as follows: 11
(1) In addition to the other powers enumerated in KRS 304.17B -001 to 304.17B -031, 12
the Office of Health Data and Analytics shall assess in surers in the amounts 13
specified in this section. The assessment shall be used for the purpose of funding 14
GAP losses and Kentucky Access. 15
(a) The amount of the assessment for each calendar year shall be as follows: 16
1. From each stop -loss carrier, an amount that is equal to two dollars ($2) 17
upon each one hundred dollars ($100) of health insurance stop -loss 18
premiums; 19
2. From all insurers, an amount based on the total amount of all health 20
benefit plan premiums earned during the prior assessment period and 21
paid by all insurers who received any of the health benefit plan 22
premiums on which the annual assessment is based. The percentage rate 23
used for the annual assessment shall be the same percentage rate as 24
calculated in the GAP risk adjustment process for the six (6) month 25
period of July 1, 1998, through December 31, 1998; 26
3. If determined necessary by the office, a second assessment may be 27
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assessed in the same manner as the annual assessment in subparagraph 1
2. of this paragraph; and 2
4. In no event shall the sum of the first assessment provided for in 3
subparagraph 2. of this paragraph and the second assessment provided 4
for in subparagraph 3. of this paragraph be greater than one percent 5
(1%) of the total amount of all assessable health benefit plan premiums 6
earned during the prior assessment period. 7
(b) The first assessment shall be for the period from January 1, 2000, through 8
December 31, 2000, and shall be paid on or before March 31, 2001. 9
Subsequent annual assessments shall be paid on or before March 31 of the 10
year following the assessment period. 11
(2) Every supporting insurer shall report to the office, in a form and at the time as the 12
office may specify, the following information for the specified period: 13
(a) The insurer's total stop-loss premiums and health benefit plan premiums in the 14
individual, small group, large group, and association markets; and 15
(b) Other information as the office may require. 16
(3) As part of the assessment process, the office shall establish and maintain the 17
Kentucky Access fund. All funds s hall be held at interest, in a single depository 18
designated in accordance with KRS 304.8-090(1) under a written trust agreement in 19
accordance with KRS 304.8 -095. All expense and revenue transactions of the fund 20
shall be posted to the Management Administrat ive Reporting System (MARS) and 21
its successors. 22
(4) The Kentucky Access fund shall be funded from the following sources: 23
(a) Premiums paid by Kentucky Access enrollees; 24
(b) The funds designated for Kentucky Access in the Kentucky Health Care 25
Improvement fund; 26
(c) Appropriations from the General Assembly; 27
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(d) [All premium taxes collected under KRS Chapter 136 from any insurer, and 1
any retaliatory taxes collected under KRS 304.3 -270 from any insurer, for 2
accident and health premiums that are in excess of the amount of the premium 3
taxes and retaliatory taxes collected for the calendar year 1997; 4
(e) ]Annual assessments from supporting insurers; 5
(e)[(f)] A second assessment from supporting insurers; 6
(f)[(g)] Gifts, grants, or other voluntary contributions; 7
(g)[(h)] Interest or other earnings on the investment of the moneys held in the 8
account; and 9
(h)[(i)] Any funds remaining on January 1, 2001, in the guaranteed acceptance 10
program account may be transferred to the Kentucky Access fund. 11
(5) The office shall determine on behalf of Kentucky Access the premiums, the 12
expenses for administration, the incurred losses, taking into account investment 13
income and other amounts needed to satisfy reserves, estimated claim liabilities, 14
and other obligations for each calendar year. The office shall also determine the 15
amount of the actual guaranteed acceptance program plan losses for each calendar 16
year. The office shall assess insurers as follows: 17
(a) On or before March 31 of each year, the amount set forth in subsection 18
(1)(a)1. and (1)(a)2. of this section. 19
(b) If the amount of actual guaranteed acceptance program plan losses exceeds 20
the assessment provided for in paragraph (a) of this subsection, a second 21
assessment shall be authorized under subsection (1)(a)3. of this section. If the 22
amount of GAP losses exceeds the assessments provided under subsection 23
(1)(a)1., subsection (1)(a)2., and subsection (1)(a)3. of this section, moneys 24
received and available from the Kentucky Hea lth Care Improvement Fund 25
after the office determines available funding for Kentucky Access for the 26
current calendar year pursuant to subsection (6) of this section, shall be used 27
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to reimburse GAP participating insurers for any actual guaranteed acceptance 1
program losses. If the amount of GAP losses exceeds the amount in the 2
Kentucky Health Care Improvement Fund after reserving sufficient funds for 3
Kentucky Access for the current year, each GAP participating insurer shall be 4
reimbursed up to the amount of i ts proportional share of actual guaranteed 5
acceptance program plan losses from the fund. Effective for any assessment 6
on or after January 1, 2001, in calculating GAP losses, total premiums and 7
total claims of the GAP participating insurer shall be used. Ac tual guaranteed 8
acceptance program losses shall be calculated as the difference between the 9
total GAP claims and the total GAP premiums on an aggregate basis. 10
(c) If GAP losses are fully covered by the assessment process provided for in 11
subsection (1)(a)1. and (1)(a)2. of this section and the second assessment 12
provided for in subsection (1)(a)3. of this section is not necessary to cover 13
GAP losses, and as determined by the office using reasonable actuarial 14
principles Kentucky Access funding is needed, a second assessment provided 15
for in subsection (1)(a)3. of this section shall be completed. 16
(6) After the end of each calendar year, GAP losses shall be reimbursed only after the 17
office determines that appropriate funding is available for Kentucky Access for the 18
current calendar year. GAP losses shall be reimbursed after reserving sufficient 19
funds for Kentucky Access. 20
(7) With respect to a GAP participating insurer who r easonably will be expected both 21
to pay assessments and to receive payments from the assessment fund, the office 22
shall calculate the net amount owed to or to be received from the fund, and the 23
office shall only collect assessments for or make payments from the fund based 24
upon net amounts. 25
(8) Insurers paying an assessment may include in any health insurance rate filing the 26
amount of these assessments as provided for in Subtitle 17A of this chapter. 27
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(9) Insurers shall pay any assessment amounts authorized in KRS 304.17B -001 to 1
304.17B-031 within thirty (30) days of receiving notice from the office of the 2
assessment amount. 3
(10) Any surpluses remaining in the Kentucky Access fund after completion of the 4
assessment process for a calendar year shall be maintained for use in the assessment 5
process for future calendar years and such funds shall not lapse. The general fund 6
appropriations to the Kentucky Access fund shall not lapse. 7
(11) Assessments on health benefit plan premiums that are required under KRS 8
304.17B-001 to 304.17B -031 shall not be applied to premiums received by an 9
insurer for state employees, Medicaid recipients, Medicare beneficiaries, and 10
CHAMPUS insureds. 11
(12) The office shall direct that receipts of Kentucky Access be held at interest, and may 12
be used to offset future losses or to reduce plan premiums in accordance with the 13
terms of KRS 304.17B -001 to 304.17B -031. As used in this subsection, "future 14
losses" may include reserves for incurred but not reported claims. 15
(13) The office shall conduct exa minations of insurers and stop -loss carriers reasonably 16
necessary to determine if the information provided by the insurers or stop -loss 17
carriers is accurate. 18
(14) The insurer, as a condition of conducting health insurance business in Kentucky, 19
shall pay the assessments specified in KRS 304.17B-001 to 304.17B-031. 20
(15) The stop-loss carrier, as a condition of doing health insurance business in Kentucky, 21
shall pay the assessments specified in KRS 304.17B-001 to 304.17B-031. 22
Section 69. KRS 11.068 is amended to read as follows: 23
(1) There is created an agency of state government known as the Office of State Budget 24
Director. The office shall be attached for administrative purposes to the Office of 25
the Governor. 26
(2) The office shall include the following major organizational units: 27
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(a) The Office of State Budget Director, headed by the state budget director. The 1
state budget director shall be appointed by the Governor pursuant to KRS 2
11.040 and shall serve, under direction of the Governor, as state budget 3
director and secretary of the state planning committee. The office shall 4
include such principal assistants and supporting personnel appointed pursuant 5
to KRS Chapter 12 as may be necessary to carry out the functions of the 6
office. The office shall have such duties, rights, and responsibilities as are 7
necessary to perform, without being limited to, the following functions: 8
1. Functions relative to the preparation, administration, and evaluation of 9
the executive budget as provided i n KRS Chapters 45 and 48 and in 10
other laws, including but not limited to, capital construction budgeting, 11
evaluation of state programs, program monitoring, financial and policy 12
analysis and issue review, and executive policy implementation and 13
compliance; 14
2. Continuous evaluation of statewide management and administrative 15
procedures and practices, including but not limited to economic 16
forecasting, technical assistance to state agencies, forms control, and 17
special analytic studies as directed by the Governor; and 18
3. Staff planning functions of the state planning committee and evaluation 19
of statewide management and administrative practices and procedures. 20
(b) Governor's Office for Policy and Management, headed by the state budget 21
director. The state budget dir ector shall maintain staff employed pursuant to 22
KRS Chapter 18A sufficient to carry out the functions of the office relating to 23
state budgeting as provided in paragraph (a) of this subsection and state 24
planning as provided in KRS Chapter 147, review of adm inistrative 25
regulations proposed by executive agencies prior to filing pursuant to KRS 26
Chapter 13A and such other duties as may be assigned by the Governor. 27
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(c) Governor's Office for Policy Research, headed by the state budget director. 1
The Governor's Offi ce for Policy Research shall assist the state budget 2
director in providing policy research data, information, and analysis to the 3
Governor on public policy issues that impact the Commonwealth. The state 4
budget director shall identify and direct the researc h to be completed and 5
provided by the office. The state budget director shall maintain staff employed 6
in accordance with KRS Chapter 18A sufficient to carry out the functions of 7
the office. 8
(d) Governor's Office for Economic Analysis, headed by the state budget director. 9
The state budget director shall maintain staff employed in accordance with 10
KRS Chapter 18A sufficient to carry out the functions of the office. The 11
Governor's Office for Economic Analysis shall carry out the revenue 12
estimating and economic analysis functions and responsibilities, including but 13
not limited to the functions and responsibilities assigned to the Office of State 14
Budget Director by KRS Chapter 48. The Governor's Office for Economic 15
Analysis shall perform the tax administrative fun ction of using tax data to 16
provide the Department of Revenue with studies, projections, statistical 17
analyses, and any other information that will assist the Department of 18
Revenue in performing its tax administrative functions. 19
(3) (a) As used in this subse ction, "tax expenditure" means an exemption, 20
exclusion, or deduction from the base of a tax, a credit against the tax, a 21
deferral of a tax, or a preferential tax rate. 22
(b) On or before September 1, 2026, and every September 1 thereafter, the 23
Office of Stat e Budget Director shall publish on its website detailed 24
estimates of the general fund and road fund for the current and next two (2) 25
fiscal years of the revenue loss resulting from tax expenditures. 26
(c) The Department of Revenue shall provide assistance an d furnish data that 27
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is not restricted by KRS 131.190. 1
(d) The estimates shall include for each tax expenditure: 2
1. The amount of revenue loss; 3
2. A citation of the legal authority for the tax expenditure; 4
3. The year in which the tax expenditure was enacted; and 5
4. The tax year in which the tax expenditure became effective. 6
SECTION 70. A NEW SECTION OF KRS CHAPTER 16 IS CREATED TO 7
READ AS FOLLOWS: 8
Notwithstanding any statute to the contrary, the department shall bill and accept 9
payment from nonstate -operated event sponsors for security services provided by the 10
department. 11
SECTION 71. A NEW SECTION OF KRS CHAPTER 138 IS CREATED TO 12
READ AS FOLLOWS: 13
(1) As used in this section: 14
(a) "Consumer" means a: 15
1. Kentucky resident who purchases an event contract through a 16
prediction market; or 17
2. Person who is not a Kentucky resident who pur chases an event 18
contract through a prediction market while in Kentucky; 19
(b) "Department" means the Department of Revenue; 20
(c) "Event contract": 21
1. Means an agreement, contract, transaction, or swap in an excluded 22
commodity based on the occurrence, extent o f an occurrence, or 23
contingency other than a change in the price, rate, value, or levels of a 24
commodity described in 7 U.S.C. sec. 1a(19)(i), as amended; and 25
2. Does not include: 26
a. Any contract of sale of a commodity for future delivery, or any 27
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option on such a contract, executed on or subject to the rules of 1
a designated contract market; or 2
b. Any swap or derivative based on: 3
i. An agricultural commodity; 4
ii. An exempt commodity; or 5
iii. Any excluded commodity not subject to subparagraph 1. of 6
this paragraph, as the terms are defined in the Commodity 7
Exchange Act; 8
(d) "Person" has the same meaning as in KRS 139.010; 9
(e) "Prediction market": 10
1. Means: 11
a. Any physical or electronic platform through which a consumer 12
may buy, sell, or exchange event contracts, whether the market is 13
located in or out of the state; or 14
b. Any platform or system that provides consumers with the ability 15
to open speculative positions on the outcomes of future events; 16
and 17
2. May be a board of tr ade designated as a contract market by the 18
Commodity Futures Trading Commission; 19
(f) "Prediction market operator": 20
1. Means a board of trade or other person, including any affiliate of the 21
person, that operates a prediction market; and 22
2. Includes but is not limited to a person that satisfies the requirements 23
of this subsection through the ownership, operation, or control of a 24
digital distribution service, digital distribution platform, online portal, 25
or application store where a prediction market may be accessed; 26
(g) "Speculative position" means a financial commitment made by a consumer 27
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in a prediction market; and 1
(h) "Transaction fee" means: 2
1. The fee charged by the prediction market operator to complete a sale, 3
purchase, or trade of an event contract to a consumer; and 4
2. The amount paid by a consumer to purchase an event contract from a 5
prediction market operator. 6
(2) On and after January 1, 2027, an excise tax is hereby imposed on a prediction 7
market operator at the rate of fourteen and one -quarter percent (14.25%) of the 8
prediction market operator's transaction fees. The accrual method of accounting 9
shall be used for purposes of calculating the amount of tax owed by the 10
prediction market operator under this subsection. 11
(3) The tax imposed by subsection (2) of this section is due and payable monthly and 12
shall be remitted to the department on or before the twentieth day of the next 13
succeeding calendar month. 14
(4) The prediction market operator's payment shall be accompanied by a return 15
prescribed by the department indicating the amount of tax due for the previous 16
calendar month as well as any other information the department shall require 17
through an administrative regulation promulgated in accordance with KRS 18
Chapter 13A. 19
(5) Any prediction market operator who violates any provision of this section shall be 20
subject to the uniform civil penalties imposed under KRS 131.180. 21
(6) In every case, any tax not paid on or before the due date shall bear interest at the 22
tax interest rate as defined in KRS 131.010 fro m the due date until the date of 23
payment. 24
(7) It is the purpose and intent of the General Assembly to levy taxes on persons 25
engaged in the operations of a prediction market. It is not the intent of the 26
General Assembly to legalize these activities. 27
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SECTION 72. A NEW SECTION OF KRS CHAPTER 138 IS CREATED TO 1
READ AS FOLLOWS: 2
(1) (a) A fantasy contest service provider shall be liable for the payment of the tax 3
levied in Section 9 of this Act. 4
(b) A prediction market operator shall be liable for the payment of the tax 5
levied in Section 71 of this Act. 6
(2) Notwithstanding anything in this chapter to the contrary, the president, vice 7
president, secretary, treasurer, or any other person holding any equivalent 8
corporate office of any corporation subject to Section 9 or 71 of this Act shall be 9
personally and individually liable, both jointly and severally, for the taxes 10
imposed by Section 9 or 71 of this Act. 11
(3) Corporate dissolution, withdrawal of the corporation from the state, or the 12
cessation of holding any corporate office shall not discharge the liability of any 13
person. The personal and individual liability shall apply to every person holding a 14
corporate office at the time the tax becomes or became due. 15
(4) Notwithstanding a ny provision of this chapter or KRS 275.150, 362.1 -306(3) or 16
predecessor law, or 362.2 -404(3) to the contrary, the managers of a limited 17
liability company, the partners of a limited liability partnership, and the general 18
partners of a limited liability lim ited partnership or any other person holding any 19
equivalent office of a limited liability company, limited liability partnership, or 20
limited liability limited partnership subject to Section 9 or 71 of this Act shall be 21
personally and individually liable, b oth jointly and severally, for the fantasy 22
sports service provider or prediction market operator taxes. 23
(5) Dissolution, withdrawal of the limited liability company, limited liability 24
partnership, or limited liability limited partnership from the state, or the cessation 25
of holding any office shall not discharge the liability of any person. The personal 26
and individual liability shall apply to every manager of a limited liability 27
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company, partner of a limited liability partnership, or general partner of a li mited 1
liability limited partnership at the time the tax becomes or became due. 2
(6) A person shall not be personally and individually liable under this section if the 3
person had no authority to collect, truthfully account for, or pay over any tax at 4
the time the taxes imposed become or became due. 5
(7) "Taxes," as used in this section, includes interest accrued at the rate provided by 6
KRS 131.183, all applicable penalties imposed under this chapter, and all 7
applicable penalties imposed under KRS 131.180, 13 1.410 to 131.445, and 8
131.990. 9
Section 73. KRS 132.017 is amended to read as follows: 10
(1) As used in this section: 11
(a) "Local governmental entity" includes a county fiscal court and legislative 12
body of a city, urban -county government, consolidated local government, 13
charter county government, unified local government, or other taxing district; 14
and 15
(b) "Next regular election " means the regular election that occurs immediately 16
after all statutory requirements for levying a property tax rate have been met, 17
regardless of whether the election occurs in the same or a subsequent calendar 18
year as the levy of the property tax rate. 19
(2) (a) 1. Except as provided in subparagraph 2. of this paragraph, the portion of a 20
tax rate levied by an ordinance, order, resolution, or motion of a taxing 21
district[ local governmental entity or district board of education] subject 22
to recall as provided for in KRS 68.245, 132.023, 132.027, and 160.470, 23
shall go into effect forty -five (45) days after its passage if a petition is 24
not filed to challenge the levy. If a petition is filed, the levy shall be 25
suspended in accordance with paragraph (e) of this subsection. 26
2. When a tax rate is levied by a [ district board of education or other] 27
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taxing district that is primarily located in a county with a population of 1
three hundred thousand (300,000) or more inhabitants [containing an 2
urban-county government or a con solidated local government] , the 3
portion of a tax rate levied by an ordinance, order, resolution, or motion 4
of a [district board of education or other ] taxing district subject to recall 5
as provided for in KRS 68.245, 132.023, 132.027, and 160.470, shall go 6
into effect fifty (50) days after its passage if a petition is not filed to 7
challenge the levy. If a petition is filed, the levy shall be suspended in 8
accordance with paragraph (e) of this subsection. 9
(b) During the same forty -five (45) day or fifty (50) day time period provided by 10
paragraph (a) of this subsection, any three (3) qualified voters, who reside in 11
the area where the tax levy will be imposed, may commence petition 12
proceedings to protest the passage of the ordinance, order, resolution, or 13
motion levied by a taxing district by filing an affidavit with the county clerk. 14
The affidavit shall state: 15
1. The three (3) qualified voters constitute the members of the petition 16
committee; 17
2. The petition committee will be responsible for circulating the petition; 18
3. The petition committee will file the petition in the proper form within 19
the same forty -five (45) day or fifty (50) day time period provided by 20
paragraph (a) of this subsection; 21
4. The names and addresses of the petition committee members; 22
5. The address to which all notices to the committee are to be sent; and 23
6. For petition committees filing petitions in response to a tax rate levied 24
by a[ district board of education or other] taxing district that is primarily 25
located in a county with a populatio n of three hundred thousand 26
(300,000) or more inhabitants [containing an urban -county government 27
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or a consolidated local government] , whether or not the petition 1
committee is willing to incur all of the expenses associated with 2
electronic petition signatures. If the petition committee is not willing to 3
incur all of the expenses, then electronic petition signatures shall not be 4
allowed for the petition. 5
(c) Upon receipt of the affidavit, the county clerk shall immediately: 6
1. Notify the petition committee of all statutory requirements for the filing 7
of a valid petition under this section; 8
2. Notify the petition committee that the clerk w ill publish a notice 9
identifying the tax levy being challenged and providing the names and 10
addresses of the petition committee on the home page of the clerk's 11
website and in a newspaper of general circulation within the county, if: 12
a. There is a newspaper within the county in which to publish the 13
notice; and 14
b. The petition committee remits an amount equal to the cost of 15
publishing the notice in the newspaper as determined in 16
accordance with the provisions of KRS 424.160 at the time of the 17
filing of the affidavit. 18
If the petition committee elects to have the notice published, the clerk 19
shall publish the notice within five (5) days of receipt of the affidavit; 20
and 21
3. Deliver a copy of the affidavit to the taxing district levying the 22
tax[appropriate local governmental entity or district board of education]. 23
(d) The petition shall meet the following requirements: 24
1. All papers of the petition shall be substantially uniform in size and style 25
and shall be assembled in one (1) instrument for filing; 26
2. Each sheet of the petition may contain the names of voters from more 27
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than one (1) voting precinct; 1
3. Each nonelectronic petition signature shall be executed in ink or 2
indelible pencil; 3
4. Each electronic petition signature shall comply with the requirements of 4
the Uniform Electronic Transactions Act, KRS 369.101 to 369.120; 5
5. Each petition signature shall be followed by the printed name, street 6
address, birth month, and birth year of the person signing; and 7
6. a. i. Except for petitions filed in response to a tax ra te levied by a 8
local[district] board of education, The petition shall be 9
signed by a number of registered and qualified voters 10
residing in the affected jurisdiction equal to at least ten 11
percent (10%) of the total number of votes cast in the last 12
preceding presidential election. 13
ii. For petitions filed in response to a tax rate levied by a 14
local[district] board of education, the petition shall be signed 15
by at least five thousand (5,000) registered and qualified 16
voters residing in the affected jurisdiction or signed by a 17
number of registered and qualified voters residing in the 18
affected jurisdiction equal to at least ten percent (10%) of the 19
total number of votes cast in the last preceding presidential 20
election, whichever is less. 21
b. Electronic petition signatures shall be included in determining 22
whether the required number of petition signatures has been 23
obtained when: 24
i. The expenses associated with the electronic petition 25
signatures have been incurred in accordance with paragraph 26
(b)6. of this subsection; 27
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ii. The electronic petition signatures comply with the 1
requirements of this subsection; and 2
iii. The petition was filed in response to a tax rate levied by a [ 3
district board of education or other] taxing district that is 4
primarily located in a county with a population of three 5
hundred thousand (300,000) or more 6
inhabitants[containing an urban -county govern ment or a 7
consolidated local government]. 8
c. The inclusion of an invalid petition signature on a page shall not 9
invalidate the entire page of the petition, but shall instead result in 10
the invalid petition signature being stricken and not counted. 11
(e) Upon the filing of the petition with the county clerk, the ordinance, order, 12
resolution, or motion shall be suspended from going into effect until after the 13
election referred to in subsection (3) of this section is held, or until the 14
petition is finally determi ned to be insufficient and no further action may be 15
taken pursuant to paragraph (i) of this subsection. 16
(f) The county clerk shall immediately notify the presiding officer of the taxing 17
district[appropriate local governmental entity or district board of e ducation] 18
that the petition has been received and shall, within thirty (30) days of the 19
receipt of the petition, make a determination of whether the petition contains 20
enough signatures of qualified voters to place the ordinance, order, resolution, 21
or motion before the voters. 22
(g) If the county clerk finds the petition to be sufficient, the clerk shall certify to 23
the petition committee and the taxing district [local governmental entity or 24
district board of education] within the thirty (30) day period provided for in 25
paragraph (f) of this subsection that the petition is properly presented and in 26
compliance with the provisions of this section, and that the ordinance, order, 27
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resolution, or motion levying the tax will be placed before the voters for 1
approval. 2
(h) If the county clerk finds the petition to be insufficient, the clerk shall, within 3
the thirty (30) day period provided for in paragraph (f) of this subsection, 4
notify, in writing, the petition committee and the taxing district levying the 5
tax[local governm ental entity or district board of education] of the specific 6
deficiencies found. Notification shall be sent by certified mail and shall be 7
published on the home page of the clerk's website and at least one (1) time in 8
a newspaper of general circulation wit hin the county containing the taxing 9
district[local governmental entity or district board of education] levying the 10
tax. If there is not a newspaper within the county in which to publish the 11
notification, then the notification shall be posted at the courthouse door. 12
(i) A final determination of the sufficiency of a petition shall be subject to final 13
review by the Circuit Court of the county in which the taxing district levying 14
the tax [local governmental entity or district board of education] is located, 15
and shall be limited to the validity of the county clerk's determination. Any 16
petition challenging the county clerk's final determination shall be filed within 17
ten (10) days of the issuance of the clerk's final determination. 18
(j) The local governmental entity levying the tax[ or district board of education] 19
may cause the cancellation of the election by reconsidering and amending the 20
ordinance, order, resolution, or motion to levy a tax rate which will produce 21
no more revenue from real property, exclusive of re venue from new property[ 22
as defined in KRS 132.010] , than four percent (4%) over the amount of 23
revenue produced by the compensating tax rate [ defined in KRS 132.010] 24
from real property. The action by the local governmental entity or 25
local[district] board of education to cancel an election shall be valid only if 26
taken within fifteen (15) days following the date the clerk finds the petition to 27
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be sufficient. 1
(3) (a) If an election is necessary under the provisions of subsection (2) of this 2
section: 3
1. The local governmental entity shall cause to be submitted to the voters 4
of the district at the next regular election, the question as to whether the 5
property tax rate shall be levied; or 6
2. The local[district] board of education shall cause to be submitted to the 7
voters of the district in a called common school election not less than 8
thirty-five (35) days nor more than forty-five (45) days from the date the 9
signatures on the petition are validated by the county clerk, or at the next 10
regular election, at the option of the local[district] board of education, 11
the question as to whether the property tax rate shall be levied. The cost 12
of a called common school election shall be borne by the school district 13
holding the election. Any called common school election shall co mply 14
with the provisions of KRS 118.025. 15
(b) If an election under paragraph (a) of this subsection is held in conjunction 16
with a regular election, the question as to whether the property tax rate shall 17
be levied shall be submitted to the county clerk no la ter than the second 18
Tuesday in August preceding the regular election. 19
(c) In an election held under paragraph (a) of this subsection, the question shall 20
be framed to ask whether the voter is for the levy of the property tax rate. If a 21
majority of the votes cast upon the question oppose its passage, the ordinance, 22
order, resolution, or motion shall not go into effect. If a majority of the votes 23
cast upon the question favor its passage, the ordinance, order, resolution, or 24
motion shall become effective. 25
(d) If the ordinance, order, resolution, or motion fails to pass pursuant to an 26
election held under paragraph (a) of this subsection, the property tax rate 27
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which will produce four percent (4%) more revenues from real property, 1
exclusive of revenue from new property[ as defined in KRS 132.010], than the 2
amount of revenue produced by the compensating tax rate [ defined in KRS 3
132.010], shall be levied without further approval by the local governmental 4
entity or local[district] board of education. 5
(e) Local, state, and federal tax dollars shall not be used to advocate, in partial 6
terms, for or against any public question that appears on the ballot in this 7
subsection. For purposes of this section, "local" means and includes any city, 8
county, urban -county government, c onsolidated local government, unified 9
local government, charter county, or special district. 10
(4) Notwithstanding any statutory provision to the contrary, if a taxing district [local 11
governmental entity or district board of education] has not established a f inal tax 12
rate as of September 15, due to the recall provisions of this section, KRS 68.245, 13
132.023, 132.027, or 160.470, regular tax bills shall be prepared as required in KRS 14
133.220 for all districts having a tax rate established by that date; and a sec ond set 15
of bills shall be prepared and collected in the regular manner, according to the 16
provisions of KRS Chapter 132, upon establishment of final tax rates by the 17
remaining districts. 18
(5) If a second billing is necessary, the collection period shall be e xtended to conform 19
with the second billing date. 20
(6) All costs associated with the second billing shall be paid by the taxing district [ or 21
districts] requiring the second billing. 22
Section 74. KRS 160.470 is amended to read as follows: 23
(1) (a) Notwithstanding any statutory provisions to the contrary, a local[no district] 24
board of education shall not levy a general tax rate which will produce more 25
revenue, exclusive of revenue from net assessment growth as defined in KRS 26
132.010, than would be produced by application of the general tax rate that 27
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could have been levied in the preceding year to the prec eding year's 1
assessment, except as provided in subsections (10)[(9)] and (11)[(10)] of this 2
section and KRS 157.440. 3
(b) If an election is held as provided for in KRS 132.017 and the question should 4
fail, such failure shall not reduce the "...general tax r ate that could have been 5
levied in the preceding year...," referred to in subsection (1)(a) of this section, 6
for purposes of computing the general tax rate for succeeding years. 7
In the event of a merger of school districts, the limitations contained in th is 8
section shall be based upon the combined revenue of the merging districts, as 9
computed under the provisions of this section. 10
(2) A local[No district] board of education shall not levy a general tax rate within the 11
limits imposed in subsection (1) of thi s section which respectively exceeds the 12
compensating tax rate defined in KRS 132.010, except as provided in subsections 13
(10)[(9)] and (11)[(10)] of this section and[,] KRS 157.440[,] and[ KRS] 157.621, 14
until the local[district] board of education has comp lied with the provisions of 15
subsection (8)[(7)] of this section. 16
(3) Upon receipt of property assessments from the Department of Revenue, the 17
commissioner of education shall certify the following to each local[district] board 18
of education: 19
(a) The general tax rate that a local[district] board of education could levy under 20
the provisions of subsection (1) of this section, and the amount of revenue 21
expected to be produced; 22
(b) The compensating tax rate as defined in KRS 132.010 for a district's general 23
