text:
TITLE XI Revenue and Taxation
CHAPTER 131 Department of Revenue
CHAPTER 132 Levy and Assessment of Property Taxes
CHAPTER 133 Supervision, Equalization, and Review of Assessments
CHAPTER 134 Payment, Collection, and Refund of Taxes
CHAPTER 135 Collection of Public Claims by Action
CHAPTER 136 Corporation and Utility Taxes
CHAPTER 137 License Taxes
CHAPTER 138 Excise Taxes
CHAPTER 139 Sales and Use Taxes
CHAPTER 140 Inheritance and Estate Taxes
CHAPTER 141 Income Taxes
CHAPTER 142 Miscellaneous Taxes
CHAPTER 143 Coal Tax
CHAPTER 143A Natural Resources Severance and Processing Taxes
CHAPTER 144 Tax Incentives for Economic Development
131.020. Major organizational units of the Department of Revenue — Functions and duties.
131.025. Coverage for employes under Workmen's Compensation Law. [Repealed.]
131.030. Functions of department — Settlement of tax cases — Collection of debts referred under KRS 45.237 and 45.241.
131.032. Criminal background investigation required for department's employees with access to or use of federal tax information.
131.040. Associate commission members; terms; funds for operation. [Repealed.]
Kentucky Taxpayers' Bill of Rights
Kentucky Board of Tax Appeals
Tax Amnesty Program
Procedure When Tax Not Paid
Application of Refunds to Taxes Due
Tobacco Master Settlement Agreement
Tobacco Master Settlement Agreement Complementary Act
List of Delinquent Taxpayers
Financial Institution Data Match System
"Commissioner" means the commissioner of revenue;
"Department" means the Department of Revenue;
"Fiduciary" means a guardian, trustee, executor, administrator, receiver, conservator, or any individual or corporation acting in a fiduciary capacity for any other person;
"Taxpayer" means any person required or permitted by law or administrative regulation to perform any act subject to the administrative jurisdiction of the department including the following:
File a report, return, statement, certification, claim, estimate, declaration, form, or other document;
Furnish any information;
Withhold, collect, or pay any tax, installment, estimate, or other funds;
Secure any license, permit, or other authorization to conduct a business or exercise any privilege, right, or responsibility;
"Adjusted prime rate charged by banks" means the average predominant prime rate quoted by commercial banks to large businesses, as determined by the board of governors of the Federal Reserve System;
"Tax interest rate" means the interest rate determined under KRS 131.183 ;
"Tax" includes any assessment or license fee administered by the department; however, it shall not include moneys withheld or collected by the department pursuant to KRS 131.560 or 160.627 ;
"Return" or "report" means any properly completed and, if required, signed form, statement, certification, claim estimate, declaration, or other document permitted or required to be submitted or filed with the department, including returns and reports or composites thereof which are permitted or required to be electronically transmitted;
"Reasonable cause" means an event, happening, or circumstance entirely beyond the knowledge or control of a taxpayer who has exercised due care and prudence in the filing of a return or report or the payment of moneys due the department pursuant to law or administrative regulation;
"Fraud" means:
Intentional or reckless disregard for the law, administrative regulations, or the department's established policies to evade the filing of any return, report, or the payment of any moneys due to the department pursuant to law or administrative regulation; or
The deliberate false reporting of returns or reports with the intent to gain a monetary advantage;
"Hard copy" means any document, record, report, or other data printed on paper or stored by an imaging system that does not permit additions, deletions, or other changes to the original documents;
"Electronic record" means a collection of related information stored as bits of data in a medium that supports electronic extraction of the data at the field level, but does not include electronic imaging systems;
"Electronic imaging systems" means a computer-based system used to store reproductions of documents and records through the use of electronic data processing, or computerized, digital, or optical scanning which records and indexes the document, but does not support electronic extraction of the data at the field level;
"Electronic fund transfer" means an electronic data processing medium that takes the place of a paper check for debiting or crediting an account and of which a permanent record is made;
"Specified tax return preparer" has the same meaning as in 26 U.S.C. sec. 6011(e)(3) ; and
"Tax return preparer" has the same meaning as in 26 U.S.C. sec. 7701(a)(36) (A).
HISTORY: 4114h-1: amend. Acts 1982, ch. 452, § 1, effective July 1, 1982; 1992, ch. 403, § 1, effective July 14, 1992; 2005, ch. 85, § 107, effective June 20, 2005; 2005, ch. 184, § 1, effective June 20, 2005; 2010, ch. 147, § 1, effective July 15, 2010; 2018 ch. 207, § 116, effective April 27, 2018.
Section 26 of Acts 1992, ch. 403, provides: "The provisions of this Act shall become effective for all tax returns or reports due on or after August 1, 1992, and all taxes assessed by the cabinet on or after December 31, 1992."
(6/20/2005). Under 2005 Ky. Acts ch. 184, sec. 18, changes in the names of agencies and officers that are made in bills confirming a reorganization of the executive branch are to be codified only to the extent those changes do not conflict with other 2005 amendments. Accordingly, an amendment to this section in Acts ch. 184 prevails over a name change made in Acts ch. 85.
2005 Ky. Acts chs. 11, 85, 95, 97, 98, 99, 123, and 181 instruct the Reviser of Statutes to correct statutory references to agencies and officers whose names have been changed in 2005 legislation confirming the reorganization of the executive branch. Such a correction has been made in this section.
1. Taxpayer.
2. —Liability of Corporate Officer.
3. Department.
1.Taxpayer.
The term "taxpayer" as used in chapter 141 must follow the definition in this section and KRS 134.010 . Koppel v. Revenue Cabinet, Commonwealth, 777 S.W.2d 938, 1989 Ky. App. LEXIS 136 (Ky. Ct. App. 1989).
Where a defendant chiropractor was held to be a taxpayer as defined by this section, he could not refuse to disclose his records, under KRS 131.130 , based on claim that it might subject him to state criminal prosecution where the Commonwealth granted him immunity from criminal prosecution based on disclosure of his records for tax auditing purposes. Boulton v. Commonwealth by Calvert, 896 S.W.2d 614, 1994 Ky. App. LEXIS 159 (Ky. Ct. App. 1994).
2.—Liability of Corporate Officer.
A corporate officer acting as the taxpayer for withholding tax purposes, was personally liable for penalties and interest due for the late payment of taxes. Koppel v. Revenue Cabinet, Commonwealth, 777 S.W.2d 938, 1989 Ky. App. LEXIS 136 (Ky. Ct. App. 1989).
3.Department.
Because KRS 131.183 authorizes interest only on taxes administered by the Kentucky Department of Revenue, as indicated in KRS 131.010 , prejudgment interest was not recoverable in an action by another agency to recover unpaid service charges. Moreover, a good faith dispute existed. Virgin Mobile USA, L.P. v. Commonwealth, 2012 Ky. App. LEXIS 104 (Ky. Ct. App. June 29, 2012), aff'd in part and rev'd in part, 2014 Ky. LEXIS 334 (Ky. Aug. 21, 2014).
The tax interest rate is that rate in effect the next day after the tax became due and such tax remained unpaid; thus, under the 1982 amendments to this section, KRS 131.183 and 139.650 , the tax interest rate on any delinquent taxes (regardless of the year) on and after July 1, 1982, shall be sixteen percent (16%). However, the sixteen percent (16%) rate is not to be retroactively applied to delinquent taxes which were due prior to July 1, 1982. OAG 83-12 .
Collection of public claims by action, KRS ch. 135.
Corporation and utility taxes, KRS ch. 136.
Finance and revenue of cities of the first class, KRS ch. 91.
Finance and revenue of cities, generally, KRS ch. 91A.
Finance and revenue of cities other than the first class, KRS ch. 92.
Gasoline tax, KRS 138.210 et seq.
Income taxes, KRS ch. 141.
Inheritance and estate taxes, KRS ch. 140.
Levy and assessment of property taxes, KRS ch. 132.
Licensing of motor vehicles, operators and trailers, KRS ch. 186.
Miscellaneous taxes, KRS ch. 142.
Payment, collection and refund of taxes, KRS ch. 134.
Supervision, equalization and review of assessments, KRS ch. 133.
Martin, Practice Before the Kentucky Department of Revenue, 28 Ky. L.J. 4 (1939).
Kentucky Law Survey, Whiteside, Taxation, 71 Ky. L.J. 479 (1982-83).
The Department of Revenue, headed by a commissioner appointed by the secretary with the approval of the Governor, shall be organized into the following functional units:
Office of the Commissioner, which shall consist of:
The Division of Protest Resolution, headed by a division director who shall report directly to the commissioner. The division shall administer the protest functions for the department from office resolution through court action;
The Division of Taxpayer Ombudsman, headed by a division director who shall report to the commissioner. The division shall perform those duties set out in KRS 131.083 ;
The Special Investigations Division, headed by a division director who shall report directly to the commissioner. The division shall investigate alleged violations of the tax laws and recommend criminal prosecution of the laws when warranted; and
The Division of Information Management, headed by a division director who shall report directly to the commissioner. The division shall provide project management, planning, analysis, application development, implementation, security, support, and maintenance for new and existing legacy systems of the department;
Office of Tax Policy and Regulation, headed by an executive director who shall report directly to the commissioner. The office shall be responsible for:
Providing oral and written technical advice on Kentucky tax law;
Drafting proposed tax legislation and regulations;
Testifying before legislative committees on tax matters;
Analyzing tax publications;
Providing expert witness testimony in tax litigation cases;
Providing consultation and assistance in protested tax cases; and
Conducting training and education programs;
Office of Registration and Operations, headed by an executive director who shall report directly to the commissioner. The office shall be responsible for processing documents, depositing funds, collecting debt payments, and coordinating, planning, and implementing a data integrity strategy. The office shall consist of the:
Division of Operations, which shall be responsible for opening all tax returns, preparing the returns for data capture, coordinating the data capture process, depositing receipts, maintaining tax data, and assisting other state agencies with similar operational aspects as negotiated between the department and the other agency; and
Division of Registration, which shall be responsible for registering businesses for tax purposes, ensuring that the data entered into the department's tax systems is accurate and complete, and assisting the taxing areas in proper procedures to ensure the accuracy of the data over time;
Office of Property Valuation, headed by an executive director who shall report directly to the commissioner. The office shall consist of the:
Division of Local Support, which shall be responsible for providing supervision, assistance, and training to the property valuation administrators and sheriffs within the Commonwealth;
Division of State Valuation, which shall be responsible for providing assessments of public service companies and motor vehicles, and providing assistance to property valuation administrators and sheriffs with the administration of tangible and omitted property taxes within the Commonwealth; and
Division of Minerals Taxation and Geographical Information System Services, which shall be responsible for providing geographical information system mapping support, ensuring proper filing of severance tax returns, ensuring consistency of unmined coal assessments, and gathering and providing data to properly assess minerals to the property valuation administrators within the Commonwealth;
Office of Sales and Excise Taxes, headed by an executive director who shall report directly to the commissioner. The office shall administer all matters relating to sales and use taxes and miscellaneous excise taxes, including but not limited to technical tax research, compliance, taxpayer assistance, tax-specific training, and publications. The office shall consist of the:
Division of Sales and Use Tax, which shall administer the sales and use tax; and
Division of Miscellaneous Taxes, which shall administer various other taxes, including but not limited to alcoholic beverage taxes; cigarette enforcement fees, stamps, meters, and taxes; gasoline tax; bank franchise tax; inheritance and estate tax; insurance premiums and insurance surcharge taxes; motor vehicle tire fees and usage taxes; and special fuels taxes;
Office of Income Taxation, headed by an executive director who shall report directly to the commissioner. The office shall administer all matters related to income and corporation license taxes, including technical tax research, compliance, taxpayer assistance, tax-specific training, and publications. The office shall consist of the:
Division of Individual Tax, which shall administer the following taxes or returns: individual income, fiduciary, and employer withholding; and
Division of Corporation Tax, which shall administer the corporation income tax, corporation license tax, pass-through entity withholding, and pass-through entity reporting requirements;
Office of Field Operations, headed by an executive director who shall report directly to the commissioner. The office shall manage the regional taxpayer service centers and the field audit program; and
Office of Enforcement, headed by an executive director who shall report directly to the commissioner. The office shall initiate all collection enforcement activity related to due and owing tax assessments, including protest resolution, and shall assist other state agencies with similar collection aspects as negotiated between the department and other state agencies. The office shall consist of the Division of Collections.
The functions and duties of the department shall include conducting conferences, administering taxpayer protests, and settling tax controversies on a fair and equitable basis, taking into consideration the hazards of litigation to the Commonwealth of Kentucky and the taxpayer. The mission of the department shall be to afford an opportunity for taxpayers to have an independent informal review of the determinations of the audit functions of the department, and to attempt to fairly and equitably resolve tax controversies at the administrative level.
The department shall maintain an accounting structure for the one hundred twenty (120) property valuation administrators' offices across the Commonwealth in order to facilitate use of the state payroll system and the budgeting process.
Except as provided in KRS 131.190(4), the department shall fully cooperate with and make tax information available as prescribed under KRS 131.190(3) to the Governor's Office for Economic Analysis as necessary for the office to perform the tax administration function established in KRS 42.410 .
Executive directors and division directors established under this section shall be appointed by the secretary with the approval of the Governor under KRS 12.050 .
HISTORY: 4618-92, 4618-93: amend. Acts 1960, ch. 186, Art. I, § 29; 1964, ch. 141, § 39; 1984, ch. 404, § 10, effective July 13, 1984; 1988, ch. 273, § 8, effective July 15, 1988; 1990, ch. 316, § 1, effective July 13, 1990; 1990, ch. 321, § 8, effective July 13, 1990; 1992, ch. 13, § 6, effective July 14, 1992; 1992, ch. 361, § 1, effective July 14, 1992; 1994, ch. 65, § 1, effective July 15, 1994; 1994, ch. 422, § 2, effective April 16, 1994; 1994, ch. 508, § 42, effective July 15, 1994; 1998, ch. 134, § 1, effective July 15, 1998; 1998, ch. 396, § 1, effective July 15, 1998; 2000, ch. 46, § 23, effective July 14, 2000; 2005, ch. 85, § 19, effective June 20, 2005; 2005, ch. 168, § 52, effective June 20, 2005; 2007, ch. 95, § 26, effective March 23, 2007; 2008, ch. 178, § 23, effective July 15, 2008; 2009, ch. 12, § 36, effective June 25, 2009; 2012, ch. 69, § 14, effective July 12, 2012; 2014, ch. 48, § 1, effective July 15, 2014; 2016 ch. 84, § 2, effective July 15, 2016; 2017 ch. 131, § 5, effective June 29, 2017; 2018 ch. 171, § 104, effective April 14, 2018; 2018 ch. 207, § 104, effective April 27, 2018; 2018 ch. 78, § 9, effective July 14, 2018; 2021 ch. 81, § 9, effective June 29, 2021.
Reeves v. Fries, 292 Ky. 450 , 166 S.W.2d 985, 1942 Ky. LEXIS 116 ( Ky. 1942 ); Ballard County v. Citizens State Bank, 261 S.W.2d 420, 1953 Ky. LEXIS 1011 ( Ky. 1953 ); Russman v. Luckett, 391 S.W.2d 694, 1965 Ky. LEXIS 322 ( Ky. 1965 ); Circle "C" Coal Co. v. Commonwealth, 628 S.W.2d 883, 1981 Ky. App. LEXIS 317 (Ky. Ct. App. 1981).
Bond of secretary of revenue, amount and conditions, KRS 62.160 , 62.180 .
Heads of statutory administrative departments, appointment, term, salary, functions, KRS 12.040 .
Oath to witnesses, cabinet head or representative may administer, KRS 12.120 .
State property and buildings commission, secretary of revenue is member of, KRS 56.450 .
Muehlenkamp, Remedies for Disproportionate Tax Assessment in Kentucky, 36 Ky. L.J. 401 (1948).
Property Assessment Remedies for the Kentucky Taxpayer, 60 Ky. L.J. 84 (1971).
Property Tax Revenue Assessment Levels and Taxing Rates: The Kentucky Rollback Law, 60 Ky. L.J. 105 (1971).
This section (Enact. Acts 1942, ch. 144, § 1) was repealed by Acts 1956, ch. 147.
