AN ACT relating to occupational license fees.

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AN ACT relating to occupational license fees. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS CHAPTER 91A IS CREATED TO 3
READ AS FOLLOWS: 4
(1) As used in this section: 5
(a) "Associated with" means an employee: 6
1. Works an average of thirty percent (30%) or more of his or her 7
workdays during the calendar year within the corporate office; and 8
2. Performs remote work that re quires continuous or material reliance 9
on centralized technological systems or operational assets that are 10
located within the corporate office; 11
(b) "Corporate office" means the office, located within the Commonwealth of 12
Kentucky, where a business's officer s or other management staff direct, 13
control, or coordinate all or a portion of the business's business activities, 14
and the office: 15
1. Was subject to the influence of an executed incentive agreement; and 16
2. Has an average of one thousand (1,000) or more emp loyees associated 17
with the corporate office during the calendar year; 18
(c) "Incentive agreement" means a written agreement between a local 19
government and a business entered into on or after January 1, 2001, that 20
includes occupational license fee incentives, infrastructure improvements, 21
land conveyance, or other economic inducements to operate the business's 22
corporate office within the jurisdiction of the local government; 23
(d) "Local government" means a city, urban -county government, charter 24
county government , consolidated local government, or unified local 25
government located within the Commonwealth; 26
(e) "Occupational license fees" means any occupational license fee levied on 27
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salaries, wages, commissions, or other compensation under KRS 91.200, 1
92.280, or 92.281; 2
(f) "Remote work" means: 3
1. For purposes of subsection (2) of this section, work performed by an 4
employee at a location other than the corporate office or a satellite 5
office of the business located within the Commonwealth; and 6
2. For purposes of subsec tion (3) of this section, work performed by an 7
employee at a location other than the state government office to which 8
the employee is assigned; and 9
(g) "Satellite office": 10
1. Means a physical location within the Commonwealth, other than the 11
corporate offic e, used by the business to conduct business activities 12
under the business's direction and control; and 13
2. Does not include a home office within a residence, temporary sites, 14
virtual offices, or a third -party location not subject to the business's 15
operational control. 16
(2) (a) Except for any portion of an employee’s wages apportioned by the employer 17
for work performed at a satellite office, one hundred percent (100%) of the 18
wages of an employee associated with the corporate office shall be 19
apportioned to the local government where the corporate office is located, 20
regardless of where the employee performs his or her work, including 21
remote work, and shall be subject to the occupational license fees imposed 22
by the local government where the corporate office is located. 23
(b) This subsection shall apply for a period of fifty (50) years from the date of 24
the execution of the incentive agreement. 25
(3) One hundred percent (100%) of the wages of an employee assigned to a state 26
government office shall be apportioned to the local government where the state 27
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government office is located and the employee is assigned, regardless of where 1
the employees performs his or her work, including remote work, and shall be 2
subject to the occupational license fees imposed by the local govern ment where 3
the state government office is located. 4
(4) An employee subject to occupational license fee requirements under subsection 5
(2) or (3) of this section may submit a refund claim to the local government that 6
received the occupational license fees fo r any workdays the employee physically 7
worked outside of the local government’s jurisdiction, subject to the provisions of 8
KRS 67.750 to 67.795. 9
(5) (a) Subject to the provisions of KRS 67.750 to 67.795, a local government 10
receiving occupational license fees pursuant to this section shall establish a 11
procedure for the submission and review of refund claims submitted to it 12
under subsection (4) of this section, including requirements for: 13
1. Documentation of work location; 14
2. Proof of occupational license fees withheld; 15
3. Employer verification; and 16
4. Any additional criteria necessary to determine eligibility. 17
(b) Refunds shall be prorated based on the percentage of time the employee 18
physically worked outside of the local government's jurisdiction and shall 19
be processed within ninety (90) days of receipt of a completed claim. 20
(c) A local government that issues a refund to an employee under this 21
subsection shall inform any other tax district located within the 22
Commonwealth where the employee claimed to have phy sically worked in 23
conformance with KRS 67.791. 24
(d) Subject to the terms of an applicable incentive agreement, a local 25
government issuing a refund to an employee under this subsection may seek 26
reimbursement from the party to the incentive agreement for any portion of 27
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the incentive payment the local government made to the party prior to 1
issuing the employee refund if the incentive payment was based on 2
occupational license fee revenues that are attributable to the employee 3
receiving the refund. 4
Section 2. KRS 67.780 is amended to read as follows: 5
(1) Every employer making payment of compensation to an employee shall deduct and 6
withhold upon the payment of the compensation any tax imposed against the 7
compensation by a tax district. Amounts withheld shall be paid to the levying tax 8
district in accordance with KRS 67.783. 9
(2) A tax district may impose minimum and maximum tax liabilities for the tax on 10
compensation. 11
(3) Compensation subject to withholding under this section may be subject to 12
apportionment under Section 1 of this Act. 13
Section 3. This Act shall apply only to the withholding, apportionment, and 14
distribution of occupational license fees for wages paid on or after the effective date of 15
this Act. This Act shall not establish any cause of action, claim, or right to recover 16
occupational license fees apportioned or distributed to another local government prior to 17
the effective date of this Act. 18
Section 4. If any provision of this Act or its application thereof to any person or 19
circumstance is held invalid, the invalidity shall not affect the other provisions or 20
applications of the Act that can be given effect without the invalid provision or 21
application, and to this end the provisions of this Act are severable. 22
Section 5. This Act may be cited as the Economic Development Incentive 23
Retention Act. 24