tax rate the amount of revenue expected to be produced; and 24
(c) The general tax rate which will produce, respectively, no more revenue from 25
real property, exclusive of revenue from new property, than four percent (4%) 26
over the amount of revenue produced by the c ompensating tax rate defined in 27
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KRS 132.010, and the amount of revenue expected to be produced. 1
(4) Upon completion of action on property assessment data, the Department of 2
Revenue shall submit certified property assessment data as required in KRS 3
133.125 to the chief state school officer. 4
(5) Within thirty (30) days after the local[district] board of education has received its 5
assessment data, the rates levied shall be forwarded to the Kentucky Board of 6
Education for its approval or disapproval. The failur e of the local[district] board of 7
education to furnish the rates within the time prescribed shall not invalidate any 8
levy made thereafter. 9
(6) (a) Each local[district] board of education shall, on or before January 31 of each 10
calendar year, formally and pu blicly examine detailed line item estimated 11
revenues and proposed expenditures for the subsequent fiscal year. On or 12
before May 30 of each calendar year, each local[district] board of education 13
shall adopt a tentative working budget which shall include a minimum reserve 14
of two percent (2%) of the total budget. 15
(b) Each local[district] board of education shall submit to the Kentucky Board of 16
Education no later than September 30, a close estimate or working budget 17
which shall conform to the administrative reg ulations prescribed by the 18
Kentucky Board of Education. 19
(7) (a) A local board of education proposing to levy a general tax rate shall make 20
the following information public: 21
1. The general tax rate levied in the preceding year and the revenue 22
produced by that rate; 23
2. The proposed tax rate for the current year and the revenue expected to 24
be produced by that rate; 25
3. A clear explanation if the proposed tax rate is expected to produce 26
more or less revenue generated for the school district than received 27
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from the general tax rate in the preceding year and the general areas 1
to which any increase in revenue will be allocated; 2
4. A specific reference to this section and Section 73 of this Act, along 3
with a statement as to whether any portion of the proposed tax rate , if 4
adopted, would be subject to recall; and 5
5. A statement to the effect that the General Assembly has required 6
publication of the information contained herein. 7
(b) To make the information in paragraph (a) of this subsection public, the 8
local board of education: 9
1. Shall publish the information for at least two (2) consecutive weeks on 10
the home page of its website and in the newspaper of largest 11
circulation in the county in a display type advertisement of not less 12
than twelve (12) column inches; 13
2. Shall read the information into the record of the school board meeting 14
in which the general tax rate is adopted; 15
3. Shall post the information on its social media platforms; and 16
4. May issue a notice containing the information to the editor of all print 17
media. 18
(8) (a) Except as provided in subsections (10)[(9)] and (11)[(10)] of this section and 19
KRS 157.440, a local[district] board of education proposing to levy a general 20
tax rate within the limits of subsection (1) of this section which 21
exceeds[exceed] the compensating tax rate defined in KRS 132.010 shall hold 22
a public hearing to hear comments from the public regarding the proposed tax 23
rate. The hearing shall be held in the principal office of the taxing district or, 24
in the event the taxing district does not have a [has no office, or the office is 25
not] suitable office to hold the [ for such a] hearing, the hearing shall be held 26
in a suitable facility as near as possible to the geographic center of the district. 27
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(b) The local[district] board of education shall include the following information 1
in the publication required in subsection (7) of this section and 2
advertisement of [advertise] the hearing [ by causing the following to be 3
published at least twice for two (2) consecutive weeks, in the newspaper of 4
largest circulation in the county, a display type advertisement of not less than 5
twelve (12) column inches]: 6
1. [The general tax rate levied in the preceding year, and the revenue 7
produced by that rate; 8
2. The general tax rate for the current year, and the revenue expected to be 9
produced by that rate; 10
3. ]The compensating general tax rate, and the revenue expected from it; 11
2.[4.] The revenue expected from new property and personal property;[ 12
5. The general areas to which revenue in excess of the revenue produced in 13
the preceding year is to be allocated;] 14
3.[6.] A time and place for the public hearing which shall be hel d not less than 15
seven (7) days nor more than ten (10) days after the day that the second 16
advertisement is published; and 17
4.[7.] The purpose of the hearing[; and 18
8. A statement to the effect that the General Assembly has required 19
publication of the advertisement and the information contained herein]. 20
(c) In lieu of the two (2) published notices in the newspaper , a single notice 21
containing the required information required by subsection (7) of this section 22
and paragraph (b) of this subsection may be sent by f irst-class mail to each 23
person owning real property, addressed to the property owner at his residence 24
or principal place of business as shown on the current year property tax roll. 25
(d) The hearing shall be open to the public. All persons desiring to be hea rd shall 26
be given an opportunity to present oral testimony. The local[district] board of 27
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education may set reasonable time limits for testimony. 1
(9)[(8)] (a) That portion of a general tax rate, except as provided in subsections 2
(10)[(9)] and (11)[(10)] of this section, KRS 157.440, and KRS 157.621, 3
levied by an action of a local[district] board of education which will produce, 4
respectively, revenue from real property, exclusive of revenue from new 5
property, more than four percent (4%) over the amount of rev enue produced 6
by the compensating tax rate defined in KRS 132.010, shall be subject to a 7
recall vote or reconsideration by the local[district] board of education as 8
provided for in KRS 132.017, and shall be advertised as provided for in 9
subsection (7) of this section and paragraph (b) of this subsection. 10
(b) The local[district] board of education shall, within seven (7) days following 11
adoption of an ordinance, order, resolution, or motion to levy a general tax 12
rate, except as provided in subsections (10)[(9)] and (11)[(10)] of this section 13
and KRS 157.440, which will produce revenue from real property, exclusive 14
of revenue from new property as defined in KRS 132.010, more than four 15
percent (4%) over the amount of revenue produced by the compensating tax 16
rate defined in KRS 132.010, cause the following to be published, on the 17
home page of its website and in the newspaper of largest circulation in the 18
county, a display type advertisement of not less than twelve (12) column 19
inches: 20
1. The fact that the local[district] board of education has adopted such a 21
rate; 22
2. The fact that the part of the rate which will produce revenue from real 23
property, exclusive of new property as defined in KRS 132.010, in 24
excess of four percent (4%) over the amount of revenue produced by the 25
compensating tax rate defined in KRS 132.010 is subject to recall; and 26
3. The name, address, and telephone number of the county clerk of the 27
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county or urban -county in which the school district is located, with a 1
notation to the effect that that offi cial can provide the necessary 2
information about the petition required to initiate recall of the tax rate. 3
(10)[(9)] (a) Notwithstanding any statutory provisions to the contrary, effective for 4
school years beginning after June 30, 1990, the board of educat ion of each 5
school district shall levy a minimum equivalent tax rate of thirty cents ($0.30) 6
for general school purposes. Equivalent tax rate is defined as the rate which 7
results when the income collected during the prior year from all taxes levied 8
by the local[district] for school purposes is divided by the total assessed value 9
of property plus the assessment for motor vehicles certified by the Department 10
of Revenue. School districts collecting school taxes authorized by KRS 11
160.593 to 160.597, 160.601 to 160.617[160.633], or 160.635 to 160.648 for 12
less than twelve (12) months during a school year shall have included in 13
income collected under this section the pro rata tax collection for twelve (12) 14
months. 15
(b) Failure of a board to comply with paragraph (a ) of this subsection may 16
constitute a forfeiture of office by its members pursuant to KRS 415.050 and 17
415.060. 18
(11)[(10)] A local[district] board of education may levy a general tax rate that will 19
produce revenue from real property, exclusive of revenue from new property, that is 20
four percent (4%) over the amount of the revenue produced by the compensating 21
tax rate as defined in KRS 132.010. 22
Section 75. KRS 157.440 is amended to read as follows: 23
(1) (a) Notwithstanding any statutory provisions to the contrary, effective for school 24
years beginning after July 1, 1990, the board of education of each school 25
district may levy an equivalent tax rate as defined in subsection (10)[(9)](a) of 26
KRS 160.470 which will produce up to fifteen percent (15%) of those 27
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revenues guaranteed by the program to support education excellence in 1
Kentucky. The levy for the 1990 -91 school year shall be made no later than 2
October 1, 1989, and no later than October 1, 1990, for the 1991 -92 school 3
year, and by October 1 of each odd -numbered year thereafter. Effective with 4
the 1990-91 school year, revenue generated by this levy shall be equalized at 5
one hundred fifty percent (150%) of the statewide average per pupil 6
assessment. 7
(b) To participate in the Facilities Support Program of Kentucky, the board of 8
education of each school district shall commit at least an equivalent tax rate of 9
five cents ($0.05) to debt service, new facilities, or major renovations of 10
existing school facilities, or the purchase of land if approved by the 11
commissioner of education as provided in KRS 157.420(4)(b). The five cents 12
($0.05) shall be in addition to the thirty cents ($0.30) required by KRS 13
160.470(10)[(9)] and any levy pursuant to paragraph (a) of this subsection. 14
The levy shall be made no later than October 1 of each odd -numbered year. 15
Eligibility for equalization funds for the biennium shall be based on the 16
district funds committed to debt service on that date. The five cents ($0.05) 17
shall be equalized at one hundred fifty percent (150%) of the statewide 18
average per pupil assessment. The equalization funds shall be committed to 19
debt service to the greatest extent possible, but any excess equalization f unds 20
not needed for debt service shall be deposited to a restricted building fund 21
account. The funds may be escrowed for future debt service or used to address 22
categorical priorities listed in the approved facilities plan pursuant to KRS 23
157.420. 24
(c) The b oard of education of each school district may contribute the levy 25
equivalent tax rate of five cents ($0.05) and equalization funds for energy 26
conservation measures under guaranteed energy savings contracts pursuant to 27
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KRS 45A.345, 45A.352, and 45A.353. Use of these funds, as provided under 1
KRS 45A.353, 56.774, and 58.600 shall be based on the following guidelines: 2
1. Energy conservation measures shall include facility alteration; 3
2. Energy conservation measures shall be identified in the district's 4
approved facility plan pursuant to KRS 157.420; 5
3. The current facility systems are consuming excess maintenance and 6
operating costs; 7
4. The savings generated by the energy conservation measures are 8
guaranteed; 9
5. The levy equivalent tax rate of five cents ($0.05) and equalization funds 10
contributed to the energy conservation measures shall be defined as 11
capital cost avoidance as provided in KRS 45A.345(2) and shall be 12
subject to the restrictions on usage as specified in KRS 45A.352(9); and 13
6. The equipment that is replaced has exceeded its useful life as 14
determined by a life cycle cost analysis. 15
(d) The rate levied by a local[district] board of education under the provisions of 16
this subsection shall not be subject to the public hearing provisions of KRS 17
160.470(8)[(7)] or to the recall provisions of KRS 160.470(9)[(8)]. 18
(e) A school district which is at or above the equivalent tax rates permi tted under 19
the provisions of the Kentucky Education Reform Act of 1990, 1990 Ky. Acts 20
ch. 476, shall not be required to levy an equivalent tax rate which is lower 21
than the rate levied during the 1989-90 school year. 22
(2) (a) A district may exceed the maximu m provided by subsection (1) of KRS 23
160.470 provided that, upon request of the board of education of the school 24
district, the county board of elections shall submit to the qualified voters of 25
the district, in the manner of submitting and voting as prescrib ed in paragraph 26
(b) of this subsection, the question whether a rate which would produce 27
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revenues in excess of the maximum provided by subsection (1) of KRS 1
160.470 shall be levied. The rate that may be levied under this section may 2
produce revenue up to no more than thirty percent (30%) of the revenue 3
guaranteed by the program to support education excellence in Kentucky plus 4
the revenue produced by the tax authorized by this section. Revenue produced 5
by this levy shall not be equalized with state funds. If a majority of those 6
voting on the question favor the increased rate, the tax levying authority shall, 7
when the next tax rate for the district is fixed, levy a rate not to exceed the rate 8
authorized by the voters. 9
(b) The election shall be held not less tha n fifteen (15) or more than thirty (30) 10
days from the time the request of the board is filed with the county clerk, and 11
reasonable notice of the election shall be given. The election shall be 12
conducted and carried out in the school district in all respects as required by 13
the general election laws and shall be held by the same officers as required by 14
the general election laws. The expense of the election shall be borne by the 15
school district. 16
(3) For the 1966 tax year and for all subsequent years for levies which were approved 17
prior to December 8, 1965, no local[district] board of education shall levy a tax at a 18
rate under the provisions of this section which exceeds the compensating tax rate as 19
defined in KRS 132.010, except as provided in subsection (4) of this section and 20
except that a rate which has been approved by the voters under this section but 21
which was not levied by the local[district] board of education in 1965 may be 22
levied after it has been reduced to the compensating tax rate as defined in KRS 23
132.010, and except that in any school district where the rate levied in 1965 was 24
less than the maximum rate which had been approved by the voters, the 25
compensating tax rate shall be computed and may be levied as though the 26
maximum approved rate had been le vied in 1965 and the amount of revenue which 27
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would have been produced from such maximum levy had been derived therefrom. 1
(4) Notwithstanding the limitations contained in subsection (3) of this section, no tax 2
rate shall be set lower than that necessary to provide such funds as are required to 3
meet principal and interest payments on outstanding bonded indebtedness and 4
payments of rentals in connection with any outstanding school revenue bonds 5
issued under the provisions of KRS Chapter 162. 6
(5) The chief state school officer shall certify the compensating tax rate to the levying 7
authorities. 8
Section 76. KRS 160.473 is amended to read as follows: 9
(1) (a) For assessment years beginning before January 1, 2029, in the event that a 10
general tax rate applicable to real property levied by a local[district] board of 11
education will produce a percentage increase in revenue from personal 12
property less than the percentage increase in revenue from real property, the 13
local[district] board o f education may levy a general tax rate applicable to 14
personal property which will produce the same percentage increase in revenue 15
from personal property as the percentage increase in revenue from real 16
property; however, in no event shall the general tax r ate levied by the 17
local[district] board of education applicable to personal property exceed the 18
prior year general tax rate applicable to personal property levied by the 19
respective local[district] board of education. 20
(b) For assessment years beginning on o r after January 1, 2029, in the event 21
that a general tax rate applicable to real property levied by a local board of 22
education will produce a percentage increase in revenue from personal 23
property less than the percentage increase in revenue from real prope rty, 24
the local board of education may levy a general tax rate applicable to 25
personal property which will produce the same percentage increase in 26
revenue from personal property as the percentage increase in revenue from 27
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real property; however, in no event s hall the general tax rate levied by the 1
local board of education applicable to personal property exceed: 2
1. The prior year general tax rate applicable to personal property levied 3
by the respective local board of education; or 4
2. The general tax rate applic able to personal property levied by the 5
respective local board of education for the January 1, 2028, 6
assessment year. 7
(2) The general tax rate applicable to personal property levied by a local[district] board 8
of education under the provisions of subsection (1) of this section shall not be 9
subject to the public hearing provisions of KRS 160.470 (8)[(7)] and to the recall 10
provisions of KRS 160.470(9)[(8)]. 11
Section 77. KRS 160.607 is amended to read as follows: 12
(1) The school tax authorized by KRS 160.482 to 160.488 and 160.605 shall be at a 13
single uniform rate not to exceed one -half of one percent (0.5%) and shall continue 14
from year to year until changed as prescribed in KRS 160.635 and 160.484. 15
(2) Any county having five[three] hundred thousand (500,000)[(300,000)] or more 16
inhabitants is authorized to increase the school tax rate to exceed the maximum set 17
in subsection (1) of this section by one -quarter of one perce nt (0.25%) before the 18
effective date of this section of this Act. 19
(3) Beginning on or after January 1, 2027: 20
(a) A school tax is not authorized to be imposed under KRS 160.482 to 160.488 21
and 160.605 in a school district that does not already have one impos ed; 22
and 23
(b) The rate of a school tax imposed under KRS 160.482 to 160.488 and 24
160.605 shall never increase. 25
Section 78. KRS 160.483 is amended to read as follows: 26
(1) (a) The license fees imposed under KRS 160.482 to 160 .488 on businesses, 27
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trades, occupations, and professions shall be at a single, uniform percentage 1
rate not to exceed one-half of one percent (0.5%) of: 2
1.[(a)] Salaries, wages, and commissions, and other compensations 3
earned by persons within the county fo r work done and services 4
performed or rendered in the county; and 5
2.[(b)] The net profits of all businesses, trades, occupations, and 6
professions, for activities conducted in the county. 7
(b) Beginning on or after January 1, 2027: 8
1. A school tax is not authorized to be imposed under KRS 160.482 to 9
160.488 and 160.605 in a school district that does not already have 10
one imposed; and 11
2. The rate of a school tax imposed under KRS 160.482 to 160.488 and 12
160.605 shall never increase. 13
(2) The license fees, once imposed, shall continue from year to year until changed as 14
prescribed in KRS 160.484. 15
(3) [No public service company which pays an ad valorem tax is required to pay a 16
license fee. 17
(4) ](a) It is the intent of the General Assembly to continue the exemption from local 18
license fees and occupational taxes that existed on January 1, 20 06, for 19
providers of multichannel video programming services or communications 20
services as defined in KRS 136.602 that were taxed under KRS 136.120 prior 21
to January 1, 2006. 22
(b) To further this intent, no company providing multichannel video 23
programming services or communications services as defined in KRS 136.602 24
shall be required to pay a license fee. If only a portion of an entity's business 25
is providing multichannel video programming services or communications 26
services, including products or services th at are related to and provided in 27
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support of the multichannel video programming services or communications 1
services, this exclusion applies only to that portion of the business that 2
provides multichannel video programming services or communications 3
services, including products or services that are related to and provided in 4
support of the multichannel video programming services or communications 5
services. 6
(4)[(5)] No license fee shall be imposed upon or collected from: 7
(a) Any bank, trust company, combined bank and trust company, combined trust, 8
banking and title business in this state; 9
(b) Any savings and loan association whether state or federally chartered; 10
(c) Any income received by members of the Kentucky National Guard for active 11
duty training, unit training assemblies, and annual field training;[ or] 12
(d) Any income received by precinct workers for election training or work at 13
election booths in state, county, and local primary, regular, or special 14
elections; 15
(e) A public service company which pays an ad valorem tax; or 16
(f) Any individual who is not a resident of the county of the tax -levying 17
authority imposing the tax.[ 18
(6) No license tax shall be collected from any individual who is not a resident of the 19
county of the tax-levying authority imposing the tax.] 20
(5)[(7)] Pursuant to this section, no tax -levying authority shall regulate any aspect of 21
the manner in which any duly ordained, commissioned, or denominationally 22
licensed minister of religion may perform his or her duties and activities as a 23
minister of religion. Duly ordained, commissioned, or denominationally licensed 24
ministers of religion shall be subject to the same license fees imposed on others by 25
the tax-levying authority on salaries, wages, commissions, and other compensation 26
earned for work done and services performed or rendered. 27
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Section 79. KRS 160.484 is amended to read as follows: 1
(1) Except as provided in subsections (2), (3), and (4) of this section the fiscal court 2
has discretion to impose or not imp ose the license fees authorized by KRS 160.482 3
to 160.488 at a percentage rate, not to exceed one -half of one percent (0.5%), 4
determined by the fiscal court. A fiscal court shall not proceed under this subsection 5
without first giving all boards of educatio n in the county thirty (30) days notice of 6
its intention. 7
(2) If one (1) or more boards of education of school districts within the county which 8
contain at least ninety percent (90%) of county's inhabitants, in the same calendar 9
year certify to the fiscal court requests for a license fee at an identical percentage 10
rate, not to exceed one-half of one percent (0.5%), then the fiscal court shall impose 11
such license fees at the requested rate. 12
(3) Any license fees imposed under subsection[subsections] (1) or (2 ) of this section 13
shall remain in full effect from year to year until all boards of education within the 14
county have certified to the fiscal court requests for a reduction in the percentage 15
rate theretofore imposed. Thereafter, the fiscal court shall reduc e the rate to the 16
highest rate certified as yet necessary by any local board of education in the county. 17
The fiscal court may require each local board of education to make no more than 18
one (1) certificate annually. 19
(4) Beginning on or after January 1, 2027: 20
(a) A school tax is not authorized to be imposed under KRS 160.482 to 160.488 21
and 160.605 in a school district that does not already have one imposed; 22
and 23
(b) The rate of a school tax imposed under KRS 160.482 to 160.488 and 24
160.605 shall never increase [In any calendar year in which one (1) or more 25
boards of education of school districts containing at least ninety percent 26
(90%) of the county's inhabitants make a certification pursuant to subsection 27
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(2) for a rate which is at a higher percentage than any currently imposed, the 1
fiscal court shall impose the license fee at the higher rate and any rate 2
imposed pursuant to subsections (1), (2), or (3) shall be rescinded upon the 3
date the new rate takes effect]. 4
Section 80. KRS 160.505 is amended to read as follows: 5
KRS 160.500 to the contrary notwithstanding, if a tax authorized by KRS 160.593 to 6
160.597, 160.601 to 160.617[160.633], and 160.635 to 160.648 shall be collected by a 7
local board of education, the local board of education shall appoint a person who shall be 8
responsible for collection and administration of such tax. If one (1) or more boards of 9
education agree in writing to levy identical taxes authorized by the statutes mentioned 10
hereinabove, the boards of education so agreeing shall jointly appoint a pers on who shall 11
be responsible for collection and administration of such tax as provided for in KRS 12
160.593(2). The position may be full -time or part -time and his compensation shall be 13
fixed by the board and/or boards of education. The bond of this person sha ll be made to 14
cover his duties as tax collector. 15
Section 81. KRS 160.593 is amended to read as follows: 16
(1) Any board of education of a school district may, after compliance with the public 17
hearing requirement contained in KRS 160.603, levy school taxes authorized by 18
KRS 160.593 to 160.597, 160.601 to 160.617[160.633], and 160.635 to 160.648. 19
The imposition of any tax levied under the provisions of 160.593 to 160.597, 20
160.601 to 160.617[160.633], and 160.635 to 160.648 sh all be limited to the 21
territory of the school district except as provided in subsection (2) of this section. 22
(2) Two (2) or more boards of education may agree in writing to levy identical school 23
taxes authorized by KRS 160.605 to 160.611 and[,] 160.613 to 160.617[, and 24
160.621 to 160.633]. After the levying in each district so agreeing of a tax under the 25
terms of such agreement, the receipts from said tax shall be held in a common fund 26
and disbursed therefrom to each district on the basis of average daily a ttendance, as 27
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set forth in KRS 160.644. Any districts levying taxes under the terms of such an 1
agreement shall be deemed to constitute a combined taxing district for the purposes 2
of reference in KRS Chapter 160. 3
Section 82. KRS 160.597 is amended to read as follows: 4
Any school tax authorized by KRS 160.593 to 160.597, 160.601 to 160.617[160.633], 5
and 160.635 to 160.648 may be recalled as follows: 6
(1) (a) The order or resolution levying any of the school taxes designated i n this 7
section shall go into effect not less than forty -five (45) days nor more than 8
ninety (90) days after its passage. 9
(b) During the forty -five (45) days immediately following the passage of the 10
order or resolution, any five (5) qualified voters who res ide in the school 11
district levying the tax may commence petition proceedings to protest the 12
passage of the order or resolution by filing with the county clerk an affidavit 13
stating that they constitute the petition committee and that they will be 14
responsible for circulating the petition and filing it in the proper form within 15
forty-five (45) days from the passage of the order or resolution. The affidavit 16
shall state their names and addresses and specify the address to which all 17
notices to the committee are t o be sent. Upon receipt of the affidavit, the 18
county clerk shall: 19
1. At the time of filing of the affidavit, notify the petition committee of all 20
statutory requirements for the filing of a valid petition under this 21
section; 22
2. At the time of the filing of the affidavit, notify the petition committee 23
that the clerk will publish a notice identifying the tax levy being 24
challenged and providing the names and addresses of the petition 25
committee in a newspaper of general circulation within the county, if 26
such publication exists, if the petition committee remits an amount equal 27
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to the cost of publishing the notice determined in accordance with the 1
provisions of KRS 424.160 at the time of the filing of the affidavit. If 2
the petition committee elects to have the notice published, the clerk shall 3
publish the notice within five (5) days of receipt of the affidavit; and 4
3. Deliver a copy of the affidavit to the local board of education [school 5
board] or combined taxing district. 6
(c) The petition shall be filed with the co unty clerk within forty-five (45) days of 7
the passage of the order or resolution. All papers of the petition shall be 8
uniform in size and style and shall be assembled in one (1) instrument for 9
filing. Each sheet of the petition shall contain the names of v oters from one 10
(1) voting precinct only, and shall include the name, number and designation 11
of the precinct in which the voters signing the petition live. The inclusion of 12
an invalid signature on a page shall not invalidate the entire page of the 13
petition, but shall instead result in the invalid signature being stricken and not 14
counted. Each signature shall be executed in ink or indelible pencil and shall 15
be followed by the printed name, street address, and Social Security number 16
or birthdate of the person signing. The petition shall be signed by a number of 17
registered and qualified voters residing in the affected jurisdiction equal to at 18
least ten percent (10%) of the total number of votes cast in the last preceding 19
presidential election, except in consolid ated local governments, where the 20
petition shall be signed by a number of registered and qualified voters equal to 21
at least five percent (5%) of the total number of votes cast in the last 22
preceding presidential election. 23
(d) Upon the filing of the petition with the county clerk, the order or resolution 24
shall be suspended from going into effect for that district until after the 25
election provided for in subsection (2) of this section is held, or until the 26
petition is finally determined to be insufficient and no further action may be 27
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taken pursuant to paragraph (h) of this subsection. 1
(e) The county clerk shall immediately notify the local board of 2
education[school board] or combined taxing district that the petition has been 3
received and shall, within thirty ( 30) days of receipt of the petition, make a 4
determination of whether the petition contains enough signatures of qualified 5
voters to place the order or resolution before the voters. 6
(f) If the county clerk finds the petition to be sufficient, the clerk shal l certify to 7
the local board of education [school board] or combined taxing district and 8
the petition committee within the thirty (30) day period provided for in 9
paragraph (e) of this subsection, that the petition is properly presented and in 10
compliance with the provisions of this section, and that the order or resolution 11
levying the tax will be placed before the voters for approval. 12
(g) If the county clerk finds the petition to be insufficient, the clerk shall, within 13
the thirty (30) day period provided for in paragraph (e) of this subsection, 14
notify, in writing, the petition committee and the school district or combined 15
taxing district levying the tax of the specific deficiencies found. Notification 16
shall be sent by certified mail, and shall be published at least one (1) time in a 17
newspaper of general circulation within the county containing the school 18
district levying the tax or, if there is no such newspaper, shall be posted at the 19
courthouse door. 20
(h) A final determination of the sufficiency of a petition shall be subject to final 21
review by the Circuit Court of the county in which the school district is 22
located, and shall be limited to the validity of the county clerk's 23
determination. Any petition challenging the county clerk's final determination 24
shall be filed within ten (10) days of the issuance of the clerk's final 25
determination. 26
(2) If the petition is sufficient, the county clerk shall, at the option of the local[district] 27
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board of education, either submit the question to the voters of the school distr ict at 1
the next regular election or submit the question to the voters of the school district at 2
a called common school election, which is to be held not less than thirty -five (35) 3
days nor more than forty -five (45) days from the date the signatures on the petition 4
are validated by the county clerk. Any called common school election shall comply 5
with the provisions of KRS 118.025. If the election is to be held in conjunction with 6
a regular election, the question shall be submitted to the county clerk not lat er than 7
the second Tuesday in August preceding the regular election. The question shall be 8
so framed that the voter may by his vote answer, "for" or "against." If a majority of 9
the votes cast in a district or combined taxing district upon the question oppo se its 10
passage, the order or resolution shall not go into effect in that district or combined 11
taxing district. If a majority of the votes cast in a district or combined taxing district 12
upon the question favor its passage, the order or resolution shall go i nto effect in 13
that district. If the election is to be held in more than one (1) school district within a 14
county, the votes shall be counted separately. The cost of a called common school 15
election shall be borne by the school district causing the election to be held. 16
(3) If any statute in existence on June 17, 1978, is found to be in conflict with any 17
provision of this section, the provisions of this section shall prevail. 18
Section 83. KRS 160.601 is amended to read as follows: 19
The school taxes authorized by KRS 160.605 to 160.611 and[,] 160.613 to 160.617[, and 20
160.621 to 160.633] shall be known as an occupational license tax for schools and[,] a 21
utility gross receipts tax for schools [, and an excise tax for schools] as set out in the 22
following sections. 23
Section 84. KRS 160.603 is amended to read as follows: 24
No local[school district] board of education shall l evy any of the school taxes authorized 25
by KRS 160.593 to 160.597, 160.601 to 160.617[160.633], and 160.635 to 160.648, 26
except the levy required by KRS 160.614(3) and (6), until after compliance with the 27
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following: 1
(1) The local[school district] board of ed ucation desiring to levy any one (1) of these 2
taxes shall give notice of any proposed levy of one (1) of the school taxes. 3
Notwithstanding any statutory provisions to the contrary, notice shall be given by 4
causing to be published, at least one (1) time in a newspaper of general circulation 5
published in the county or by posting at the courthouse door if there be no such 6
newspaper, the fact that such levy is being proposed. The advertisement shall state 7