The Department of Revenue shall exercise all administrative functions of the state in relation to the state revenue and tax laws, the licensing and registering of motor vehicles, the equalization of tax assessments, the assessment of public utilities and public service corporations for taxes, the assessment of franchises, the supervision of tax collections, and the enforcement of revenue and tax laws, either directly or through supervision of tax administration activity in other departments to which the department may commit administration of certain taxes.
The department shall have all the powers and duties with reference to assessment or equalization of the assessment of property heretofore exercised or performed by any state board or commission.
The department shall have all the powers and duties necessary to consider and settle tax cases under KRS 131.110 and refund claims made under KRS 134.580 . The department is encouraged to settle controversies on a fair and equitable basis and shall be authorized to settle tax controversies based on the hazards of litigation applicable to them.
The department shall have all the powers and duties necessary to collect any debts owed to the Commonwealth, or any local government of the Commonwealth, that are referred to the department by an organizational unit or administrative body in the executive branch of state government, as defined in KRS 12.010 , the Court of Justice in the judicial branch of state government, and any local government, under KRS 45.237 and 45.241 .
History. 4114h-2, 4149b-12, 4202a-31, 4223b-10, 4224a-5, 4224c-3, 4257b-1, 4281a-33, 4281a-40, 4281b-23, 4281c-20, 4281e-9, 4281f-5, 4281f-27, 4281g-13, 4281h-12, 4281i-6, 4281j-4, 4618-30, 4618-91: amend. Acts 1992, ch. 361, § 2, effective July 14, 1992; 2004, ch. 118, § 3, effective July 13, 2004; 2005, ch. 85, § 108, effective June 20, 2005; 2013, ch. 88, § 6, effective June 25, 2013.
1. Assessment.
2. Authority of County Clerks.
1.Assessment.
The power of the department of revenue (now revenue cabinet) and the Kentucky tax commission to assess property is purely administrative, and not judicial, being limited to assessment after finding of facts establishing the existence of the property to be assessed. If the property is found to exist, the taxpayer upon being notified of the assessment must follow the statutory procedure for obtaining correction or relief from the assessment, but where there is no factual basis for the finding that the taxable property exists, as in the case where a taxpayer who is sought to be charged with a franchise tax has no property with a taxable situs in the state, the purported assessment is void and the taxpayer may proceed by suit for injunction to restrain collection of tax. Reeves v. Service Lines, Inc., 291 Ky. 410 , 164 S.W.2d 593, 1942 Ky. LEXIS 236 ( Ky. 1942 ).
2.Authority of County Clerks.
County clerks were not entitled to summary judgment in their action to enforce a state transfer tax against two federal secondary lenders because, while they had standing to bring the suit, they lacked authority to do so, the federal charter exemptions were constitutional as an appropriate exercise of Congress' powers in regulating the secondary mortgage market, and there was no federal interference in the State's power to tax. Spoonamore v. Fed. Hous. Fin. Agency, 2014 U.S. Dist. LEXIS 6210 (E.D. Ky. Jan. 17, 2014).
Newport v. Pennsylvania R. Co., 287 Ky. 613 , 154 S.W.2d 719, 1941 Ky. LEXIS 600 ( Ky. 1941 ); Reeves v. Talbott, 289 Ky. 581 , 159 S.W.2d 51, 1941 Ky. LEXIS 37 ( Ky. 1941 ); Reeves v. Fries, 292 Ky. 450 , 166 S.W.2d 985, 1942 Ky. LEXIS 116 ( Ky. 1942 ); Blue Diamond Coal Co. v. Cornett, 300 Ky. 647 , 189 S.W.2d 963, 1945 Ky. LEXIS 618 ( Ky. 1945 ); Ballard County v. Citizens State Bank, 261 S.W.2d 420, 1953 Ky. LEXIS 1011 ( Ky. 1953 ).
Alcoholic beverages, functions of cabinet with respect to, KRS 241.020 .
Auditor of public accounts, functions with respect to revenue, KRS 43.050 .
County finance, functions of cabinet with respect to, KRS chs. 66, 68.
Finance and administration cabinet, functions in relation to state finances and budget, KRS 41.070 , 45.301 .
Escheats, functions of cabinet with respect to, KRS ch. 393.
Estimate of income to department of highways, KRS 176.270 , 177.360 .
Fire protection districts, functions of cabinet, KRS 75.040 .
Model procurement code, functions in relation thereto, KRS 45A.030 et seq.
Motor carriers, nonresident, administration of reciprocal tax and fee exemption agreements for, KRS 281.835 .
State purchasing, functions in relation thereto, KRS 45A.665 to 45A.685 .
Each employee of the Department of Revenue, including contract staff, with access to or use of federal tax information shall submit to a criminal background investigation by means of a fingerprint check by the Department of Kentucky State Police and the Federal Bureau of Investigation.
The Department of Revenue shall promulgate administrative regulations in accordance with KRS Chapter 13A to implement this section.
History. 2017 ch. 97, § 2, effective March 21, 2017.
This section (4618-92: amend. Acts 1946, ch. 193, § 1; 1960, ch. 186, Art. I, § 30) was repealed by Acts 1964, ch. 141, § 39.
131.050. Division of General Taxation. [Repealed.]
131.051. "Taxpayer representative" defined for KRS 131.041 to 131.081.
131.060. Division of Motor Vehicles. [Repealed.]
131.061. KRS 131.041 to 131.081 to apply to all taxes administered by Department of Revenue.
131.070. Division of Local Finance. [Repealed.]
131.071. Office of the Taxpayer Ombudsman — Qualifications and duties of tax ombudsman. [Repealed.]
131.080. Division of research and statistics. [Repealed.]
131.081. Rules applicable to the administration of all taxes under jurisdiction of Department of Revenue.
131.083. Division of Taxpayer Ombudsman — Duties — Annual reports.
131.090. Functions of tax commission. [Repealed.]
131.100. Commission may compel giving of testimony and production of evidence. [Repealed.]
The provisions of KRS 131.041 to 131.081 shall be known and may be cited as the "Kentucky Taxpayers' Bill of Rights."
This section (4618-94) was repealed by Acts 1960, ch. 186, art. I, § 33, effective June 16, 1960.
As used in KRS 131.041 to 131.081 , unless the context requires otherwise, "taxpayer representative" means any attorney, tax practitioner, or other person designated by a taxpayer to represent him before the department in any matter relating to taxes administered by the department.
History. Enact. Acts 1990, ch. 423, § 1, effective July 13, 1990; 2005, ch. 85, § 109, effective June 20, 2005; 2009, ch. 12, § 37, effective June 25, 2009.
In addition to all other rights or privileges afforded Kentucky taxpayers, and notwithstanding any provisions of the Kentucky Revised Statutes to the contrary, the provisions of KRS 131.041 to 131.081 shall apply with regard to all taxes administered by the Department of Revenue.
This section (4618-96) was repealed by Acts 1960, ch. 68, Art. V, § 7 and Acts 1960, ch. 186, Art. I, § 33.
This section (Enact. Acts 1990, ch. 423, § 3, effective July 13, 1990; 1994, ch. 10, § 1, effective July 15, 1994; 2005, ch. 85, § 20, effective June 20, 2005) was repealed by Acts 2009, ch. 12, § 56, effective June 25, 2009.
This section (4618-97) was repealed by Acts 1960, ch. 186, Art. I, § 33.
The following rules, principles, or requirements shall apply in the administration of all taxes subject to the jurisdiction of the department:
The department shall develop and implement a Kentucky tax education and information program directed at new taxpayers, taxpayer and industry groups, and department employees to enhance the understanding of and compliance with Kentucky tax laws, including the application of new tax legislation to taxpayer activities and areas of recurrent taxpayer noncompliance or inconsistency of administration;
The department shall publish brief statements in simple and nontechnical language which explain procedures, remedies, and the rights and obligations of taxpayers and the department. These statements shall be provided to taxpayers with the initial notice of audit; each original notice of tax due; each denial or reduction of a refund or credit claimed by a taxpayer; each denial, cancellation, or revocation of any license, permit, or other required authorization applied for or held by a taxpayer; and, if practical and appropriate, in informational publications by the department distributed to the public;
Taxpayers shall have the right to be assisted or represented by an attorney, accountant, or other person in any conference, hearing, or other matter before the department. The taxpayer shall be informed of this right prior to conduct of any conference or hearing;
The department shall perform audits and conduct conferences and hearings only at reasonable times and places;
Taxpayers shall have the right to make audio recordings of any conference with or hearing by the department. The department may make similar audio recordings if prior written notice is given to the taxpayer or if the taxpayer records the conference or hearing. The taxpayer shall be entitled to a copy of this department recording or a transcript as provided in KRS 61.874 ;
If any taxpayer's failure to submit a timely return or payment to the department is due to the taxpayer's reasonable reliance on written advice from the department, the taxpayer shall be relieved of any penalty or interest with respect thereto, provided the taxpayer requested the advice in writing from the department and the specific facts and circumstances of the activity or transaction were fully described in the taxpayer's request, the department did not subsequently rescind or modify the advice in writing, and there were no subsequent changes in applicable laws or regulations or a final decision of a court which rendered the department's earlier written advice no longer valid;
Taxpayers shall have the right to receive a copy of any audit of the department by the Auditor of Public Accounts relating to the department's compliance with the provisions of KRS 131.041 to 131.081 ;
The department shall include with each notice of tax due a clear and concise description of the basis and amount of any tax, penalty, and interest assessed against the taxpayer and the agent's written narrative setting forth the grounds upon which the assessment is made. (8) (a) The department shall include with each notice of tax due a clear and concise description of the basis and amount of any tax, penalty, and interest assessed against the taxpayer and the agent's written narrative setting forth the grounds upon which the assessment is made.
Copies of the agent's audit workpapers shall be:
Included with the notice of tax due; or
Delivered electronically to the taxpayer.
Taxpayers shall be similarly notified regarding the denial or reduction of any refund or credit claim filed by a taxpayer;
Taxpayers shall have the right to an installment payment agreement for the payment of delinquent taxes, penalties, and interest owed, provided the taxpayer requests the agreement in writing clearly demonstrating: (9) (a) Taxpayers shall have the right to an installment payment agreement for the payment of delinquent taxes, penalties, and interest owed, provided the taxpayer requests the agreement in writing clearly demonstrating:
His or her inability to pay in full; and
That the agreement will facilitate collection by the department of the amounts owed.
The department may modify or terminate an installment payment agreement and may pursue statutory remedies against the taxpayer if it determines that:
The taxpayer has not complied with the terms of the agreement, including minimum payment requirements established by the agreement;
The taxpayers' financial condition has sufficiently changed;
The taxpayer fails to provide any requested financial condition update information;
The taxpayer gave false or misleading information in securing the agreement; or
The taxpayer fails to timely report and pay any other tax due the Commonwealth.
The department shall give written notice to the taxpayer at least thirty (30) days prior to modifying or terminating an installment payment agreement unless the department has reason to believe that collection of the amounts owed will be jeopardized in whole or in part by delay;
The department shall not knowingly authorize, require, or conduct any investigation or surveillance of any person for nontax administration related purposes, except internal security related investigations involving department personnel;
In addition to the circumstances under which an extension of time for filing reports or returns may be granted pursuant to KRS 131.170 , taxpayers shall be entitled to the same extension of the due date of any comparable Kentucky tax report or return for which the taxpayer has secured a written extension from the Internal Revenue Service provided the taxpayer notifies the department in writing and provides a copy of the extension at the time and in the manner which the department may require;
The department shall bear the cost or, if paid by the taxpayer, reimburse the taxpayer for recording or bank charges as the direct result of any erroneous lien or levy by the department, provided the erroneous lien or levy was caused by department error and, prior to issuance of the erroneous lien or levy, the taxpayer timely responded to all contacts by the department and provided information or documentation sufficient to establish his or her position. When the department releases any erroneous lien or levy, notice of the fact shall be mailed to the taxpayer and, if requested by the taxpayer, a copy of the release, together with an explanation, shall be mailed to the major credit reporting companies located in the county where it was filed;
The department shall not evaluate individual officers or employees on the basis of taxes assessed or collected or impose or suggest tax assessment or collection quotas or goals. (13) (a) The department shall not evaluate individual officers or employees on the basis of taxes assessed or collected or impose or suggest tax assessment or collection quotas or goals.
No arrangement or contract shall be entered into for the service to:
Examine a taxpayer's books and records;
Collect a tax from a taxpayer; or
Provide legal representation of the department;
if any part of the compensation or other benefits paid or payable for the service is contingent upon or otherwise related to the amount of tax, interest, fee, or penalty assessed against or collected from the taxpayer. Any such arrangement or contract shall be void and unenforceable;
Taxpayers shall have the right to bring an action for damages against the Commonwealth to the Board of Tax Appeals for actual and direct monetary damages sustained by the taxpayer as a result of willful, reckless, or intentional disregard by department employees of the rights of taxpayers as set out in KRS 131.041 to 131.081 or in the tax laws administered by the department. In the awarding of damages pursuant to this subsection, the board shall take into consideration the negligence or omissions, if any, on the part of the taxpayer which contributed to the damages. If any proceeding brought by a taxpayer is ruled frivolous by the Board of Tax Appeals, the department shall be reimbursed by the taxpayer for its costs in defending the action. Any claims brought pursuant to this subsection shall be in accordance with KRS 49.040 to 49.180 ; and
Taxpayers shall have the right to privacy with regard to the information provided on their Kentucky tax returns and reports, including any attached information or documents. Except as provided in KRS 131.190 , no information pertaining to the returns, reports, or the affairs of a person's business shall be divulged by the department to any person or be intentionally and without authorization inspected by any present or former commissioner or employee of the department, member of a county board of assessment appeals, property valuation administrator or employee, or any other person.
HISTORY: Enact. Acts 1990, ch. 423, § 4, effective July 13, 1990; 1992, ch. 361, § 3, effective July 14, 1992; 1994, ch. 508, § 43, effective July 15, 1994; 1998, ch. 134, § 2, effective July 15, 1998; 2000, ch. 503, § 1, effective July 14, 2000; 2005, ch. 85, § 111, effective June 20, 2005; 2006, ch. 251, § 2, effective July 12, 2006; 2013, ch. 119, § 1, effective July 1, 2013; 2017 ch. 74, § 63, effective June 29, 2017; 2018 ch. 171, § 100, effective April 14, 2018; 2018 ch. 207, § 100, effective April 27, 2018; 2021 ch. 156, § 1, effective June 29, 2021; 2021 ch. 185, § 58, effective June 29, 2021.
1. Elements of Notice.
2. Deficiency Interest.
3. Privacy.
1.Elements of Notice.
Department's initial, timely letter, which notified the telephone company of a sales tax assessment and of the amount of the assessed tax deficiency, was sufficient to satisfy the statute of limitations, KRS 139.620(1), and to allow collection of the tax because the letter was not required to contain all five requirements of KRS 131.081(8). Revenue Cabinet v. GTE South, Inc., 238 S.W.3d 655, 2007 Ky. LEXIS 160 ( Ky. 2007 ).
2.Deficiency Interest.
Assessment of deficiency interest added to a taxpayer's assessed tax for certain years was not abated pursuant to KRS 131.081(8) because the provision did not appear to address the issue of interest and penalty abatement. In any event, the taxpayer did not cite to written advice from an administrative agency which the taxpayer relied upon in failing to properly report its separate accounts in its filings. Monumental Life Ins. Co. v. Dep't of Revenue, 294 S.W.3d 10, 2008 Ky. App. LEXIS 207 (Ky. Ct. App. 2008), cert. denied, 559 U.S. 1037, 130 S. Ct. 2062, 176 L. Ed. 2d 414, 2010 U.S. LEXIS 2866 (U.S. 2010).
3.Privacy.
Because records that identified registered payers of utility license tax easily could be redacted to comply with privacy requirements and a state website did not provide an alternative remedy, the records were not exempt from open records disclosure after redaction; moreover, the evidence supported a finding that the documents requested were maintained. Dep't of Revenue v. Eifler, 436 S.W.3d 530, 2013 Ky. App. LEXIS 140 (Ky. Ct. App. 2013).
Unpublished decision: Department of Revenue was required to produce for inspection redacted copies of its final rulings because the production of the material a tax attorney and tax analysts sought was required by the Open Records Act; the Department's final rulings contained information related to its reasoning and analysis with respect to its task in administration of the tax laws, and that information could be made available without jeopardizing taxpayers' privacy interests under the Taxpayers' Bill of Rights. Fin. & Admin. Cabinet v. Sommer, 2017 Ky. App. LEXIS 9 (Ky. Ct. App. Jan. 13, 2017, sub. op., 2017 Ky. App. Unpub. LEXIS 624 (Ky. Ct. App. Jan. 13, 2017).
Direct pay authorization is directly related to a taxpayer's status. It is an arrangement between the Department and the taxpayer, in which the taxpayer pays the sales or use tax directly to the Department. Disclosure by the Department or any of its employees of information revealing taxpayers' DPA status, permit numbers and addresses would be divulging information of the business affairs of those taxpayers in violation of the confidentiality provisions of KRS 131.190(1). OAG 04-ORD-42.
Where the open records request requested contracts, memorandums of agreement or understanding, or similar documents reflecting the Department's participation in the Joint Audit Program of the Multistate Tax Commission, it is highly unlikely that a contract or memorandum of agreement would contain sufficient detail to divulge information pertaining to the tax schedules, returns, reports or the affairs of a person's business, in violation of the confidentiality provisions of KRS Chapter 131. OAG 2006-ORD-032.
The department shall provide the services of a Division of Taxpayer Ombudsman to carry out the spirit and specific purposes of KRS 131.041 to 131.081 . The division shall:
Coordinate the resolution of taxpayer complaints and problems, if so requested by a taxpayer or the taxpayer's representative;
Provide recommendations to the department for new or revised informational publications and recommend taxpayer and department employee education programs needed to reduce or eliminate errors or improve voluntary taxpayer compliance;
Provide recommendations to the department for simplification or other improvements needed in tax laws, regulations, forms, systems, and procedures to promote better understanding and voluntary compliance by taxpayers; and
At least annually, on or before October 1, prepare and submit a report to the commissioner of the Department of Revenue summarizing the activities of the division during the immediately preceding fiscal year, describing any recommendations made pursuant to subsections (2) and (3) of this section, including the progress in implementing such recommendations, and providing such other information as the division deems appropriate relating to the rights of Kentucky taxpayers.
History. Enact. Acts 2012, ch. 69, § 1, effective July 12, 2012; 2016 ch. 84, § 3, effective July 15, 2016.
This section (4114h-3, 4618-93: amend. Acts 1960, ch. 186, Art. I, § 31) was repealed by Acts 1964, ch. 141, § 39.
This section (4114h-3) was repealed by Acts 1964, ch. 141, § 39.
131.110. Protest of assessment by Department of Revenue — Review — Appeal.
131.120. Appeal to Franklin circuit court from commission. [Repealed.]
131.125. Appeal under KRS 131.110 and 131.120 is exclusive remedy. [Repealed.]
131.130. General powers and duties of department — Prosecution duties.
131.131. Department to publish forms and instructions without promulgation of administrative regulation.
131.135. Annual report by employers on workers' compensation coverage.
131.140. Powers and duties of department concerning local finance — Supervision of local officials in revenue duties.
131.150. Jeopardy assessments.
131.155. Tax payments to be made by electronic fund transfer — Administrative regulations — Waiver — Refund by electronic fund transfer.
131.160. Collection on bond for taxes.
131.170. Extension of time for filing reports and returns.
131.175. Commissioner authorized to waive penalty, but not interest.
131.180. Uniform Civil Penalty Act.
131.181. Coal mining license revocation for or denial to delinquent taxpayer or his agent, contract miner, or delegate.
131.1815. Revocation of alcoholic beverage license issued to person who becomes a delinquent taxpayer.
131.1817. Delinquent taxpayer subject to revocation or denial of professional or occupational license, driver's license, and motor vehicle registration — Agencies' duties to assist department — Notice — Appeal — Written tax clearance before reissuance.
131.182. Refusal of drawee to honor check. [Repealed.]
131.183. Tax interest rate.
131.185. Period for which records to be preserved.
131.190. Information acquired in tax administration not to be divulged — Exceptions.
131.191. Prohibition against employment of prisoners in jobs with access to taxpayer information.
131.192. Duplication of records by department.
131.194. Disposition of fee charged for duplicating records.
131.200. Field agents and accountants to execute bond. [Repealed.]
131.205. Temporary deposits of collections by field representatives — Transmittal to department.
131.207. Disposition of amounts collected. [Repealed.]
131.210. Investigation of officers' accounts.
131.220. Reporting and prosecution of tax law violators. [Repealed.]
131.230. Interstate comity.
131.240. Taxpayer's records in electronic format — Requirements — Satisfaction of requirements.
131.250. Returns, reports, and statements to be filed electronically — Waiver.
The Department of Revenue shall mail to the taxpayer a notice of any tax assessed by it. The assessment shall be due and payable if not protested in writing to the department within: (1) (a) The Department of Revenue shall mail to the taxpayer a notice of any tax assessed by it. The assessment shall be due and payable if not protested in writing to the department within:
Forty-five (45) days from the date of notice, for assessments issued prior to July 1, 2018; and
Sixty (60) days from the date of notice, for assessments issued on or after July 1, 2018.
Claims for refund of paid assessments may be made under KRS 134.580 and denials appealed under KRS 49.220 .
The protest shall be accompanied by a supporting statement setting forth the grounds upon which the protest is made. (c) 1. The protest shall be accompanied by a supporting statement setting forth the grounds upon which the protest is made.
Upon written request, the department may extend the time for filing the supporting statement if it appears the delay is necessary and unavoidable.
The refusal of the extension may be reviewed in the same manner as a protested assessment.
After a timely protest has been filed, the taxpayer may request a conference with the department. The request shall be granted in writing stating the date and time set for the conference. The taxpayer may appear in person or by representative. Further conferences may be held by mutual agreement.
After considering the taxpayer's protest, including any matters presented at the final conference, the department shall issue a final ruling on any matter still in controversy, which shall be mailed to the taxpayer. The ruling shall state that it is a final ruling of the department, generally state the issues in controversy, the department's position thereon and set forth the procedure for prosecuting an appeal to the Board of Tax Appeals.
The taxpayer may request in writing a final ruling at any time after filing a timely protest and supporting statement. When a final ruling is requested, the department shall issue such ruling within thirty (30) days from the date the request is received by the department.
After a final ruling has been issued, the taxpayer may appeal to the Board of Tax Appeals pursuant to the provisions of KRS 49.220 .
History. 4114h-4, 4114h-5: amend. Acts 1946, ch. 233, § 1; 1958, ch. 69, § 1; 1964, ch. 141, § 13; 1978, ch. 233, § 32, effective June 17, 1978; 1990, ch. 120, § 1, effective July 13, 1990; 1990, ch. 423, § 9, effective July 13, 1990; 1992, ch. 361, § 4, effective July 14, 1992; 2005, ch. 85, § 112, effective June 20, 2005; 2017 ch. 74, § 64, effective June 29, 2017; 2018 ch. 171, § 106, effective April 14, 2018; 2018 ch. 207, § 106, effective April 27, 2018; 2021 ch. 185, § 59, effective June 29, 2021.
(7/13/90) This section was amended by two 1990 Acts (ch. 120 and ch. 423) which are in conflict. Pursuant to KRS 446.250 , the Act which was last enacted by the General Assembly (ch. 423) prevails.
2. Assessment Void.
3. Taxes Due.
4. Notice of Assessment.
5. Petition for Review.
6. Time of Filing.
8. Remedy Exclusive.
9. Sales and Use Taxes.
10. Judicial Review.
11. Supporting Statement.
12. Mandatory Nature of Requirements.
13. Final Ruling Necessary.
14. Claim for Refund.
15. Cabinet's Authority.
The Revenue Cabinet is not required to consider every variable in assessing the tax value of unmined coal tracts; its consideration of mineable and merchantable acres, average clean coal seam thickness, location by county, and whether the coal was idle, permitted, or permitted and producing provided sufficient information to make a logical and reasonable estimate of the property's cash value. Prior to initiating a lawsuit, taxpayers who believe their valuations are in excess of fair cash value should exhaust the administrative remedies of formally protesting the assessment and, if necessary, appealing any final determination by the Cabinet to the Kentucky Board of Tax Appeals. Revenue Cabinet v. Gillig, 957 S.W.2d 206, 1997 Ky. LEXIS 91 ( Ky. 1997 ).
2.Assessment Void.
Where the undisputed facts showed that taxpayer had no property within the jurisdiction of this state, and did no business therein, attempted assessment of franchise tax by Department of Revenue was void, and could be enjoined. Reeves v. Service Lines, Inc., 291 Ky. 410 , 164 S.W.2d 593, 1942 Ky. LEXIS 236 ( Ky. 1942 ).
3.Taxes Due.
Under this section taxes become due and payable on the day the assessment becomes final. Commonwealth ex rel. Luckett v. Kettenacker, 335 S.W.2d 339, 1960 Ky. LEXIS 256 ( Ky. 1960 ).
4.Notice of Assessment.
Where in an action to collect unpaid sales taxes, the defendant corporation claimed that it had never received notice of the assessment, and the record disclosed that the commonwealth did not or could not offer any proof that the subject notice of taxes due had been mailed to, or received by, the defendant corporation, the commonwealth was not entitled to a presumption that the tax notices were properly mailed as a usual business practice; therefore, where there was no proof by the commonwealth of a regular system or scheme for mailing the tax notices, it was a question of fact as to whether the defendant received the notice of assessment, and the trial court erred when it granted summary judgment in favor of the commonwealth. Koscot Interplanetary, Inc. v. Commonwealth, 649 S.W.2d 201, 1983 Ky. LEXIS 243 ( Ky. 1983 ).
Notice of tax assessment was properly addressed, for purposes of the presumption that a properly mailed letter is received in due course, where it was shown that the correct zip code and the incorrect one used were both used to deliver mail on the same road in the same city, and that the taxpayer received other correspondence from the department (now cabinet) with the same incorrect zip code. Zeigler Coal Co. v. Commonwealth, Dep't of Revenue, 691 S.W.2d 216, 1985 Ky. App. LEXIS 495 (Ky. Ct. App. 1985).
5.Petition for Review.
The department or commissioner need not submit a petition for review to the tax commission unless the petition is filed within 15 days. Reeves v. Fries, 292 Ky. 450 , 166 S.W.2d 985, 1942 Ky. LEXIS 116 ( Ky. 1942 ) (decided under prior law).
6.Time of Filing.
Where taxpayer did not file petition for review within 15-day period, his right to relief was barred. The action of the commissioner (now secretary) of revenue in ruling on the merits of the taxpayer's complaint did not operate to waive the statute, where the commissioner in making the ruling expressly reserved the question as to whether the complaint was timely, and finally rejected the complaint on the ground that it was not filed in time. Reeves v. Fries, 292 Ky. 450 , 166 S.W.2d 985, 1942 Ky. LEXIS 116 ( Ky. 1942 ) (decided under prior law).
7.Hearing.
The hearing by the tax commission is not an appeal, but a de novo redetermination. Reeves v. Fries, 292 Ky. 450 , 166 S.W.2d 985, 1942 Ky. LEXIS 116 ( Ky. 1942 ).
8.Remedy Exclusive.
Where the defendant failed to object to or appeal from the department's (now cabinet's) classification of income, the remedy was exclusive and the assessment became final. Koehler v. Commonwealth, 432 S.W.2d 397, 1968 Ky. LEXIS 325 ( Ky. 1968 ).
The question of the defendant's residence was foreclosed when he neglected to pursue his statutory remedy and the issue could not be raised in an action to collect the delinquent tax. Koehler v. Commonwealth, 432 S.W.2d 397, 1968 Ky. LEXIS 325 ( Ky. 1968 ).
9.Sales and Use Taxes.
The general provisions contained in this section do not govern appeals as to overdue sales and use taxes where the chapter concerned with the levy and collection of such taxes has provisions that are exclusive and controlling in all matters concerning the due date, penalties and interest. Kentucky Board of Tax Appeals v. Brown Hotel Co., 528 S.W.2d 715, 1975 Ky. LEXIS 83 ( Ky. 1975 ).
10.Judicial Review.
Where religious organization failed to exhaust administrative remedies by filing protest under this section within 30 days after jeopardy assessment under KRS 131.150 , there was judicial review by trial court considering separate temporary injunction issue since it determined that activities at state fair were sales not protected by constitutional privileges of the First Amendment to the United States Constitution; thus, failure to exhaust remedies was not fatal to right of judicial review. International Soc. for Krishna Consciousness, Inc. v. Commonwealth, 610 S.W.2d 910, 1980 Ky. App. LEXIS 406 (Ky. Ct. App. 1980).
Court of Appeals erred in determining that a facial constitutional issue raised by a taxpayer was one that the Kentucky Board of Tax Appeals could not decide because the case did not challenge the constitutionality of the administrative process for collecting a tax refund, there were several administrative issues that had to be resolved prior to addressing the statute's constitutionality, which necessitated formal written findings, and the deference afforded the findings would be dependent upon their sufficiency. Commonwealth v. AT&T Corp., 462 S.W.3d 399, 2015 Ky. LEXIS 1631 ( Ky. 2015 ).
11.Supporting Statement.
Something more substantial than mere denials of tax liability is required as a "supporting statement" under this section. Eagle Machine Co. v. Commonwealth, 698 S.W.2d 528, 1985 Ky. App. LEXIS 600 (Ky. Ct. App. 1985).
The term "supporting statement" is not limited to full and complete tax returns; however, a taxpayer has an obligation to provide financial statements, records or some other documentation that would allow the revenue department some basis for reconsideration. Eagle Machine Co. v. Commonwealth, 698 S.W.2d 528, 1985 Ky. App. LEXIS 600 (Ky. Ct. App. 1985).
12.Mandatory Nature of Requirements.
Regardless of the motive of the entity being assessed, this section is mandatory in nature and, therefore, a taxpayer who failed to submit the required documentation before the Revenue Cabinet issued its final order, failed to preserve his right to review of a delinquency assessed by the Revenue Cabinet for sales and use taxes. Scotty's Constr. Co. v. Commonwealth Revenue Cabinet, 779 S.W.2d 234, 1989 Ky. App. LEXIS 146 (Ky. Ct. App. 1989).
13.Final Ruling Necessary.
This statute clearly indicates that after a protest to a tax assessment has been made by a taxpayer, the Cabinet shall issue a final ruling or determination on the matter. It is only when such ruling is final—and so states—that it can be appealed to the Board of Tax Appeals. Revenue Cabinet v. Castleton, Inc., 826 S.W.2d 334, 1992 Ky. App. LEXIS 67 (Ky. Ct. App. 1992).
14.Claim for Refund.
The remedy for filing a claim for a refund of taxes pursuant to KRS 134.580 is not conditioned upon satisfaction of the procedural requirements provided in this section for filing a protest of a tax assessment. Subsection (1) of this section allows a taxpayer 30 (now 45) days within which to file such a protest. KRS 134.580 (3) and 139.770(1), on the other hand, are concerned with requests for refunds of taxes already paid and provide that claims for refund must be made within four (4) years of the due date of the return or the date the money was paid into the treasury, whichever is later. Revenue Cabinet v. Castleton, Inc., 826 S.W.2d 334, 1992 Ky. App. LEXIS 67 (Ky. Ct. App. 1992).
Under KRS 134.580 , an "overpayment" or "payment where no tax was due" must occur before a refund is authorized under KRS 139.770 , and, thus, a taxpayer is only entitled to a refund if he has overpaid his tax liability; therefore, although the court had held that a timely notice of assessment issued by the Commonwealth of Kentucky, Revenue Cabinet was deficient under KRS 131.081(8) and KRS 131.110(1) and that its subsequent notice was barred by the statute of limitations under KRS 139.620(1), it accepted the Cabinet's alternative argument that the taxpayer was not entitled to a refund concerning the sales and use taxes it paid during a certain period because it did not "overpay" its taxes for that period, and it held that the Cabinet had the right to retain prior excess payments for that time period to the extent that they did not exceed the amount which might have been properly assessed and demanded. GTE South, Inc. v. Commonwealth, 2004 Ky. App. LEXIS 86 (Ky. Ct. App. 2004), rehearing denied, 2004 Ky. App. LEXIS 180 (Ky. Ct. App. 2004), rev'd, Revenue Cabinet v. GTE South, Inc., 238 S.W.3d 655, 2007 Ky. LEXIS 160 ( Ky. 2007 ) (reversed on grounds that the notice of assessment was sufficient).