that the local[district] board of education will meet at a place and on a day fixed in 8
the advertisement, not earlier than one (1) week and not later than two (2) weeks 9
from the date of the advertisement, for the purpose of hearing comments and 10
complaints regarding the proposed increase and explaining the reaso ns for such 11
proposal. 12
(2) The local[school district] board of education shall conduct a public hearing at the 13
place and on the date advertised for the purpose of hearing comments and 14
complaints regarding the proposed levy and explaining the reasons for suc h 15
proposal. 16
(3) In the event that a combined taxing district desires to levy any one (1) of these 17
taxes, the boards of education shall make a joint advertisement and hold a joint 18
hearing in the manner prescribed heretofore for an individual school district. 19
Section 85. KRS 160.635 is amended to read as follows: 20
School taxes imposed under [ the provisions of] KRS 160.593 to 160.597, 160.601 to 21
160.617[160.633], and 160.635 to 160.648 shall remain in full force and effect from year 22
to year until the local board of education reduces the rate in effect; however, at the time 23
the tax is first levied the board may set a date on which the tax shall expire. 24
Section 86. KRS 160.637 is amended to read as follows: 25
[(1) "Requesting school districts" shall mean those school districts for which the 26
Department of Revenue is requested to act as tax collector under the authority of 27
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KRS 160.627(2). 1
(2) ]Reasonable expenses not to exceed the actual costs of collection incurr ed by any 2
tax collector, except the Department of Revenue, for the administration or collection of 3
the school taxes authorized by KRS 160.605 to 160.611 and[,] 160.613 to 160.617[, and 4
160.621 to 160.633] shall be reimbursed by the school local[district] boards of education 5
on a monthly basis or on the basis agreed upon by the boards of education and the tax 6
collector. The expenses shall be borne by the school districts on a basis proportionate to 7
the revenue received by the districts. 8
[(3) The following sh all apply only when the Department of Revenue is acting as tax 9
collector under the authority of KRS 160.627(2): 10
(a) When the department is initially requested to be the tax collector under KRS 11
160.627(2), the department shall estimate the costs of implemen ting the 12
administration of the tax so requested, and shall inform the requesting school 13
district of this estimated cost. The requesting school district shall pay to the 14
department ten percent (10%) of this estimated cost referred to as "start -up 15
costs" wit hin thirty (30) days of notification by the department. Subsequent 16
requesting school districts shall pay their pro rata share, or ten percent (10%), 17
whichever is less, of the unpaid balance of the initial "start -up costs" until the 18
department has fully rec overed the costs. The payment shall be made within 19
thirty (30) days of notification by the department. 20
(b) The Department of Revenue shall also be reimbursed by each school district 21
for its proportionate share of the actual operational expenses incurred by the 22
department in collecting the excise tax. The expenses, which shall be 23
deducted by the Department of Revenue from payments to school districts 24
made under the provisions of KRS 160.627(2), shall be allocated by the 25
department to school districts on a ba sis proportionate to the number of 26
returns processed by the Department of Revenue for each district compared to 27
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the total processed by the Department of Revenue for all districts. 1
(c) All funds received by the department under the authority of paragraphs ( a) 2
and (b) of this subsection shall be deposited into an account entitled the 3
"school tax fund account," an account created within the restricted fund group 4
set forth in KRS 45.305. The use of these funds shall be restricted to paying 5
the department for th e costs described in paragraphs (a) and (b) of this 6
subsection. This account shall not lapse. 7
(d) The department may retain a portion of the school tax revenues collected in a 8
special account entitled the "school tax refund account" which is an account 9
created within the restricted fund group set forth in KRS 45.305. The sole 10
purpose of this account shall be to authorize the Department of Revenue to 11
refund school taxes. This account shall not lapse. Refunds shall be made in 12
accordance with the provisions in KRS 134.580(6), and when the taxpayer has 13
made an overpayment or a payment where no tax was due as defined in KRS 14
134.580(7), within four (4) years of payment. 15
(e) KRS 160.621 notwithstanding, when the department is acting as tax collector 16
under the autho rity of KRS 160.627(2), the requesting school district may 17
enact the tax enumerated in KRS 160.621 only at the following rates: five 18
percent (5%), ten percent (10%), fifteen percent (15%), and twenty percent 19
(20%) on a school district resident's state indi vidual income tax liability as 20
computed under KRS Chapter 141. 21
(f) Beginning August 1, 1982, any school district which requests the department 22
to collect taxes under the authority of KRS 160.627(2) shall inform the 23
department of this request not less than one hundred fifty (150) days prior to 24
January 1. 25
(g) The department shall not be required to collect taxes authorized in KRS 26
160.621 of an individual when the department is not pursuing collection of 27
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that individual's state income taxes. The department sha ll not be required to 1
collect or defend the tax set forth in KRS 160.621 in any board or court of this 2
state. 3
(h) Any overpayments of the tax set forth in KRS 141.020 or payments made 4
when no tax was due may be applied to any tax liability arising under KR S 5
160.621 before a refund is authorized to the taxpayer. No individual's tax 6
payment shall be credited to the tax set forth in KRS 160.621 until all 7
outstanding state income tax liabilities of that individual have been paid. 8
(i) KRS 160.510 notwithstanding , the State Auditor shall be the only party 9
authorized to audit the Department of Revenue with respect to the 10
performance of its duties under KRS 160.621.] 11
Section 87. KRS 160.640 is amended to read as follows: 12
Any person having custody of the proceeds of any school tax authorized by KRS 160.605 13
to 160.611 and[,] 160.613 to 160.617, [ and 160.621 to 160.633,] except the Department 14
of Revenue, shall be required to secure a corporate surety bond in an amount to be set by 15
the Kentucky Board of Education. The cost of the surety bond shall be considered a part 16
of the cost of the administration of the school taxes a uthorized under KRS 160.605 to 17
160.611 and[,] 160.613 to 160.617[, and 160.621 to 160.633]. 18
Section 88. KRS 160.642 is amended to read as follows: 19
Any person having custody of the proceeds of any school tax authorized by KRS 160.605 20
to 160.611 and[,] 160.613 to 160.617[, 160.621 to 160.633] shall be audited as provided 21
by KRS 156.265 to 156.285. 22
Section 89. KRS 160.644 is amended to read as follows: 23
The school taxes and penalties collec ted under KRS 160.593 to 160.597, 160.601 to 24
160.617[160.633], 160.635 to 160.648 shall be distributed to the treasurer of the board of 25
education of the school district. In the event that more than one (1) local board of 26
education within the county is part icipating in one (1) of these tax levies, the funds 27
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collected shall be distributed in proportion to the tax rate levied and the number of pupils 1
in average daily attendance in the participating districts as shown by the final certification 2
by the chief state school officer for the previous school year pursuant to the provisions of 3
KRS 157.310 to 157.440. 4
Section 90. KRS 160.648 is amended to read as follows: 5
(1) Any person, individual, or corporation required by the provi sions of KRS 160.605 6
to 160.611 [ and 160.621 to 160.633] to file any return or report or furnish any 7
information requested under the authority of KRS 160.605 to 160.611 [ and 160.621 8
to 160.633] who fails to file such return or report or furnish such inform ation on or 9
before the date required shall pay a penalty in the amount of ten dollars ($10) for 10
each failure. 11
(2) Any person, individual, or corporation who fails to pay, on or before the due date, 12
any school tax authorized by KRS 160.605 to 160.611 [ and 1 60.621 to 160.633] 13
and levied by the local[district] board of education shall pay a penalty of one 14
percent (1%) per month of the amount of such tax past due until paid. 15
Section 91. KRS 157.621 is amended to read as follows: 16
(1) In addition to the levy required by KRS 157.440(1)(b) to participate in the Facilities 17
Support Program of Kentucky, local school districts that have made the levy 18
required by KRS 157.440(1)(b) are authorized to levy the following additional 19
equivalent rates to support debt service, new facilities, or major renovations of 20
existing school facilities, which levies shall not be subject to recall under any 21
provision of the Kentucky Revised Statutes, or to voter approval under the 22
provisions of KRS 157.440(2): 23
(a) 1. Prior to April 24, 2008, local school districts that have experienced 24
student population growth during a five (5) year period may levy an 25
additional five cents ($0.05) equivalent rate for debt service and new 26
facilities. The tax rate levied by the district under this provision shall not 27
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be equalized by state funding, except as provided in paragraph (b) of 1
this subsection. Any levy imposed under this paragraph prior to April 2
24, 2008, by a local school district shall continue until removed by the 3
local school district. 4
2. A local school district shall meet the following criteria in order to levy 5
the tax provided in subparagraph 1. of this paragraph: 6
a. Growth of at least one hundred fifty (150) students in average 7
daily attendance and three percent (3%) overall growth for the five 8
(5) preceding years; 9
b. Bonded debt to the maximum capability of at least eighty percent 10
(80%) of capital outlay from the Support Education Excellence in 11
Kentucky funding program, all revenue from the local facility tax, 12
and all receipts from state equalization on the local facility tax; 13
c. Current student enrollment in excess of available classroom space; 14
and 15
d. A local school facility plan that has been approved by the 16
Kentucky Board of Education and certified to the School Faciliti es 17
Construction Commission; 18
(b) 1. In addition to the levy authorized by paragraph (a) of this subsection, a 19
local school district may levy an additional five cents ($0.05) equivalent 20
rate under the same terms and conditions established by paragraph (a) of 21
this subsection beginning in fiscal year 2003 -2004 if the levy was made 22
prior to April 24, 2008, and if the local school district: 23
a. Levied the five cents ($0.05) equivalent rate authorized by 24
paragraph (a) of this subsection; and 25
b. Still meets the requ irements established by paragraph (a)2. of this 26
subsection. 27
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2. Any school district that imposes both the levy authorized by paragraph 1
(a) of this subsection and the additional levy authorized by subparagraph 2
1. of this paragraph shall receive equalization funding from the state for 3
the levy imposed by paragraph (a) of this subsection beginning in fiscal 4
year 2003 -2004. Equalization shall be provided at one hundred fifty 5
percent (150%) of the statewide average per pupil assessment, subject to 6
subsection (6) of this section [the provision of funding by the General 7
Assembly]. Equalization funds shall be used as provided in KRS 8
157.440(1)(b). 9
3. Any levy imposed under this paragraph prior to April 24, 2008, by a 10
local school district shall continue until removed by the local school 11
district; and 12
(c) 1. A local school district that meets the following conditions may levy an 13
additional five cents ($0.05) equivalent rate on and after April 24, 2008: 14
a. The local school district is located in a county that will have m ore 15
students as a direct result of the new mission established for Fort 16
Knox by the Base Realignment and Closure (BRAC) 2005 issued 17
by the United States Department of Defense pursuant to the 18
Defense Base Closure and Realignment Act of 1990, Pub. L. No. 19
100-526, Part A of Title XXIX of 104 Stat. 1808, 10 U.S.C. sec. 20
2687 note; and 21
b. The commissioner of education has determined, based upon the 22
presentation of credible data, that the projected increased number 23
of students is sufficient to require new faciliti es or the major 24
renovation of existing facilities to accommodate the new students, 25
and has approved the imposition of the additional levy. 26
2. Any local school district that imposes both the levy authorized by 27
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paragraph (a) of this subsection and the additi onal levy authorized by 1
subparagraph 1. of this paragraph, and that has not received equalization 2
funding under subsection (2) or (3) of this section, shall receive 3
equalization funding from the state for the levy imposed by paragraph 4
(a) of this subsectio n beginning in the fiscal year following the fiscal 5
year in which the levy authorized by subparagraph 1. of this paragraph 6
is imposed. Equalization shall be provided at one hundred fifty percent 7
(150%) of the statewide average per pupil assessment, subject to 8
subsection (6) of this section [the provision of funding by the General 9
Assembly]. Equalization funds shall be used as provided in KRS 10
157.440(1)(b). 11
3. Any levy imposed under this paragraph by a local school district shall 12
continue until removed by the local school district. 13
(2) (a) Any local school district that, prior to April 27, 2016, levied an equivalent rate 14
that: 15
1. Was subject to recall at the time it was levied; and 16
2. Included a rate of at least five cents ($0.05) equivalent rate for the 17
purpose of debt service for school construction or major renovation of 18
existing school facilities; 19
shall be eligible for retroactive equalization from the state for that levy at one 20
hundred fifty percent (150%) of the statewide average per pupil assessment 21
beginning in fiscal year 2003 -2004, subject to subsection (6) of this 22
section[the fiscal condition of the Commonwealth and the provision of 23
funding by the General Assembly] . Equalization funds shall be used as 24
provided in KRS 157.440(1)(b). 25
(b) It is the inte nt of the General Assembly that for levies described in this 26
subsection that are imposed on or after April 27, 2016, equalization funds, if 27
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provided by the General Assembly, shall terminate upon the earlier of June 1
30, 2038, or the date the bonds for the l ocal school district supported by this 2
equalization funding are retired. Equalization shall be subject to subsection 3
(6)(b) and (c) of this section, the fiscal condition of the Commonwealth , and[ 4
the provision of] funding by the General Assembly. 5
(3) Any local school district that: 6
(a) Levied an equivalent tax rate as of April 24, 2008, that included at least ten 7
cents ($0.10) that was devoted to building purposes, or that had debt service 8
corresponding to a ten cents ($0.10) equivalent rate; 9
(b) Did not receive equalized growth funding pursuant to subsection (1)(b)2. of 10
this section; and 11
(c) Has been approved by the commissioner of education; 12
shall be eligible for equalization from the state for that levy at one hundred fifty 13
percent (150%) of the statewide average per pupil assessment beginning in fiscal 14
year 2005 -2006, subject to subsection (6)(b) and (c) of this section and the 15
provision of funding by the General Assembly. Equalization funds shall be used as 16
provided in KRS 157.440(1)(b). Equalization funds shall be available to a local 17
school district pursuant to this subsection until the earlier of June 30, 2038, or the 18
date the bonds for t he local school district supported by this equalization funding 19
are retired. 20
(4) (a) Notwithstanding any other provision of this section, any local school district 21
receiving equalization funding prior to April 27, 2016, related to an equivalent 22
rate levy d escribed in subsection (1), (2), (3), or (5) of this section shall 23
continue to receive the equalization funding related to the applicable 24
equivalent rate levy, subject to subsection (6) of this section, the limitations 25
established by subsections (1), (2), (3), and (5) of this section,[ and subject to] 26
the fiscal condition of the Commonwealth , and the provision of funding by 27
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the General Assembly, until amended by subsequent action of the General 1
Assembly. A local school district described in this paragraph s hall not be 2
eligible to receive equalization for any additional equivalent rate levies made 3
by it on or after April 27, 2016. 4
(b) Notwithstanding any other provision of this section, any local school district 5
that has imposed an equivalent rate levy descri bed in subsection (1)(a) or (b) 6
or (2) of this section prior to April 27, 2016, that qualifies for equalization but 7
that has not yet received equalization funding shall be eligible for equalization 8
funding as provided in subsection (1)(a) or (b) or (2) of this section, subject to 9
subsection (6) of this section [the provision of funding by the General 10
Assembly]. 11
(c) On and after April 24, 2008, a local school district not included in paragraph 12
(a) or (b) of this subsection shall be prohibited from imposing an equivalent 13
rate levy under the provisions of subsection (1)(a) or (b) of this section, and 14
shall not be eligible for equalization funding under the provisions of this 15
section. 16
(d) On and after April 24, 2008, a local school district meeting the requiremen ts 17
of subsection (1)(c) of this section may impose the levy authorized by 18
subsection (1)(c) of this section, and shall qualify for equalization as provided 19
in subsection (1)(c) of this section, subject to subsection (6) of this 20
section[the provision of funding by the General Assembly]. 21
(5) (a) Any local school district that: 22
1. Had school facilities classified as Category 5 on May 18, 2010, by the 23
Kentucky Department of Education; and 24
2. Levied an additional five cents ($0.05) equivalent tax rate prior to A pril 25
27, 2016, for debt service, new construction, and major renovation 26
beyond the five cents ($0.05) equivalent tax rate required by KRS 27
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157.440(1)(b), except as provided in paragraph (b) of this subsection; 1
shall be eligible for equalization from the st ate for that levy at one hundred 2
fifty percent (150%) of the statewide average per pupil assessment beginning 3
in the fiscal year following the fiscal year in which the levy was imposed 4
subject to subsection (6) of this section . This levy shall be subject t o the 5
recall provisions of KRS 132.017. 6
(b) School districts that levied a five cents ($0.05) equivalent tax rate for debt 7
service, new construction, and major renovation, beyond the rate required by 8
KRS 157.440(1)(b) prior to May 18, 2010, shall not be re quired to levy an 9
additional tax to receive the equalization funds provided in paragraph (a) of 10
this subsection. 11
(c) If the school district utilizes the equalization funds to support a bond issue for 12
construction purposes, equalization funds shall be provi ded until the earlier of 13
twenty (20) years or date the bonds are retired. 14
(d) In the event that a school district receives funding pursuant to this subsection 15
to support construction of a new school facility and subsequently, as a result 16
of litigation, receives funding for the same facility for which state funds were 17
provided, that school district shall reimburse the Commonwealth an amount 18
equal to the amount provided under paragraph (a) of this subsection. Any 19
funds received in this manner shall be deposit ed in the budget reserve trust 20
fund account established in KRS 48.705. 21
(6) (a) For equivalent tax rates levied under this section prior to January 1, 2026, 22
equalization funds authorized under this section shall terminate upon the 23
earlier of twenty (20) yea rs or the date the bonds supported by the 24
equalization funding are retired. Equalization shall be subject to the fiscal 25
condition of the Commonwealth and funding by the General Assembly. 26
(b) For equivalent tax rates levied under this section on or after Ja nuary 1, 27
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2026, equalized funds shall not be authorized under this section or provided 1
by the state. 2
(c) The commissioner of education shall compile a list of every equivalent tax 3
rate levied by a school district under the authority of this section, the bon ds 4
or debt service to which the equivalent tax rate revenues and any related 5
equalized funds are dedicated, and the date those bonds or debt service are 6
scheduled to be retired. This list shall be submitted to the Legislative 7
Research Commission for referr al to the Interim Joint Committee on 8
Appropriations and Revenue Committee by September 1 of each year until 9
the equalization funds are terminated under paragraph (a) of this 10
subsection. 11
Section 92. KRS 11A.211 is amended to read as follows: 12
(1) Each executive agency lobbyist, employer, and real party in interest shall file with 13
the commission within ten (10) days following the engagement of an executive 14
agency lobbyist, an initial registration statement showing all of the following: 15
(a) The name, business address, and occupation of the executive agency lobbyist; 16
(b) The name and business address of the employer and of any real party in 17
interest on whose behalf the executive agency lobbyist is acting, if it is 18
different fro m the employer. However, if a trade association or other 19
charitable or fraternal organization that is exempt from federal income 20
taxation under Section 501(c) of the Internal Revenue Code is the employer, 21
the statement need not list the names and addresses of every member of the 22
association or organization, so long as the association or organization itself is 23
listed; 24
(c) A brief description of the executive agency decision to which the engagement 25
relates; 26
(d) The name of the executive agency or agencies to which the engagement 27
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relates; 1
(e) Certification by the employer and executive agency lobbyist that the 2
information contained in the registration statement is complete and accurate; 3
(f) Compensation paid to, or received by, each executive agency lobbyist, 4
employer, and real party in interest as part of the engagement; and 5
(g) Certification that the employer and agent have complied with KRS 11A.236. 6
(2) In addition to the initial registration statement required by subsection (1) of this 7
section, each executive agency lobbyist, employer, and real party in interest shall 8
file with the commission, not later than the last day of July of each year, an updated 9
registration statement that confirms the continuing existence of each engagement 10
described in an initial registration statement, that lists the specific executive agency 11
decisions the executive agency lobbyist sought to influence under the engagement 12
during the period covered by the updated statement, and the compensation paid to, 13
or received by, each executive agency lobbyist, employer, and real party in interest 14
as part of the engagement, and with it any statement of expenditures required to be 15
filed by K RS 11A.216 and any details of financial transaction required to be filed 16
by KRS 11A.221. 17
(3) Compensation paid under subsection (1)(f) of this section shall be reported after it 18
is received by, or paid to, each executive agency lobbyist, employer, and real party 19
in interest as determined by the terms of the engagement, and shall be listed by the 20
amount paid or received, the intervals on which the payment is paid or received, 21
and shall include any other compensation received or paid as part of the 22
engagement. 23
(4) If an executive agency lobbyist is engaged by more than one (1) employer, the 24
executive agency lobbyist shall file a separate initial and updated registration 25
statement for each engagement and list compensation paid to, or received by each 26
executive agency lobbyist, employer, and real party in interest as part of the 27
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engagement. If an employer engages more than one (1) executive agency lobbyist, 1
the employer shall file only one (1) updated registration statement under subsection 2
(2) of this section, which shall contain the information required by subsection (2) of 3
this section regarding all executive agency lobbyists engaged by the employer. 4
(5) (a) A change in any information required by subsection (1)(a), (b), (c), (d), or (2) 5
of this section shall b e reflected in the next updated registration statement 6
filed under subsection (2) of this section. 7
(b) Within thirty (30) days following the termination of an engagement, the 8
executive agency lobbyist who was employed under the engagement shall file 9
written notice of the termination with the commission. 10
(6) Each employer of one (1) or more executive agency lobbyists, and each real party 11
in interest, shall pay a registration fee of seven hundred fifty dollars ($750) [five 12
hundred dollars ($500)] upon the fili ng of an updated registration statement. All 13
fees collected by the commission under the provisions of this subsection shall be 14
deposited in the State Treasury in a trust and agency fund account to the credit of 15
the commission. These agency funds shall be u sed to supplement general fund 16
appropriations for the operations of the commission and shall not lapse. No part of 17
the trust and agency fund account shall revert to the general funds of this state. 18
(7) Upon registration pursuant to this section, an executi ve agency lobbyist shall be 19
issued a card annually by the commission showing the executive agency lobbyist is 20
registered. The registration card shall be valid from the date of its issuance through 21
the thirty-first day of July of the following year. 22
(8) The commission shall review each registration statement filed with the commission 23
under this section to determine if the statement contains all of the required 24
information. If the commission determines the registration statement does not 25
contain all of the re quired information or that an executive agency lobbyist, 26
employer, or real party in interest has failed to file a registration statement, the 27
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commission shall send written notification of the deficiency by certified mail to the 1
person who filed the registr ation statement or to the person who failed to file the 2
registration statement regarding the failure. Any person so notified by the 3
commission shall, not later than fifteen (15) days after receiving the notice, file a 4
registration statement or an amended r egistration statement that includes all of the 5
required information. If any person who receives a notice under this subsection fails 6
to file a registration statement or an amended registration statement within the 7
fifteen (15) day period, the commission may initiate an investigation of the person's 8
failure to file. If the commission initiates an investigation pursuant to this section, 9
the commission shall also notify each elected executive official and the secretary of 10
each cabinet listed in KRS 12.250 of the pending investigation. 11
(9) In the biennial report published under KRS 11A.110(13), the commission shall, in 12
the manner and form the commission determines, include a report containing 13
statistical information on the registration statements filed under thi s section during 14
the preceding biennium. 15
(10) If an employer who engages an executive agency lobbyist, or a real party in interest 16
on whose behalf the executive agency lobbyist was engaged is the recipient of a 17
contract, grant, lease, or other financial ar rangement pursuant to which funds of the 18
state or of an executive agency are distributed or allocated, the executive agency or 19
any aggrieved party may consider the failure of the real party in interest, the 20
employer, or the executive agency lobbyist to com ply with this section as a breach 21
of a material condition of the contract, grant, lease, or other financial arrangement. 22
(11) Executive agency officials may require certification from any person seeking the 23
award of a contract, grant, lease, or financial arrangement that the person, his or her 24
employer, and any real party in interest are in compliance with this section. 25
SECTION 93. A NEW SECTION OF KRS 363.510 TO 363.850 IS CREATED 26
TO READ AS FOLLOWS: 27
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(1) Beginning January 1, 2027, an electric vehicle power dealer shall not operate an 1
electric vehicle charging station without first obtaining a retail electric vehicle 2
charging license from the department. A retail electric vehicle charging license 3
shall be valid from the da te of issuance until January 31 of the following 4
calendar year. 5
(2) The department shall collect an annual license fee in the amount of one hundred 6
dollars ($100) per electric vehicle charging port located at an electric vehicle 7
charging station from the license holder to be deposited in the fund established in 8
subsection (3) of this section for the purpose of implementing and administering 9
of the retail electric vehicle charging program established by this section. 10
(3) (a) There is hereby established in th e State Treasury a trust and agency 11
account to be known as the retail electric vehicle charging station license 12
fund. The fund shall consist of moneys received from the license fee 13
imposed in subsection (2) of this section, state appropriations, gifts, gra nts, 14
and federal funds. 15
(b) The fund shall be administered by the department. 16
(c) Amounts deposited in the fund shall be used for the implementation and 17
administration of the electric vehicle charging station inspection program 18
established by this section and for no other purpose. 19
(d) Notwithstanding KRS 45.229, fund amounts not expended at the close of a 20
fiscal year shall not lapse but shall be carried forward into the next fiscal 21
year. 22
(4) Except as provided in subsection (5) of this section, beginning Ja nuary 1, 2027, 23
the department shall inspect each licensed electric vehicle charging station owned 24
or leased by an electric vehicle power dealer at least once every two (2) years. The 25
inspection shall include determinations of compliance with the standards in the 26
current edition of the National Institute of Standards and Technology's 27
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Handbook 44 or other applicable standards relating to: 1
(a) The accuracy of the meters and displays of the electric vehicle charging 2
ports from which electricity is sold, includi ng with regard to the electrical 3
rate, the charging speed, and the real-time charging status of the customer's 4
electric vehicle; 5
(b) Electrical and safety standards; 6
(c) Output voltages from electric vehicle charging port connectors; 7
(d) Security of payment methods and customer data; and 8
(e) Any physical security or cybersecurity measures that the department may 9
require. 10
(5) Electric vehicle charging stations constructed using funds from the National 11
Electric Vehicle Infrastructure Funding Program establish ed under the federal 12
Infrastructure Investment and Jobs Act, Pub. L. No. 117 -58, shall not be subject 13
to the licensure or inspection requirements of this section or administrative 14
regulations promulgated under this section until five (5) years have elapsed from 15
the initial date of operation of the electric vehicle charging station and the long -16
term stewardship requirement under 23 C.F.R. sec. 680.106 has expired. 17
(6) Within ninety (90) days of the effective date of this section of this Act, the 18
department shall promulgate administrative regulations in accordance with KRS 19
Chapter 13A to establish electric vehicle charging station inspection standards 20
and to carry out and enforce this section. 21
Section 94. KRS 363.510 is amended to read as follows: 22
As[When] used in KRS 363.510 to 363.850: 23
(1) "Department" means the Kentucky Department of Agriculture; 24
(2) "Commissioner" means the Commissioner of Agriculture; 25
(3) "Division" means the Division of Regulation and Inspection; 26
(4) (a) "Weights and measures" means all weights and measures of every kind, 27
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instruments and devices for weighing and measuring, and any appliances and 1
accessories associated with any of the instruments and devices. 2
(b) The term shall incl ude instruments and devices used to measure internal 3
moisture or density levels in unprocessed bulk tobacco if that moisture or 4
density determination is used as a condition of sale or as part of a contractual 5
sales agreement. 6
(c) The term shall not include meters for the measurement of electricity, gas 7
(natural or manufactured), or water when they are operated in a public utility 8
system. Electricity, gas, and water meters are specifically excluded from the 9
purview of KRS 363.510 to 363.850, and none of the provisions of KRS 10
363.510 to 363.850 shall apply to those meters or to any appliances or 11
accessories associated with those meters . However, this paragraph shall not 12
be construed to prohibit the department from regulating or inspecting 13
electric vehicle char ging stations or any associated electric meters under 14
Section 93 of this Act or the administrative regulations promulgated under 15
Section 93 of this Act; 16
(5) "Sell" and "sale" mean barter and exchange; 17
(6) "Director" means the state director of the Division of Regulation and Inspection; 18
(7) "Inspector" means a state inspector of weights and measures; 19
(8) "Intrastate commerce" means all commerce or trade that is begun, carried on, and 20
completed wholly within the limits of the State of Kentucky, and the phrase 21
"introduced into intrastate commerce" defines the time and place at which the first 22
sale and delivery of a commodity is made within the state, the delivery being made 23
either directly to the purchaser or to a common carrier for shipment to the 24
purchaser; 25
(9) "Commodity in package form" means a commodity put up or packaged in any 26
manner in advance of sale in units suitable for either wholesale or retail sale, 27
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exclusive of any auxiliary shipping container enclosing packages that individually 1
conform to the re quirements of KRS 363.510 to 363.850. An individual item or lot 2
of any commodity not in package form as defined in this section, but on which there 3
is marked a selling price based on an established price per unit of weight or of 4
measure, shall be considered a commodity in package form; 5
(10) "Consumer package" or "package of consumer commodity" means a commodity in 6
package form that is customarily produced or distributed for sale through retail 7
sales agencies or instrumentalities for consumption by individua ls or use by 8
individuals for the purposes of personal care or in the performance of services 9
ordinarily rendered in or about the household or in connection with personal 10
possessions; 11
(11) "Nonconsumer package" or "package of nonconsumer commodity" means an y 12
commodity in package form other than a consumer package, and particularly a 13
package designed solely for industrial or institutional use or for wholesale 14
distribution only; 15
(12) (a) "Barrel," when used in connection with fermented liquor, means a unit of 16
thirty-one (31) gallons. 17
(b) "Ton" means a unit of two thousand (2,000) pounds avoirdupois weight. 18
(c) "Cord," when used in connection with wood intended for fuel purposes, 19
means the amount of wood that is contained in a space of one hundred twenty-20
eight (128) cubic feet when the wood is ranked and well stowed;[ and] 21
(13) "Weight," as used in connection with any commodity, means net weight. If any 22
commodity is sold on the basis of weight, the net weight of the commodity shall be 23
used, and all contracts concerning commodities shall use net weight as their basis of 24
weight; 25
(14) "Electric vehicle" has the same meaning as in KRS 186.010; 26
(15) "Electric vehicle charging port" means the system at an electric vehicle charging 27
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station that can provide power to charg e only one (1) electric vehicle at a time, 1
even though it may have multiple connectors; 2
(16) "Electric vehicle charging station" means any place with electric vehicle supply 3
equipment that has an electrical power charging capacity of twenty (20) kilowatts 4
or more and that: 5
(a) Is accessible to general public vehicular traffic; and 6
(b) Sells electricity at retail to charge a battery or other storage device of an 7
electric vehicle; 8
(17) "Electric vehicle power dealer" means a person who owns or leases an elec tric 9
vehicle charging station; and 10
(18) "Electric vehicle supply equipment" means any device or system designed and 11
used specifically to transfer electrical energy to an electric vehicle, either as 12
charge transferred via physical or wireless connection, by loading a fully charged 13
battery, or by other means. 14
Section 95. KRS 138.477 is amended to read as follows: 15
(1) As used in this section: 16
(a) "Department" means the Department of Revenue; 17
(b) "Distribute" means the delivery or transfer of electric power into the battery or 18
other energy storage device of an electric vehicle at a location in this state; 19
(c) "Electric vehicle power" means electrical energy distributed into the battery or 20
other energy storage device of an electric vehicle to be used to power the 21
vehicle; 22
(d) "Electric vehicle power dealer" means a person who: 23
1. Owns or leases an electric vehicle charging station with a charging 24
capacity of twenty (20) kilowatts or more; or 25
2. Receives payment for charges for power distributed through an 26
electric vehicle charging station; 27
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(e) "Electric vehicle" has the same meaning as in KRS 186.010; 1
(f) "Electric vehicle charging station" means any p lace accessible to general 2
public vehicular traffic where electric power may be used to charge a battery 3
or other storage device of a licensed electric vehicle; and 4
(g) "Person" has the same meaning as in KRS 139.010. 5
(2) On or after January 1, 2024: 6
(a) An excise tax with an initial base rate of three cents ($0.03) per kilowatt hour 7
is imposed on electric vehicle power distributed in this state by an electric 8
vehicle power dealer for the purpose of charging electric vehicles in this state; 9
and 10
(b) A surtax with an initial base rate of three cents ($0.03) per kilowatt hour is 11
imposed on electric vehicle power distributed in this state by an electric 12
vehicle power dealer when the electric vehicle charging station is located on 13
state property. 14
(3) (a) On or be fore December 1 of each year [, 2024, and on or before each 15
December 1 thereafter,] the department shall compare the most current 16
quarterly National Highway Construction Cost Index 2.0 (NHCCI 2.0) value 17
and determine the percentage change in relation to the NHCCI 2.0 value from 18
the same quarter for the previous year. 19
(b) 1. The tax rate on January 1, 2025, and on each January 1 thereafter, shall 20
be adjusted by the change in the NHCCI 2.0 determined by paragraph 21
(a) of this subsection, unless the change is: 22
a. Greater than a five percent (5%) increase, in which case the taxes 23
shall be one hundred five percent (105%) of the tax rates in effect 24
at the close of the previous calendar year; or 25
b. Greater than a five percent (5%) decrease, in which case the taxes 26
shall be ninety -five percent (95%) of the tax rates in effect at the 27
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close of the previous calendar year. 1
2. Notwithstanding subparagraph 1. of this paragraph, the tax rate shall not 2
be less than the initial base rate identified in subsection (2) of this 3
section. 4
(c) Adjustments to the tax rate shall be rounded to the nearest one -tenth of one 5
cent ($0.001). 6
(4) At least twenty (20) days in advance of the first day of each calendar year, the 7
department shall provide notification of: 8
(a) The adjusted electric vehicle power tax rate for the upcoming calendar year to 9
all electric vehicle power dealers; and 10
(b) The adjusted electric vehicle ownership fee imposed under KRS 138.475 for 11
the upcoming calendar year to all county clerks. 12
(5) This tax shall be: 13
(a) Administered by the department; and 14
(b) Transferred to the road fund as defined in KRS 48.010. 15
(6) (a) The tax shall be added to the selling price charged by the electric vehicle 16
power dealer at the electric vehicle charging station on electric vehicle power 17
sold in this state. 18
(b) If there is n o selling price at the charging station, the electric vehicle power 19
dealer shall be responsible for paying the tax on the electric power distributed 20
by the electric vehicle charging station, except in the case of an electric 21
vehicle charging station installed prior to July 1, 2022. 22
(7) (a) The tax imposed shall be paid by the electric vehicle power dealer to the State 23
Treasurer. 24
(b) The electric vehicle power dealer is liable for the electric vehicle power tax. 25
(8) Every electric vehicle power dealer shall, by the twenty -fifth day of each month, 26
transmit to the department reports, on the forms the department may prescribe, on 27
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the total kilowatt hours distributed and the amount of tax collected. Payment of the 1
tax shall be due with the report. 2
(9) The electric vehicle power dealer shall keep and preserve an accurate record of all 3
receipts of electricity and tax together with invoices or other pertinent records and 4
papers required by the department for five (5) years. 5
(10) (a) No dealer or other person shall fa il or refuse to make the returns and pay the 6
tax prescribed by this section, or refuse to permit the department or its 7
representatives appointed by the commissioner of the department in writing to 8
examine his or her records, papers, files, and equipment pe rtaining to the 9
taxable business. 10
(b) No person shall make an incomplete, false, or fraudulent return, or attempt to 11
do anything to avoid a full disclosure of the amount of business done or to 12
avoid the payment of the whole or any part of the tax or penalties due. 13
(c) No person shall fail to keep and preserve records of electric vehicle power 14
distributed to make reports as required by this section. 15
(11) Any person who violates any provision of this section shall be subject to the 16
uniform civil penalties imp osed pursuant to KRS 131.180 and interest at the tax 17
interest rate as defined in KRS 131.183. 18
(12) (a) Notwithstanding any other provisions of this chapter to the contrary, the 19
president, vice president, secretary, treasurer, or any other person holding an y 20
equivalent corporate office of any corporation subject to the provisions of this 21
chapter shall be personally and individually liable, both jointly and severally, 22
for the taxes imposed under this chapter, and neither the corporate dissolution 23
nor withdrawal of the corporation from the state nor the cessation of holding 24
any corporate office shall discharge the foregoing liability of any person. 25
(b) The personal and individual liability shall apply to each and every person 26
holding the corporate office at the time the taxes become or became due. 27
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(c) No person will be personally and individually liable pursuant to this section 1
who had no authority in the management of the business or financial affairs of 2
the corporation at the time that the taxes imposed by thi s chapter become or 3
became due. 4
(13) (a) Notwithstanding any other provisions of this chapter, KRS 275.150, 362.1 -5
306(3) or predecessor law, or 362.2 -404(3) to the contrary, the managers of a 6
limited liability company, the partners of a limited liability p artnership, and 7
the general partners of a limited liability limited partnership or any other 8
person holding any equivalent office of a limited liability company, limited 9
liability partnership, or limited liability limited partnership subject to the 10
provisions of this chapter shall be personally and individually liable, both 11
jointly and severally, for the taxes imposed under this chapter. 12
(b) Dissolution or withdrawal of the limited liability company, limited liability 13
partnership, or limited liability limit ed partnership from the state, or the 14
cessation of holding any office shall not discharge the liability of any person. 15
(c) The personal and individual liability shall apply to each and every manager of 16
a limited liability company, partner of a limited liab ility partnership, and 17
general partner of a limited liability limited partnership at the time the taxes 18
become or became due. 19
(d) No person shall be personally and individually liable under this subsection 20
who had no authority to collect, truthfully account for, or pay any tax imposed 21
by this chapter at the time that the taxes imposed by this chapter become or 22
became due. 23
(14) "Taxes" as used in this section shall include interest accrued at the rate provided by 24
KRS 131.183, all applicable penalties imposed under this chapter, and all applicable 25
penalties and fees imposed under KRS 131.180, 131.410 to 131.445, and 131.990. 26
(15) The department may prescribe forms and promulgate administrative regulations to 27
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execute and administer the provisions of this section. 1
Section 96. KRS 138.446 is amended to read as follows: 2
(1) Bus companies [and taxicab companies ] operating under a certificate issued 3
pursuant to KRS Chapter 281 and senior citizen programs which utilize Title III 4
funds of the Older Americans Act in the provision of transportation services shall 5
be entitled to a refund of seven -ninths (7/9) of the amount of KRS Chapter 138 6
taxes paid on motor fuels used in their regularly scheduled operations in Kentucky. 7
(2) A[No] person shall not be entitled to a refund pursuant to this section unless he or 8
she shall have first filed with the department a bond issued by a surety company 9
authorized to do business in Kentucky in an amount of not less than one thousand 10
dollars ($1,000) n or more than five thousand dollars ($5,000) to be determined by 11
the department, conditioned upon faithful compliance with this section and upon the 12
payment to the Commonwealth of any refunds to which he was not entitled. 13
(3) Applications for refund shall b e filed with the department on a calendar quarter or 14
calendar year basis on forms and in the manner prescribed by it for refund of tax 15
paid on motor fuel used by buses [ or taxicabs] . Each application for a refund shall 16
show the number of gallons of motor f uel purchased during the quarter for use in 17
buses[ or taxicabs]; the date and quantity of each purchase; the vendor from whom 18
the fuel was purchased; the number of gallons on which refund is claimed; and 19
other information the department may require. [ Invoi ces shall be attached to 20
applications from taxicab companies.] 21
(4) [The department may require any gasoline dealer or any dealer's authorized agent to 22
identify gasoline sold by him for taxicab use by adding any chemical or substance, 23
which shall be furnished by the department and used in the manner as prescribed by 24
the department. ]The department [also ]may require that the dealer keep a complete 25
record of all the gasoline sold by him or her, which records shall give the date of 26
each sale, the number of gallons sold, the name of the person to whom sold, and the 27
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sale price. 1
(5) The department shall audit the application and make any other investigation it 2
deems necessary to determine whether it constitutes a proper claim. When the 3
department is satisfied that a refund is proper, it shall authorize seven -ninths (7/9) 4
of the amount of the tax paid to be refunded as other refunds are made and the 5
amount refunded shall be deducted from current motor fuel tax receipts. The tax 6
shall be refunded with interest at the tax interest rate as defined in KRS 7
131.010[(6)]. 8
(6) When the departme nt finds that an application for a refund contains a false or 9
fraudulent statement or that a refund has been fraudulently obtained, the department 10
shall refuse to grant any refunds to the person making the false or fraudulent 11
statement or fraudulently obta ining a refund for a period of two (2) years from the 12
date of the findings. 13
(7) The department may prescribe, promulgate and enforce administrative regulations 14
relating to the administration and enforcement of this section[. 15
(8) The refund provided for in this section shall be effective on motor fuel purchased 16
on or after July 1, 1978]. 17
Section 97. KRS 138.210 is amended to read as follows: 18
As used in KRS 138.210 to 138.448 [138.220 to 138.446] , unless the context requires 19
otherwise: 20
(1) "Accountable loss" means loss or destruction of "received" gasoline or special fuel 21
through wrecking of transportation conveyance, explosion, fire, flood or other 22
casualty loss, or contaminated and returned to storage. The loss shall be rep orted 23
within thirty (30) days after discovery of the loss to the department in a manner and 24
form prescribed by the department, supported by proper evidence which in the sole 25
judgment of the department substantiates the alleged loss or contamination and 26
which is confirmed in writing to the reporting dealer by the department. The 27
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department may make any investigation deemed necessary to establish the bona 1
fide claim of the loss; 2
(2) "Agricultural purposes" means purposes directly related to the production of 3
agricultural commodities and the conducting of ordinary activities on the farm; 4
(3) "Annual survey value" means the average of the quarterly survey values for a fiscal 5
year, as determined by the department, based upon surveys taken during the first 6
month of each quarter of the fiscal year; 7
(4) "Average wholesale price" means the weighted average per gallon wholesale price 8
of gasoline, based on the quarterly survey value as determined by the department, 9
and as adjusted by KRS 138.228; 10
(5) "Bulk storage facil ity" means gasoline or special fuels storage facilities of not less 11
than twenty thousand (20,000) gallons owned or operated at one (1) location by a 12
single owner or operator for the purpose of storing gasoline or special fuels for 13
resale or delivery to retail outlets or consumers; 14
(6) "Cellulosic ethanol" has the same meaning as in KRS 141.422; 15
(7) "Dealer" means any person who is: 16
(a) Regularly engaged in the business of refining, producing, distilling, 17
manufacturing, blending, or compounding gasoline or s pecial fuels in this 18
state; 19
(b) Regularly importing gasoline or special fuel, upon which no tax has been 20
paid, into this state for distribution in bulk to others; 21
(c) Distributing gasoline from bulk storage in this state; 22
(d) Regularly engaged in the busin ess of distributing gasoline or special fuels 23
from bulk storage facilities primarily to others in arm's-length transactions; 24
(e) In the case of gasoline, receiving or accepting delivery within this state of 25
gasoline for resale within this state in amounts of not less than an average of 26
one hundred thousand (100,000) gallons per month during any prior 27
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consecutive twelve (12) months' period, when in the opinion of the 1
department, the person has sufficient financial rating and reputation to justify 2
the conclus ion that he or she will pay all taxes and comply with all other 3
obligations imposed upon a dealer; or 4
(f) Regularly exporting gasoline or special fuels; 5
(8)[(7)] "Department" means the Department of Revenue; 6
(9)[(8)] "Diesel fuel": 7
(a) Means any liquid oth er than gasoline that, without further processing or 8
blending, is suitable for use as a fuel in a diesel powered highway vehicle ; 9
and[. Diesel fuel ] 10
(b) Does not include unblended kerosene, No. 5 [,] and No. 6 fuel oils[oil] as 11
described in ASTM specification D 396, or F-76 Fuel Naval Distillate MILL -12
F-166884; 13
(10)[(9)] "Dyed diesel fuel" means diesel fuel that i s required to be dyed under United 14
States Environmental Protection Agency rules for high sulfur diesel fuel, or is dyed 15
under the Internal Revenue Service rules for low sulfur fuel, or pursuant to any 16
other requirements subsequently set by the United State s Environmental Protection 17
Agency or the Internal Revenue Service; 18
(11) "Ethanol" has the same meaning as in KRS 141.422; 19
(12) "Ethanol flex fuel" means an ethanol fuel blend of ethanol and gasoline that 20
meets the current ASTM specification D5798; 21
(13)[(10)] "Financial instrument" means a bond issued by a corporation authorized to do 22
business in Kentucky, a line of credit, or an account with a financial institution 23
maintaining a compensating balance; 24
(14) "Fuel grade ethanol" includes ethanol, cellulosic ethanol, and ethanol flex fuel; 25
(15)[(11)] "Gasoline": 26
(a) Means all liquid fuels, including liquids ordinarily, practically, and 27
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commercially usable in internal combustion engines for the generation of 1
power, and all distillates of and condensates from petroleum, natural gas, coal, 2
coal tar, vegetable ferments, and all other products so usable which are 3
produced, blended, or compounded for the purpose of operating motor 4
vehicles, showing a flash point of one hundred ten ( 110) degrees Fahrenheit 5
or below, using the Eliott Closed Cup Test, or when tested in a manner 6
approved by the United States Bureau of Mines, are prima facie commercially 7
usable in internal combustion engines;[.] 8
(b) Includes[The term "gaso line" as used herein shall include] casing head, 9
absorption, natural gasoline, fuel grade ethanol, and condensates when used 10
without blending as a motor fuel, sold for use in motors direct, or sold to those 11
who blend for their own use; and[, ] 12
(c) Does[but shall] not include [:] propane, butane, or other liquefied petroleum 13
gases;[,] kerosene;[,] cleaner solvent;[,] fuel oil;[,] diesel fuel;[,] crude oil; or 14
casing head, absorption, natural gasoline, fuel grade ethanol, and condensates 15
when sold to be blended or compounded with other less volatile liquids in the 16
manufacture of commercial gasoline for motor fuel ;[,] industrial naphthas;[,] 17
rubber solvents ;[,] Stoddard solvent ;[,] mineral spirits ;[,] VM and P [& 18
]naphthas;[,] turpentine substitutes ;[,] pentane;[,] hexane;[,] heptane;[,] 19
octane;[,] benzene;[,] benzine;[,] xylol;[,] toluol;[,] aromatic petroleum 20
solvents;[,] alcohol;[,] and liquefied gases which would not exist as liquids at 21
a temperature of sixty (60) degrees Fahrenheit and a pressure of fourteen and 22
seven tenths ( 14.7) pounds per square inch absolute, unless the products are 23
used wholly or in combination with gasoline as a motor fuel; 24
(16)[(12)] "Motor vehicle" means any vehicle, machine, or mechanical contrivance 25
propelled by an internal combustion engine and licensed for operation and operated 26
upon the public highways and any trailer or semitrailer attached to or having its 27
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front end supported by the motor vehicles; 1
(17)[(13)] "Public highways" means every way or place generally open to the use of the 2
public as a matter or right for the purpose of vehicular travel, notwithstanding that 3
they may be temporarily closed or travel thereon restricte d for the purpose of 4
construction, maintenance, repair, or reconstruction; 5
(18)[(14) (a)] "Quarterly survey value": 6
(a) Means a value determined by the department for each calendar quarter of the 7
weighted average per gallon wholesale price of gasoline, det ermined from 8
information available through independent statistical surveys of gasoline 9
prices or, if requested, from information furnished by licensed gasoline 10
dealers. The department shall determine, within twenty (20) days following 11
the end of the first month of each calendar quarter, the weighted average of 12
per gallon wholesale selling prices of gasoline for the previous month. That 13
value shall be the quarterly survey value for the beginning of the following 14
calendar quarter; and[.] 15
(b) ["Quarterly surve y value" ] Shall be determined exclusive of any federal 16
gasoline tax and any fee on imported oil imposed by the Congress of the 17
United States; 18
(19)[(15)] "Received," [or ]"received gasoline," or "received special fuels" means[shall 19
have the following meanings]: 20
(a) 1. Gasoline and special fuels produced, manufactured, or compounded at 21
any refinery in this state or acquired by any dealer and delivered into or 22
stored in refinery, marine, or pipeline terminal storage facilities in this 23
state shall be deemed to be received when it has been loaded for bulk 24
delivery into tank cars or tank trucks consigned to destinations within 25
this state. 26
2. For the purpose of the proper administration of this chapter and to 27
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prevent the evasion of the tax and to enforce the duty of the dealer to 1
collect the tax, it shall be presumed that all gasoline and special fuel 2
loaded by any licensed dealer within this state into tank cars or tank 3
trucks is consigned to destinations within this state, unless the contrary 4
is established by th e dealer, pursuant to administrative regulations 5
prescribed by the department; and 6
(b) 1. Gasoline and special fuels acquired by any dealer in this state, and not 7
delivered into refinery, marine, or pipeline terminal storage facilities, 8
shall be deemed to be received when it has been placed into storage 9
tanks or other containers for use or subject to withdrawal for use, 10
delivery, sale, or other distribution. 11
2. Dealers may sell gasoline or special fuels to licensed bonded dealers in 12
this state in transport truckload, carload, or cargo lots, withdrawing it 13
from refinery, marine, pipeline terminal, or bulk storage tanks, without 14
paying the tax. In these instances, the licensed bonded dealer purchasing 15
the gasoline or special fuels shall be deemed to have received that fuel at 16
the time of withdrawal from the seller's storage facility and shall be 17
responsible to the state for the payment of the tax thereon; 18
(20)[(16)] "Refinery" means any place where gasoline or special fuel is refined, 19
manufactured, compounded, or otherwise prepared for use; 20
(21)[(17)] "Retail filling station" means any place accessible to general public vehicular 21
traffic where gasoline or special fuel is or may be placed into the fuel supply tank of 22
a licensed motor vehicle; 23
(22)[(18)] "Special fuels" means and includes all combustible gases and liquids capable 24
of being used for the generation of power in an internal combustion engine to 25
propel vehicles of any kind upon the public highways, including diesel fuel, and 26
dyed diesel fuel used exclus ively for nonhighway purposes in off -highway 27
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equipment and in nonlicensed motor vehicles, except that it does not include 1
gasoline, aviation jet fuel, kerosene unless used wholly or in combination with 2
special fuel as a motor fuel, or liquefied petroleum gas as defined in KRS 234.100; 3
(23)[(19)] "Storage" means all gasoline and special fuels produced, refined, distilled, 4
manufactured, blended, or compounded and stored at a refinery storage or delivered 5
by boat at a marine terminal for storage, or delivered by pipeline at a pipeline 6
terminal, delivery station, or tank farm for storage; 7
(24)[(20)] "Transporter" means any person who transports gasoline or special fuels on 8
which the tax has not been paid or assumed; and 9
(25)[(21)] "Wholesale floor price" means[: 10
(a) Prior to April 1, 2015, one dollar and seventy -eight and six -tenths cents 11
($1.786) per gallon; and 12
(b) On and after April 1, 2015,] two dollars and seventeen and seven -tenths cents 13
($2.177) per gallon. 14
SECTION 98. A NEW SECTION OF KRS CHAPTER 246 IS CREATED TO 15
READ AS FOLLOWS: 16
(1) There is hereby created in the State Treasury a trust and agency account to be 17
known as the Friends of Kentucky Agriculture fund. The fund shall consist of the 18
special license plate EF fees associated with the issuance of the Friends of 19
Kentucky Agricultur e license plate pursuant to Section 99 of this Act, state 20
appropriations, gifts, grants, and federal funds. 21
(2) The fund shall be administered by the Department of Agriculture. 22
(3) Amounts deposited in the fund shall be used for agricultural programs 23
administered by the department and for no other purpose. 24
(4) Notwithstanding KRS 45.229, fund amounts not expended at the close of a fiscal 25
year shall not lapse, but shall be carried forward to the next fiscal year. 26
Section 99. KRS 186.162 is amended to read as follows: 27
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(1) As used in this section and in KRS 186.043, 186.164, 186.166, 186.1722, and 1
186.174: 2
(a) "Special license plate" means a unique license plate issued under this chapter 3
to a group or organization that readil y identifies the operator of the motor 4
vehicle or motorcycle bearing the plate as a member of a group or 5
organization, or a supporter of the work, goals, or mission of a group or 6
organization. The term shall not include regular license plates issued under 7
KRS 186.240; 8
(b) "Street rod" means a modernized private passenger motor vehicle 9
manufactured prior to the year 1949, or designed or manufactured to resemble 10
a vehicle manufactured prior to 1949; 11
(c) "SF" means the portion of an initial or renewal fee to o btain a special license 12
plate that is dedicated for use by the Transportation Cabinet; 13
(d) "CF" means the county clerk's fee for issuing a motor vehicle registration as 14
established under KRS 186.040(1). If a CF amount is charged for a license 15
plate listed in this section, the applicant for that plate shall also pay the fees 16
identified in KRS 186.040(6). If a CF amount is not charged, the applicant 17
shall not be required to pay those fees; and 18
(e) "EF" means the portion of an initial or renewal fee to obtain a special license 19
plate that is mandated by this chapter to be dedicated for use by a particular 20
group or organization. 21
(2) The initial purchase fee and renewal fee for a special license plate created under this 22
chapter shall be as established in this subs ection and includes the name of group or 23
organization and the total initial and renewal fee required for the plate. The amount 24
in parentheses indicates how the total fee is required to be divided: 25
(a) Disabled veterans who receive assistance to purchase a vehicle from the 26
United States Department of Veterans' Affairs, veterans declared by the 27
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United States Department of Veterans' Affairs to be one hundred percent 1
(100%) service -connected disabled, and recipients of the Congressional 2
Medal of Honor: 3
1. Initial Fee: $0 ($0 SF/$0 CF/$0 EF). 4
2. Renewal Fee: $0 ($0 SF/$0 CF/$0 EF). 5
(b) Former prisoners of war , recipients of the Purple Heart, and survivors of 6
Pearl Harbor: 7
1. Initial Fee: $23 ($12 SF/$6 CF/$5 EF to the veterans' 8
program trust fund established under KRS 40.460). 9
2. Renewal Fee: $11 ($0 SF/$6 CF/$5 EF to the veterans' 10
program trust fund established under KRS 40.460). 11
(c) Members of the Kentucky National Guard [ and recipients of the Purple 12
Heart]: 13
1. Initial Fee: $23 ($12 SF/$6 CF/$5 EF to the National 14
Guard Association of Kentucky [veterans' program trust fund 15
established under KRS 40.460]). 16
2. Renewal Fee: $11 ($0 SF/$6 CF/$5 EF to the National Guard 17
Association of Kentucky[veterans' program trust fund established under 18
KRS 40.460]). 19
(d) Members of the Civil Air Patrol; active, retired, veteran, reserve, or auxiliary 20
members of the United States Army, Navy, Air Force, Marine Corps, Space 21
Force, or Coast Guard; Merchant Marines who served between December 7, 22
1941, and August 15, 1945; recipient s of the Silver Star Medal, the Legion of 23
Merit Medal, the Distinguished Flying Cross, the Air Medal, the Combat 24
Action Badge, the Combat Infantry Badge, or the Bronze Star Medal; persons 25
who wish to receive Gold Star Mothers, Gold Star Fathers, or Gold St ar 26
Spouses license plates beyond the two (2) exempted from fees under KRS 27
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186.041(6); individuals eligible for a special military service academy license 1
plate under KRS 186.041(8); individuals eligible for a special military unit 2
license plate under KRS 1 86.163; and disabled veterans who have been 3
declared to be between fifty percent (50%) and ninety -nine percent (99%) 4
service-connected disabled by the United States Department of Veterans' 5
Affairs: 6
1. Initial Fee: $23 ($12 SF/$6 CF/$5 EF to the veterans' 7
program trust fund established under KRS 40.460). 8
2. Renewal Fee: $23 ($12 SF/$6 CF/$5 EF to the veterans' 9
program trust fund established under KRS 40.460). 10
(e) Recipients of the Distinguished Service Cross, Navy Cross, or Air Force 11
Cross: 12
1. Initial Fee: $6 ($0 SF/$6 CF/$0 EF). 13
2. Renewal Fee: $6 ($0 SF/$6 CF/$0 EF). 14
(f) Disabled license plates: 15
1. Initial Fee: $18 ($12 SF/$6 CF/$0 EF). 16
2. Renewal Fee: $18 ($12 SF/$6 CF/$0 EF). 17
(g) Historic vehicles: 18
1. Initial Fee for two plates: $56 ($50 SF/$6 CF/$0 EF). 19
2. Renewal Fee: Do not renew annually. 20
(h) Members of Congress: 21
1. Initial Fee: $43 ($37 SF/$6 CF/$0 EF). 22
2. Renewal Fee: $23 ($12 SF/$6 CF/$5 EF to the veterans' 23
program trust fund established under KRS 40.460). 24
(i) Firefighters: 25
1. Initial Fee: $28 ($12 SF/$6 CF/$10 EF to the Kentucky 26
Firefighters Association). 27
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2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the Kentucky 1
Firefighters Association). 2
(j) Emergency management: 3
1. Initial Fee: $31 ($25 SF/$6 CF/$0 EF). 4
2. Renewal Fee: $18 ($12 SF/$6 CF/$0 EF). 5
(k) Fraternal Order of Police: 6
1. Initial Fee: $41 ($25 SF/$6 CF/$10 EF to the Kentucky 7
FOP Death Benefit Fund). 8
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the Kentucky 9
FOP Death Benefit Fund). 10
(l) Law Enforcement Memorial: 11
1. Initial Fee: $41 ($25 SF/$6 CF/$10 EF to the Kentucky 12
Law Enforcement Memorial Foundation, Inc.). 13
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the Kentucky 14
Law Enforcement Memorial Foundation, Inc.). 15
(m) Personalized plates for a motor vehicle that is required to be registered under 16
the provisions of KRS 186.050(1), (3)(a), or (4)(a), or a motorcycle required 17
to be registered under the provisions of KRS 186.050(2): 18
1. Initial Fee: $43 ($37 SF/$6 CF/$0 EF). 19
2. Renewal Fee: $43 ($37 SF/$6 CF/$0 EF). 20
(n) Street rods: 21
1. Initial Fee: $43 ($37 SF/$6 CF/$0 EF). 22
2. Renewal Fee: $18 ($12 SF/$6 CF/$0 EF). 23
(o) Nature plates: 24
1. Initial Fee: $28 ($12 SF/$6 CF/$10 EF to Kentucky 25
Heritage Land Conservation Fund established under KRS 146.570). 26
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to Kentucky 27
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Heritage Land Conservation Fund established under KRS 146.570). 1
(p) Amateur radio: 2
1. Initial Fee: $43 ($37 SF/$6 CF/$0 EF). 3
2. Renewal Fee: $18 ($12 SF/$6 CF/$0 EF). 4
(q) Kentucky General Assembly: 5
1. Initial Fee: $43 ($37 SF/$6 CF/$0 EF). 6
2. Renewal Fee: $23 ($12 SF/$6 CF/$5 EF to the veterans' 7
program trust fund established under KRS 40.460). 8
(r) Kentucky Court of Justice: 9
1. Initial Fee: $43 ($37 SF/$6 CF/$0 EF). 10
2. Renewal Fee: $11 ($0 SF/$6 CF/$5 EF to the veterans' 11
program trust fund established under KRS 40.460). 12
(s) Masons: 13
1. Initial Fee: $41 ($25 SF/$6 CF/$10 EF to the Masonic 14
Homes of Kentucky). 15
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the Masonic 16
Homes of Kentucky). 17
(t) Collegiate plates: 18
1. Initial Fee: $53 ($37 SF/$6 CF/$10 EF to the general 19
scholarship fund of the university whose name will be borne on the 20
plate). 21
2. Renewal Fee: $28 ($12 SF/$6 CF/$ 10 EF to the general 22
scholarship fund of the university whose name will be borne on the 23
plate). 24
(u) Independent Colleges: 25
1. Initial Fee: $41 ($25 SF/$6 CF/$10 EF to the Association of 26
Independent Kentucky Colleges and Universities for distribution to th e 27
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general scholarship funds of the Association's members). 1
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the Association of 2
Independent Kentucky Colleges and Universities for distribution to the 3
general scholarship funds of the Association's members). 4
(v) Child Victims: 5
1. Initial Fee: $41 ($25 SF/$6 CF/$10 EF to the child victims' 6
trust fund established under KRS 41.400). 7
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the child victims' 8
trust fund established under KRS 41.400). 9
(w) Kentucky Horse Council: 10
1. Initial Fee: $41 ($25 SF/$6 CF/$10 EF to the Kentucky 11
Horse Council). 12
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the Kentucky 13
Horse Council). 14
(x) Ducks Unlimited: 15
1. Initial Fee: $41 ($25 SF/$6 CF/$10 EF to Kentucky Ducks 16
Unlimited). 17
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to Kentucky Ducks 18
Unlimited). 19
(y) Spay neuter: 20
1. Initial Fee: $28 ($12 SF/$6 CF/$10 EF to the animal control 21
and care fund established under KRS 258.119). 22
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the animal control 23
and care fund established under KRS 258.119). 24
(z) Gold Star Mothers, Gold Star Fathers, or Gold Star Spouses: 25
1. Initial Fee: $0 ($0 SF/$0 CF/ $0 EF). 26
2. Renewal Fee: $0 ($0 SF/$0 CF/ $0 EF). 27
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3. A person may receive a maximum of two (2) plates under this paragraph 1
free of charge and may purchase additional plates for fees as established 2
in subsection (2)(d) of this section. 3
(aa) I Support Veterans: 4
1. Initial Fee: $28 ($12 SF/$6 CF/$10 EF to th e Kentucky 5
Department of Veterans' Affairs). 6
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the Kentucky 7
Department of Veterans' Affairs). 8
(ab) Gold Star Siblings, Gold Star Sons, or Gold Star Daughters: 9
1. Initial Fee: $28 ($12 SF/$6 CF/$10 EF to the vete rans' 10
program trust fund established under KRS 40.460). 11
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the veterans' 12
program trust fund established under KRS 40.460). 13
(ac) POW/MIA Awareness: 14
1. Initial Fee: $41 ($25 SF/$6 CF/$10 EF to the veterans' 15
program trust fund established under KRS 40.460). 16
2. Renewal Fee: $28 ($12 SF/$6 CF/$10 EF to the veterans' 17
program trust fund established under KRS 40.460). 18
(ad) Personalized plates for a recreational vehicle that is required to be registered 19
under the provisions of KRS 186.050(11): 20
1. Initial Fee: $51 ($45 SF/$6 CF/$0 EF). 21
2. Renewal Fee: $51 ($45 SF/$6 CF/$0 EF). 22
(ae) Friends of Kentucky Agriculture: 23
1. Initial Fee: $28 ($12 SF/$6 CF/$10 EF to the Friends of 24
Kentucky Agriculture fund established under Sec tion 98 of this 25
Act[agricultural program trust fund established under KRS 246.247]). 26
2. Renewal Fee: $23 ($12 SF/$6 CF/$5 EF to the Friends of 27
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Kentucky Agriculture fund established under Section 98 of this 1
Act[agricultural program trust fund established under KRS 246.247]). 2
(af) Special license plates established under KRS 186.164: 3
1. Initial Fee: $41 ($25 SF/$6 CF/$10 EF). 4