Company could receive a refund of its payment of an ad valorem tax assessment, where the company filed its refund claim within the statute of limitations provided by KRS 134.590 , protested the denial of its claim in accordance with KRS 131.110 , and exhausted the administrative remedies available. Dep't of Revenue, Fin. & Admin. Cabinet v. Cox Interior, Inc., 2010 Ky. App. Unpub. LEXIS 1008 (Ky. Ct. App. Nov. 5, 2010), aff'd, 400 S.W.3d 240, 2013 Ky. LEXIS 288 ( Ky. 2013 ).
"Or other administrative remedy procedures" language at the end of KRS 134.590(2) is an acknowledgement that a protest pursuant to KRS 131.110 is not the only administrative remedy procedure that may be applicable in a refund situation. Indeed, the disjunctive use of the word "or" which joins "other administrative remedy procedures," evidences an intention that all prior references in the sentence are not to be treated as conjunctive, or in steps, but in the disjunctive, and this affords the taxpayer the option to use any one and maybe all of the administrative remedies available. Dep't of Revenue, Fin. & Admin. Cabinet v. Cox Interior, Inc., 2010 Ky. App. Unpub. LEXIS 1008 (Ky. Ct. App. Nov. 5, 2010), aff'd, 400 S.W.3d 240, 2013 Ky. LEXIS 288 ( Ky. 2013 ).
No specific administrative protest procedures are required for a tax refund claim involving a classification issue, which may be brought within two years after payment; thus, by filing for a refund of tangible personal property tax and appealing its denial before seeking judicial review, a taxpayer properly challenged the classification and tax rate applied to manufacturing machinery without going through the expedited assessment protest procedure. Dep't of Revenue, Fin. & Admin. Cabinet v. Cox Interior, Inc., 400 S.W.3d 240, 2013 Ky. LEXIS 288 ( Ky. 2013 ).
15.Cabinet's Authority.
Revenue Cabinet initiated an audit of defendant to address the failure of defendant's earlier management to maintain exemption certificates representing that sales of thoroughbred yearlings to out-of-state buyers were not subject to sales tax, according to KRS 139.531 . When defendant submitted 22 exemption certificates to the Cabinet, under the language of KRS 139.531 it did not place those sales "in controversy"—absent fraud, it disposed of the controversy. The Cabinet does not have the arbitrary authority to at any time determine that a taxpayer, who in a good faith manner began the submission of evidence, has in fact supplied a quanta of evidence insufficient to perfect a protest and place a matter "in controversy", and thereupon issue an "Eagle Machine Letter", (Eagle Machine Co. v. Commonwealth, 698 S.W.2d 528, 529, 1985 Ky. App. LEXIS 600 (1985)) (1) which does not advise the taxpayer of the finality of the Cabinet's ruling; (2) which does not let the taxpayer know that no additional documentation will be accepted by the Cabinet; (3) which does not state the pertinent issues and the Cabinet's position thereon; and, perhaps most egregiously on a practical level, (4) which does not notify the taxpayer of the procedure for undertaking an appeal to the Kentucky Board of Tax Appeals—all things required of the Cabinet by KRS 131.110(3). Commonwealth, Revenue Cabinet v. Kenington Sales, Inc., 836 S.W.2d 902, 1992 Ky. App. LEXIS 129 (Ky. Ct. App. 1992).
Reeves v. Kentucky Utilities Co., 291 Ky. 226 , 163 S.W.2d 482, 1942 Ky. LEXIS 211 ( Ky. 1942 ); Todd County v. Bond Bros., 300 Ky. 224 , 188 S.W.2d 325, 1945 Ky. LEXIS 521 ( Ky. 1945 ); Kentucky Tax Com. v. Sandman, 300 Ky. 423 , 189 S.W.2d 407, 1945 Ky. LEXIS 563 , 166 A.L.R. 512 ( Ky. 1945 ); Fields v. Reeves, 314 Ky. 163 , 234 S.W.2d 661, 1950 Ky. LEXIS 1044 ( Ky. 1950 ); Reeves v. Jefferson County, 245 S.W.2d 606, 1951 Ky. LEXIS 1263 ( Ky. 1951 ); Fontaine v. Department of Finance, 249 S.W.2d 799, 1952 Ky. LEXIS 872 ( Ky. 1952 ); Hahn v. Allphin, 282 S.W.2d 824, 1955 Ky. LEXIS 263 ( Ky. 1955 ); Bobinchuck v. Levitch, 380 S.W.2d 233, 1964 Ky. LEXIS 292 ( Ky. 1964 ); Department of Conservation v. Co-De Coal Co., 388 S.W.2d 614, 1964 Ky. LEXIS 537 ( Ky. 1964 ); Revenue Cabinet, Commonwealth v. Plasma Alliance, Inc., 794 S.W.2d 639, 1990 Ky. App. LEXIS 60 (Ky. Ct. App. 1990); Revenue Cabinet v. Charles R. Gaba, P.S.C., 885 S.W.2d 706, 1994 Ky. App. LEXIS 122 (Ky. Ct. App. 1994).
Unpublished decision: Final rulings of the Department of Revenue must contain a general statement of the issues in controversy and the Department's position with respect to them; consequently, the substantive portions of final rulings contain a wealth of information relative to the implementation of our tax laws. Fin. & Admin. Cabinet v. Sommer, 2017 Ky. App. LEXIS 9 (Ky. Ct. App. Jan. 13, 2017, sub. op., 2017 Ky. App. Unpub. LEXIS 624 (Ky. Ct. App. Jan. 13, 2017).
Letter of electric corporation attached to payment of ad valorem taxes protesting payment and asking the sheriff to sign the letter acknowledging receipt of the protest did not constitute a valid or legal protest, since such taxes are assessed by the Revenue Cabinet and thus protests of such assessments must be made to the Revenue Cabinet; therefore, the sheriff should not sign such protest. OAG 83-202 .
Appeal procedure, KRS 133.120 .
Oberst, Lewis, Claims Against the State of Kentucky, 42 Ky. L.J. 65 (1953).
This section (4114h-5, 4114h-6: amend. Acts 1960, ch. 186, Art. I, §§ 31, 32; 1962, ch. 56, § 1) was repealed by Acts 1964, ch. 141, § 39.
This section (Enact. Acts 1946, ch. 233, § 2; 1960, ch. 186, Art. I, §§ 31, 32) was repealed by Acts 1964, ch. 141, § 39.
Without limitation of other duties assigned to it by law, the following powers and duties are vested in the Department of Revenue:
The department may promulgate administrative regulations, and direct proceedings and actions, for the administration and enforcement of all tax laws of this state. To assist taxpayers in understanding and interpreting the tax laws, the department may, through incorporation by reference, include examples as part of any administrative regulation. The examples may include demonstrative, nonexclusive lists of items if the department determines the lists would be helpful to taxpayers in understanding the application of the tax laws.
The department, by representatives it appoints in writing, may take testimony or depositions, and may examine hard copy or electronic records, any person's documents, files, and equipment if those records, documents, or equipment will furnish knowledge concerning any taxpayer's tax liability, when it deems this reasonably necessary to the performance of its functions. The department may enforce this right by application to the Circuit Court in the county where the person is domiciled or has his or her principal office, or by application to the Franklin Circuit Court, which courts may compel compliance with the orders of the department.
The department shall prescribe the style, and determine and enforce the use or manner of keeping, of all assessment and tax forms and records employed by state and county officials, and may prescribe forms necessary for the administration of any revenue law.
The department shall advise on all questions respecting the construction of state revenue laws and its application to various classes of taxpayers and property.
Attorneys employed by the Finance and Administration Cabinet and approved by the Attorney General as provided in KRS 15.020 may prosecute all violations of the criminal and penal laws relating to revenue and taxation. If a Finance and Administration Cabinet attorney undertakes any of the actions prescribed in this subsection, that attorney shall be authorized to exercise all powers and perform all duties in respect to the criminal actions or proceedings which the prosecuting attorney would otherwise perform or exercise, including the authority to sign, file, and present any complaints, affidavits, information, presentments, accusations, indictments, subpoenas, and processes of any kind, and to appear before all grand juries, courts, or tribunals.
In the event of the incapacity of attorneys employed by the Finance and Administration Cabinet or at the request of the secretary of the Finance and Administration Cabinet, the Attorney General or his or her designee shall prosecute all violations of the criminal and penal laws relating to revenue and taxation. If the Attorney General undertakes any of the actions prescribed in this subsection, he or she shall be authorized to exercise all powers and perform all duties in respect to the criminal actions or proceedings which the prosecuting attorney would otherwise perform or exercise, including but not limited to the authority to sign, file, and present any and all complaints, affidavits, information, presentments, accusations, indictments, subpoenas, and processes of any kind, and to appear before all grand juries, courts, or tribunals.
The department may require the Commonwealth's attorneys and county attorneys to prosecute actions and proceedings and perform other services incident to the enforcement of laws assigned to the department for administration.
Notwithstanding KRS Chapter 13A, the department may research the fields of taxation, finance, and local government administration, publish its findings, respond to the public's and taxpayers' questions, and publish its responses, as the commissioner may deem wise. To assist taxpayers and the public in understanding and interpreting the tax laws, the department may include examples as part of any response or publication. The examples may include demonstrative, nonexclusive lists of items, if the department determines that the list would be helpful to taxpayers in understanding the application of the tax laws.
The department may promulgate administrative regulations necessary to establish a system of taxpayer identifying numbers for the purpose of securing proper identification of taxpayers subject to any tax laws or other revenue measure of this state, and may require the taxpayer to place on any return, report, statement, or other document required to be filed, any number assigned pursuant to the administrative regulations.
The department may, when it is in the best interest of the Commonwealth and helpful to the efficient and effective enforcement, administration, or collection of sales and use tax, motor fuels tax, or the petroleum environmental assurance fee, enter into agreements with out-of-state retailers or other persons for the collection and remittance of sales and use tax, the motor fuels tax, or the petroleum environmental assurance fee.
The department may enter into annual memoranda of agreement with any state agency, officer, board, commission, corporation, institution, cabinet, department, or other state organization to assume the collection duties for any debts due the state entity and may renew that agreement for up to five (5) years. Under such an agreement, the department shall have all the powers, rights, duties, and authority with respect to the collection, refund, and administration of those liquidated debts as provided under:
KRS Chapters 131, 134, and 135 for the collection, refund, and administration of delinquent taxes; and
Any applicable statutory provisions governing the state agency, officer, board, commission, corporation, institution, cabinet, department, or other state organization for the collection, refund, and administration of any liquidated debts due the state entity.
The department may refuse to accept a personal check in payment of taxes due or collected from any person who has ever tendered a check to the state which, when presented for payment, was not honored. Any check so refused shall be considered as never having been tendered.
HISTORY: 4019a-10c, 4114h-2, 4149b-12, 4202a-31, 4223b-10, 4224a-5, 4224c-3, 4224c-5, 4281a-33, 4281a-40, 4281b-23, 4281c-20, 4281e-9, 4281f-5, 4281f-27, 4281g-13, 4281h-12, 4281i-6, 4281j-4: amend. Acts 1962, ch. 56, § 2; 1988, ch. 322, § 12, effective July 15, 1988; 1996, ch. 56, § 1, effective July 15, 1996; 1998, ch. 314, § 3, effective July 15, 1998; 1998, ch. 536, § 2, effective July 15, 1998; 2002, ch. 117, § 1, effective July 15, 2002; 2003, ch. 135, § 1, effective June 24, 2003; 2004, ch. 118, § 5, effective July 13, 2004; 2005, ch. 85, § 113, effective June 20, 2005; 2005, ch. 184, § 2, effective June 20, 2005; 2009, ch. 10, § 31, effective January 1, 2010; 2010, ch. 81, § 1, effective July 15, 2010; 2016 ch. 82, § 32, effective July 15, 2016; 2017 ch. 95, § 1, effective June 29, 2017.
3. Production of Files and Reports.
4. —Subpoena of Records.
5. Actions to Collect Taxes.
The purpose of this section is to aid the Department of Revenue in performing its administrative duties and not to affect any provision relative to court procedure. Commonwealth v. American Creosoting Co., 296 Ky. 858 , 178 S.W.2d 988, 1944 Ky. LEXIS 677 ( Ky. 1944 ).
This section deals exclusively with the administrative powers of the Department of Revenue and was intended to enable the department to obtain the information necessary to make the assessments directed by law. Commonwealth v. American Creosoting Co., 296 Ky. 858 , 178 S.W.2d 988, 1944 Ky. LEXIS 677 ( Ky. 1944 ).
Until the assessment is made and the Circuit Court of the county in which it is sought to be enforced has acquired jurisdiction by appeal from the county court this section applies, but it was not intended to alter or supplant existing court procedure where the Circuit Court of the county "wherein the person is domiciled or has his principal office" has acquired jurisdiction for the purpose of determining the correctness of the assessment made by the county court. Commonwealth v. American Creosoting Co., 296 Ky. 858 , 178 S.W.2d 988, 1944 Ky. LEXIS 677 ( Ky. 1944 ).
3.Production of Files and Reports.
For the purpose of determining whether a rural electric cooperative corporation is actually operating on a nonprofit basis, the Department of Revenue may require it to file schedules and reports showing that it has no franchise value over and above the value of its tangible property. Inter-County Rural Electric Co-operative Corp. v. Reeves, 294 Ky. 458 , 171 S.W.2d 978, 1943 Ky. LEXIS 446 ( Ky. 1943 ).
Where a defendant chiropractor was held to be a taxpayer as defined by KRS 131.010 , he could not refuse to disclose his records, under this section, based on claim that it might subject him to state criminal prosecution where the Commonwealth granted him immunity from criminal prosecution based on disclosure of his records for tax auditing purposes. Boulton v. Commonwealth by Calvert, 896 S.W.2d 614, 1994 Ky. App. LEXIS 159 (Ky. Ct. App. 1994).
4.—Subpoena of Records.
This section gives the Revenue Cabinet no independent power to either summon or subpoena the taxpayers records, and an administrative summons issued thereby is nothing more than a request, lacking the force of law. Revenue Cabinet, Commonwealth v. Cherry, 803 S.W.2d 570, 1990 Ky. LEXIS 110 ( Ky. 1990 ).
5.Actions to Collect Taxes.
Action to collect distilled spirits excise tax was properly brought in the name of the Commonwealth by the commissioner of revenue. Kentucky ex rel. Martin v. Morris Wholesale Liquor Distributing Co., 29 F. Supp. 310, 1939 U.S. Dist. LEXIS 2306 (D. Ky. 1939 ).
Reynolds Metal Co. v. Martin, 269 Ky. 378 , 107 S.W.2d 251, 1937 Ky. LEXIS 604 ( Ky. 1937 ), appeal denied, Reynolds Metals Co. v. Martin, 302 U.S. 646, 58 S. Ct. 146, 82 L. Ed. 502, 1937 U.S. LEXIS 585 (1937); Old Lewis Hunter Distillery Co. v. Kentucky Tax Com., 302 Ky. 68 , 193 S.W.2d 464, 1945 Ky. LEXIS 759 ( Ky. 1945 ); Allphin v. Joseph E. Seagram & Sons, Inc., 294 S.W.2d 515, 1956 Ky. LEXIS 122 ( Ky. 1956 ); Allphin v. Butler, 619 S.W.2d 483, 1981 Ky. LEXIS 259 ( Ky. 1981 ).
The county sheriff should list in his cash book the name of every taxpayer who pays taxes to the county sheriff. OAG 66-60 .
A county conservation district, which assists individual landowners with the development and implementation of a resource conservation plan for a unit of land, is required to allow Department of Revenue representatives access to individual resource conservation plans upon request on a confidential basis. OAG 76-272 .
A deputy property valuation administrator (PVA) has no recourse for appeal other than the Department of Revenue and, if a deputy PVA believes that the department is misapplying its statutory authority to administer the PVA personnel system, he may seek judicial review of the department's action in Circuit Court. Venue would lie in the Franklin Circuit Court since the main office of the Department of Revenue is located in Frankfort and the action forming the basis for the litigation would occur in Frankfort. OAG 82-360 .
Deputy property valuation administrators are deputy state officers and state employes under the direct administrative control of the Department of Revenue. OAG 82-360 .
The Department of Revenue has the authority to set specifications for deputy property valuation administrators (PVAs) if it does so in a reasonable manner. The department is not required to adhere to the rules and regulations of the personnel system when applied to the PVA deputies, but is required to establish an administrative organizational structure and to operate within standard personnel policies pursuant to the statutory guidelines contained in KRS Chapter 132; a system that is comparable to that utilized by the department of personnel for the classified service or in the regulations governing the unclassified service is reasonable for this purpose. OAG 82-360 .