2. Renewal Fee: $41 ($25 SF/$6 CF/$10 EF). 5
(3) Any special license plate may be combined with a personalized license plate for a 6
twenty-five dollar ($25) state fee in addition to all other fees for the particular 7
special license plate established in this section and in KRS 186.164(3). The twenty -8
five d ollar ($25) fee required under this subsection shall be divided between the 9
cabinet and the county clerk of the county where the applicant is applying for the 10
license plate with the cabinet receiving twenty dollars ($20) and the county clerk 11
receiving five dollars ($5). 12
(4) (a) A sponsoring organization of any special license plate issued under this 13
section or any special license plate established under the provisions of KRS 14
186.164 may petition the cabinet for the production of that special license 15
plate for motorcycles. 16
(b) The cabinet shall make all of the special military license plates in this section 17
available for motorcycles owned or leased by eligible individuals. 18
(c) Owners and lessees of motorcycles registered under KRS 186.050(2) may be 19
eligible t o receive special license plates approved by the cabinet under 20
paragraphs (a) and (b) of this subsection. Applicants for a special license plate 21
for a motorcycle shall be required to pay the fee for a special plate as 22
prescribed in this section or in KRS 186.164. The fee paid for the special plate 23
for a motorcycle shall be in lieu of the registration fee required under KRS 24
186.050(2). 25
(5) The Transportation Cabinet shall: 26
(a) Identify the cost of issuing a child victims' trust fund special license plate 27
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under subsection (2)(v) of this section; and 1
(b) Transfer any revenue received from the initial or renewal SF fee that is in 2
excess of the cost identified in paragraph (a) of this subsection to the child 3
victims' trust fund established under KRS 41.400. 4
Section 100. KRS 186.164 is amended to read as follows: 5
(1) The SF portion of the fee required under KRS 186.162 shall include the fee to 6
reflectorize all license plates under KRS 186.240. All EF fees required under KRS 7
186.162 shall be collected at the time of an initial or renewal application by the 8
county clerk who shall forward the EF fee to the cabinet. The cabinet shall remit EF 9
fees to the fund, group, or organization identified in KRS 186.162 on a quarterly 10
basis. The cabinet may retain any investment income earned from holding EF fees 11
designated to be remitted under this subsection to offset administrative costs 12
incurred by the cabinet in the administration of EF fees. 13
(2) A special license plate shall be the color and design selected by the group or 14
organization identified in subsection (13) of this section, contingent upon the 15
approval of the Transportation Cabinet. In addition to the design selected for a 16
special license plate, the name "Kentucky," an annual renewal decal, and any 17
combination of letters or numerals required by the cabinet in the design shall also 18
appear on the plate. 19
(3) An actual metal special license plate shall be issued on the same schedule as regular 20
license plates are issued under KRS 186.240. T he cabinet shall have the discretion 21
to extend the time period that will exist between the date a metal special license 22
plate is issued and the date that regular plates are issued under KRS 186.240. A 23
renewal registration decal shall be issued all other ye ars during the owner's or 24
lessee's birth month, except as provided in KRS 186.041(2) and 186.042(5). A 25
person seeking a special license plate for a vehicle provided as part of the person's 26
occupation shall conform to the requirements of KRS 186.050(14). 27
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(4) (a) If a special license plate issued under this chapter deteriorates to the point that 1
the lettering, numbering, or images on the face of the plate are not legible, the 2
plate shall be replaced free of charge, if the owner or lessee has not 3
transferred t he vehicle to which the plate was issued during the current 4
licensing period. 5
(b) If a special license plate issued under this chapter is lost, stolen, or damaged 6
in an accident, the county clerk shall issue a new plate upon payment of a 7
three dollar ($3) county clerk fee, if the owner or lessee has not transferred the 8
vehicle to which the plate was issued during the current licensing period. 9
(5) Upon the sale, transfer, or termination of a lease of a vehicle with any special 10
license plate issued under this chapter, the owner or lessee shall remove the special 11
plate and return it and the certificate of registration to the county clerk. The county 12
clerk shall reissue the owner or lessee a regular license plate and a certificate of 13
registration upon payment of a three dollar ($3) county clerk fee. If the owner or 14
lessee requests, the county clerk shall reissue the special plate upon payment of a 15
three dollar ($3) county clerk fee for use on any other vehicle of the same 16
classification and category owned, leased , or acquired by the person during the 17
current licensing period. If the owner or lessee has the special plate reissued to a 18
vehicle which has been previously registered in this state, the regular license plate 19
that is being replaced shall be returned to th e county clerk who shall forward the 20
plate to the Transportation Cabinet. 21
(6) A special license plate may be issued to the owner or lessee of a motor vehicle that 22
is required to be registered under KRS 186.050(1), (3)(a), or (4)(a), except a special 23
license plate shall not be issued to a taxicab, limousine, or U-Drive-It registered and 24
licensed under this chapter or KRS Chapter 281. A person applying for a special 25
license plate shall apply in the office of the county clerk in the county of the 26
person's residence, except as provided in KRS 186.168(3). All special license plates 27
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issued under this chapter may be combined with a personalized license plate under 1
the provisions of KRS 186.174. The fee to combine a special license plate with a 2
personalized license plate shall be as established in KRS 186.162(3). 3
(7) Within thirty (30) days of termination from election to, appointment to, or 4
membership with any group or organization, an applicant to whom a special license 5
plate was issued under this chapter shall ret urn the special license plate to the 6
county clerk of the county of his or her residence, unless the person is merely 7
changing his or her status with the group or organization to retired. 8
(8) A group wanting to create a special license plate that is not aut horized under this 9
chapter on June 27, 2019, shall comply with the following conditions before being 10
eligible to apply for a special license plate: 11
(a) The group shall be nonprofit and based, headquartered, or have a chapter in 12
Kentucky; 13
(b) The group may be organized for, but shall not be restricted to, social, civic, or 14
entertainment purposes; 15
(c) The message to be placed on the license plate, if created, shall not 16
discriminate against any race, color, religion, sex, or national origin, and shall 17
not be c onstrued, as determined by the cabinet, as an attempt to victimize or 18
intimidate any person due to the person's race, color, religion, sex, or national 19
origin; 20
(d) The plate shall not represent a political party and shall not have been created 21
primarily to promote a specific political belief; 22
(e) The plate shall not have as its primary purpose the promotion of any specific 23
faith, religion, or antireligion; 24
(f) The plate shall not be the name of a special product or brand name, and shall 25
not be construed, as determined by the cabinet, as promoting a product or 26
brand name; and 27
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(g) The plate's lettering, logo, image, or message to be placed on the license plate, 1
if created, shall not be obscene, as determined by the cabinet. 2
(9) If the cabinet denies to issue a group a special license plate based upon the 3
conditions specified in subsection (8) of this section, the cabinet shall, immediately 4
upon denying to issue a group a special license plate, notify in writing the 5
chairperson of both the House and Senate standing committees on transportation of 6
the denial and the reasons upon which the cabinet based the denial. 7
(10) If the cabinet approves a request for a special license plate, the cabinet shall begin 8
designing and printing the plate after: 9
(a) The group collects a minimum of nine hundred (900) applications with each 10
application being accompanied by a fee as set forth in KRS 186.162. The 11
applications and accompanying fee shall be submitted to the cabinet at one (1) 12
time as a whole and shall not be submitted individually or intermittently; and 13
(b) The group submits to the cabinet the programming and production costs for 14
the plate. 15
(11) A group that is approved for a special license plate shall maintain a minimum 16
number of five hundr ed (500) registrations annually for the cabinet to continue 17
production of the plate. 18
(12) An initial applicant for, or an applicant renewing, his or her registration for a 19
special license plate shall, at the time of application, make a contribution that th e 20
county clerk shall forward to the cabinet as set forth in KRS 186.162. The cabinet 21
shall, on an annual basis, remit the contributions to the appropriate group identified 22
to be used for the declared purpose stated under subsection (13) of this section. Th e 23
cabinet may retain any investment income earned from holding contributions 24
designated to be remitted under this subsection to offset administrative costs 25
incurred by the cabinet in the administration of the contributions. Any group or 26
organization that r eceives a mandatory EF fee under KRS 186.162 shall maintain 27
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the information required under subsection (13)(a) and (c) of this section with the 1
Transportation Cabinet. 2
(13) The group shall, at the time the nine hundred (900) applications are submitted to the 3
Transportation Cabinet, also submit a notarized affidavit to the cabinet attesting to: 4
(a) The name, address, and telephone number for the group or organization. If the 5
group or organization does not have its headquarters in the Commonwealth, 6
then the name, address, and telephone number for the group or organization's 7
Kentucky state chapter shall be required. The names of the officers of the 8
group or organization shall also be required. If the entity receiving funds 9
under subsection (12) of this section i s not a state governmental agency, a 10
program unit within a state governmental agency, or is a group or 11
organization that does not have a statewide chapter, then a donation for use by 12
the group or organization shall be prohibited; 13
(b) The amount of the mone tary donation the group wants to receive when a 14
person purchases the group or organization's special license plate; and 15
(c) The purpose for which the donated funds will be used by the group or 16
organization. Donated funds shall not be limited for use by mem bers of the 17
group or organization, and shall not be used for administrative or personnel 18
costs of the group or organization. 19
(14) (a) All funds received by a group or organization under subsection (12) of this 20
section shall be deposited into an account sep arate from all other accounts the 21
group or organization may have. 22
(b) If the amount of money received in any fiscal year by a group or 23
organization under subsection (12) of this section is: 24
1. Equal to or greater than two hundred thousand dollars ($200,000 ),[ 25
and] the account shall be audited yearly at the expense of the group or 26
organization, and [.] the completed audit shall be forwarded to the 27
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Transportation Cabinet; or 1
2. Less than two hundred thousand dollars ($200,000), the group or 2
organization shall submit a form to the cabinet attesting to its 3
compliance with this section[in Frankfort]. 4
(c) One hundred percent (100%) of the funds received by a group or organization 5
under subsection (12) of this section shall be used for the express purpose 6
identified by the group in subsection (13) of this section. 7
(d) Except as provided in paragraph (e) of this subsection, any agency, group, 8
or organization that receives a mandatory EF fee under KRS 186.162 shall 9
comply with[ the provisions of] this subsection. 10
(e) If a mandatory EF fee under Section 99 of this Act is directed into a fund 11
established in statute, the agency controlling the fund shall not be required 12
to keep the EF fee proceeds in a separate account. 13
(15) (a) No later than October 1, 2026, and each Octo ber 1 thereafter, any group or 14
organization that receives funds under this section or EF fees under Section 15
99 of this Act, or any agency that administers a fund established in statute 16
that receives funds under this section or EF fees under Section 99 of t his 17
Act, shall submit a report on the use of these funds in the previous fiscal 18
year to the: 19
1. Legislative Research Commission for referral to the Interim Joint 20
Committee on Appropriations and Revenue; and 21
2. Auditor of Public Accounts. 22
(b) The report required under paragraph (a) of this subsection shall include: 23
1. The total receipts of the fund; 24
2. The sources of those receipts; 25
3. An accounting of all expenditures from the fund; 26
4. A detailed summary of the activities supported by EF fee proceeds, 27
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including the amount of money spent on each activity; 1
5. The identification of any unexpended funds and the reason why the 2
funds were not expended; and 3
6. An explanation of how all expenditures align with program objectives. 4
(16) The secretary of the Transportation Cabinet shall promulgate administrative 5
regulations in accordance with [under] KRS Chapter 13A to establish additional 6
rules to implement the issu ance of special license plates issued under this chapter, 7
including but not limited to: 8
(a) Documentation that will be required to accompany an application for a special 9
license plate to provide proof of: 10
1. Election to the United States Congress or the Ke ntucky General 11
Assembly; 12
2. Election or appointment to the Kentucky Court of Justice; 13
3. Membership in a Masonic Order, Fraternal Order of Police, or 14
emergency management organization; 15
4. Eligibility for membership in the Gold Star Mothers of America; 16
5. Eligibility as a father for associate membership in the Gold Star Mothers 17
of America; 18
6. Eligibility for membership in the Gold Star Wives of America; 19
7. Ownership of an amateur radio operator license; 20
8. Receipt of the Silver Star Medal; 21
9. Receipt of the Bronze Star Medal; 22
10. Receipt of the Air Medal; 23
11. Receipt of the Distinguished Flying Cross; 24
12. Receipt of the Combat Action Badge; 25
13. Receipt of the Combat Infantry Badge; 26
14. Eligibility for a Gold Star Siblings license plate for a person whose 27
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sibling died while serving the country in the United States Armed 1
Forces. As used in [For the purposes of] this subparagraph, "sibling" 2
means a sibling by blood, a sibling by half -blood, a sibling by adoption, 3
or a stepsibling; or 4
15. Eligibility for a Gold Star Sons or Gold Star Daughters license plate for 5
a person whose parent or stepparent died while servin g the country in 6
the United States Armed Forces; 7
(b) The time schedule permissible for a group or organization to request a design 8
change for the special license plate; and 9
(c) The procedures for review of proposed license plates and the standards by 10
which proposed special license plates are approved or rejected in accordance 11
with subsection (10) of this section. 12
(17)[(16)] Any individual, group, or organization that fails to audit any funds as 13
required[received] under this section[chapter], or that intenti onally uses any funds 14
received in any way other than attested to under subsection (13) of this section or 15
for administrative or personnel costs in violation of subsection (13) of this section, 16
shall be guilty of a Class D felony and upon conviction shall, in addition to being 17
subject to criminal penalties, be assessed a mandatory five thousand dollar ($5,000) 18
fine. 19
Section 101. KRS 186.041 is amended to read as follows: 20
(1) Each initial and renewal application by a person who meets the criteria of paragraph 21
(a) of this section and each initial application by a person who meets the criteria of 22
paragraph (b), (c), or (d) of this section for a special military license plate shall be 23
accompanied by proof as set forth in subsec tion (10) of this section that the person 24
is associated with the United States Army, United States Navy, United States Air 25
Force, United States Marine Corps, United States Space Force, United States Coast 26
Guard, United States Coast Guard Auxiliary, Kentuck y National Guard, Merchant 27
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Marines with service between December 7, 1941, and August 15, 1945, or Civil Air 1
Patrol in one (1) of the following ways: 2
(a) A member of the Armed Forces of the United States; 3
(b) A retired member; 4
(c) A member of the National G uard or Reserve component who has completed 5
his or her term of service, or has retired with a minimum of twenty (20) years 6
of service; or 7
(d) A veteran who received a discharge under honorable conditions, or the 8
veteran's surviving spouse, and: 9
1. Performed one hundred eighty (180) days of active-duty service; 10
2. Received an early release due to injuries or other medical condition, or 11
at the convenience of the service; 12
3. Received a hardship discharge; 13
4. Was separated or retired due to a disability; or 14
5. Was determined to have a service -connected disability incurred during 15
the enlistment. 16
(2) The member, retired member, veteran, reservist, or his or her spouse who is eligible 17
under subsection (9) of this section may purchase an unlimited number of special 18
military-related license plates described in subsection (1) of this section, annually 19
for vehicles they own or lease. A disabled veterans license plate shall expire on July 20
31. 21
(3) A recipient of the Distinguished Service Cross, Navy Cross, or Air Force Cross 22
shall be eligible for a Service Cross license plate upon submission of an application 23
to the Kentucky Department of Veterans' Affairs. The recipient shall be required to 24
include with the initial application for a Service Cross license plate a copy of the 25
general order that authorized the award and the recipient's Department of Defense 26
form number 214. The Department of Veterans' Affairs shal l verify the 27
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documentation submitted with the application for a Service Cross license plate, and 1
if the individual applying for the plate is confirmed to be a recipient of the 2
Distinguished Service Cross, Navy Cross, or Air Force Cross, the Department of 3
Veterans' Affairs shall submit the applicant's name to the Transportation Cabinet's 4
Division of Motor Vehicle Licensing not later than September 1 preceding the year 5
that the Service Cross license plate is to be initially issued or renewed. When the 6
Service Cross license plate is ready, the plate shall be sent to the county clerk in the 7
county of the applicant's residence. The Transportation Cabinet's Division of Motor 8
Vehicle Licensing shall inform each applicant in writing that the Service Cross 9
license pl ate is ready and may be picked up at the county clerk's office. The 10
Transportation Cabinet shall prescribe the type of application form required by this 11
subsection and shall supply the Department of Veterans' Affairs with the 12
application form required by this subsection. 13
(4) A person who is a former prisoner of the enemy during World War I, World War II, 14
the Korean War, or the Vietnam War, or the spouse of a deceased former prisoner 15
of war, shall be eligible for a former prisoner of war license plate by sub mitting 16
written proof from the United States Department of Veterans Affairs or other 17
appropriate federal agency stating the period of time the person or person's spouse 18
was a prisoner of war. If a former prisoner of war dies with a vehicle licensed as 19
authorized under this section, the person's surviving spouse may retain the license 20
plate for use on the same vehicle or on another vehicle that complies with KRS 21
186.164(7). 22
(5) A person who is certified by the Kentucky chapter of the Pearl Harbor Survivors 23
Association as being a survivor of the attack on Pearl Harbor shall be eligible for a 24
Pearl Harbor license plate and shall be required to attach to the special military -25
related license plate application written evidence from the Kentucky chapter of the 26
Pearl Harbor Survivors Association that the person: 27
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(a) Was a member of the United States Armed Forces on December 7, 1941; 1
(b) Was on station on December 7, 1941, during the hours of 7:55 a.m. to 9:45 2
a.m., Hawaii time, at Pearl Harbor, the island of Oahu, or offshore at a 3
distance not to exceed three (3) miles; 4
(c) Was discharged honorably from the United States Armed Forces; and 5
(d) Is certified by the Kentucky chapter of the Pearl Harbor Survivors 6
Association. 7
(6) A person who is eligible to receive a Gold Star Mothers, Gold Star Fathers, or Gold 8
Star Spouses license plate under KRS 186.164 (16)(a)[(15)(a)] may receive up to 9
two (2) Gold Star Mothers, Gold Star Fathers, or Gold Star Spouses license plates 10
free of charge and may purchase additional license pla tes by paying the same fee as 11
for special military -related plates issued under KRS 186.162(2)(d) annually for 12
vehicles he or she owns or leases. 13
(7) The surviving spouse of a Purple Heart recipient, or a Kentucky National Guard 14
member or a retired member, who possessed a vehicle licensed with the Purple 15
Heart recipient special license plate or the Kentucky National Guard special license 16
plate, may retain the license plate for use on the same vehicle or another vehicle 17
that complies with KRS 186.164(7). The surviving spouse may renew the license 18
plate indefinitely, provided the appropriate registration fee is paid annually. 19
(8) A person who is attending or who is a graduate of the United States Air Force 20
Academy, the United States Military Academy, the United States Naval Academy, 21
the United States Coast Guard Academy, or the United States Merchant Marine 22
Academy shall be eligible for a special military service academy license plate. A 23
special military service academy license plate under this subsection shall use the 24
same plate template as the standard special military license plate under subsection 25
(1) of this section, with stickers to identify the various service academies. The 26
Transportation Cabinet shall promulgate administrative regulations pursuant to 27
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KRS Chapter 13A to establish the proof required to demonstrate current attendance 1
at or graduation from a service academy. An eligible applicant may receive up to 2
two (2) special military service academy license plates. 3
(9) (a) The legally married spouse of a member of the Armed Forces of the United 4
States who meets the criteria for a special military license plate under 5
subsection (1) of this section shall be eligible for a special military license 6
plate. A special military license plate under this subsection shall use the same 7
template as the standard special military license plate under subsection (1) of 8
this section, with a sticker identifying the plate as that of a military spouse. 9
(b) An applicant who is eligible for a special military license plate under this 10
subsection shall present as proof of eligibility an original or copy of his or her 11
marriage certificate establishing marriage to the member of the Armed Forces 12
of the United States and an original or copy of one (1) of the following: 13
1. His or her unexpired DD-1173 form; or 14
2. Any identification document outlined in subsection (10) of this section 15
issued to his or her spouse. 16
(10) Prior to receiving a special military -related plate requested under subsection (1) of 17
this section, the applicant shall pr esent as proof of eligibility, an original or copy of 18
his or her: 19
(a) Unexpired Veteran Identification Card or Veteran Health Identification Card 20
issued by the United States Department of Veterans Affairs; 21
(b) DD-2, DD-214, DD-256, DD-257, or NGB-22 form; or 22
(c) Unexpired Geneva Conventions Identification Card issued by the United 23
States Department of Defense. 24
Section 102. KRS 186.166 is amended to read as follows: 25
(1) The Transportation Cabinet shall, unless directed otherwise by the General 26
Assembly, perpetually produce the following special license plates: military license 27
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plates, military unit license plates, U.S. Congressional license plates, firefighter 1
license pla tes, emergency management license plates, Fraternal Order of Police 2
license plates, Law Enforcement Memorial license plates, street rod license plates, 3
nature license plates, amateur radio license plates, Kentucky General Assembly 4
license plates, Kentucky Court of Justice license plates, Masonic Order license 5
plates, collegiate license plates, independent college and university license plates, 6
child victims' trust fund license plates, Kentucky Horse Council license plates, 7
Ducks Unlimited license plates, Go ld Star Mothers, Fathers, and Spouses license 8
plates, Gold Star Siblings, Sons, and Daughters license plates, Silver Star Medal 9
license plates, Legion of Merit Medal license plates, Bronze Star Medal license 10
plates, Air Medal license plates, Distinguished Flying Cross license plates, Combat 11
Action Badge license plates, Combat Infantry Badge license plates, POW/MIA 12
Awareness license plates, spay neuter license plates, service academy license plates, 13
Friends of Kentucky Agriculture license plates, and I Suppo rt Veterans license 14
plates. 15
(2) The design of the plates identified for perpetual production under this section may 16
be revised upon request of a group or organization requesting a design revision 17
under the provisions of KRS 186.164(16)[(15)]. 18
(3) (a) The design of a Purple Heart license plate shall not include any representation 19
of the word "Kentucky" that is a registered trademark or slogan which appears 20
on a general issue license plate. 21
(b) The design of a Purple Heart license plate shall include a repres entation of the 22
Purple Heart medal and the words "Combat Wounded." 23
Section 103. KRS 143.022 is amended to read as follows: 24
(1) A taxpayer engaged in severing or processing coal within this Commonwealth that 25
has paid the tax imposed under KRS 143.020 may apply for a refund equal to the 26
amount of tax paid under KRS 143.020 if the coal is transported directly to a market 27
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outside of the United States of[North] America. 1
(2) To apply for the refund allowed under subsection (1) of this section the taxpayer 2
shall file an application for refund with the department and submit all information 3
and documentation necessary to substantiate that the tax was paid upon the coal 4
which was transported directly to a market outside of the United States of [North] 5
America. 6
(3) The refund process allowed under subsection (1) of this section is available 7
beginning on or after August 1, 2020, but before July 1, 2028[2026], and limited 8
during any calendar year to the export of a combined total of: 9
(a) Ten million (10,000,000) tons of coal subject to the tax imposed under KRS 10
143.020 and exported through United States coal export terminals to markets 11
outside of North America; and 12
(b) Two million five hundred thousand (2,500,000) tons of coal subject to the 13
tax imposed under KRS 143.020 and exported through United States coal 14
export terminals to markets outside of the United States of America and 15
within North America. 16
(4) (a) By November 1, 2026, and each November 1 thereafter as long a refund is 17
issued u nder this section, the department shall report to the Legislative 18
Research Commission for referral to the Interim Joint Committee on 19
Appropriations and Revenue: 20
1. By destination: 21
a. The total tons of coal in which refunds were granted under 22
subsection (3)(a) of this section for the taxable year; and 23
b. The total tons of coal in which refunds were granted under 24
subsection (3)(b) of this section for the taxable year; 25
2. By county: 26
a. The total number of refunds requested for the taxable year; 27
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b. The total dollar amount of the refunds requested for the taxable 1
year; 2
c. The total number of refunds issued for the taxable year; and 3
d. The total dollar amount of the refunds issued for the taxable 4
year; and 5
3. By taxpayer: 6
a. The name and location of the taxpayer r equesting the refund as 7
listed on the tax return; and 8
b. The total dollar amount of the refund issued for the taxable year. 9
(b) The information required to be reported under this section shall not be 10
considered confidential taxpayer information and shall n ot be subject to 11
KRS Chapter 131 or any other provisions of the Kentucky Revised Statutes 12
prohibiting disclosure or reporting of information. 13
Section 104. KRS 278.130 is amended to read as follows: 14
(1) For the purpose of maintaining the commission, including the payment of salaries 15
and all other expenses, and the cost of regulation of the utilities subject to its 16
jurisdiction, the Department of Revenue shall each year assess the utilities in 17
proportion to their earnings or receipts derived from intrastate business in Kentucky 18
for the preceding calendar year as modified by KRS 278.150, and shall notify each 19
utility on or before July 1 of the amount assessed against it. The total amount [ so] 20
assessed shall be twenty -three hundredths of one percent (0.23%) of [not in any 21
year exceed two (2) mills on] intrastate receipts as so modified, which shall be 22
deposited into the State Treasury to the credit of the general fund. The sum by each 23
utility shall not be less than fifty dollars ($50) in any one (1) year. 24
(2) The assessments provided for in this section shall be in lieu of all other fees or 25
assessments levied by any city or other political subdivision for the control or 26
regulation of utilities. 27
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(3) The commission, upon application by a utility, shall authorize the utility to adjust 1
its rates to recover, within not more than one (1) year, any change in the annual 2
assessment and any costs imposed by commission order for the fees and expenses 3
of consultants. The application, and any hearing or other proceedings thereon, shall 4
be limited to the amount of such adjustment. 5
Section 105. KRS 278.150 is amended to read as follows: 6
(1) The commission shall, on or before June 1, certify to the Department of Revenue 7
and the Finance and Administration Cabinet the amount of intrastate business of 8
each utility in the state subject to its jurisdiction during the previous calendar year. 9
The com mission shall, when certifying the intrastate sales of retail electric 10
suppliers, deduct from such sales one -half (1/2) of the applicable wholesale power 11
costs, provided the utility from which such wholesale power purchases were made 12
pays assessment on the full wholesale value of its gross intrastate sales in Kentucky. 13
When certifying the intrastate sales of retail electric suppliers not subject to the 14
jurisdiction of the commission for rates, the commission shall deduct one -half (1/2) 15
of their actual intrastate sales. All utilities classified as retail electric suppliers shall 16
pay assessments based on the amount of intrastate sales less deductions as certified 17
by the commission. 18
(2) [The Finance and Administration Cabinet shall, on or before June 10, establ ish the 19
assessment rate and give written notification thereof to the Department of Revenue 20
and the commission. ] The Department of Revenue shall collect and pay the 21
assessment into the State Treasury to the credit of the general expenditure fund. All 22
such assessments shall be paid into the State Treasury through the Department of 23
Revenue on or before July 31 of the year in which the assessments are made. 24
(3) If any amount in the special fund for the maintenance of the commission remains 25
unexpended at the end of any fiscal year, that amount shall not lapse, but shall 26
remain credited to the account of the commission and may be used during any 27
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succeeding year. 1
Section 106. KRS 117.322 is amended to read as follows: 2
(1) (a) Any candidate for any elected office whose appearance, action, or speech is 3
altered through the use of synthetic media in an electioneering communication 4
may seek injunctive or other equitable relief against the sponsor of the 5
electioneering communication req uiring that the communication includes a 6
disclosure that is clear and conspicuous and included in, or alongside and 7
associated with, the content in a manner that is likely to be noticed by the 8
user. 9
(b) The court may award a prevailing party reasonable att orney's fees and costs. 10
This paragraph does not limit or preclude a plaintiff from securing or 11
recovering any other available remedy. 12
(2) In any action brought under subsection (1) of this section: 13
(a) The plaintiff shall: 14
1. File in Circuit Court of the county in which he or she resides; and 15
2. Bear the burden of establishing the use of synthetic media by clear and 16
convincing evidence; and 17
(b) The following shall not be liable except as provided in subsection (3) of this 18
section: 19
1. The medium disseminating the electioneering communication; and 20
2. An advertising sales representative of such medium. 21
(3) Failure to comply with an order of the court to include the required disclosure 22
herein shall be subject to the penalties set forth in KRS 121.990(3) for viol ation of 23
KRS 121.190(1). 24
(4) It is an affirmative defense for any action brought under subsection (1) of this 25
section that the electioneering communication containing synthetic media includes 26
a disclosure that is clear and conspicuous and included in, or a longside and 27
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associated with, the content in a manner that is likely to be noticed by the user. 1
(5) Except when a licensee, programmer, or operator of a federally licensed 2
broadcasting station transmits an electioneering communication that is subject to 47 3
U.S.C. sec. 315, a medium or its advertising sales representative may be held liable 4
in a cause of action brought under subsection (1) of this section if: 5
(a) The person intentionally removes any disclosure described in subsection (4) 6
of this section from the electioneering communication it disseminates and 7
does not remove the electioneering communication or replace the disclosure 8
when notified; or 9
(b) Subject to affirmative defenses described in subsection (4) of this section, the 10
person with intent to de ceive or mislead changes the content of an 11
electioneering communication in a manner that results in it qualifying as 12
synthetic media. 13
(6) (a) A provider or user of an interactive computer service shall not be treated as 14
the publisher or speaker of any info rmation provided by another information 15
content provider. 16
(b) An interactive computer service may be held liable in accordance with 17
subsection (3) of this section. 18
(c) An interactive computer service shall be exempt as provided by the 19
Communications Decency Act of 1996, as amended, 47 U.S.C. sec. 230. 20
(7) Courts are encouraged to determine matters under this section expediently. 21
Section 107. KRS 154.30-010 is amended to read as follows: 22
As used in this subchapter: 23
(1) "Activation date" means: 24
(a) For all projects except those described in paragraph (b) of this subsection, the 25
date established any time within a two (2) year period after the 26
commencement date. The Commonwealth may extend the two (2) year period 27
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to no more than four (4) years upon written application by the agency 1
requesting the extension; and 2
(b) For signature projects approved under KRS 154.30 -050(3)(a), the date 3
established any time within a ten (10) year period after the commencement 4
date. 5
For all projects established after July 14, 2018, the activation date is the date on 6
which the time period for the pledge of incremental revenues shall commence. To 7
implement the activation date, the minimum capital investment must be met and the 8
agency that is a party to the tax incentive agreement shall notify the office; 9
(2) "Agency" means: 10
(a) An urban renewal and community development agency established under 11
KRS Chapter 99; 12
(b) A development authority established under KRS Chapter 99; 13
(c) A nonprofit corporation; 14
(d) A housing authority established under KRS Chapter 80; 15
(e) An air board established under KRS 183.132 to 183.160; 16
(f) A local industrial development authority established under KRS 154.50 -301 17
to 154.50-346; 18
(g) A riverport authority established under KRS 65.510 to 65.650; or 19
(h) A designated department, division, or office of a city or county; 20
(3) (a) "Approved public infrastructure costs" means costs associated with the 21
acquisition, installation, construction, or reconstruction of public works, 22
public improvements, and public buildings, including planning and design 23
costs associated with the development of the public amenities. 24
(b) "Approved public infrastructure costs" in cludes but is not limited to costs 25
incurred for the following: 26
1. Land preparation, including demolition and clearance work; 27
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2. Buildings; 1
3. Sewers and storm drainage; 2
4. Curbs, sidewalks, promenades, and pedways; 3
5. Roads; 4
6. Street lighting; 5
7. The provision of utilities; 6
8. Environmental remediation; 7
9. Floodwalls and floodgates; 8
10. Public spaces or parks; 9
11. Parking; 10
12. Easements and rights-of-way; 11
13. Transportation facilities; 12
14. Public landings; 13
15. Amenities, including fountains, benches, and sculptures; and 14
16. Riverbank modifications and improvements; 15
(4) "Approved signature project costs" means: 16
(a) The acquisition of land for portions of the project that are for infrastructure; 17
and 18
(b) Costs associated with the acquisition, installation, development, construction, 19
improvement, or reconstruction of infrastructure, including planning and 20
design costs associated with the development of infrastructure, including but 21
not limited to parking structures, including portions of parking structures that 22
serve as platforms to support development above; 23
that have been determined by the commission to represent a unique challenge in the 24
financing of a project such that the project could not be developed without 25
incentives intended by this chapter to foster economic development; 26
(5) "Authority" means the Kentucky Economic Development Finance Authority 27
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established by KRS 154.20-010; 1
(6) "Capital investment" means: 2
(a) Obligations incurred for labor and to contractors, subcontractors, builders, and 3
materialmen in connection with the acquisition, construction, installation, 4
equipping, and rehabilitation of a project; 5
(b) The cost of acquiring land or rights in land within the development area on the 6
footprint of the pr oject, and any cost incident thereto, including recording 7
fees; 8
(c) The cost of contract bonds and of insurance of all kinds that may be required 9
or necessary during the course of acquisition, construction, installation, 10
equipping, and rehabilitation of a project which is not paid by the contractor 11
or contractors or otherwise provided; 12
(d) All costs of architectural and engineering services, including test borings, 13
surveys, estimates, plans, specifications, preliminary investigations, 14
supervision of construction, and the performance of all the duties required by 15
or consequent upon the acquisition, construction, installation, equipping, and 16
rehabilitation of a project; 17
(e) All costs that are required to be paid under the terms of any contract for the 18
acquisition, construction, installation, equipping, and rehabilitation of a 19
project; and 20
(f) All other costs of a nature comparable to those described in this subsection 21
that occur after preliminary approval; 22
(7) "City" means any city, consolidated local governmen t, or urban -county 23
government; 24
(8) "Commencement date" means the final approval date or the date on which a tax 25
incentive agreement is executed; 26
(9) "Commonwealth" means the Commonwealth of Kentucky; 27
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(10) "County" means any county, consolidated local government, charter county, unified 1
local government, or urban-county government; 2
(11) "CPI" means the nonseasonally adjusted Consumer Price Index for all urban 3
consumers, all items, base year computed for 1982 to 1984 equals one hundred 4
(100), published by the United States Department of Labor, Bureau of Labor 5
Statistics; 6
(12) "Department" means the Department of Revenue; 7
(13) "Development area" means an area established under KRS 65.7049, 65.7051, and 8
65.7053; 9
(14) "Economic development projects" means projects which are approved for tax 10
credits under Subchapter 20, 22, 23, 24, 25, 26, 27, 28, 34, or 48 of KRS Chapter 11
154; 12
(15) "Financing costs" means principal, interest, costs of issuance, debt service reserve 13
requirements, underwriting discount, costs of credit enhancement or liquidity 14
instruments, and other costs directly related to the issuance of bonds or debt for 15
approved public infrastructure costs or approved signature project costs for projects 16
approved pursuant to KRS 154.30-050; 17
(16) "Footprint" means the actual perimeter of a discrete, identified project within a 18
development area. The footprint shall not include any portion of a development area 19
outside the area for which actual capital investments are made and must be 20
contiguous; 21
(17) "Governing body" means the body possessing legislative authority in a city or 22
county; 23
(18) "Increment bonds" means bonds and notes issu ed for the purpose of paying the 24
costs of one (1) or more projects; 25
(19) "Incremental revenues" means: 26
(a) The amount of revenues received by a taxing district, as determined by 27
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subtracting old revenues from new revenues in a calendar year with respect to 1
a development area, or a project within a development area; or 2
(b) The amount of revenues received by the Commonwealth as determined by 3
subtracting old revenues from new revenues in a calendar year with respect to 4
the footprint; 5
(20) "Local participation a greement" means the agreement entered into under KRS 6
65.7063; 7
(21) "Local tax revenues" has the same meaning as in KRS 65.7045; 8
(22) "Modified new revenues for income tax" means the amount of individual income 9
tax included in state tax revenues that is: 10
(a) The result of multiplying the portion of state tax revenues from individual 11
income taxes by the modifier; 12
(b) Used for calculating state tax revenues in calendar years 2023 to 2048[2026]; 13
and 14
(c) For projects approved prior to January 1, 2023; 15
(23) "Modifier" means the result of: 16
(a) 1. Dividing the individual income tax rate of five percent (5%), in effect as 17
of December 31, 2022, by: 18
2. The individual income tax rate under KRS 141.020 for the calendar year 19
in which the new revenues for income tax are being computed; and 20
(b) Subtracting from the result of paragraph (a) of this subsection the number 21
one (1); 22
(c) Multiplying the result of paragraph (b) of this subsection by twenty -five 23
percent (25%); and 24
(d) Adding to the result of paragraph (c) of this subsection the number one (1); 25
(24) "New revenues" means: 26
(a) The amount of local tax revenues received by a taxing district with respect to 27
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a development area in any calendar year beginning with the year in which the 1
activation date occurred; and 2
(b) The amount of state tax revenues received by the Commonwealth with respect 3
to the footprint in any calendar year beginning with the year in which the 4
activation date occurred. 5
For projects approved prior to January 1, 2023, any state tax revenues received by 6
the Commonwealth from individual income tax shall be computed using modified 7
new revenues for income tax; 8
(25) "Old revenues" means: 9
(a) The amount of local tax revenues received by a taxing district with respect to 10
a development area as of December 31 of the year of preliminary approval; or 11
(b) 1. The amount of state tax revenues received by the Commonwealth within 12
the footprint as of Dece mber 31 of the year of preliminary approval. If 13
the authority determines that the amount of state tax revenues received 14
as of December 31 of the last calendar year prior to the commencement 15
of preliminary approval does not represent a true and accurate dep iction 16
of revenues, the authority may consider revenues for a period of no 17
longer than three (3) calendar years prior to the year of preliminary 18
approval, so as to determine a fair representation of state tax revenues. 19
The amount determined by the authorit y shall be specified in the tax 20
incentive agreement. If state tax revenues were derived from the 21
footprint prior to the year of preliminary approval, old revenues shall 22
increase each calendar year by: 23
a. The percentage increase, if any, of the CPI or a com parable index; 24
or 25
b. An alternative percentage increase that is determined to be 26
appropriate by the authority. 27
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The method for increasing old revenues shall be set forth in the tax 1
incentive agreement. 2
2. If state revenues were derived from the footprint p rior to the year of 3
preliminary approval, the calculation of incremental revenues shall be 4
based on the value of old revenues as increased using the method 5
prescribed in subparagraph 1. of this paragraph to reflect the same 6
calendar year as is used in the determination of new revenues; 7
(26) "Outstanding" means increment bonds that have been issued, delivered, and paid 8
for by the purchaser, except any of the following: 9
(a) Increment bonds canceled upon surrender, exchange, or transfer, or upon 10
payment or redemption; 11
(b) Increment bonds in replacement of which or in exchange for which other 12
increment bonds have been issued; or 13
(c) Increment bonds for the payment, redemption, or purchase for cancellation 14
prior to maturity, of which sufficient moneys or investme nts, in accordance 15
with the ordinance or other proceedings or any applicable law, by mandatory 16
sinking fund redemption requirements, or otherwise, have been deposited, and 17
credited in a sinking fund or with a trustee or paying or escrow agent, whether 18
at or prior to their maturity or redemption, and, in the case of increment bonds 19
to be redeemed prior to their stated maturity, notice of redemption has been 20
given or satisfactory arrangements have been made for giving notice of that 21
redemption, or waiver of t hat notice by or on behalf of the affected bond 22
holders has been filed with the issuer or its agent; 23
(27) "Preliminary approval" means the action taken by the authority preliminarily 24
approving an eligible project for incentives under this subchapter; 25
(28) "Project" means any property, asset, or improvement located in a development area 26
and certified by the governing body as: 27
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(a) Being for a public purpose; and 1
(b) Being for the development of facilities for residential, commercial, industrial, 2
public, recre ational, or other uses, or for open space, including the 3
development, rehabilitation, renovation, installation, improvement, 4
enlargement, or extension of real estate and buildings; and 5
(c) Contributing to economic development or tourism; and 6
(d) Meeting the additional requirements established by KRS 154.30 -040, 154.30-7
050, or 154.30-060; 8
(29) "Signature project" means a project approved under KRS 154.30-050; 9
(30) "State real property ad valorem tax" means real property ad valorem taxes levied 10
under KRS 132.020(1)(a); 11
(31) "State tax revenues" means revenues received by the Commonwealth from one (1) 12
or more of the following sources: 13
(a) State real property ad valorem taxes; 14
(b) Individual income taxes levied under KRS 141.020, other than individual 15
income tax es that have already been pledged to support an economic 16
development project within the development area; 17
(c) Corporation income taxes levied under KRS 141.040, other than corporation 18
income taxes that have already been pledged to support an economic 19
development project within the development area; 20
(d) Limited liability entity taxes levied under KRS 141.0401, other than limited 21
liability entity taxes that have already been pledged to support an economic 22
development project within the development area; and 23
(e) Sales taxes levied under KRS 139.200, excluding sales taxes already pledged 24
for: 25
1. Approved tourism attraction projects, as defined in KRS 148.851, within 26
the development area; and 27
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2. Projects which are approved for sales tax refunds under Subchapter 20 1
of KRS Chapter 154 within the development area; 2
(32) "Tax incentive agreement" means an agreement entered into in accordance with 3
KRS 154.30-070; and 4
(33) "Termination date" means: 5
(a) For a tax incentive agreement satisfying the requirements of KRS 154.30 -040 6
or 154.30 -060, a date established by the tax incentive agreement that is no 7
more than twenty (20) years from the activation date. However, the 8
termination date for a tax incentive a greement shall in no event be more than 9
forty (40) years from the establishment date of the development area to which 10
the tax incentive agreement relates; and 11
(b) For a project grant agreement satisfying the requirements of KRS 154.30 -050, 12
a date establish ed by the tax incentive agreement that is no more than thirty 13
(30) years from the activation date. However, the termination date for a tax 14
incentive agreement shall in no event be more than forty (40) years from the 15
establishment date of the development ar ea to which the tax incentive 16
agreement relates. 17
Section 108. KRS 132.380 is amended to read as follows: 18
(1) (a) Before any person's name shall appear before the voters on election day as a 19
candidate for the office of pr operty valuation administrator in any primary or 20
general election, except a current property valuation administrator already 21
qualified as a candidate to succeed himself or herself in office, or before that 22
person may be appointed property valuation adminis trator, except as an 23
interim appointee as provided by KRS 132.375, that person shall hold a 24
certificate issued by the department, showing that he or she has been 25
examined by the department and is qualified for the office. 26
(b) All certificates issued shall expire one (1) year from the date of issuance. 27
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(c) The examinations shall be written and formulated so as to test fairly the 1
ability and fitness of the applicant to serve as property valuation 2
administrator. 3
(d) The department shall hold the examination at a central location during the 4
month of November of each year immediately preceding each year in which 5
property valuation administrators are to be elected. 6
(e) The department shall, at least thirty (30) days prior to the examination, issue a 7
statewide pres s release announcing the examination and post the 8
announcement on the department's Web site. 9
(f) Any person desiring to take an examination shall appear at the time and place 10
designated. 11
(2) (a) If, after the giving of the examination, as provided in subse ction (1) of this 12
section, there is no person qualified to be a candidate in the county, the 13
department shall hold a second examination. 14
(b) Applicants from only those counties having no person qualified shall be 15
eligible to take the examination. 16
(c) Notice of the second examination shall be made by issuing a press release in 17
those counties and posting an announcement for the examination on the 18
department's Web site at least fourteen (14) days prior to the second 19
examination. 20
(3) (a) If no qualified candida te files for the office, a special examination shall be 21
given at a time determined by the department. 22
(b) Notice of and registration for the special examination shall be provided in the 23
same manner as provided in subsection (2) of this section. 24
(4) (a) Whenever there is a vacancy in the office of property valuation administrator 25
to be filled by appointment or by election, and there is not more than one (1) 26
person holding a valid certificate and eligible for appointment or election, the 27
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department shall hold a special examination for applicants seeking a 1
certificate for the office. 2
(b) If, after the giving of a special examination, only one (1) person is qualified, 3
the county judge/executive may request a second examination. 4
(c) Notice of and registration for the special examination shall be provided in the 5
same manner as provided by subsection (2) of this section. 6
(5) (a) Examinations shall be given and graded in accordance with rules of the 7
department published at the time of the examination. 8
(b) Within ten (10) days after the examination, a certificate of fitness and 9
qualification to fill the office of property valuation administrator shall be 10
issued by the department to each person passing the examination. 11
(6) Notwithstanding subsections (2) to (5) of this section, if there is not a qualified 12
candidate for property valuation administrator of a county before the filing 13
deadline for the primary election, the department shall continuously hold the 14
examination until the earlier of: 15
(a) At least two (2) persons for that county are certified by the department; or 16
(b) Thirty (30) days prior to the certification of candidates for the regular 17
election under KRS 118.215. 18
(7) Examination records shall be preserved b y the department for twelve (12) months 19
after the examination, and the record of any person who took the examination may 20
be seen by him or her at the office of the department in Frankfort, Kentucky. 21
SECTION 109. A NEW SECTION OF KRS CHAPTER 211 IS CREATED TO 22
READ AS FOLLOWS: 23
(1) There is hereby established in the State Treasury a restricted fund. 24
(2) The fund shall consist of moneys received from donations, grants, gifts, state 25
appropriations, and federal funds. 26
(3) The fund shall be administered by the Department for Public Health. 27
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(4) Moneys in the fund shall remain in the fund until appropriated by the General 1
Assembly. 2
(5) Notwithstanding KRS 45.229, fund amounts not expended at the close of a fiscal 3
year shall not lapse but shall be carried forward to the next fiscal year. 4
SECTION 110. A NEW SECTION OF KRS CHAPTER 194A IS CREATED 5
TO READ AS FOLLOWS: 6
(1) There is hereby established in the State Treasury a restricted fund to be known a s 7
the out-of-home care program fund. 8
(2) The fund shall consist of moneys received from donations, grants, gifts, state 9
appropriations, and federal funds. 10
(3) The fund shall be administered by the Department for Community Based 11
Services. 12
(4) Moneys in the fund shall remain in the fund until appropriated by the General 13
Assembly. 14
(5) Notwithstanding KRS 45.229, fund amounts not expended at the close of a fiscal 15
year shall not lapse but shall be carried forward to the next fiscal year. 16
SECTION 111. A NEW SECTION OF KRS CHAPTER 224A IS CREATED 17
TO READ AS FOLLOWS: 18
(1) There is hereby established in the State Treasury a revolving account to be known 19
as the residential housing infrastructure fund. The fund shall consist of moneys 20
received from state appropriations, gifts, grants, federal funds, and all repayment, 21
interest or other return on the investment of fund dollars. 22
(2) The fund shall be administered by the Kentucky Infrastructure Authority. 23
(3) Amounts deposited in the fund shall be used for the purpose of making low 24
interest loans to local governments for building, upgrading, renovation, or 25
expansion of infrastructure owned, maintained, or operated by the local 26
government seeking funding. 27
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(4) Notwithstanding KRS 45.229, fun d amounts not expended at the close of a fiscal 1
year shall not lapse but shall be carried forward into the next fiscal year. 2
Section 112. KRS 196.288 is amended to read as follows: 3
[(1) The department shall measure and document cost savings resulting from 4
amendments to or creation of statutes in KRS Chapters 27A, 196, 197, 431, 439, 5
532, 533, and 534 contained in 2011 Ky. Acts ch. 2. Mea sured and documented 6
savings shall be reinvested or distributed as provided in this section. 7
(2) The department shall establish a baseline for measurement using the average 8
number of inmates incarcerated at each type of penitentiary as defined in KRS 9
197.010 and at local jails in fiscal year 2010-2011. 10
(3) The department shall determine the average cost of: 11
(a) Incarceration for each type of penitentiary as defined in KRS 197.010 and for 12
local jails, including health care costs, transportation costs, and ot her related 13
costs, for one (1) inmate for one (1) year for the immediately preceding fiscal 14
year; 15
(b) Providing probation and parole services for one (1) parolee for one (1) year 16
for the immediately preceding fiscal year; and 17
(c) Reentry services and peer support as a condition of parole for those with 18
opiate addiction and other substance abuse disorders. 19
(4) Beginning with the budget request for the 2012 -2014 fiscal biennium, savings shall 20
be estimated from the baseline established in subsection (2) of thi s section as 21
follows: 22
(a) The estimated average reduction of inmates due to mandatory reentry 23
supervision as required by KRS 439.3406 multiplied by the appropriate 24
average cost as determined in subsection (3)(a) of this section; 25
(b) The estimated average reduction of inmates due to accelerated parole hearings 26
as required by KRS 439.340 multiplied by the appropriate average cost as 27
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determined in subsection (3)(a) of this section; 1
(c) The estimated average increase of parolees due to paragraphs (a) and (b) of 2
this subsection multiplied by the average cost as determined in subsection 3
(3)(b) of this section; and 4
(d) The estimated average reduction of parolees due to parole credit for good 5
behavior as provided in KRS 439.345 multiplied by the average cost as 6
determined in subsection (3)(b) of this section. 7
(5) ]Beginning in fiscal year 2026 -2027, the following amounts shall be allocated or 8
distributed by the secretary of the Justice Cabinet [from the estimated amount of savings 9
that would otherwise remain in the general fund]: 10
(1)[(a)] Four million six hundred thirty thousand two hundred dollars 11
($4,630,200)[Twenty-five percent (25%)] shall be distributed to the local 12
corrections assistance fund established by KRS 441.207; 13
(2)[(b)] Sixteen million three hundred eighty -three thousand five hundred dollars 14
($16,383,500)[Fifty percent (50%)] shall be distributed for the following purposes: 15
(a)[1.] To the department to provide or to contract for th e provision of 16
substance abuse treatment in county jails, regional jails, or other local 17
detention centers that employ evidence -based practices in behavioral health 18
treatment or medically assisted treatment for nonstate inmates with opiate 19
addiction or other substance abuse disorders; 20
(b)[2.] For KY-ASAP programs operating under KRS Chapter 15A in county 21
jails or in facilities under the supervision of county jails that employ evidence-22
based behavioral health treatment or medically assisted treatment for inm ates 23
with opiate addiction or other substance abuse disorders; 24
(c)[3.] To KY -ASAP to provide supplemental grant funding to community 25
mental health centers for the purpose of offering additional substance abuse 26
treatment resources through programs that empl oy evidence-based behavioral 27
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health treatment or medically assisted treatment; 1
(d)[4.] To KY -ASAP to address neonatal abstinence syndrome by providing 2
supplemental grant funding to community substance abuse treatment 3
providers to offer residential treatmen t services to pregnant women through 4
programs that employ evidence -based behavioral health treatment or 5
medically assisted treatment; 6
(e)[5.] To provide supplemental funding for traditional KY -ASAP substance 7
abuse programming under KRS Chapter 15A; 8
(f)[6.] To the department for the purchase of FDA -approved medication -9
assisted treatment products as a component of evidence -based treatment for 10
inmates with opioid dependence, opioid use disorder, or other substance abuse 11
disorders, for use in substance abuse tr eatment programs operated or 12
supervised by the department. In purchasing such FDA -approved products, 13
the department shall consider products and treatments that may minimize the 14
risk of diversion; 15
(g)[7.] To the Department of Public Advocacy to provide supp lemental funding 16
to the Social Worker Program for the purpose of creating additional social 17
worker positions to develop individualized alternative sentencing plans; and 18
(h)[8.] To the Prosecutors Advisory Council to enhance the use of rocket 19
docket prosecutions in controlled substance cases[; and 20
(c) In enacting the budget for the department and the judicial branch, beginning 21
in the 2012 -2014 fiscal biennium and each fiscal biennium thereafter, the 22
General Assembly shall: 23
1. Determine the estimated amount necessary for reinvestment in: 24
a. Expanded treatment programs and expanded probation and parole services 25
provided by or through the department; and 26
b. Additional pretrial services and drug court case specialists provided by or 27
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through the Administrative Office of the Courts; and 1
2. Shall allocate and appropriate sufficient amounts to fully fund these 2
reinvestment programs. 3
(6) The amount of savings shall be estimated each year of the 2012 -2014 fiscal 4
biennium, and for each year of each fiscal biennium therea fter, as specified in 5
subsection (4) of this section. 6
(7) (a) In submitting its budget request for the 2012 -2014 fiscal biennium and 7
each fiscal biennium thereafter, the department shall estimate the amount of 8
savings measured under this section and shall request the amount necessary to 9
distribute or allocate those savings as provided in subsection (5) of this 10
section. 11
(b) In submitting its budget request for the 2012 -2014 fiscal biennium and each 12
fiscal biennium thereafter, the judicial branch shall reques t the amount 13
necessary to distribute or allocate those savings as provided in subsection (5) 14
of this section]. 15
Section 113. KRS 441.207 is amended to read as follows: 16
(1) The local corrections assistance fund is created as a separate revolving fund to be 17
administered by the department. The fund shall consist of amounts transferred to 18
the fund pursuant to KRS 196.288, along with any other proceeds from grants, 19
contributions, appropriations, or other moneys made available f or purposes of the 20
fund. 21
(2) Notwithstanding KRS 45.229, amounts not expended at the close of a fiscal year 22
shall not lapse but shall be carried forward to the next fiscal year. 23
(3) Any interest earnings from the fund shall become a part of the fund and sh all not 24
lapse. 25
(4) Moneys in the fund shall be distributed to the counties each year. Amounts 26
distributed from the fund shall be used to support local correctional facilities and 27
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programs, including the transportation of prisoners, as follows: 1
(a) In each fiscal year, the first $3,000,000 received by the fund, or, if the fund 2
receives less than $3,000,000, the entire balance of the fund, shall be 3
divided equally among all counties; and 4
(b) Any moneys remaining after making the distributions required by 5
paragraph (a) of this subsection shall be distributed to each county based on 6
a ratio, the numerator of which shall be the county's county inmate 7
population on the second Thursday in January d uring the prior fiscal year, 8
and the denominator of which shall be the total counties' county inmate 9
population for the entire state on the second Thursday in January during 10
the prior fiscal year [Moneys in the fund shall accrue to the fund and shall be 11
retained in the fund until the General Assembly establishes a statutory process 12
and method for distributing the funds to local correctional facilities and 13
programs]. 14
Section 114. KRS 217.2202 is amended to read as follows: 15
A kratom processor or kratom retailer shall not: 16
(1) Distribute, dispense, sell, or make available for sale any kratom, kratom extract, or 17
kratom product[ to an individual who is under twenty-one (21) years of age]; or 18
(2) Prepare, manufacture, distribute , dispense, sell, or make available for sale any 19
kratom, kratom extract, or kratom product[ that: 20
(a) Is adulterated with a dangerous nonkratom substance that affects the quality 21
or strength of the kratom extract or kratom product to such a degree that it 22
may injure a consumer; 23
(b) Contains a poisonous or otherwise harmful nonkratom ingredient, including 24
but not limited to any controlled substance as defined in KRS Chapter 218A; 25
(c) Contains a level of 7 -hydroxymitragynine in the alkaloid fraction that is 26
greater than two percent (2%) of the overall alkaloid composition of the 27
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product; 1
(d) Contains any synthetic alkaloid, including synthetic mitragynine, synthetic 7 -2
hydroxymitragynine, or any other synthetically derived compound of the plant 3
Mitragyna speciosa; 4
(e) Contains levels of residual solvents higher than those permitted under the 5
United States Pharmacopeia Chapter 467; or 6
(f) Does not meet the labeling requirements established pursuant to KRS 7
217.2203 or any administrative regulation promulgated thereunder]. 8
Section 115. KRS 217.2207 is amended to read as follows: 9
A kratom processor or kratom retailer who violates KRS 217.2202 [or 217.2203 or any 10
administrative regulation promulgated thereunder ] shall be subject to a civil penalty of 11
not more than five thousand[hundred] dollars ($5,000)[($500)] for a first offense and not 12
more than ten[one] thousand dollars ($10,000)[($1,000)] for a second or subsequent 13
offense. 14
Section 116. KRS 139.495 is amended to read as follows: 15
(1) As used in this section: 16
(a) "Educational or charitable institution" means [The taxes imposed by this 17
chapter shall apply to]: 18
1.[(a)] A resident, nonprofit educational or[,] charitable[, or religious] 19
institution th at has [institutions which have] qualified for exemption 20
from income taxation under Section 501(c)(3) of the Internal Revenue 21
Code; or[and] 22
2.[(b)] Any resident, single member limited liability company that is: 23
a.[1.] Wholly owned and controlled by a reside nt or nonresident, 24
nonprofit educational or[,] charitable[, or religious] institution 25
that[which] has qualified for exemption from income taxation 26
under Section 501(c)(3) of the Internal Revenue Code; and 27
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b.[2.] Disregarded as an entity separate from the resident or nonresident, 1
nonprofit educational or[,] charitable[, or religious] institution for 2
federal income tax purposes pursuant to 26 C.F.R. sec. 301.7701 -3
2; and 4
(b) "Religious institution" means: 5
1. A resident nonprofit religious institution that has qualified for 6
exemption from income taxation under Section 501(c)(3) of the 7
Internal Revenue Code; 8
2. Any resident, single member limited liability company that is: 9
a. Wholly owned and controlled by a resident or nonresident, 10
nonprofit religious institution that has qualified for exemption 11
from income taxation under Section 501(c)(3) of the Internal 12
Revenue Code; and 13
b. Disregarded as an entity separate from the resident or 14
nonresident, nonprofit religious institution for federal income 15
tax purposes pursuant to 26 C.F.R. sec. 301.7701-2; or 16
3. A resident nonprofit religious institution that has chosen not to apply 17
to the Internal Revenue Service for a Section 501(c)(3) designation 18
but would otherwise qualify for that designation by demonstrating that 19
the institution has: 20
a. A recognized creed and form of worship; 21
b. A distinct religious history; 22
c. Ordained minister that ministers to the congregation of 23
believers; 24
d. An established place of worship where worship services are held 25
in the same location on a regular basis; 26
e. A congregation of who regularly attend worship services; and 27
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f. Regularly scheduled and promoted religious services for the 1
public to attend[ 2
as provided in this section]. 3
(2) (a) For educational or charitable institutions, except as provided in paragraph 4
(b) of this subsection, the taxes imposed by this chapter do [Tax does] not 5
apply to any of the following: 6
1. Purchases[Sales] of tangible personal property, digital property, or 7
services made by [to] these institutions [ or limited liability companies 8
described in subsection (1) o f this section] , provided the tangible 9
personal property, digital property, or service is to be used solely in this 10
state within the educational or[,] charitable[, or religious] function; 11
2. Sales of food to students in school cafeterias or lunchrooms; 12
3. Sales by school bookstores of textbooks, workbooks, and other course 13
materials; 14
4. Sales by nonprofit, school sponsored clubs and organizations, provided 15
the[such] sales do not include tickets for athletic events; 16
5. Sales of admissions, including the sale s of admissions to a golf course 17
when the admission is the result of a fundraising event, by [ nonprofit] 18
educational or[,] charitable[, or religious] institutions[ described in 19
subsection (1) of this section] . All other sales of admissions to a golf 20
course by these institutions are not exempt from tax under this section; 21
or 22
6. a. Fundraising event sales made by [nonprofit ] educational or[,] 23
charitable[, or religious] institutions[ and limited liability 24
companies described in subsection (1) of this section]. 25
b. As used in [For the purposes of] this subparagraph, "fundraising 26
event sales" does not include sales related to the operation of a 27
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retail business, including but not limited to thrift stores, 1
bookstores, surplus property auctions, recycle and reuse stor es, or 2
any ongoing operations in competition with for-profit retailers. 3
(b) The exemptions provided in subparagraphs 5. and 6. of paragraph (a) of this 4
subsection shall not apply to sales generated by or arising at a tourism 5
development project approved under KRS 148.851 to 148.860. 6
(3) (a) An educational or charitable [An] institution shall be entitled to a refund 7
equal to twenty-five percent (25%) of the tax collected on its sale of donated 8
goods if the refund is used exclusively as reimbursement for capit al 9
construction costs of additional retail locations in this state, provided the 10
institution: 11
1.[(a)] Routinely sells donated items; 12
2.[(b)] Provides job training and employment to individuals with 13
workplace disadvantages and disabilities; 14