Claims due state, attorney general and auditor of public accounts shall aid in collection, KRS 15.060 .
Department of Revenue to prorate and distribute to counties, cities and school districts payments made to department by T.V.A., KRS 96.895 .
Right to inspect books and records of alcoholic beverage licensees, KRS 244.150 .
Tax bill forms, Department of Revenue to furnish to county clerks, KRS 133.220 .
Property Tax Assessment Administration in Kentucky, 60 Ky. L.J. 141 (1971).
Notwithstanding KRS 13A.110 , the Department of Revenue shall publish tax forms and instructions to those forms without promulgation of an administrative regulation.
HISTORY: 2016 ch. 82, § 35, effective July 15, 2016.
(7/15/2016). 2016 Ky. Acts ch. 82, sec. 35 directed that a new section of KRS Chapter 141 be created for the text of this statute. The subject matter of KRS Chapter 141 relates to income taxes. Since this statute authorizes the Department of Revenue to publish forms and instructions relating to all types of taxes, not just forms and instructions relating to income taxes, in codification the Reviser of Statutes created a new section of KRS Chapter 131, which addresses the duties of the Department of Revenue and taxes in general, as a more appropriate statutory designation under the authority of KRS 7.136(1)(a).
Each employer subject to KRS Chapter 342 shall file annually with the Department of Revenue, in accordance with administrative regulations, a report providing the policy number and the name and address of the employer's workers' compensation insurance carrier.
The report may be made available to other state agencies notwithstanding the confidentiality provisions of KRS 131.190 .
History. Enact. Acts 1996 (1st Ex. Sess.), ch. 1, § 50, effective December 12, 1996; 2005, ch. 85, § 114, effective June 20, 2005.
The department shall requisition the Finance and Administration Cabinet to furnish to local officials an adequate supply of forms for listing property for taxation and other forms and blanks the state is required by law to provide. The books and records prescribed for use by property valuation administrators, county clerks, sheriffs and other county tax collectors shall be designed to promote economical operation, adequate control, availability of useful information, and safekeeping.
The department may confer with, advise and direct local officials respecting their duties relating to taxation, and shall supervise the officials in the performance of those duties. The department shall provide to the property valuation administrators up-to-date appraisal manuals outlining uniform procedures for appraising all types of real and personal property assessed by them. The property valuation administrators shall follow the uniform procedures for appraising property outlined in these manuals. The department shall maintain and make accessible to all property valuation administrators a statewide commercial real property comparative sales file. The department, by authorized agents, may visit local governmental units and officers for investigational purposes, when necessary.
The Department of Revenue shall conduct a biennial performance audit of each property valuation administrator's office. This audit shall include, but shall not be limited to, an inspection of maps and records, an appraisal study of real property, and an evaluation of the overall effectiveness of the office. Each property valuation administrator's office shall provide the department with access to its files, maps and records during the audit. The department shall prepare a report on assessment equity and quality for each county based on the performance audit, and shall provide a copy to the Legislative Research Commission.
The department shall arrange for an annual conference of the property valuation administrators, or the county officers whose duty it is to assess property for taxation, to give them systematic instruction in the fair and just valuation and assessment of property, and their duty in connection therewith. The conference shall continue not more than five (5) days. The officers shall attend and take part in the conference, unless prevented by illness or other reason satisfactory to the commissioner. Any officer willfully failing to attend the conference may be removed from office by the Circuit Court of the county where he was elected. If the officer participates in all sessions of the conference, one-half (1/2) of his actual and necessary expenses in attending the conference shall be paid by the state, and the other half shall be paid by the county from which he attends. Each officer shall prepare an itemized statement showing his actual and necessary expenses, and if it is found regular and supported by proper receipts it shall be approved by the department before payment.
History. 4114h-2: amend. Acts 1960, ch. 68, Art. V, § 6; 1974, ch. 74, Art. II, § 9(1); 1978, ch. 384, § 256, effective June 17, 1978; 1988, ch. 418, § 1, effective July 15, 1988; 2005, ch. 85, § 115, effective June 20, 2005; 2005, ch. 168, § 53, effective January 1, 2006.
(1/1/2006). This section was amended by 2005 Ky. Acts chs. 85 and 168, which do not appear to be in conflict and have been codified together.
Parrent v. Fannin, 616 S.W.2d 501, 1981 Ky. LEXIS 250 ( Ky. 1981 ).
The county sheriff should list in his cash book the name of every taxpayer who pays taxes to the county sheriff. OAG 66-660 .
Candidate for property valuation administrator to have certificate of examination from department, KRS 132.380 .
Emergency assessment of property by Department of Revenue, KRS 132.660 .
Equalization of assessment of property in county, KRS 133.150 to 133.170 .
Post-auditing of county records by auditor of public accounts, KRS 43.070 , 43.080 .
Property valuation administrator duties partially transferred to department, KRS 132.420 .
Supplies and equipment for property valuation administrator, department may buy and lend, KRS 132.605 .
When the Department of Revenue reasonably believes that any taxpayer has withdrawn from the state or concealed his assets or a material part thereof so as to hinder or evade the assessment or collection of taxes, or has desisted from any taxable activity in the state, or has become domiciled elsewhere, or has departed from this state with fraudulent intent to hinder or evade the assessment or collection of taxes, or has done any other act tending to render partly or wholly ineffective proceedings to assess or collect any such taxes, or contemplates doing any of these acts in the immediate future, or that any tax claim for any other reason is being endangered, such tax liability shall become due and payable immediately upon assessment or determination of the amount of taxes due, as authorized in this section.
Under any of the circumstances set out in subsection (1) of this section, the department may make a tentative assessment or determination of the taxes due, and may proceed immediately to bring garnishment, attachment or any other legal proceedings to collect the taxes so assessed or determined to be due. Notwithstanding the provisions of KRS 131.180(1), if the tax so assessed is due to the failure of the taxpayer to file a required tax return a minimum penalty of one hundred dollars ($100) shall be assessed unless the taxpayer demonstrates that the failure to file was due to reasonable cause as defined in KRS 131.010(9). This penalty shall be applicable whether or not any tax is determined to be due on a subsequently filed return or if the subsequently filed return results in a refund. No bond shall be required of the department in such proceedings. The taxpayer may stay legal proceedings by filing a bond in an amount sufficient in the opinion of the department to cover the taxes, penalties, interest, and costs. If no legal proceedings have been instituted, the department may require a bond adequate to cover all taxes, penalties, and interest. On making bond, exception to the assessment or determination of tax liability may be filed in the same manner and time as provided in KRS 131.110 . If no exceptions are filed to the tentative assessment or determination, it shall become final.
The department may require any such taxpayer to file with it forthwith the reports required by law or regulation, or any additional reports or other information necessary to assess the property or determine the amount of tax due.
If the department fails to exercise the authority conferred by this section, such taxpayer shall report and pay all taxes due as otherwise provided by law.
History. 4114h-9: amend. Acts 1984, ch. 141, § 39; 2002, ch. 366, § 13, effective January 1, 2003; 2005, ch. 85, § 116, effective June 20, 2005.
1. Judicial Review.
2. Evasion of Taxes.
3. Priority of Liens.
Where religious organization failed to exhaust administrative remedies by filing protest under KRS 131.110 within 30 days after jeopardy assessment under this section, since there was judicial review by trial court considering separate temporary injunction issue where it determined that activities at state fair were sales not protected by constitutional privileges of the First Amendment to the United States Constitution and thus, failure to exhaust remedies was not fatal to right of judicial review. International Soc. for Krishna Consciousness, Inc. v. Commonwealth, 610 S.W.2d 910, 1980 Ky. App. LEXIS 406 (Ky. Ct. App. 1980).
2.Evasion of Taxes.
When a taxpayer has been apprised of a tax liability, disputes that liability, but never offers any material to support that denial, the Department of Revenue is reasonable in believing that the taxpayer is attempting to "evade the assessment or collection of taxes." Eagle Machine Co. v. Commonwealth, 698 S.W.2d 528, 1985 Ky. App. LEXIS 600 (Ky. Ct. App. 1985).
3.Priority of Liens.
Judgment lien would be given priority over Revenue Cabinet's tax lien, resulting from a jeopardy assessment pursuant to this section, notwithstanding the priority rules enacted at KRS 134.420 , where the Revenue Cabinet failed to present any evidence regarding the validity or amount of its lien. Commonwealth, Revenue Cabinet v. Liberty Nat'l Bank, 858 S.W.2d 199, 1993 Ky. App. LEXIS 40 (Ky. Ct. App. 1993).
Commonwealth ex rel. Luckett v. Kettenacker, 335 S.W.2d 339, 1960 Ky. LEXIS 256 ( Ky. 1960 ).
For the purpose of facilitating the administration, payment, or collection of the taxes, the department may require any tax payment to be made by electronic fund transfer.
The following payments shall be made by electronic fund transfer:
The payment required by KRS 136.620 ;
For tax periods beginning on or after January 1, 2007, the payment required by KRS 138.280 ;
For collections on or after August 1, 2010, the clerk shall deposit motor vehicle usage tax and sales and use tax collections in the clerk's local depository account not later than the next business day following receipt. The clerk shall cause the funds to be electronically transferred from the clerk's local depository account to the State Treasury in the manner and at the times prescribed by the department;
For any period beginning after December 31, 2000, any payment required under KRS Chapter 139, if the taxpayer's average payment per reporting period during the lookback period exceeds twenty-five thousand dollars ($25,000);
For any period beginning after December 31, 2000, any payment required under KRS 141.330 , if the taxpayer's average payment per reporting period during the lookback period exceeds twenty-five thousand dollars ($25,000); and
For tax periods beginning on or after July 1, 2005, the payment required under KRS 160.615 .
The electronic fund transfer shall be made on or before the date the tax is due. (3) (a) The electronic fund transfer shall be made on or before the date the tax is due.
The department may permit the filing of the tax return following the date of the tax payment.
The department shall promulgate administrative regulations establishing electronic fund transfer requirements for the payment of taxes and fees administered by the department.
The department may waive the requirement that a qualifying taxpayer remit the payment by electronic fund transfer if the taxpayer is unable to remit funds electronically.
Taxpayers and any other persons who are required to collect or remit taxes administered by the department by electronic fund transfer shall be entitled to receive refunds for any overpayment of taxes or fees, on or after July 1, 2001, by electronic fund transfer.
History. Enact. Acts 1994, ch. 4, § 1, effective July 15, 1994; 1998, ch. 314, § 1, effective July 15, 1998; 2000, ch. 184, § 1, effective August 1, 2000; 2005, ch. 85, § 117, effective June 20, 2005; 2010, ch. 147, § 3, effective July 15, 2010.
Section 3 of Acts 1994, ch. 4, provided that this section "shall apply to taxable periods beginning after December 31, 1994."
Section 4 of Acts 1998, ch. 314, provided that the 1998 amendments to this section "shall apply for payments remitted on or after August 1, 1998."
If any taxpayer required to make bond for the payment of taxes fails to pay the taxes when due, the department shall notify him and his surety by mailing notice to their last known addresses. If, after expiration of a reasonable time from the date of the notice, the amount due remains unpaid, the commissioner shall proceed by suit to collect the amount due, including the penalties, interest and costs. The defaulting taxpayer need not be made a party to any suit brought against his surety.
History. 4114h-10: amend. Acts 2005, ch. 85, § 118, effective June 20, 2005.
Bond for alcoholic beverage taxes, KRS 243.400 to 243.420 .
The Department of Revenue may, when extension is not otherwise provided for, grant a reasonable extension of time for filing reports or returns whenever, in its judgment, good cause therefor exists. The department shall keep a record of such extensions. Except where a taxpayer is abroad, no extension shall be granted for more than six (6) months, and in no case for more than one (1) year. If any extension operates to postpone a tax payment, interest at the tax interest rate as defined in KRS 131.010(6) shall be collected. The department may condition the extension upon a bond sufficient to cover any tax and penalty determined to be due. The department may, on request, permit a person to file a tax return or report or pay tax on a date other than that prescribed by statute, or to change the fiscal period covered by such return or report, if the variation will not ultimately effect a reduction in revenue.
History. 4114h-13: amend. Acts 1992, ch. 338, § 1, effective August 1, 1992; 2005, ch. 85, § 119, effective June 20, 2005.
Notwithstanding any other provisions of KRS Chapters 131 to 143A, for all taxes payable directly to the Department of Revenue, the sheriff or the county clerk, the commissioner shall have authority to waive the penalty, but not interest, where it is shown to the satisfaction of the department that failure to file or pay timely is due to reasonable cause. For purposes of this section, any addition to tax provided in KRS 141.044 and 141.305 shall be considered as penalty.
History. Enact. Acts 1986, ch. 459, § 6, effective July 15, 1986; 1990, ch. 27, § 1, effective July 13, 1990; 2005, ch. 85, § 120, effective June 20, 2005; 2019 ch. 151, § 3, effective June 27, 2019.
Acts 1986, ch. 459, § 7, states that the provisions of this section apply to taxable years beginning after December 31, 1985.
The provisions of this section shall be known as the "Uniform Civil Penalty Act." Penalties to be assessed in accordance with this section shall apply as follows unless otherwise provided by law:
Any taxpayer who files any return or report after the due date prescribed for filing or the due date as extended by the department shall, unless it is shown to the satisfaction of the department that the failure is due to reasonable cause, pay a penalty equal to two percent (2%) of the total tax due for each thirty (30) days or fraction thereof that the report or return is late. The total penalty levied pursuant to this subsection shall not exceed twenty percent (20%) of the total tax due; however, the penalty shall not be less than ten dollars ($10);
Any taxpayer who fails to withhold or collect any tax as required by law, fails to pay the tax computed due on a return or report on or before the due date prescribed for it or the due date as extended by the department or, excluding underpayments determined under KRS 141.044 or 141.305 , fails to have timely paid at least seventy-five percent (75%) of the tax determined due by the department shall, unless it is shown to the satisfaction of the department that the failure is due to reasonable cause, pay a penalty equal to two percent (2%) of the tax not withheld, collected, or timely paid for each thirty (30) days or fraction thereof that the withholding, collection, or payment is late. The total penalty levied pursuant to this subsection shall not exceed twenty percent (20%) of the tax not timely withheld, collected, or paid; however, the penalty shall not be less than ten dollars ($10);
If any taxpayer fails or refuses to make and file a report or return or furnish any information requested in writing by the department, the department may make an estimate of the tax due from any information in its possession, assess the tax at not more than twice the amount estimated to be due, and add a penalty equal to five percent (5%) of the tax assessed for each thirty (30) days or fraction thereof that the return or report is not filed. The total penalty levied pursuant to this subsection shall not exceed fifty percent (50%) of the tax assessed; however, the penalty shall not be less than one hundred dollars ($100) unless the taxpayer demonstrates that the failure to file was due to reasonable cause as defined in KRS 131.010(9). This penalty shall be applicable whether or not any tax is determined to be due on a subsequently filed return or if the subsequently filed return results in a refund;
If any taxpayer fails or refuses to pay within sixty (60) days of the due date any tax assessed by the department which is not protested in accordance with KRS 131.110 , there shall be added a penalty equal to two percent (2%) of the unpaid tax for each thirty (30) days or fraction thereof that the tax is final, due, and owing, but not paid;
Any taxpayer who fails to obtain any identification number, permit, license, or other document of authority from the department within the time required by law shall, unless it is shown to the satisfaction of the department that the failure is due to reasonable cause, pay a penalty equal to ten percent (10%) of any cost or fee required to be paid for the identification number, permit, license, or other document of authority; however, the penalty shall not be less than fifty dollars ($50);
If any tax assessed by the department is the result of negligence by a taxpayer or other person, a penalty equal to ten percent (10%) of the tax so assessed shall be paid by the taxpayer or other person who was negligent;
If any tax assessed by the department is the result of fraud committed by the taxpayer or other person, a penalty equal to fifty percent (50%) of the tax so assessed shall be paid by the taxpayer or other person who committed fraud;
If any check tendered to the department is not paid when presented to the drawee bank for payment, there shall be paid as a penalty by the taxpayer who tendered the check, upon notice and demand of the department, an amount equal to ten percent (10%) of the check. The penalty under this section shall not be less than ten dollars ($10) nor more than one hundred dollars ($100). If the taxpayer who tendered the check shows to the department's satisfaction that the failure to honor payment of the check resulted from error by parties other than the taxpayer, the department shall waive the penalty;
Any person who fails to make any tax report or return or pay any tax within the time, or in the manner required by law, for which a specific civil penalty is not provided by law, shall pay a penalty as provided in this section, with interest from the date due at the tax interest rate as defined in KRS 131.010(6);
The penalties levied pursuant to subsection (4) of this section shall apply to any tax assessment protested pursuant to KRS 131.110 to the extent that any appeal of the assessment or portion of it is ruled by the Board of Tax Appeals or, if appealed from, the court of last resort, as not protested, appealed, or pursued in good faith by the taxpayer;
Nothing in this section shall be construed to prevent the assessment or collection of more than one (1) of the penalties levied under this section or any other civil or criminal penalty provided for violation of the law for which penalties are imposed; and
All penalties levied pursuant to this section shall be assessed, collected, and paid in the same manner as taxes. Any corporate officer or other person who becomes liable for payment of any tax assessed by the department shall likewise be liable for all penalties and interest applicable thereto.