3.[(c)] Spends a t least seventy -five percent (75%) of its annual revenue 15
on job training, job placement, or other related community services; 16
4.[(d)] Submits a refund application to the department within sixty (60) 17
days after the new retail location opens for business; and 18
5.[(e)] Provides records of capital construction costs for the new retail 19
location and any other information the department deems necessary to 20
process the refund. 21
The maximum refund allowed for any location shall not exceed one million 22
dollars ($1,000,000). 23
(b) As used in this subsection, "capital construction cost": 24
1. Means the cost of construction of any new facilities or the purchase and 25
renovation of any existing facilities; and[, but] 26
2. Does not include the cost of real property other than real p roperty 27
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designated as a brownfield site as defined in KRS 65.680(4). 1
(4) Notwithstanding any other provision of law to the contrary, refunds under 2
subsection (3) of this section shall be made directly to the institution. Interest shall 3
not be allowed or pa id on the refund. The department may examine any refund 4
within four (4) years from the date the refund application is received. Any 5
overpayment shall be subject to the interest provisions of KRS 131.183 and the 6
penalty provisions of KRS 131.180. 7
(5) All ot her sales made by [nonprofit ] educational or[,] charitable[, or religious] 8
institutions[ or limited liability companies described in subsection (1) of this 9
section] are taxable and the tax may be passed on to the purchaser as provided in 10
KRS 139.210. 11
(6) For religious institutions, the taxes imposed by this chapter do not apply to any of 12
the following: 13
(a) Sales of tangible personal property, digital property, or services made by a 14
religious institution, provided the tangible personal property, digital 15
property, or service is sold in this state within the religious function; or 16
(b) Purchases of tangible personal property, digital property, or services made 17
by a religious institution, provided the tangible personal property, digital 18
property, or service is to be used solely in this state within the religious 19
function. 20
Section 117. KRS 132.195 is amended to read as follows: 21
(1) When any real or personal property which is exempt from taxation is leased or 22
possession is otherwi se transferred to a natural person, association, partnership, or 23
corporation in connection with a business conducted for profit, the leasehold or 24
other interest in the property shall be subject to state and local taxation at the rate 25
applicable to real or personal property levied by each taxing jurisdiction. 26
(2) Subsection (1) of this section shall not apply to interests in: 27
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(a) Industrial buildings, as defined under KRS 103.200, owned and financed by a 1
tax-exempt governmental unit or tax -exempt statutory a uthority under the 2
provisions of KRS Chapter 103, the taxation of which is provided for under 3
the provisions of KRS 132.020 and 132.200; 4
(b) Federal property for which payments are made in lieu of taxes in amounts 5
equivalent to taxes which might otherwise be lawfully assessed; 6
(c) Property of any state-supported educational institution; 7
(d) Vending stand locations and facilities operated by blind persons under the 8
auspices of the Division of Kentucky Business Enterprise, regardless of 9
whether the property is owned by the federal, state, or a local government; 10
(e) Property of any free public library; 11
(f) Property in Fayette County, Kentucky, administered by the Department of 12
Military Affairs, Bluegrass Station Division; 13
(g) All privately owned leasehold inter ests in residential property when the 14
residential property is owned in fee simple by a purely public charity as of 15
July 1, 2020: 16
1. When the real property includes a residential property unit that is: 17
a. Leased by the purely public charity for a period of at least one (1) 18
year to an individual person who is fifty -five (55) years of age or 19
older; 20
b. Maintained as the individual person's permanent residence under a 21
lease agreement that: 22
i. Prohibits the lessee from subleasing the unit; and 23
ii. Provides that t he lessee's possessory interest in the unit is 24
terminable by the lessor upon the death of the lessee, the 25
physical or mental inability of the lessee to continue to reside 26
in the unit, or the lessee's relocation to a nursing home or 27
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similar assisted living facility; and 1
c. Constructed on or before July 1, 2020, or constructed after July 1, 2
2020, on land that was privately owned in fee simple by the purely 3
public charity on or before July 1, 2020; 4
2. If the fee simple ownership is transferred by the purely pu blic charity 5
after July 1, 2020, it shall be transferred to another purely public charity 6
and the requirements established for the residential property unit in 7
subparagraph 1. of this paragraph shall be maintained; and 8
3. The taxation of which is provided for under KRS 132.020 and 132.200;[ 9
or] 10
(h) All privately owned leasehold interests in residential property owned in fee 11
simple by a purely public charity, which is exempt from ad valorem taxation 12
under Kentucky Constitution Section 170, when the residential property unit 13
is leased by the purely public charity to an individual person who is: 14
1. Receiving medical or educational supportive services from the purely 15
public charity; and 16
2. a. A postsecondary educational participant; 17
b. A minor; 18
c. Sick, disabled, or impoverished; or 19
d. Over the age of sixty-five (65); 20
(i) Public-private partnership projects or property developed, acquired, or 21
leased in accordance with KRS 45A.077 or 65.028; or 22
(j) Real property owned by the Kentucky Housing Corporation under KRS 23
Chapter 198A: 24
1. That is acquired and leased in connection with an activity, including 25
new construction, that would result in an increase of forty -eight (48) 26
units or more to the stock of residential multifamily housing; 27
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2. Subject to an extended use agreement in favor of the Kentucky 1
Housing Corporation; and 2
3. The county judge/executive and the mayor of the applicable political 3
subdivisions have provided written consent of the acquisition and 4
lease. 5
(3) Taxes shall be assessed to lessees of exempt real or personal property and collected 6
in the same ma nner as taxes assessed to owners of other real or personal property, 7
except that taxes due under this section shall not become a lien against the property. 8
When due, such taxes shall constitute a debt due from the lessee to the state, county, 9
school distri ct, special district, or urban -county government for which the taxes 10
were assessed and if unpaid shall be recoverable by the state as provided in KRS 11
Chapter 134. 12
Section 118. KRS 65.494 is amended to read as follows: 13
(1) As used in this section: 14
(a) "Existing development area" means a development area established by a 15
county containing a city of the first class or by a city of the first class prior to 16
March 23, 2007, that is subject to the provisions of a grant contract, Interlocal 17
Cooperation Agreement, or Master Agreement executed prior to March 23, 18
2007; and 19
(b) "New development area" means a development area that: 20
1. Is created within an existing development area; and 21
2. Exists for a period of thirty (30) years, and m ay be extended for a 22
period not to exceed an additional twenty -five (25) years to 23
accommodate the pilot program term permitted pursuant to KRS 24
65.4931. 25
(2) The provisions of KRS 65.490 to 65.499 shall apply only to: 26
(a) Existing development areas; and 27
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(b) New development areas, provided that: 1
1. The project for the existing development area is amended to remove the 2
new development area from the existing development area; 3
2. All contracts regarding the application of increment derived from the 4
new development area require not less than: 5
a. Ten percent (10%) of the increment be paid to the agency for 6
which the existing development area was established; 7
b. Eighty percent (80%) of the increment be paid to the developer of 8
the new development area; and 9
c. Ten percent (10%) shall be retained by the Commonwealth or 10
local government, as applicable; 11
3. Notwithstanding KRS 65.495 to the contrary, the payment to the agency 12
under subparagraph 2. of this paragraph shall not be taken into account 13
in determining whet her thresholds within the contract have been met; [ 14
and] 15
4. The amendment of the project for an existing development area is 16
approved by: 17
a. i. The county containing a city of the first class; or 18
ii. The city of the first class; 19
in which the existing development area is located; 20
b. The Kentucky Economic Development Finance Authority[state]; 21
c. The agency for which the existing development area was 22
established; and 23
d. If applicable, the insurer of any bonds issued for the benefit of the 24
agency for which the e xisting development area was established ; 25
and 26
5. Any negotiation or agreement made related to an existing development 27
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area or a new development area shall be approved by the Kentucky 1
Economic Development Finance Authority. 2
Section 119. KRS 141.438 is amended to read as follows: 3
(1) For taxable years beginning on or after January 1, 2011, there is hereby established 4
the Endow Kentucky tax credit. 5
(2) A taxpayer providing an endowment gift to a permanent endowment fund of a 6
qualified community foundation, or county -specific component fund, or affiliate 7
community foundation, which has been certified under KRS 147A.325, and 8
meeting the requirements of subsection (7) of this section, may claim a credit 9
against the taxes imposed by KRS 141.020 or 141.040 and 141.0401. The ordering 10
of the credit shall be as provided in KRS 141.0205. 11
(3) The credit shall be equal to twenty percent (20%) of the value of the endowment 12
gift provided by the taxpayer, not to exceed ten thousand dollars ($10,000). 13
(4) The credit shall be nonrefundable, but any amount of credit that a taxpayer is not 14
able to utilize during a particular taxable year may be carried forward for use in a 15
subsequent taxable year, for a period not to exceed five (5) years. 16
(5) No tax credit claimed under this section may be sold or transferred. If the taxpayer 17
is a pass -through entity not subject to tax under KRS 141.040, the amount of 18
approved credit shall be applied against the tax imposed by KRS 141.0401 at the 19
entity level, a nd shall also be distributed to each partner, member, or shareholder 20
based on the partner's, member's, or shareholder's distributive share of the income 21
of the pass-through entity. 22
(6) The total amount of tax credit that may be awarded under this section s hall be 23
limited to: 24
(a) Five hundred thousand dollars ($500,000) in each fiscal year beginning on or 25
before July 1, 2015;[ and] 26
(b) One million dollars ($1,000,000) in each fiscal year beginning on or after July 27
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1, 2016, and prior to July 1, 2026; and[.] 1
(c) Two million dollars ($2,000,000) in each fiscal year beginning on or after 2
July 1, 2026. 3
(7) A taxpayer pursuing a tax credit under this section shall: 4
(a) File an application for preliminary authorization of the tax credit with the 5
department; 6
(b) After receiving preliminary authorization from the department, provide an 7
endowment gift to a qualified community foundation, county -specific 8
component fund, or affiliate community foundation which has been certified 9
under KRS 147A.325 within thirty (30) days of the date of the notice of 10
authorization for the tax credit from the department; and 11
(c) Within ten (10) days of making the gift, report to the department proof of the 12
endowment gift. 13
(8) (a) The department shall: 14
1. Create the application required to be filed by the taxpayer seeking 15
preliminary approval for the tax credit; and 16
2. Publish on its Web site the amount of total credit allocated to date, the 17
date the last processed application for preliminary approval was 18
received, and the remaining credit available. 19
(b) 1. Upon receipt of an application for preliminary approval submitted under 20
subsection (7) of this section, the department shall review the 21
application and, if approved, the department shall issue a notice of 22
preliminary approval to the requesting taxpayer. 23
2. The notice of preliminary approval shall include the amount of credit, 24
shall notify the taxpayer that the proposed gift must be made within 25
thirty (30) days of the date reflected on the notice of authori zation, and 26
that the taxpayer must notify the department that the gift has been made, 27
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in the form and format determined by the department, within ten (10) 1
days of making the gift. 2
3. Upon preliminary approval of an application for credit, the department 3
shall reduce the outstanding available credit cap amount to reflect the 4
preliminary approved credit. 5
(c) Upon timely receipt of notification from a taxpayer preliminarily approved for 6
a credit that the investment has been timely made, the department shall ve rify 7
the information provided and, if the information is accurate, the department 8
shall issue a final tax credit letter to the taxpayer. 9
(d) If a taxpayer fails to make the required investment or provide proof of the 10
investment to the department within the time frames established by this subsection 11
and subsection (7) of this section, the department shall void the preliminary 12
approval and shall restore the allocated amounts to the tax credit cap. 13
Section 120. KRS 278.010 is amended to read as follows: 14
As used in KRS 278.010 to 278.450, 278.541 to 278.544, 278.546 to 278.5462, and 15
278.990, unless the context otherwise requires: 16
(1) "Corporation" includes private, quasipublic, and public corporations, and all boards, 17
agencies, and instrumentalities thereof, associations, joint -stock companies, and 18
business trusts; 19
(2) "Person" includes natural persons, partnerships, corporations, and two (2) or more 20
persons having a joint or common interest; 21
(3) "Utility" mean s any person except a regional wastewater commission established 22
pursuant to KRS 65.8905 and, for purposes of paragraphs (a), (b), (c), (d), and (f) of 23
this subsection, a city or a municipal interlocal gas utility , who owns, controls, 24
operates, or manages any facility used or to be used for or in connection with: 25
(a) The generation, production, transmission, or distribution of electricity to or 26
for the public, for compensation, for lights, heat, power, or other uses; 27
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(b) The production, manufacture, storage , distribution, sale, or furnishing of 1
natural or manufactured gas, or a mixture of same, to or for the public, for 2
compensation, for light, heat, power, or other uses; 3
(c) The transporting or conveying of gas, crude oil, or other fluid substance by 4
pipeline to or for the public, for compensation; 5
(d) The diverting, developing, pumping, impounding, distributing, or furnishing 6
of water to or for the public, for compensation; 7
(e) The transmission or conveyance over wire, in air, or otherwise, of any 8
message by telephone or telegraph for the public, for compensation; or 9
(f) The collection, transmission, or treatment of sewage for the public, for 10
compensation, if the facility is a subdivision collection, transmission, or 11
treatment facility plant that is affixed to real property and is located in a 12
county containing a city of the first class or is a sewage collection, 13
transmission, or treatment facility that is affixed to real property, that is 14
located in any other county, and that is not subject to regulation by a 15
metropolitan sewer district or any sanitation district created pursuant to KRS 16
Chapter 220; 17
(4) "Retail electric supplier" means any person, firm, corporation, association, or 18
cooperative corporation, excluding municipal corporations, engaged in the 19
furnishing of retail electric service; 20
(5) "Certified territory" shall mean the areas as certified by and pursuant to KRS 21
278.017; 22
(6) "Existing distribution line" shall mean an electric line which on June 16, 1972, is 23
being or has been substantially used to s upply retail electric service and includes all 24
lines from the distribution substation to the electric consuming facility but does not 25
include any transmission facilities used primarily to transfer energy in bulk; 26
(7) "Retail electric service" means electric service furnished to a consumer for ultimate 27
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consumption, but does not include wholesale electric energy furnished by an 1
electric supplier to another electric supplier for resale; 2
(8) "Electric-consuming facilities" means everything that utilizes electric energy from a 3
central station source; 4
(9) "Generation and transmission cooperative" or "G&T" means a utility formed under 5
KRS Chapter 279 that provides electric generation and transmission services; 6
(10) "Distribution cooperative" means a utility formed under KRS Chapter 279 that 7
provides retail electric service; 8
(11) "Facility" includes all property, means, and instrumentalities owned, operated, 9
leased, licensed, used, furnished, or supplied for, by, or in connection with the 10
business of any utility; 11
(12) "Rate" means any individual or joint fare, toll, charge, rental, or other compensation 12
for service rendered or to be rendered by any utility, and any rule, regulation, 13
practice, act, requirement, or privilege in any way relating to such fare, toll, charge, 14
rental, or other compensation, and any sc hedule or tariff or part of a schedule or 15
tariff thereof; 16
(13) "Service" includes any practice or requirement in any way relating to the service of 17
any utility, including the voltage of electricity, the heat units and pressure of gas, 18
the purity, pressure, and quantity of water, and in general the quality, quantity, and 19
pressure of any commodity or product used or to be used for or in connection with 20
the business of any utility, but does not include Voice over Internet Protocol (VoIP) 21
service; 22
(14) "Adequate service" means having sufficient capacity to meet the maximum 23
estimated requirements of the customer to be served during the year following the 24
commencement of permanent service and to meet the maximum estimated 25
requirements of other actual customers to be supplied from the same lines or 26
facilities during such year and to assure such customers of reasonable continuity of 27
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service; 1
(15) "Commission" means the Public Service Commission of Kentucky; 2
(16) "Commissioner" means one (1) of the members of the commission; 3
(17) "Demand-side management" means any conservation, load management, or other 4
utility activity intended to influence the level or pattern of customer usage or 5
demand, including home energy assistance programs; 6
(18) "Affiliate" means a person that controls or that is controlled by, or is under common 7
control with, a utility; 8
(19) "Control" means the power to direct the management or policies of a person 9
through ownership, by contract, or otherwise; 10
(20) "CAM" means a cost allocation manual which is an indexed compilation and 11
documentation of a company's cost allocation policies and related procedures; 12
(21) "Nonregulated activity" means the provision of competitive retail gas or electric 13
services or other products or services over which the commissio n exerts no 14
regulatory authority; 15
(22) "Nonregulated" means that which is not subject to regulation by the commission; 16
(23) "Regulated activity" means a service provided by a utility or other person, the rates 17
and charges of which are regulated by the commission; 18
(24) "USoA" means uniform system of accounts which is a system of accounts for 19
public utilities established by the FERC and adopted by the commission; 20
(25) "Arm's length" means the standard of conduct under which unrelated parties, each 21
party actin g in its own best interest, would negotiate and carry out a particular 22
transaction; 23
(26) "Subsidize" means the recovery of costs or the transfer of value from one (1) class 24
of customer, activity, or business unit that is attributable to another; 25
(27) "Solicit" means to engage in or offer for sale a good or service, either directly or 26
indirectly and irrespective of place or audience; 27
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(28) "USDA" means the United States Department of Agriculture; 1
(29) "FERC" means the Federal Energy Regulatory Commission; 2
(30) "SEC" means the Securities and Exchange Commission; 3
(31) "Commercial mobile radio services" has the same meaning as in 47 C.F.R. sec. 20.3 4
and includes the term "wireless" and service provided by any wireless real time two 5
(2) way voice communication dev ice, including radio -telephone communications 6
used in cellular telephone service, personal communications service, and the 7
functional or competitive equivalent of a radio -telephone communications line used 8
in cellular telephone service, a personal communications service, or a network radio 9
access line;[ and] 10
(32) "Voice over Internet Protocol" or "VoIP" has the same meaning as in federal law ; 11
and 12
(33) "Municipal interlocal gas utility" has the same meaning as in Section 121 of this 13
Act. 14
Section 121. KRS 65.230 is amended to read as follows: 15
As used in KRS 65.210 to 65.300, unless the context otherwise requires: 16
(1) "Interlocal agency" means a separate legal or administrative entity with a governing 17
board that is created in an agreement entered into by public agencies pursuant to the 18
provisions of KRS 65.210 to 65.300; 19
(2) "Local government" means any: 20
(a) City; 21
(b) County; 22
(c) Consolidated local government; 23
(d) Urban-county government; 24
(e) Charter county government; or 25
(f) Unified local government; 26
(3) "Municipal interlocal gas utility" means an interlocal agency whose membership 27
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is only composed of city governments formed for the purpose of constructing and 1
operating a system that is capabl e of acquiring, distributing, transmitting, 2
furnishing, or selling natural gas to a federal military installation, municipal 3
utilities, and other industrial and commercial customers; and 4
(4) "Public agency" means: 5
(a) Any local government; 6
(b) Any political subdivision of this state or of another state; 7
(c) Any agency, board instrumentality, or commission created by a local 8
government; 9
(d) Any taxing district as defined by KRS 65.180; 10
(e) Any special purpose government entity as defined in KRS 65A.010(9)(a) to 11
(c), including those entities that are exempt from the definition of special 12
purpose governmental entity under the provisions of KRS 65A.010(9)(d)7. to 13
9.; 14
(f) Any interlocal agency; 15
(g) The Commonwealth or any agency or instrumentality of the state go vernment 16
or of the United States, including but not limited to a state -supported 17
institution of higher education; 18
(h) Any county school district or independent school district; and 19
(i) Any private institution of higher education entering into an agreement 20
authorized by KRS 65.240(4) with another public agency. 21
SECTION 122. A NEW SECTION OF KRS 65.210 TO 65.300 IS CREATED 22
TO READ AS FOLLOWS: 23
(1) (a) In addition to the city government members that form a municipal interlocal 24
gas utility, the governing body of a municipal interlocal gas utility shall 25
include one (1) nonmember ex officio representative of each county and city 26
government in the Commonwealth that: 27
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1. Is served by the municipal interlocal gas utility; 1
2. Contains any infrastructure used by the municipal interlocal gas 2
utility to provide natural gas utility service; 3
3. Contains any easements or rights -of-way used by the municipal 4
interlocal gas utility to provide natural gas utility service; or 5
4. Contains any land for which the municipal interlocal gas utility has 6
requested an easement or right -of-way that will be used to provide 7
natural gas utility service. 8
(b) The county judge/executive of a county described in paragraph (a) of this 9
subsection shall select one (1 ) county representative for the municipal 10
interlocal gas utility governing body and the mayor of a city described in 11
paragraph (a) of this subsection shall select one (1) city representative. 12
Representatives selected under this paragraph shall not vote on any matter 13
before the municipal interlocal gas utility except as provided in paragraph 14
(c) of this subsection. 15
(c) For any proposed municipal interlocal gas utility action directly impacting 16
an unincorporated area of any county represented on the governing body, 17
county representatives may, if every county representative on the governing 18
body votes unanimously for the s ame outcome, cast a single combined vote 19
to be counted with the votes of the member city governments on whether the 20
municipal interlocal gas utility may undertake the action. 21
(2) A municipal interlocal gas utility shall not provide natural gas utility se rvice to a 22
residential customer except: 23
(a) As provided in KRS 278.485, in which case the natural gas utility service 24
shall be furnished at rates and minimum monthly charges as determined by 25
the Public Service Commission as required by KRS 278.485(1); and 26
(b) A municipal interlocal gas utility may furnish natural gas to a municipal 27
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utility that provides natural gas utility service to residential customers. 1
Section 123. KRS 65.240 is amended to read as follows: 2
(1) Any powers, privileges, or authorities exercised or capable of exercise by a public 3
agency of this state may be exercised and enjoyed jointly with any other public 4
agency of this state, and jointly with any public agency of any other state or of the 5
United States to the extent that the laws of the United States permit such joint 6
exercise or enjoyment. Any agency of the state government when acting jointly 7
with any public agency may exercise and enjoy all of the powers, privileges and 8
authority conferred by KRS 65.210 to 65.300 upon a public agency. 9
(2) Any two (2) or more public agencies may enter into agreements with one another 10
for joint or cooperative action pursuant to the provisions of KRS 65.210 to 65.300, 11
including but not limited to for the sharing of reven ues and physical assets. 12
Appropriate action by ordinance, resolution or otherwise pursuant to law, of the 13
governing bodies of the participating public agencies shall be necessary before any 14
such agreement may enter into force. 15
(3) Any public agency may ent er into agreements with another public agency or 16
agencies pursuant to KRS 65.210 to 65.300 to acquire by purchase or lease, any real 17
or personal property, or any interest, right, easement, or privilege therein, outside of 18
its municipal or jurisdictional bo undaries, in connection with the acquisition, 19
construction, operation, repair, or maintenance of any water, sewage, wastewater, 20
natural gas, or storm water facilities, notwithstanding any other provision of the 21
Kentucky Revised Statutes restricting, qualif ying, or limiting their authority to do 22
so, except as set forth in KRS Chapter 278. 23
(4) A private institution of higher education and one (1) or more county school districts 24
or independent school districts may enter into agreements under KRS 65.210 to 25
65.300 for the purposes of establishing and operating a program or facility, 26
including a center for child learning and study, designed to help one (1) or more 27
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schools meet the goals set out in KRS 158.6451, or for the investment of funds if 1
the Attorney Genera l determines that the proposal is compatible with the United 2
States Constitution as part of the review of the agreement provided in KRS 3
65.260(2), notwithstanding any other provision of the statutes restricting, qualifying 4
or limiting their authority to do so. 5
Section 124. KRS 96.5375 is amended to read as follows: 6
(1) Subject to the limitations of subsection (4) of this section and KRS 96.045 and 7
96.538, any city that owns and operates a municipal system for the acquisit ion, 8
distribution, or transmission of natural gas may extend the system or construct a 9
new system as authorized in KRS 96.170 and 96.542, to [ into and] furnish and sell 10
natural gas to any person or entity within the boundaries of the city or within any 11
territory outside of the city's boundaries. Municipal interlocal gas utilities shall 12
have the same authority to extend existing natural gas systems or construct new 13
systems to furnish and sell natural gas in territory inside or outside of their 14
constituent ci ties' boundaries. In exercising the authority provided by this 15
subsection, the city may install the necessary apparatus to provide natural gas 16
distribution or transmission service and may also condemn or otherwise acquire 17
rights-of-way as private utilities may do. The provisions of this subsection shall 18
apply to all cities of this Commonwealth transporting or distributing natural gas as 19
well as any board, commission, or agency thereof. 20
(2) A city, other than a city of the first class or a consolidated local government, may 21
acquire the entire plant of an existing natural gas distribution system only under the 22
same process and subject to the same limitations established by KRS 96.580, 23
96.590, and 96.600. 24
(3) No property owned or operated by an existing natural gas distribution system 25
located within the Commonwealth may be condemned by a city from another state. 26
(4) A natural gas utility, which, for purposes of this subsection, means a public, private 27
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or municipally owned gas utility distributing or transporting natural gas to 1
customers within this Commonwealth, shall not: 2
(a) Extend its system for the purposes of furnishing or selling natural gas to any 3
person or entity that is currently being served by another natural gas utility; or 4
(b) Extend its system to fu rnish or sell natural gas to any person or entity when 5
there is another natural gas utility in closer proximity to the person or entity to 6
be served, unless the natural gas utility in closer proximity has declined to 7
provide service. 8
(5) The provisions of subsection (4) of this section shall only apply to extension of 9
service issues between a municipally owned natural gas utility servicing customers 10
located outside its municipal boundaries and a private or investor-owned natural gas 11
utility. The term "munic ipally owned" shall include systems distributing or 12
transporting natural gas that are owned by a city from another state. 13
(6) As used in this section, "municipal interlocal gas utility" has the same meaning 14
as in Section 121 of this Act. 15
Section 125. KRS 164.2847 is amended to read as follows: 16
(1) Tuition and mandatory student fees for any undergraduate or graduate program of 17
any Kentucky public postsecondary institution, including all four (4) year 18
universities and colle ges and institutions of the Kentucky Community and 19
Technical College System, shall be waived for a Kentucky foster or adopted child 20
who is a full-time or part-time student if the student meets all entrance requirements 21
and maintains academic eligibility wh ile enrolled at the postsecondary institution, 22
and if: 23
(a) The student's family receives state -funded adoption assistance under KRS 24
199.555; 25
(b) The student is currently committed to the Cabinet for Health and Family 26
Services under KRS 610.010(5) and place d in a family foster home or is 27
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placed in accordance with KRS 605.090(3); 1
(c) The student is in an independent living program and the placement is funded 2
by the Cabinet for Health and Family Services; 3
(d) The student who is an adopted child was in the perm anent legal custody of 4
and placed for adoption by the Cabinet for Health and Family Services. A 5
student who meets the eligibility criteria of this paragraph and lives outside of 6
Kentucky at the time of application to a Kentucky postsecondary institution 7
may apply for the waiver up to the amount of tuition for a Kentucky resident; [ 8
or] 9
(e) The Cabinet for Health and Family Services was the student's legal custodian 10
on his or her eighteenth birthday; or 11
(f) The student was adjudicated dependent, neglected, or abused under KRS 12
Chapter 620, removed from parental custody, and subsequently adopted by 13
a relative. 14
(2) Tuition and mandatory student fees for any undergraduate program of any 15
Kentucky public postsecondary institution, including all four (4) year univers ities 16
and colleges and institutions of the Kentucky Community and Technical College 17
System, shall be waived for a Department of Juvenile Justice foster child who is a 18
full-time or part -time student if the student meets all entrance requirements and 19
maintains academic eligibility while enrolled at the postsecondary institution and 20
obtains a recommendation for participation from an official from the Department of 21
Juvenile Justice, and if: 22
(a) The student has not been sentenced to the Department of Juvenile Ju stice 23
under KRS Chapter 640; 24
(b) The student has been committed to the Department of Juvenile Justice for a 25
period of at least twelve (12) months; 26
(c) The student is in an independent living program and placement is funded by 27
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the Department of Juvenile Justice; 1
(d) The parental rights of the student's biological parents have been terminated; or 2
(e) The student was committed to the Cabinet for Health and Family Services 3
prior to a commitment to the Department of Juvenile Justice. 4
(3) Upon request of the postsecondary institution, the Cabinet for Health and Family 5
Services shall confirm the eligibility status under subsection (1) of this section and 6
the Dep artment of Juvenile Justice shall confirm the eligibility status and 7
recommendations under subsection (2) of this section of the student seeking to 8
participate in the waiver program. Release of this information shall not constitute a 9
breach of confidentiality required by KRS 199.570, 610.320, or 620.050. 10
(4) The student shall complete the Free Application for Federal Student Aid to 11
determine the level of need and eligibility for state and federal financial aid 12
programs. If the sum of the tuition waiver plus other student financial assistance, 13
except loans and the work study program under 42 U.S.C. secs. 2751 -2756b, from 14
all sources exceeds the student's total cost of attendance, as defined in 20 U.S.C. 15
sec. 1087ll, the tuition waiver shall be reduced by the amount exceeding the total 16
cost of attendance. 17
(5) Except when extended in accordance with subsection (6) of this section, the student 18
shall be eligible for the tuition waiver: 19
(a) For entrance to the institution for a period of no more than four (4) years after 20
the date of graduation from high school or obtaining a high school 21
equivalency diploma; and 22
(b) For one hundred fifty (150) consecutive or nonconsecutive credit hours 23
earned, after first admittance to any Kentucky institution if satisfactory 24
progress is achieved or maintained up to age twenty-eight (28). 25
(6) The expiration of a student's eligibility under subsection (5)(a) of this section shall 26
be extended by the number of academic terms the institution determines the student 27
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was unable to enroll for or complete due to serving: 1
(a) On active duty status in the United States Armed Forces; 2
(b) As an officer in the Commissioned Corps of the United States Public Health 3