HISTORY: 4114h-12: amend. Acts 1982, ch. 452, § 2, effective July 1, 1982; 1992, ch. 403, § 2, effective July 14, 1992; 1994, ch. 4, § 2, effective July 15, 1994; 2002, ch. 366, § 14, effective January 1, 2003; 2005, ch. 85, § 121, effective June 20, 2005; 2017 ch. 74, § 65, effective June 29, 2017; 2018 ch. 171, § 107, effective April 14, 2018; 2018 ch. 207, § 107, effective April 27, 2018; 2019 ch. 151, § 4, effective June 27, 2019; 2021 ch. 185, § 60, effective June 29, 2021.
2. Predeprivation Remedies.
The penalty provision in this section is not applicable to the occupational license fee levied in KRS 91.200 . Louisville v. Fischer Packing Co., 520 S.W.2d 744, 1975 Ky. LEXIS 171 ( Ky. 1975 ).
2.Predeprivation Remedies.
Because the statutory scheme of Kentucky is pointedly designed to coerce taxpayers into remitting taxes before challenging any liability to avoid potential economic disadvantage, this state does not offer meaningful, adequate predeprivation remedies for purposes of federal law. Revenue Cabinet v. Gossum, 887 S.W.2d 329, 1994 Ky. LEXIS 85 ( Ky. 1994 ), limited, Dawson v. Birenbaum, 968 S.W.2d 663, 1998 Ky. LEXIS 56 ( Ky. 1998 ).
Whenever it is determined that a taxpayer, who holds a license to mine coal in Kentucky under KRS 351.175 , is a "delinquent taxpayer" as defined in subsection (3) of this section, the Department of Revenue shall, after giving notice as provided in subsection (4) of this section, submit the name of the taxpayer to the Department for Natural Resources for revocation of the license issued under KRS 351.175 .
If it is determined that a person who is an agent, contract miner, or delegate of a delinquent taxpayer as defined in subsection (3) holds a license to mine coal for the delinquent taxpayer in Kentucky under KRS 351.175 , the Department of Revenue shall, after giving notice as provided in subsection (4) of this section, submit the name of the agent, contract miner, or delegate to the Department for Natural Resources for revocation of the license issued under KRS 351.175 to mine coal for the delinquent taxpayer.
Any of the following situations is sufficient to cause a taxpayer to be classified as a "delinquent taxpayer" for purposes of this section:
When a taxpayer has an overdue state tax liability arising directly or indirectly from the mining, transportation, or processing of coal, for which all protest and appeal rights granted by law have expired and has been contacted by the department concerning the overdue tax liability. This does not include a taxpayer who is making current timely installment payments on the overdue tax liability under agreement with the department.
When a taxpayer has not filed a required tax return as of thirty (30) days after the due date or after the extended due date, and has been contacted by the department concerning the delinquent return. This applies only to tax returns required as the result of the taxpayer's involvement in the mining, transportation, or processing of coal.
When an owner, partner, or corporate officer of a proprietorship, partnership, or corporation holding a license under KRS 351.175 , held a similar position in a business whose license was revoked as a "delinquent taxpayer", and the tax liability remains unpaid.
At least twenty (20) days in advance of submitting a taxpayer's name to the Department for Natural Resources as provided in subsection (1) or (2) of this section, the department shall notify the taxpayer by certified mail that the action is to be taken. The notice shall state the reason for the action and shall set out the amount of any tax liability including any applicable penalties and interest and any other area of noncompliance which must be satisfied in order to prevent the submission of his name to the Department for Natural Resources as a "delinquent taxpayer."
If it is determined that an applicant for a license to mine coal under the provisions of KRS 351.175 is a delinquent taxpayer as defined in subsection (3) of this section, or is an agent, contract miner, or delegate of a delinquent taxpayer, the Department for Natural Resources shall refuse a mine license to the applicant.
History. Enact. Acts 1978, ch. 233, § 35, effective June 17, 1978; 1992, ch. 271, § 1, effective July 14, 1992; 2005, ch. 85, § 122, effective June 20, 2005.
It is apparent that the purpose of KRS 351.175(3) (now (4)) is to deny a mine license to an applicant who is a "delinquent taxpayer" as defined by KRS Chapter 131. Therefore, it appears that KRS 351.175(3) (now (4)) authorizes the department of mines and minerals to refuse a mine license to any applicant whose license has been previously revoked because of tax delinquencies as defined in this section so long as those delinquencies remain unsatisfied. OAG 83-157 .
Whenever it is determined that a taxpayer, who holds a license under KRS Chapter 243, is a delinquent taxpayer as defined in subsection (2) of this section, the department may, after giving notice as provided in subsection (3) of this section, submit the name of the taxpayer to the Department of Alcoholic Beverage Control for revocation of any license issued under KRS Chapter 243.
Any of the following situations shall be sufficient to cause a taxpayer to be classified as a "delinquent taxpayer" for purposes of this section:
When a taxpayer has an overdue state tax liability arising directly or indirectly from the manufacture, sale, transportation, or distribution of alcoholic beverages, for which all protest and appeal rights granted by law have expired, and the taxpayer has been contacted by the department concerning the overdue tax liability. This does not include a taxpayer who is making current timely installment payments on the overdue tax liability under agreement with the department;
When a taxpayer has not filed a required tax return as of ninety (90) days after the due date or after the extended due date, and the taxpayer has been contacted by the department concerning the delinquent return; or
When an owner, partner, or corporate officer of a proprietorship, partnership, or corporation holding a license under KRS Chapter 243 held a similar position in a business whose license was revoked as a "delinquent taxpayer," and the tax liability remains unpaid as of ninety (90) days after the due date.
At least twenty (20) days before submitting a taxpayer's name to the Department of Alcoholic Beverage Control as provided in subsection (1) of this section, the department shall notify the taxpayer by certified mail that the action is to be taken. The notice shall state the reason for the action and shall set out the amount of any tax liability including any applicable penalties and interest and any other area of noncompliance that must be satisfied in order to prevent the submission of his name to the Department of Alcoholic Beverage Control as a delinquent taxpayer.
History. Enact. Acts 1996, ch. 329, § 1, effective July 15, 1996; 2005, ch. 85, § 123, effective June 20, 2005; 2010, ch. 24, § 91, effective July 15, 2010.
"Attorney's license" means a license issued pursuant to the rules of the Supreme Court of Kentucky authorizing the practice of law in the Commonwealth;
"Delinquent taxpayer" means:
A taxpayer with an overdue state tax liability:
That is not covered by a current installment payment agreement;
For which all protest and appeal rights under the law have expired; and
About which the department has contacted the taxpayer; or
A taxpayer who:
Has not filed a required tax return within ninety (90) days following the due date of the return, or if the due date was extended, within ninety (90) days following the extended due date of the return; and
Was contacted by the department about the delinquent return;
"Driver's license" means a license issued by the Transportation Cabinet;
"License" means any occupational or professional certification, license, registration, or certificate issued by a licensing agency that is required to engage in an occupation, profession, or trade in the Commonwealth, other than a license issued to an attorney; and
"Licensing agency" means any instrumentality, agency, board, commission, or department established by statute that has the power and authority within the Commonwealth to issue any license, except "licensing agency" shall not include the Supreme Count of Kentucky, relating to licenses issued to attorneys to practice law in the Commonwealth.
The department may identify licensing agencies from which it wants to obtain information for the purpose of tax compliance.
Any licensing agency identified by the department shall work with the department to develop a process to provide the department with information about its licensees.
Any delinquent taxpayer who:
Holds a license;
Is an attorney licensed to practice law in the Commonwealth;
Holds a driver's license; or
Owns a motor vehicle registered in the Commonwealth;
may have that license or driver's license suspended or revoked, and may be denied the ability to register his or her motor vehicle in the Commonwealth as provided in subsection (5) of this section.
To begin the process of revocation of a license, or suspension of the ability to register a motor vehicle, the department shall notify the delinquent taxpayer by certified mail at least twenty (20) days prior to submission of the name of a delinquent taxpayer to the relevant agency that his or her name will be submitted to: (5) (a) To begin the process of revocation of a license, or suspension of the ability to register a motor vehicle, the department shall notify the delinquent taxpayer by certified mail at least twenty (20) days prior to submission of the name of a delinquent taxpayer to the relevant agency that his or her name will be submitted to:
The licensing agency, for revocation of a license;
The Transportation Cabinet, for revocation of a driver's license or denial of the ability to register a motor vehicle in the Commonwealth; or
The Kentucky Supreme Court, for the revocation of a license to practice law in the Commonwealth.
The notice shall:
State the reason for the action;
Set forth the amount of any overdue tax liability, including any applicable penalties and interest;
Explain any other area of noncompliance that must be satisfied to prevent the submission of the taxpayer's name to the licensing agency as a delinquent taxpayer; and
List all licenses or registrations for which revocation will be sought.
After the passage of at least twenty (20) days from the date the notice was sent under paragraph (a) of this subsection, and if the issues identified in the notice were not resolved to the satisfaction of the department, the department may:
Submit the name of the delinquent taxpayer to the licensing agency or the Transportation Cabinet; or
If the delinquent taxpayer is an attorney licensed to practice law in the Commonwealth, submit the name of the attorney to the Kentucky Supreme Court for appropriate action to enforce Supreme Court Rules.
Upon notification by the department that the licensee or motor vehicle owner is a delinquent taxpayer, the licensing agency or Transportation Cabinet, as the case may be, shall deny or revoke any license held or applied for by the licensee, and the Transportation Cabinet shall not allow the delinquent taxpayer to register a motor vehicle in the Commonwealth.
Any delinquent taxpayer who has had a license denied or revoked, or who has been denied the ability to register a motor vehicle shall have the right to appeal to the licensing agency or the Transportation Cabinet as authorized by law, provided that appeals shall only be permitted based upon a mistake in facts relied upon by the department, the licensing agency, or the Transportation Cabinet that the licensee or motor vehicle owner is a delinquent taxpayer.
A license that has been denied or revoked under this section shall not be reissued or renewed, and a motor vehicle registration that has been denied under this section shall not be permitted, until a written tax clearance has been received from the department by the licensing agency or the Transportation Cabinet, as the case may be.
The department may promulgate administrative regulations under KRS Chapter 13A to implement the provisions of this section.
History. Enact. Acts 2012, ch. 110, § 7, effective April 11, 2012; 2013, ch. 119, § 2, effective July 1, 2013.
Except for the addition to tax required when an underpayment of estimated tax occurs under KRS 141.044 and 141.305 , all taxes payable to the Commonwealth not paid at the time prescribed by statute shall accrue interest at the tax interest rate. (1) (a) Except for the addition to tax required when an underpayment of estimated tax occurs under KRS 141.044 and 141.305 , all taxes payable to the Commonwealth not paid at the time prescribed by statute shall accrue interest at the tax interest rate.
The tax interest rate shall be equal to the adjusted prime rate charged by banks rounded to the nearest full percent as adjusted by subsection (2) of this section.
The commissioner of revenue shall adjust the tax interest rate not later than November 15 of each year if the adjusted prime rate charged by banks during September of that year, rounded to the nearest full percent, is at least one (1) percentage point more or less than the tax interest rate which is then in effect. The adjusted tax interest rate shall become effective on January 1 of the immediately succeeding year.
All taxes payable to the Commonwealth that have not been paid at the time prescribed by statute shall accrue interest at the tax interest rate as determined in accordance with subsection (1) of this section until May 1, 2008. (2) (a) 1. All taxes payable to the Commonwealth that have not been paid at the time prescribed by statute shall accrue interest at the tax interest rate as determined in accordance with subsection (1) of this section until May 1, 2008.
Beginning on May 1, 2008, all taxes payable to the Commonwealth that have not been paid at the time prescribed by statute shall accrue interest at the tax interest rate as determined in accordance with subsection (1) of this section plus two percent (2%).
Interest shall be allowed and paid upon any overpayment as defined in KRS 134.580 in respect of any of the taxes provided for in Chapters 131, 132, 134, 136, 137, 138, 139, 140, 141, 142, 143, 143A, and 243 of the Kentucky Revised Statutes and KRS 160.613 and 160.614 at the rate provided in subsection (1) of this section until May 1, 2008. (b) 1. Interest shall be allowed and paid upon any overpayment as defined in KRS 134.580 in respect of any of the taxes provided for in Chapters 131, 132, 134, 136, 137, 138, 139, 140, 141, 142, 143, 143A, and 243 of the Kentucky Revised Statutes and KRS 160.613 and 160.614 at the rate provided in subsection (1) of this section until May 1, 2008.
Beginning on May 1, 2008, interest shall be allowed and paid upon any overpayment as defined in KRS 134.580 at the rate provided in subsection (1) of this section minus two percent (2%).
Effective for refunds issued after April 24, 2008, except for the provisions of KRS 138.351 , 141.044(2), 141.235(3), and subsection (3) of this section, interest authorized under this subsection shall begin to accrue sixty (60) days after the latest of:
The due date of the return;
The date the return was filed;
The date the tax was paid;
The last day prescribed by law for filing the return; or
The date an amended return claiming a refund is filed.
In no case shall interest be paid in an amount less than five dollars ($5).
No refund shall be made of any estimated tax paid unless a return is filed as required by KRS Chapter 141.
Effective for refund claims filed on or after July 15, 1992, if any overpayment of the tax imposed under KRS Chapter 141 results from a carryback of a net operating loss or a net capital loss, the overpayment shall be deemed to have been made on the date the claim for refund was filed. Interest authorized under subsection (2) of this section shall begin to accrue ninety (90) days from the date the claim for refund was filed.
No interest shall be allowed or paid on any sales tax refund as provided by KRS 139.536 .
For purposes of this section, any addition to tax provided in KRS 141.044 and 141.305 shall be considered a penalty.
History. Enact. Acts 1982, ch. 452, § 3, effective July 1, 1982; 1990, ch. 423, § 5, effective July 13, 1990; 1992, ch. 98, § 1, effective July 14, 1992; 1992, ch. 264, § 1, effective July 14, 1992; 1998, ch. 238, § 5, effective April 1, 1998; 2005, ch. 85, § 124, effective June 20, 2005; 2006, ch. 6, § 1, effective March 6, 2006; 2008, ch. 132, § 8, effective April 24, 2008; repealed and reenact., Acts 2009, ch. 86, § 7, effective March 24, 2009; 2015 ch. 67, § 11, effective June 24, 2015; 2020 ch. 91, § 1, effective April 15, 2020.
(4/15/2020). 2020 Ky. Acts ch. 91, sec. 76 provides that the changes made to this statute in Section 1 of that Act apply to taxable years beginning on or after January 1, 2019.
(3/24/2009). 2009 Ky. Acts ch. 86, sec. 15, provides that "the provisions of Sections 7 to 10 of this Act shall apply retroactively to all outstanding refund claims for taxable years ending prior to the effective date of this Act and shall apply to all claims for those taxable years pending in any judicial or administrative forum."
(3/24/2009). 2009 Ky. Acts ch. 86, sec. 17, provides that "The intent of the General Assembly in repealing and reenacting KRS 136.392 , 138.195 , 141.160 , 160.6156 , 160.6157 , 160.6158 , 131.183 , 141.044 , 141.235 , 134.580 , 393.060 , and 157.621 in Sections 1 to 12 of this Act is to affirm the amendments made to these sections in 2008 Ky. Acts ch. 132. The provisions in Sections 1 to 12 of this Act shall apply retroactively to April 24, 2008."