Service; or 4
(c) On active service in the Peace Corps Act or the Americorps. 5
The original age limitation under subsection (5)(b) of this section shall be extended 6
by the total number of years during which the student was on active duty status. The 7
number of months served on active duty status shall be rounded up to the next 8
higher year to determine the maximum length of eligibility extension allowed. 9
(7) The Council on Postsecondary Education shall report nonidentifying data on 10
graduation rates of students participating in the tuition waiver program by 11
November 30 each year to the Legislative Research Commission. 12
(8) Nothing in this section shall be construed to: 13
(a) Guarantee acceptance of or entrance into any postsecondary institution for a 14
foster or adopted child; 15
(b) Limit the participation of a foster or adopted student in any other progr am of 16
financial assistance for postsecondary education; 17
(c) Require any postsecondary institution to waive costs or fees relating to room 18
and board; or 19
(d) Restrict any postsecondary institution, the Department of Juvenile Justice, or 20
the Cabinet for Healt h and Family Services from accessing other sources of 21
financial assistance, except loans, that may be available to a foster or adopted 22
student. 23
Section 126. KRS 154.32-010 is amended to read as follows: 24
(1) "Activation date" means the date established in the tax incentive agreement that is 25
within two (2) years of final approval; 26
(2) "Affiliate" means the following: 27
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(a) Members of a family, including only brothers and sisters of the whole or half 1
blood, spouse, ancestors, and lineal descendants of an individual; 2
(b) An individual, and a corporation more than fifty percent (50%) in value of the 3
outstanding stock of which is owned, directly or indirectly, by or for that 4
individual; 5
(c) An individual, and a limited liability c ompany of which more than fifty 6
percent (50%) of the capital interest or profits are owned or controlled, 7
directly or indirectly, by or for that individual; 8
(d) Two (2) corporations which are members of the same controlled group, which 9
includes and is limited to: 10
1. One (1) or more chains of corporations connected through stock 11
ownership with a common parent corporation if: 12
a. Stock possessin g more than fifty percent (50%) of the total 13
combined voting power of all classes of stock entitled to vote or 14
more than fifty percent (50%) of the total value of shares of all 15
classes of stock of each of the corporations, except the common 16
parent corporat ion, is owned by one (1) or more of the other 17
corporations; and 18
b. The common parent corporation owns stock possessing more than 19
fifty percent (50%) of the total combined voting power of all 20
classes of stock entitled to vote or more than fifty percent (50%) of 21
the total value of shares of all classes of stock of at least one (1) of 22
the other corporations, excluding, in computing the voting power 23
or value, stock owned directly by the other corporations; or 24
2. Two (2) or more corporations if five (5) or fewer persons who are 25
individuals, estates, or trusts own stock possessing more than fifty 26
percent (50%) of the total combined voting power of all classes of stock 27
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entitled to vote or more than fifty percent (50%) of the total value of 1
shares of all classes of stock of each corporation, taking into account the 2
stock ownership of each person only to the extent the stock ownership is 3
identical with respect to each corporation; 4
(e) A grantor and a fiduciary of any trust; 5
(f) A fiduciary of a trust and a fiduciary o f another trust, if the same person is a 6
grantor of both trusts; 7
(g) A fiduciary of a trust and a beneficiary of that trust; 8
(h) A fiduciary of a trust and a beneficiary of another trust, if the same person is a 9
grantor of both trusts; 10
(i) A fiduciary of a trust and a corporation more than fifty percent (50%) in value 11
of the outstanding stock of which is owned, directly or indirectly, by or for the 12
trust or by or for a person who is a grantor of the trust; 13
(j) A fiduciary of a trust and a limited liability company more than fifty percent 14
(50%) of the capital interest, or the interest in profits, of which is owned 15
directly or indirectly, by or for the trust or by or for a person who is a grantor 16
of the trust; 17
(k) A corporation, a partnership, or a limited partnership if the same persons own: 18
1. More than fifty percent (50%) in value of the outstanding stock of the 19
corporation; and 20
2. More than fifty percent (50%) of the capital interest, or the profits 21
interest, in the partnership or limited partnership; 22
(l) A corporation and a limited liability company if the same persons own: 23
1. More than fifty percent (50%) in value of the outstanding stock of the 24
corporation; and 25
2. More than fifty percent (50%) of the capital interest or the profits in the 26
limited liability company; 27
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(m) A partnership or limited partnership and a limited liability company if the 1
same persons own: 2
1. More than fifty percent (50%) of the capital interest or profits in the 3
partnership or limited partnership; and 4
2. More than fifty percent (50%) of the capital interest or the profits in the 5
limited liability company; 6
(n) An S corporation and another S corporation if the same persons own more 7
than fifty percent (50%) in value of the outstanding stock of each corporation; 8
S corporation designation being the same as that designation under the 9
Internal Revenue Code of 1986, as amended; 10
(o) An S corporation and a C corporation, if the same persons own more than 11
fifty percent (50%) in value of the outstanding stock of each corporation; S 12
and C corporation designations being the same as those designations under the 13
Internal Revenue Code of 1986, as amended; or 14
(p) Two (2) or more limited liability companies, if the same persons own more 15
than fifty percent (50%) of the capital interest or are entitled to more than fifty 16
percent (50%) of the capital profits in the limited liability companies; 17
(3) "Agribusiness" means the processing of raw agricultural products, including but not 18
limited to timber and industrial hemp, or the performance of value -added functions 19
with regard to raw agricultural products; 20
(4) "Alternative fuel production" means a Kentucky operation that primarily produces 21
alternative transportation fuels for sale. The alternative fuel production may 22
produce electricity as a by-product if the primary function of the operations remains 23
the production and sale of alternative transportation fuels; 24
(5) "Alternative transportation fuels" has the same meaning as in KRS 152.715; 25
(6) "Approved company" means an eligible company that has received final appr oval 26
to receive incentives under this subchapter; 27
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(7) "Approved costs" means the amount of eligible costs approved by the authority at 1
final approval; 2
(8) "Authority" means the Kentucky Economic Development Finance Authority 3
established by KRS 154.20-010; 4
(9) "Biomass resources" has the same meaning as in KRS 152.715; 5
(10) "Capital lease" means a lease classified as a capital lease by the Statement of 6
Financial Accounting Standards No. 13, Accounting for Leases, issued by the 7
Financial Accounting Standards Board, November 1976, as amended; 8
(11) "Carbon dioxide or hydrogen transmission pipeline" means the in -state portion of a 9
pipeline, including appurtenant f acilities, property rights, and easements, that is 10
used exclusively for the purpose of transporting carbon dioxide or hydrogen to the 11
point of sale, storage, or other carbon or hydrogen management applications; 12
(12) "Coal severing and processing" means act ivities resulting in the eligible company 13
being subject to the tax imposed by KRS Chapter 143; 14
(13) "Commonwealth" means the Commonwealth of Kentucky; 15
(14) "Confirmed approved costs" means: 16
(a) For owned economic development projects, the documented eligib le costs 17
incurred on or before the activation date; or 18
(b) For leased economic development projects: 19
1. The documented eligible costs incurred on or before the activation date; 20
and 21
2. Estimated rent to be incurred by the approved company throughout the 22
term of the tax incentive agreement. 23
For both owned and leased economic development projects, "confirmed approved 24
costs" may be less than approved costs, but shall not be more than approved costs; 25
(15) "Department" means the Department of Revenue; 26
(16) "Economic development project" means: 27
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(a) The acquisition, leasing, or construction of a new facility; 1
(b) The acquisition, leasing, rehabilitation, or expansion of an existing facility; or 2
(c) The installation and equipping of a facility; 3
by an eligible compa ny. "Economic development project" does not include any 4
economic development project that will result in the replacement of facilities 5
existing in the Commonwealth, except as provided in KRS 154.32-060; 6
(17) (a) "Eligible company" means any corporation, li mited liability company, 7
partnership, limited partnership, sole proprietorship, business trust, or any 8
other entity with a proposed economic development project that is engaged in 9
or is planning to be engaged in one (1) or more of the following activities 10
within the Commonwealth: 11
1. Manufacturing; 12
2. Agribusiness; 13
3. Nonretail service or technology; 14
4. Headquarters operations, regardless of the underlying business activity 15
of the company; 16
5. Alternative fuel, gasification, energy -efficient alternative fuel, or 17
renewable energy production; 18
6. Carbon dioxide or hydrogen transmission pipeline; 19
7. Coal severing and processing; or 20
8. Hospital operations. 21
(b) "Eligible company" does not include companies where the primary activity to 22
be conducted within the Commonwealth is forestry, fishing, the provision of 23
utilities, construction, wholesale trade, retail trade, real estate, rental and 24
leasing, educational ser vices, accommodation and food services, or public 25
administration services; 26
(18) "Eligible costs" means: 27
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(a) For owned economic development projects: 1
1. Start-up costs; 2
2. Nonrecurring obligations incurred for labor and nonrecurring payments 3
to contractors, subcontractors, builders, and materialmen in connection 4
with the economic development project; 5
3. The cost of acquiring land or rights in land and any cost incidental 6
thereto, including recording fees; 7
4. The cost of contract bonds and of insurance of all kinds that may be 8
required or necessary for completion of an economic development 9
project which is not paid by a contractor or otherwise provided for; 10
5. All costs of architectural and engineering services, including test 11
borings, surveys, estimated plans and specifications, preliminary 12
investigations, and supervision of construction, as well as for the 13
performance of all the duties required for construction of the economic 14
development project; 15
6. All costs which are required to be paid under the terms of any contract 16
for the economic development project; 17
7. All costs incurred for construction activities, including site tests and 18
inspections; subsurface site work; excavation; removal of structures, 19
roadways, cemeteries, and other surface obstructions; filli ng, grading, 20
and providing drainage and storm water retention; installation of utilities 21
such as water, sewer, sewage treatment, gas, electric, communications, 22
and similar facilities; off -site construction of utility extensions to the 23
boundaries of the rea l estate; construction and installation of railroad 24
spurs as needed to connect the economic development project to existing 25
railways; or similar activities as the authority may determine necessary 26
for construction of the economic development project; and 27
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8. All other costs of a nature comparable to those described in this 1
paragraph, including but not limited to investments in: 2
a. Laboratory equipment; 3
b. Computer servers; 4
c. Software; 5
d. Capitalized leases; and 6
e. Leasehold improvements; 7
when the costs are integral to the operation of research and 8
development, headquarters, high -technology operations, or service 9
sector facilities[above]; and 10
(b) For leased economic development projects: 11
1. Start-up costs; 12
2. Building/leasehold improvements;[ and] 13
3. Fifty percent (50%) of the estimated annual rent for each year of the tax 14
incentive agreement; and 15
4. Investments in: 16
a. Laboratory equipment; 17
b. Computer servers; 18
c. Software; and 19
d. Capitalized leases; 20
when the costs are directly related to the establishment or expansion of 21
research and development, headquarters, high -technology operations, 22
or service sector facilities. 23
Notwithstanding any other provision of this subsection, for economic development 24
projects that are not in enhanced incentive counties, the cost of equipment eligible 25
for recovery as an eligible cost shall not exceed twenty thousand dollars ($20,000) 26
for each new full-time job created as of the activation date; 27
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(19) "Employee benefits" mea ns payments by an approved company for its full -time 1
employees for health insurance, life insurance, dental insurance, vision insurance, 2
defined benefits, 401(k), or similar plans; 3
(20) "Energy-efficient alternative fuel production" means a Kentucky operat ion that 4
produces for sale energy-efficient alternative fuels; 5
(21) "Energy-efficient alternative fuels" means homogeneous fuels that: 6
(a) Are produced from processes designed to densify feedstock coal, waste coal, 7
or biomass resources; and 8
(b) Have an energy content that is greater than the feedstock coal, waste coal, or 9
biomass resource; 10
(22) "Enhanced incentive counties" means counties certified by the authority pursuant to 11
KRS 154.32-050; 12
(23) "Final approval" means the action taken by the authority aut horizing the eligible 13
company to receive incentives under this subchapter; 14
(24) (a) "Full-time job" means a job held by a person who: 15
1. Is required to work a minimum of thirty-five (35) hours per week; and 16
2. a. Is subject to the Kentucky individual incom e tax imposed by KRS 17
141.020; or 18
b. Works remotely away from the economic development project if 19
the job meets all of the following conditions: 20
i. Is held by a Kentucky resident; 21
ii. Was created as a result of the economic development project; 22
and 23
iii. The payroll of this job is expensed to the economic 24
development project. 25
(b) "Full-time job" does not include a job held by a resident of any state with a 26
reciprocal agreement between the Commonwealth and the other state as 27
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described in KRS 141.070; 1
(25) "Gasification process" means a process that converts any carbon -containing 2
material into a synthesis gas composed primarily of carbon monoxide and 3
hydrogen; 4
(26) "Gasification production" means a Kentucky operation that primarily produces for 5
sale: 6
(a) Alternative transportation fuels; 7
(b) Synthetic natural gas; 8
(c) Chemicals; 9
(d) Chemical feedstocks; or 10
(e) Liquid fuels; 11
from coal, waste coal, coal -processing waste, or biomass resources, through a 12
gasification process. The gasification production may produce electricity as a by -13
product if the primary function of the operations remains the production and sale of 14
alternative transportation fuels, synthetic natural gas, chemicals, chemical 15
feedstocks, or liquid fuels; 16
(27) "Headquarters" means the principal office where the principal executives of the 17
entity are located and from which other personnel, branches, affiliates, off ices, or 18
entities are controlled; 19
(28) "Hospital" means a facility licensed by the Cabinet for Health and Family Services 20
under KRS Chapter 216B for the operation of a hospital and the basic services 21
provided by a hospital; 22
(29) "Incentives" means the ince ntives available under this subchapter, as listed in KRS 23
154.32-020(3); 24
(30) "Job target" means the annual average number of new full -time jobs that the 25
approved company commits to create and maintain at the economic development 26
project, which shall not be less than ten (10) new full-time jobs; 27
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(31) "Kentucky gross receipts" has the same meaning as in KRS 141.0401; 1
(32) "Kentucky gross profits" has the same meaning as in KRS 141.0401; 2
(33) "Lease agreement" means an agreement between an approved company and an 3
unrelated entity conveying the right to use a facility, the terms of which reflect an 4
arms' length transaction. "Lease agreement" does not include a capital lease; 5
(34) "Leased project" means an economic development project site occupied by an 6
approved company pursuant to a lease agreement; 7
(35) "Manufacturing" means any activity involving: 8
(a) Processing, assembling, or production of any property, including the 9
processing resulting in a change in the conditions of the property and any 10
activity related to the processing, assembling, or production of property, 11
together with the storage, warehousing, distribution, and related office 12
facilities; or 13
(b) Production of vital medications, personal protective equipment, or equipment 14
necessary to produce personal protective equipment; 15
(36) (a) "Nonretail service or technology" means any activity where service or 16
technology is provided predominantly outside the Commonwealth and 17
designed to serve a multistate, national, or international market. 18
(b) "Nonretail service or technology" includes but is not limited to call centers, 19
centralized administrative or processing centers, telephone or Internet sales 20
order or processing centers, distribution or fulfillment centers, data processing 21
centers, research and development facilities, and other similar activities; 22
(37) "Owned project" means an economic development project owned in fee simple by 23
the approved company or an affiliate, or possessed by the approved company or an 24
affiliate pursuant to a capital lease; 25
(38) "Personal protective equipment" means protective clothing, helmets, gloves, face 26
shields, goggles, face masks, respirators, and other equipment designed to protect 27
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the user from injury or the spread of infection or illness; 1
(39) "Preliminary approval" means the a ction taken by the authority preliminarily 2
approving an eligible company for incentives under this subchapter; 3
(40) "Renewable energy production" means a Kentucky operation that utilizes wind 4
power, biomass resources, landfill methane gas, hydropower, sola r power, or other 5
similar renewable resources to generate electricity for sale to unrelated entities; 6
(41) "Rent" means the actual annual rent or fee paid by an approved company under a 7
lease agreement; 8
(42) "Start-up costs" means nonrecurring costs incurr ed to furnish and equip a facility 9
for an economic development project, including costs incurred for: 10
(a) Computers, furnishings, office equipment, manufacturing equipment, and 11
fixtures; 12
(b) The relocation of out-of-state equipment;[ and] 13
(c) Cost of fixed telecommunications equipment; and 14
(d) Investments in: 15
1. Laboratory equipment; 16
2. Computer servers; 17
3. Software; 18
4. Capitalized leases; and 19
5. Leasehold improvements; 20
when the costs are necessary to accommodate research and development, 21
headquarters, high-technology operations, or service sector facilities; 22
as certified to the authority in accordance with KRS 154.32-030; 23
(43) "Synthetic natural gas" means the same thing as in KRS 152.715; 24
(44) "Tax incentive agreement" means the agreement entered into pursuant to KRS 25
154.32-040 between the authority and an approved company; 26
(45) "Term" means the period of time for which a tax incentive agreement may be in 27
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effect, which shall not exceed fifteen (15) years for an economic development 1
project located in an enhanced incentive county, or ten (10) years for an economic 2
development project not located in any other county; 3
(46) "Vital medications" means any drug or biologic used to prevent or treat a serious 4
life-threatening disease or medical condition for which there is no other available 5
source with sufficient supply of that drug or biologic or alternative drug or biologic; 6
(47) "Wage" means the per hour earnings of a full-time employee, including wages, tips, 7
overtime, bonuses, and commissions, as reflected on the employee's federal form 8
W-2 wage and tax statement, but excludes employee benefits; and 9
(48) "Wage target" means the average total hourly compensation amount, includ ing the 10
minimum wage and employee benefits, that the approved company commits to 11
meet for all new full -time jobs created and maintained as a result of the economic 12
development project, which shall not be less than: 13
(a) One hundred twenty -five percent (125% ) of the federal minimum wage in 14
enhanced incentive counties; or 15
(b) One hundred fifty percent (150%) of the federal minimum wage in all other 16
counties. 17
SECTION 127. A NEW SECTION OF KRS CHAPTER 11 IS CREATED TO 18
READ AS FOLLOWS: 19
(1) Pursuant to KRS 11.026(1), if a statue, monument, or object of art is privately 20
funded and created depicting or representing United States Senator Addison 21
Mitchell McConnell, and that statue, monument, or object of art is offered to the 22
Commonwealth of Kentucky as a donation, the state curator shall accept that 23
statue, monument, or object of art for display in the New State Capitol rotunda. 24
(2) Notwithstanding the authority granted to the Historic Properties Advisory 25
Commission in KRS 11.027(3), the commission shall reserve a place in one (1) of 26
the four (4) corners of the first floor of the New State Capitol rotunda for the 27
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installation and permanent display of the statue, monument, or object of art 1
referred to in subsection (1) of this section. 2
(3) Pursuant to KRS 11.027(3)(a) and (d)1., the General Assembly hereby identifies 3
and authorizes the installation and permanent display of the statue, monument, 4
or object of art referred to in subsection (1) of this section in the place designated 5
in su bsection (2) of this section, and the commission and the Department for 6
Facilities and Support Services in the Finance and Administration Cabinet shall 7
take whatever action is required to install and display the statue, monument, or 8
object of art upon the reopening of the New State Capitol after completion of its 9
renovation. 10
SECTION 128. A NEW SECTION OF KRS CHAPTER 139 IS CREATED TO 11
READ AS FOLLOWS: 12
(1) As used in this section: 13
(a) "Facility operator" means a person who owns or operates a venue; 14
(b) "Professional sporting event": 15
1. Means an organized, competitive event, governed by rules and a 16
sporting body, where participants compete for compensation beyond 17
actual expenses; and 18
2. Excludes minor league sporting events; 19
(c) "Qualifying attraction" means a series of professional sporting events 20
which is: 21
1. Held at a venue over a duration of at least three (3) consecutive days; 22
2. Hosted by a sponsoring entity pursuant to an agreement with a facility 23
operator that authorizes the sponsoring entity to conduct one (1) or 24
more series of a professional sporting event; and 25
3. Open to the public upon purchase of tickets, with attendance to taling 26
at least one hundred thousand (100,000) admissions over the duration 27
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of each series of professional sporting events; and 1
(d) "Sponsoring entity" means the person hosting a qualifying attraction; and 2
(e) "Venue" means: 3
1. Public property located in a consolidated local government or in an 4
urban-county government that is owned, operated, or controlled by the 5
consolidated local government, urban-county government; 6
2. A park located in a consolidated local government that is: 7
a. Open to the general public; and 8
b. Owned, operated, or controlled by any nonprofit corporation 9
established under the provisions of KRS 273.161 to 273.390; 10
3. Property located in a consolidated local government or in an urban -11
county government that is owned, operated, or controlled by a public 12
university; or 13
4. Privately owned property located in a consolidated local government 14
or in an urban -county government that is suitable for hosting 15
professional sporting events and qualifying attractions. 16
(2) Notwithstanding KRS 134.580 and 139.770: 17
(a) A sponsoring entity shall be granted a sales tax incentive equal to one 18
hundred percent (100%) of the Kentucky sales tax generated by the sale of 19
admissions to a qualifying attraction held at a venue, and the sales of 20
tangible personal property and services related to the qualifying attraction, 21
including but not limited to the sale of: 22
1. Food and beverage concessions; 23
2. Souvenirs; 24
3. Parking; 25
4. Suites; 26
5. Sponsorships; and 27
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6. Other hospitality services; 1
sold at the qualifying attraction. 2
(b) One hundred percent (100%) of the sales tax incentive authorized in 3
paragraph (a) of this subsection shall be paid to the sponsoring entity of the 4
qualifying attraction from which the sales taxes were generated; 5
(c) Only one (1) incentive request shall be made for each qualifying attraction 6
each year; 7
(d) The sponsoring entity shall have no obligation to refund or otherwise return 8
any amount of the sales tax incentive to the persons from whom the sales 9
tax was collected; 10
(e) The sales tax incentive shall be reduced by the vendor compensation 11
allowed under KRS 139.570; and 12
(f) Interest shall not be allowed or paid on any sales tax incentive payment 13
made under this section. 14
(3) The department shall accept initial applications for sales tax incentives under this 15
section for qualifying attractions held on or after July 1, 2026. 16
(4) To be eligible for a sales tax incentive under this section, the sponsoring entity 17
shall file an initial application with the department, which: 18
(a) Includes sufficient information regarding the qualifying attraction to 19
demonstrate whether it qualifies for the sales tax incentive; and 20
(b) Is filed at least sixty (60) days prior to the date of the first p rofessional 21
sporting event constituting the qualifying attraction. 22
(5) Within thirty (30) days of receipt of the initial application, the department shall 23
notify the sponsoring entity of its preliminary approval or denial of the qualifying 24
attraction. 25
(6) If the initial application is denied, the department shall provide the reason for the 26
denial. 27
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(7) After approval of its initial application and the completion of the qualifying 1
attraction, a sponsoring entity shall apply for a sales tax incentive no earlie r than 2
thirty (30) days following the end of the month during which sales taxes that were 3
generated from the qualifying attraction are collected. The application may 4
aggregate eligible sales taxes from previous months if the events comprising the 5
qualifying attraction were held in more than one (1) month. 6
(8) The department shall review each application for a sales tax incentive and 7
determine if it meets the requirements of this section, pending the verification of 8
required attendance. 9
(9) In determining el igibility for a sales tax incentive authorized under this section, 10
the department shall waive the duration and attendance requirements listed in 11
subsection (1)(c)1. and 3. of this section if the person requesting an incentive 12
demonstrates that any delays, cancellations, or postponements were due to 13
inclement weather or other extraordinary events beyond the control of the parties 14
involved and that the weather or other extraordinary events rendered the 15
satisfaction of the requirement impossible. 16
(10) Both the initial application and the sales tax incentive application shall be in the 17
form prescribed by the department through the promulgation of an administrative 18
regulation in accordance with KRS Chapter 13A. 19
(11) The department shall verify the amount of sale s tax incentive and pay the 20
allocations determined to be due in accordance with subsection (2)(b) of this 21
section within forty-five (45) days of receipt of the later of: 22
(a) The application submitted under subsection (7) of this section; or 23
(b) All necessa ry supporting information required by the department to 24
determine that the sponsoring entity is eligible for the incentive. 25
(12) (a) Prior to November 1, 2027, and continuing each November 1 thereafter to 26
November 1, 2037, the department shall provide an a nnual report detailing 27
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information related to each qualifying attraction receiving incentives during 1
the fiscal year concluding on June 30 of the reporting period. 2
(b) The department shall include the following information in the report: 3
1. The name of the qualifying attraction; 4
2. The venue where the qualifying attraction was held; 5
3. The name of the facility operator; 6
4. The name of the sponsoring entity; 7
5. The duration of the qualifying attraction and the number of 8
admissions over that duration; 9
6. The amount of incentive paid to the facility operator; and 10
7. The amount of incentive paid to the sponsoring entity. 11
(c) The information required to be reported under this subsection shall not be 12
considered confidential taxpayer information and shall not be su bject to 13
KRS Chapter 131 or any other provisions of the Kentucky Revised Statutes 14
prohibiting disclosure or reporting of information. 15
(13) The provisions of this section shall expire on November 30, 2036, and a 16
qualifying attraction held after November 30, 2036, shall not be eligible for the 17
incentives authorized in this section. 18
(14) The General Assembly is committed to the research and development of tourism 19
policies, including the aspiration to hold other professional sporting events across 20
the Commonwealth and especially in rural Kentucky. 21
SECTION 129. A NEW SECTION OF KRS CHAPTER 171 IS CREATED TO 22
READ AS FOLLOWS: 23
(1) For taxable years beginning on or after January 1, 2027, but before January 1, 24
2031, a taxpayer completing a certified rehabilitation of a certified historic 25
structure containing a minimum of twenty -five (25) stories shall be allowed a 26
credit against the t axes imposed by KRS 141.020 or 141.040 and 141.0401, with 27
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the ordering of the credit as provided in KRS 141.0205 for projects in which the 1
total qualified rehabilitation expenses exceed one hundred fifty million dollars 2
($150,000,000). 3
(2) The credit shall be equal to the lesser of: 4
(a) The percentage of qualified rehabilitation expenses as provided in Section 5
59 of this Act; or 6
(b) The amount of federal credit allowed under 26 U.S.C. sec. 47 for the same 7
qualified rehabilitation expenses that generated the tax credit under this 8
section. 9
(3) (a) The credit shall not: 10
1. Exceed forty million dollars ($40,000,000); or 11
2. Be subject to the maximum credit amounts allowed in Section 59 of 12
this Act. 13
(b) Any project approved for credit under this section shall not be considered in 14
determining whether the certified rehabilitation credit cap has been met for 15
any taxable year and therefore not subject to the percentage of the credit 16
cap allocated to owner -occupied residential property or other property that 17
is not owne r-occupied residential property as provided in Section 57 of this 18
Act. 19
(4) A taxpayer seeking the credit under this section shall file an application in 20
accordance with Section 59 of this Act. 21
(5) Unless otherwise stated in this section, the provisions of Section 59 of this Act 22
shall apply to this section. 23
Section 130. Notwithstanding KRS 45.777, a postsecondary institution’s 24
governing board may elect to sell or dispose of real property purchased in whole or in 25
part with capital construction funds, or equipment purchased in whole or in part with 26
state moneys. If the governing board elects to sell the real property or equipment, a 27
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detailed accounting of the cost of the real property or equipment, the maintenance of the 1
property or equipment using moneys from an asset preservation pool appropriation, and 2
the proceeds from the sale of the real property or equipment shall be submitted to the 3
Office of State Budget Director and the Interim Joint Committee on Appropriations and 4
Revenue within 30 days from the sale of the real property or equipment. Proceeds from 5
the sale of the real property or equipment shall be designated by the postsecondary 6
institution, on a proportionate basis, based on the funding sources used for the acquis ition 7
and maintenance of the real property or equipment sold. 8
Section 131. Urgent Needs School Assistance: If authorized in 2014 Ky. Acts 9
ch. 117, Part I, A., 28., (5), 2014 Ky. Acts ch. 117, Part I, C., 1., (19), 2016 K y. Acts ch. 10
149, Part I, A., 28., (4) and (5), 2018 Ky. Acts ch. 169, Part I, A., 27., (3), or 2021 Ky. 11
Acts ch. 169, Part I, A,. 28., (3), and subsequently, as a result of litigation or insurance, it 12
receives funds for the original facility, the school di strict shall reimburse the 13
Commonwealth an amount equal to that received for such purposes. If the litigation or 14
insurance receipts are less than the amount received, the district shall reimburse the 15
Commonwealth an amount equal to that received as a resul t of litigation or insurance less 16
the district’s costs and legal fees in securing the judgment or payment. Any funds 17
received in this manner shall be deposited in the General Fund. 18
Section 132. The staff of the Legislative Research Commission is directed to 19
complete a study on the taxation structure of depository financial institutions. The study 20
shall include an analysis of other state's statutes, regulations, and policies and federal 21
government regulations and guidance. The study shall be submitted to the Legislative 22
Research Commission no later than December 1, 2026, for referral to the Interim Joint 23
Committee on Appropriations and Revenue and the Interim Joint Committee on Banking 24
and Insurance. 25
Section 133. The following KRS sections are repealed: 26
160.621 Excise tax on individual income for schools. 27
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160.625 Excise tax returns -- Payment -- Form. 1
160.627 Information on state income tax liability of school district residents -- 2
Department of Revenue as tax collector. 3
160.633 Deposit of excise tax proceeds. 4
Section 134. The following KRS sections are repealed: 5
211.390 Definitions for KRS 211.392. 6
211.392 Fluidized bed combustion technology tax exemption certificate. 7
217.2203 Labeling requirements. 8
217.2205 Administrative regulations. 9
217.2209 Federal regulation to supersede. 10
Section 135. Sections 1, 11 to 17, 45, 95 to 97, and 116 of this Act take effect 11
August 1, 2026. 12
Section 136. Sections 9, 10, 71, 72, 107 to 115 and 117 of this Act take effect 13
January 1, 2027. 14
Section 137. Sections 120 to 124 shall apply retroactively to January 1, 2020. 15
Section 138. Sections 98 to 102 of this Act shall apply retroactively to January 16
1, 2026. 17
Section 139. Section 128 of this Act shall take effect on July 1, 2026. 18
Section 140. Whereas funding the operations of state government is an essential 19
part of the Commonwealth's budget, an emergency is declared to exist, and Sections 18 to 20
21, 33 to 35, 57 to 70, 73 to 91, 108 to 113, 119, 127, and 130 to 133 of this Act take 21
effect upon passage and approval by the Governor or upon its otherwise becoming a law. 22