(3/24/2009). 2009 Ky. Acts ch. 86, sec. 18, provides "To the extent that any provision included in this Act is considered new language, the provisions of KRS 446.145 requiring such new language to be underlined are notwithstood."
(4/24/2008). 2008 Ky. Acts chs. 80 and 132, sec. 15 provides that the amendments made to this statute by that Act "shall apply retroactively to all outstanding refund claims for taxable years ending prior to the effective date of this Act (April 24, 2008) and shall apply to all claims for those taxable years pending in any judicial or administrative forum."
(3/6/2006). 2006 Ky. Acts ch. 6, sec. 26, provides that this section applies retroactively to January 1, 2006.
KRS 134.590 , which authorizes reimbursements for unconstitutional taxes, as opposed to overpayments, does not provide for interest; and the tax interest rate statute applies only to overpayments. Commonwealth Revenue Cabinet v. St. Ledger, 955 S.W.2d 539, 1997 Ky. App. LEXIS 57 (Ky. Ct. App. 1997).
Department of Revenue v. To Your Door Pizza, Inc., 670 S.W.2d 482, 1983 Ky. App. LEXIS 358 (Ky. Ct. App. 1983); Commonwealth v. Cromwell Louisville Assocs., — S.W.3d —, 2008 Ky. App. LEXIS 250 (Ky. Ct. App. 2008).
Income tax returns shall be kept for five (5) years; primary accounting records of tax payments, seven (7) years; and records containing all data of motor vehicle registration, three (3) years. Records of the department which are not required by this section or other statutory provisions to be preserved for a fixed period may be kept or disposed of according to the discretion of the department.
History. Enact. Acts 1942, ch. 144, § 3; 1950, ch. 75; 1992, ch. 88, § 1, effective July 14, 1992; 2005, ch. 85, § 125, effective June 20, 2005.
Records of examination of candidates for property valuation administrator to be preserved one year, KRS 132.380 .
Tax schedules to be preserved 7 years, KRS 133.040 .
No present or former commissioner or employee of the department, present or former member of a county board of assessment appeals, present or former property valuation administrator or employee, present or former secretary or employee of the Finance and Administration Cabinet, former secretary or employee of the Revenue Cabinet, or any other person, shall intentionally and without authorization inspect or divulge any information acquired by him or her of the affairs of any person, or information regarding the tax schedules, returns, or reports required to be filed with the department or other proper officer, or any information produced by a hearing or investigation, insofar as the information may have to do with the affairs of the person's business.
The prohibition established by subsection (1) of this section shall not extend to:
Information required in prosecutions for making false reports or returns of property for taxation, or any other infraction of the tax laws;
Any matter properly entered upon any assessment record, or in any way made a matter of public record;
Furnishing any taxpayer or his or her properly authorized agent with information respecting his or her own return;
Testimony provided by the commissioner or any employee of the department in any court, or the introduction as evidence of returns or reports filed with the department, in an action for violation of state or federal tax laws or in any action challenging state or federal tax laws;
Providing an owner of unmined coal, oil or gas reserves, and other mineral or energy resources assessed under KRS 132.820 , or owners of surface land under which the unmined minerals lie, factual information about the owner's property derived from third-party returns filed for that owner's property, under the provisions of KRS 132.820 , that is used to determine the owner's assessment. This information shall be provided to the owner on a confidential basis, and the owner shall be subject to the penalties provided in KRS 131.990(2). The third-party filer shall be given prior notice of any disclosure of information to the owner that was provided by the third-party filer;
Providing to a third-party purchaser pursuant to an order entered in a foreclosure action filed in a court of competent jurisdiction, factual information related to the owner or lessee of coal, oil, gas reserves, or any other mineral resources assessed under KRS 132.820. The department may promulgate an administrative regulation establishing a fee schedule for the provision of the information described in this paragraph. Any fee imposed shall not exceed the greater of the actual cost of providing the information or ten dollars ($10);
Providing information to a licensing agency, the Transportation Cabinet, or the Kentucky Supreme Court under KRS 131.1817 ;
Statistics of gasoline and special fuels gallonage reported to the department under KRS 138.210 to 138.448 ;
Providing any utility gross receipts license tax return information that is necessary to administer the provisions of KRS 160.613 to 160.617 to applicable school districts on a confidential basis;
Providing documents, data, or other information to a third party pursuant to an order issued by a court of competent jurisdiction; or
Providing information to the Legislative Research Commission under:
KRS 139.519 for purposes of the sales and use tax refund on building materials used for disaster recovery;
KRS 141.436 for purposes of the energy efficiency products credits;
KRS 141.437 for purposes of the ENERGY STAR home and the ENERGY STAR manufactured home credits;
KRS 141.383 for purposes of the film industry incentives;
KRS 154.26-095 for purposes of the Kentucky industrial revitalization tax credits and the job assessment fees;
KRS 141.068 for purposes of the Kentucky investment fund;
KRS 141.396 for purposes of the angel investor tax credit;
KRS 141.389 for purposes of the distilled spirits credit;
KRS 141.408 for purposes of the inventory credit;
KRS 141.390 for purposes of the recycling and composting credit;
KRS 141.3841 for purposes of the selling farmer tax credit;
KRS 141.4231 for purposes of the renewable chemical production tax credit;
KRS 141.524 for purposes of the Education Opportunity Account Program tax credit; and
KRS 141.398 for purposes of the development area tax credit.
The commissioner shall make available any information for official use only and on a confidential basis to the proper officer, agency, board or commission of this state, any Kentucky county, any Kentucky city, any other state, or the federal government, under reciprocal agreements whereby the department shall receive similar or useful information in return.
Access to and inspection of information received from the Internal Revenue Service is for department use only, and is restricted to tax administration purposes. Information received from the Internal Revenue Service shall not be made available to any other agency of state government, or any county, city, or other state, and shall not be inspected intentionally and without authorization by any present secretary or employee of the Finance and Administration Cabinet, commissioner or employee of the department, or any other person.
Statistics of crude oil as reported to the department under the crude oil excise tax requirements of KRS Chapter 137 and statistics of natural gas production as reported to the department under the natural resources severance tax requirements of KRS Chapter 143A may be made public by the department by release to the Energy and Environment Cabinet, Department for Natural Resources.
Notwithstanding any provision of law to the contrary, beginning with mine-map submissions for the 1989 tax year, the department may make public or divulge only those portions of mine maps submitted by taxpayers to the department pursuant to KRS Chapter 132 for ad valorem tax purposes that depict the boundaries of mined-out parcel areas. These electronic maps shall not be relied upon to determine actual boundaries of mined-out parcel areas. Property boundaries contained in mine maps required under KRS Chapters 350 and 352 shall not be construed to constitute land surveying or boundary surveys as defined by KRS 322.010 and any administrative regulations promulgated thereto.
HISTORY: 4114h-15: amend. Acts 1942, ch. 64, §§ 1, 3; 1974, ch. 163, § 1; 1978, ch. 233, § 8, effective June 17, 1978; 1982, ch. 47, § 1, effective July 15, 1982; 1994, ch. 326, § 1, effective July 15, 1994; 1994, ch. 508, § 44, effective July 15, 1994; 1998, ch. 134, § 3, effective July 15, 1998; 2000, ch. 503, § 2, effective July 14, 2000; 2003, ch. 87, § 1, effective June 24, 2003; 2005, ch. 85, § 126, effective June 20, 2005; 2005, ch. 123, § 14, effective June 20, 2005; 2005, ch. 184, § 5, effective June 20, 2005; 2010, ch. 24, § 92, effective July 15, 2010; 2010, ch. 75, § 14, effective April 7, 2010; 2013, ch. 119, § 3, effective July 1, 2013; 2018 ch. 171, § 102, effective April 14, 2018; 2018 ch. 207, § 102, effective April 27, 2018; 2019 ch. 196, § 1, effective June 27, 2019; 2020 ch. 91, § 21, effective April 15, 2020; 2021 ch. 156, § 20, effective June 29, 2021; 2021 ch. 167, § 21, effective June 29, 2021; 2021 ch. 203, § 10, effective June 29, 2021; 2021 ch. 122, § 4, effective July 1, 2021.
(7/1/2021). This statute was amended by 2021 Ky. Acts chs. 122, 156, 167, and 203, which do not appear to be in conflict and have been codified together.
(6/29/2021). This statute was amended by 2021 Ky. Acts chs. 156, 167, and 203, which do not appear to be in conflict and have been codified together.
(6/27/2019). This statute was amended in 2019 Ky. Acts ch. 151, sec. 5 (HB 354) and ch. 196, sec. 1 (HB 458). Although HB 354 was enacted, 2019 Ky. Acts ch. 196, sec. 16 (HB 458) repealed certain sections of that prior Act, including Section 5, and directed the Reviser of Statutes to not codify them. Therefore, the amendment to this statute in 2019 Ky. Acts ch. 151, sec. 5, was not codified.
2. Constitutionality of Regulation.
4. —Inspection.
5. —Confidential.
6. Right of Privacy.
This section applies only to tax officials and employees. Tomlin v. Taylor, 290 Ky. 619 , 162 S.W.2d 210, 1942 Ky. LEXIS 468 ( Ky. 1942 ).
This section applies only to tax officials and employees and other officials authorized to receive tax schedules, returns, or reports and publicizing such confidential information. Maysville Transit Co. v. Ort, 296 Ky. 524 , 177 S.W.2d 369, 1943 Ky. LEXIS 161 ( Ky. 1943 ); Maysville Transit Co. v. Taylor, 296 Ky. 527 , 177 S.W.2d 371, 1943 Ky. LEXIS 162 ( Ky. 1943 ).
This section and subsection (3) of KRS 131.990 apply only to officials dealing with state and county taxes, and therefore the fact that the provision in an ordinance levying an occupational license tax penalizing the disclosure of information received by city officials through tax returns and examination of taxpayers' records imposed a penalty less than that imposed by these sections for the same offense did not violate Const., § 168. Kohler v. Benckart, 252 S.W.2d 854, 1952 Ky. LEXIS 1025 ( Ky. 1952 ).
2.Constitutionality of Regulation.
Regulation of Department of Revenue, adopted pursuant to reciprocal agreement with other states, requiring Kentucky cigarette exporters to report names and addresses of persons to whom cigarettes were sold in interstate commerce and for which tax exemption was claimed, did not violate the federal Constitution, although information was to be made available to authorities of other states. Dixie Wholesale Grocery, Inc. v. Martin, 278 Ky. 705 , 129 S.W.2d 181, 1939 Ky. LEXIS 485 (Ky.), cert. denied, 308 U.S. 609, 60 S. Ct. 173, 84 L. Ed. 509, 1939 U.S. LEXIS 113 (U.S. 1939).
4.—Inspection.
A county has no right to inspect the reports which corporations paying franchise taxes are required to file under KRS 136.130 . Fayette County v. Martin, 279 Ky. 387 , 130 S.W.2d 838, 1939 Ky. LEXIS 299 ( Ky. 1939 ), overruled, St. Matthews v. Voice of St. Matthews, Inc., 519 S.W.2d 811, 1974 Ky. LEXIS 12 ( Ky. 1974 ).
5.—Confidential.
A city desiring information for the purpose of assessing omitted property or collecting taxes has the right to inspect, on a confidential basis only, the reports which corporations paying franchise taxes are required to file, and the right may be enforced by mandamus. Fayette County v. Martin, 279 Ky. 387 , 130 S.W.2d 838, 1939 Ky. LEXIS 299 ( Ky. 1939 ), overruled, St. Matthews v. Voice of St. Matthews, Inc., 519 S.W.2d 811, 1974 Ky. LEXIS 12 ( Ky. 1974 ).
One making a tax report to the state Department of Revenue has the right, under this section, to have the report treated in a confidential manner, and if it is not so treated, and he can show he has been damaged thereby, he may assert a cause of action against the offender. Maysville Transit Co. v. Ort, 296 Ky. 524 , 177 S.W.2d 369, 1943 Ky. LEXIS 161 ( Ky. 1943 ).
The president of a corporation has no personal right of action for violation of this section by the publicizing of the confidential tax returns of the corporation. Tomlin v. Ort, 296 Ky. 528 , 177 S.W.2d 371, 1943 Ky. LEXIS 163 ( Ky. 1943 ).
6.Right of Privacy.
A violation of this section is not a violation of one's right of privacy and damages for such a violation must be actual. Maysville Transit Co. v. Ort, 296 Ky. 524 , 177 S.W.2d 369, 1943 Ky. LEXIS 161 ( Ky. 1943 ).
Newport v. Pennsylvania R. Co., 287 Ky. 613 , 154 S.W.2d 719, 1941 Ky. LEXIS 600 ( Ky. 1941 ); Louisville Title Mortg. Co. v. Commonwealth, 299 Ky. 224 , 184 S.W.2d 963, 1944 Ky. LEXIS 1041 ( Ky. 1944 ); Curd v. Commonwealth, 312 Ky. 457 , 227 S.W.2d 1003, 1950 Ky. LEXIS 677 ( Ky. 1950 ); St. Matthews v. Voice of St. Matthews, Inc., 519 S.W.2d 811, 1974 Ky. LEXIS 12 ( Ky. 1974 ).
This section does not apply to escheat records required to be filed under former KRS 393.110 . OAG 71-482 .
Although records in the property valuation administrator's office are public records open to inspection by any interested person, only tax rolls can be inspected, for the working papers consisting of property record cards in individual file folders from which the tax rolls are made are not a part of the material that is open to public inspection. OAG 76-182 .
The Department of Revenue can legally engage in a lockboxing arrangement with a selected depository bank which acts as an agent of the department in carrying out duties relative to tax collections and deposits in the state treasury and which is bound by the confidentiality provisions of this section. OAG 76-510 .
Records held by the city finance director which show the total amount of the city payroll tax received by the city from a medical center are not exempt from public disclosure since the total amount of payroll tax paid by an employer is not exempt under this section, as records of individual employee payroll tax would be, so that records of total payroll tax would not be exempt under subsection (1)(j) (now (1)( l )) of KRS 61.878 , and similarly, the fact that such records are made confidential by a city ordinance would not prevent disclosure under subsection (1) of KRS 61.878 . OAG 81-286 .
City records which disclose the names of employers who are delinquent in paying occupational taxes are open to public inspection, since a city is a public agency and is subject to the provisions of the Open Records Law, KRS 61.870 to 61.884 ; this section prohibits the disclosure of information from tax records "insofar as the information may have to do with the affairs of the person's business", but does not prohibit the disclosure of the fact that a person is delinquent in paying his taxes, for although tax records cannot be made totally available for public inspection because of the restrictions of this section, non-exempt material can and must be made available under KRS 61.878(3). OAG 81-309 .
The date of application and effective period of a county business license is not such information as reveals the affairs of a person's business contrary to subsection (1) of this section; however, before making such information available to the public the division of tax collection should either delete confidential matter from the licenses prior to public inspection or provide the requested information in lieu of allowing personal inspection. OAG 82-2 .
One of the purposes of the Open Records Law is to allow any member of the public to personally check on the operation of the government by inspecting the original records of public agencies or by purchasing copies thereof, and the question whether taxes are being paid by all persons who are legally obligated to pay them is a legitimate interest of the public on which any person has a right to check; accordingly, confidentiality provisions of ordinance which imposed an annual license for privilege of doing business in city contravened the Open Records Law since every licensee in the city was required to pay a $25 minimum license fee and the public disclosure of who had paid the fee revealed no private detail concerning a taxpayer's business. OAG 82-435 .
Request to inspect and copy cost reports filed with the Department of Revenue by group self-insureds was properly denied since subsection ( 1 ) of this section makes tax records and reports to the department concerning taxes confidential and that specific statute dealing with the subject prevails over any provisions of the Kentucky Open Records Law; moreover, the open records statute, in KRS 61.878(1)(j) (now (1)( l )), also expressly exempts from its open records requirements public records or information the disclosure of which is prohibited or restricted or otherwise made confidential by enactment of the General Assembly. OAG 83-78 .
A request for the names and addresses of all taxpayers who had protested assessment of sales tax resulting from audit or otherwise by the sales and use tax section of the Revenue Cabinet was a request for a list which did not exist, and the request was properly denied since an agency is not required to prepare a list which is not already in existence. The subject request could also be denied under KRS 61.878(1)(g) (now (1)(i)) which exempts from mandatory public disclosure "correspondence with private individuals." OAG 83-167 .
The Revenue Cabinet could not deny request for information regarding the motor vehicle tax account of deceased county clerk under either KRS 61.878(1)(g), (h) (now (1)(i), (j)) or subsection (1) of this section since the permissive exceptions provided in the Open Records Law by KRS 61.878(1)(g) and (h) have no application to reports required to be filed by local officers with a state cabinet or department and subsection (1) of this section provides a cloak of confidentiality for taxpayers, not for public officials and applies only to living taxpayers who are still in business and not to deceased persons. OAG 83-257 .
The Revenue Cabinet properly denied request to inspect all correspondence sent or received regarding the feasibility of an unmined minerals tax because they consisted entirely of intraoffice memoranda which were preliminary in nature and which contained expressions of opinion, recommendations and proposals from subordinate state employees to their superiors and thus they were exempt from mandatory public disclosure by KRS 61.878(1)(g) and (h) (now (1)(i) and (j)). Such records were not made confidential by subsection (1) of this section because they made no mention of any individual taxpayer or information concerning any taxpayer's business. However, since the records may be withheld from public inspection by the permissive exemptions of KRS 61.878(1)(g) and (h), the Revenue Cabinet has the option of either allowing inspection of the records or keeping them confidential as it sees fit, provided that it treats all requests to inspect the records according to the same policy. OAG 83-263 .
Subsection (1) of this section makes tax records confidential only insofar as the information may have to do with the person's business; information such as the names of businesses licensed, the dates of the applications, and the dates of the effectiveness of licenses are not such information as reveals the affairs of a person's business, and access to such information is not an unwarranted invasion of personal privacy under KRS 61.878(1)(a). OAG 85-1 .
The records requested of the Revenue Cabinet, the names and addresses of coal companies which paid severance taxes in 1985, were not information having to do with the affairs of the coal companies' business and thus were not privileged information under this section and subdivision (1)(j) (now (1)( l )) of KRS 61.878 . OAG 86-11 .
The county improperly denied the request to inspect county records relative to occupational license fees or taxes to obtain the names of the contractors or construction companies that are paying the county occupational tax; the county may compile the list containing such information or allow the requesting party to prepare his or her own list, with the excepted material separated from the nonexcepted material before he or she examines the records. OAG 87-57 .
A request that addresses be provided to correspond with names and social security numbers presented by requester is not one properly founded upon Open Records provisions. In any event, the Revenue Cabinet had no compiled record corresponding to the request, and is banned by this section from divulging address information from tax returns, from which information conforming to request would have to have been extracted, thus its denial of address information was proper. OAG 89-45 .
"Affairs of any person" and "affairs of the person's business," as used in subsection (1) of this section, refer to matters associated with a person that are recognized as being private, and not subject to routine public perusal; stock holdings and other intangibles, and business inventories fall in the category of information regarding the "affairs of a person or their business," and such information, in accordance with KRS 131.190(1) and KRS 61.878(1)(j) (now (1)(1)), may not be divulged by a property valuation administrator or employee thereof. OAG 89-50 .
Information properly excepted from inspection pursuant to KRS 61.878 , or this section, that is contained on property assessment and property record cards, must be separated from nonexcepted information, as by masking. OAG 89-50 .
Disclosure of information concerning stock holdings and intangibles, as well as other personal property not subject to public recordation and valuation, may be deemed an unwarranted invasion of personal privacy; similarly, disclosure of intangibles, and business inventories might also be an invasion, since such information may relate to the "affairs of any person" or "their business," within the meaning of this section. OAG 92-30 .
The public's interest in what businesses are taxed, where they are located, and whether they are delinquent in paying their taxes (but not the amount of taxes owed or any other information that reveals the affairs of their businesses), is superior to any privacy interest asserted. The City and the Tourist & Convention Commission improperly withheld records containing "the names and locations of businesses that are delinquent on the payment of their food/restaurant taxes" notwithstanding the city ordinance that deemed those records confidential. OAG 01-ORD-63.
Conference records containing the information required to be kept by KRS 133.120(1) and other information of a confidential nature that is information about property that constitutes the "affairs of any person" and "affairs of a person's business," as set forth in KRS 131.190(1) and is not of general recordation or routine observation may properly be withheld from disclosure under KRS 131.190(1) and KRS 61.878(1)( l ). However, information contained in the records that is either publicly recorded in records recognized as being subject to routine public scrutiny, or that may be relatively readily observed from a public street, should be made available for inspection. OAG 04-ORD-38.
Since it is the Revenue Cabinet's interpretation that the requester must certify that he is currently an authorized agent of the defunct corporation and that, without that status, the Department would be divulging information of the business affairs of the corporation in violation of the confidentiality provisions of KRS 131.190(1), in the absence of any legal authority which is contrary to this position, the Attorney General defers to the Department in its interpretation of the confidentiality provision that is binding on the Department. OAG 04-ORD-152.
Comments, Access to Public Documents in Kentucky, 64 Ky. L.J. 165 (1975-76).
The Department of Revenue shall not enter into any contract with the Department of Corrections, the United States Government, any local government, or any private contractor operating a correctional institution on behalf of the Department of Corrections, the United States Government, or any local government for the use or employment of prisoners in any capacity that allows prisoners access to taxpayer information, including, but not limited to, tax returns, informational reporting returns, social security numbers, telephone numbers, or addresses.
Whenever it becomes necessary within the discretion of the commissioner of revenue to photostat, duplicate, publish or supply for the use and benefit of persons or agencies, other than agencies of state government, information contained in official records of the Department of Revenue, whose contents are not confidential according to law, the Department of Revenue is hereby authorized to photostat, duplicate or publish the said information and supply the same to the requesting person or agency. For such services the department may charge a fee which will be adequate to cover the expenses of photostating, duplicating or publishing such information and any expense incidental to supplying the same.
History. Enact. Acts 1958, ch. 64, § 1, effective June 19, 1958; 2005, ch. 85, § 128, effective June 20, 2005.
All money received by the Department of Revenue, for supplying to persons or agencies other than state agencies information which is contained in the official files of the department, shall be promptly deposited with the State Treasurer in the same manner as provided by law for other deposits. The amount of money so deposited shall be treated as a reimbursement to the appropriation of the Department of Revenue from which the disbursements were made for expenses incurred in performing the services authorized by KRS 131.192 .
This section (4259) was repealed by Acts 1946, ch. 27, § 11.
Any field representative of the Department of Revenue who is authorized to collect taxes or money due the Commonwealth may deposit to his special account as field representative of the department any money so collected in a state or national bank in this Commonwealth.
He shall within forty-eight (48) hours after making such deposits draw a check or checks payable to the State Treasurer for the full amount of the deposit and mail same to the department or transmit same in a manner approved by the department. Nothing in this section shall be construed as authorizing any field representative of the department to enforce or cash, even for the purpose of a deposit, any check or other instrument of value payable to the Commonwealth or any agency thereof.
Deposits shall be made in such banks as the department may by regulation designate, and subject to such further conditions as the department may prescribe. Any reasonable service charges made by the bank may be paid by the department from its appropriation as other claims against it are paid.
History. Enact. Acts 1942, ch. 144, § 2; 2005, ch. 85, § 130, effective June 20, 2005.
Public money to be paid into state depositories promptly; procedures, KRS 41.070 .
This section (Enact. Acts 1962, ch. 29, § 9) was repealed by Acts 1968, ch. 152, § 168.
Any field agent, accountant or attorney, when authorized in writing by the commissioner of revenue, may investigate the accounts, books and records of all officers whose duty it is to receive or collect money due the state, county, school district or other taxing district, and report to the commissioner all delinquent officers and the amounts collected by them which they have failed to pay into the State Treasury, or into the treasury of the county, school district or other taxing district. Every such field agent, accountant or attorney shall report to the fiscal court of the county all delinquent officers and the amounts owing by them to the county and all amounts which such officers should have collected and which they failed to collect, and the person owing same. Every field agent, accountant or attorney shall report all excessive charges made by such officers, and shall report all officers who have received or retained a greater sum for their services or the services of their deputies than is allowed by law. Every field agent, accountant or attorney shall report all other facts by which any taxing authority is being unlawfully deprived of any money, and any other facts that he deems important touching the interest of any taxing authority, or of which the commissioner of revenue, county attorney, county judge/executive or fiscal court may require information.
History. 4262: amend. Acts 2005, ch. 85, § 131, effective June 20, 2005.
1.Employment of Auditor.
This section does not deprive county board of education of power to employ an auditor to examine the books of sheriff who is delinquent in school tax collections. Bell County Board of Education v. Lee, 239 Ky. 317 , 39 S.W.2d 492, 1931 Ky. LEXIS 775 ( Ky. 1931 ).
Examination of records of county officers, post-audit by auditor of public accounts, KRS 43.050 , 43.070 to 43.090 .
This section (4261) was repealed by Acts 1988, ch. 322, § 14, effective July 15, 1988.
The courts of this state shall recognize and enforce statutes concerning taxation constitutionally imposed by other states that extend like comity.
History. 4114h-17.
Dixie Wholesale Grocery, Inc. v. Martin, 278 Ky. 705 , 129 S.W.2d 181, 1939 Ky. LEXIS 485 ( Ky. 1939 ), cert. denied, Dixie Wholesale Grocery v. Martin, 308 U.S. 609, 60 S. Ct. 173, 84 L. Ed. 509, 1939 U.S. LEXIS 113 (1939); State of Ohio ex rel. Duffy v. Arnett, 314 Ky. 403 , 234 S.W.2d 722, 1950 Ky. LEXIS 1058 ( Ky. 1950 ).
Interstate comity as to inheritance tax on intangible personal property of nonresident decedent held by Kentucky trustee, KRS 140.275 .
Walden, Enforcement by State Courts of Tax Claims of Sister States — Ohio v. Arnett, 39 Ky. L.J. 472 (1950).
If a taxpayer's required records are maintained as both electronic records and hard copies, the taxpayer shall make the records available to the department in electronic record format upon the department's request and in accordance with the following:
Electronic records used to establish tax compliance shall contain sufficient information so that the details underlying the electronic record can be identified and made available to the department upon request;
Taxpayers shall not be required to construct electronic records for tax purposes other than those created in the course of business;
If a taxpayer uses codes to identify some element in an electronic record or hard copy, the taxpayer shall provide the department with a method to interpret the coded information; and
The taxpayer's computer hardware or software shall accommodate the extraction and conversion of retained electronic records.
A taxpayer may create electronic records solely for the department's use if the taxpayer documents the process that created the record and the relationship between the electronic record and the original record.
Nothing in this section shall relieve taxpayers of the responsibility to retain hard-copy records that are created or received in the ordinary course of business as required by existing law.
Nothing in this section shall prevent the department from requesting, in lieu of electronic records, any hard-copy printouts that the taxpayer possesses at the time of examination.
The department's access to electronic records as required in subsection (1) of this section may be satisfied by:
The taxpayer providing the department with the hardware, software, and personnel resources to access the electronic records;
The taxpayer arranging for a third party to provide the hardware, software, and personnel resources necessary to access the electronic records. Contracting with a third party does not relieve the taxpayer of its responsibilities under this section; or
The taxpayer converting the electronic records to a standard record format specified by the department, including copies of files, on a medium to which the department agrees.
For the purpose of facilitating the administration of the taxes it administers, the department may require any tax return, report, or statement to be electronically filed.
A person required to electronically file a return, report, or statement may apply for a waiver from the requirement by submitting the request on a form prescribed by the department. (2) (a) A person required to electronically file a return, report, or statement may apply for a waiver from the requirement by submitting the request on a form prescribed by the department.
The request shall indicate the lack of one (1) or more of the following:
Compatible computer hardware;
Internet access; or
Other technological capabilities determined relevant by the department.
HISTORY: Enact. Acts 2010, ch. 147, § 2, effective July 15, 2010; 2018 ch. 207, § 117, effective April 27, 2018; 2019 ch. 151, § 6, effective June 27, 2019; 2020 ch. 91, § 2, effective April 15, 2020.
(7/15/2010) Following the enactment of 2010 House Bill 319, which became 2010 Ky. Acts ch. 147, the drafter informed the Reviser of Statutes that the date, August 1, 2010, in subsection (2)(c) of this statute should have been January 1, 2007. Following an examination of the materials in the bill folder, the Reviser determined that the statutory authority necessary to make this adjustment was lacking, and the date has not been altered.
131.310. Kentucky Board of Tax Appeals created. [Repealed]
131.311. Appeals to Tax Commission preserved. [Repealed.]
131.315. Members of board, appointment — Terms — Chairman — Vacancies. [Repealed]
131.320. Qualifications of members — Removal — Salary — Location of office — Training. [Repealed]
131.325. Record of board. [Renumbered]
131.330. Clerk of Board of Tax Appeals — Appointment — Qualifications. [Repealed]
131.335. Expenses of hearings outside offices. [Renumbered]
131.340. Jurisdiction of board — Notice of rulings of county or state agencies — Appeals to board — Procedure. [Renumbered]
131.345. Conduct of proceedings before board — Persons who may be compensated for representation. [Repealed.]
131.350. Subpoenas — Depositions — Enforcement of process — Administration of oaths. [Repealed.]
131.355. Proceedings before board public in nature — Exception — Appeal procedure. [Renumbered]
131.360. Written decisions required — Contents — Refunds. [Repealed.]
131.365. Effect of board decisions — Remand to agency — Refund. [Renumbered]
131.370. Judicial review of board decisions — Stay of collection of tax. [Renumbered]
History. Enact. Acts 1964, ch. 141, § 1; 1968, ch. 152, § 168; 2010, ch. 24, § 93, effective July 15, 2010; repealed by 2017 ch. 74, § 106, effective June 29, 2017.
This section (Enact. Acts 1964, ch. 141, § 1; 1968, ch. 152, § 168; 2010, ch. 24, § 93, effective July 15, 2010) was repealed by Acts 2017, ch. 74, § 106, effective June 29, 2017.
History. Enact. Acts 1964, ch. 141, § 2; repealed by 2017 ch. 74, § 106, effective June 29, 2017.
This section (Enact. Acts 1964, ch. 141, § 2) was repealed by Acts 2017, ch. 74, § 106, effective June 29, 2017.
History. Enact. Acts 1964, ch. 141, § 3; 1976, ch. 206, § 30; 1992, ch. 449, § 1, effective April 13, 1992; 1994, ch. 191, § 1, effective July 15, 1994; 1996, ch. 318, § 31, effective July 15, 1996; 2005, ch. 85, § 132, effective June 20, 2005; repealed by 2017 ch. 74, § 106, effective June 29, 2017.
This section (Enact. Acts 1964, ch. 141, § 3; 1976, ch. 206, § 30; 1992, ch. 449, § 1, effective April 13, 1992; 1994, ch. 191, § 1, effective July 15, 1994; 1996, ch. 318, § 31, effective July 15, 1996; 2005, ch. 85, § 132, effective June 20, 2005) was repealed by Acts 2017, ch. 74, § 106, effective June 29, 2017.
History. Enact. Acts 1964, ch. 141, § 4; renumbered to § 49.200 by 2017 ch. 74, § 20, effective June 29, 2017.
History. Enact. Acts 1964, ch. 141, § 5(1); 1982, ch. 448, § 66, effective July 15, 1982; 2010, ch. 24, § 94, effective July 15, 2010; repealed by 2017 ch. 74, § 106, effective June 29, 2017.
This section (Enact. Acts 1964, ch. 141, § 5(1); 1982, ch. 448, § 66, effective July 15, 1982; 2010, ch. 24, § 94, effective July 15, 2010) was repealed by Acts 2017, ch. 80, § 58, effective June 29, 2017.
History. Enact. Acts 1964, ch. 141, § 5 (2); renumbered 2017, ch. 74, § 21, effective June 29, 2017.
This section was renumbered as KRS 49.210 effective June 29, 2017.
History. Enact. Acts 1964, ch. 141, § 6; 1984, ch. 111, § 71, effective July 13, 1984; 1986, ch. 410, § 1, effective July 15, 1986; 1996, ch. 318, § 32, effective July 15, 1996; 2005, ch. 85, § 133, effective June 20, 2005; renumbered 2017, ch. 74, § 22, effective June 29, 2017.
This section (Enact. Acts 1964, ch. 141, § 7; 1992, ch. 449, § 2, effective April 13, 1992; 1994, ch. 85, § 2, effective July 15, 1994) was repealed by Acts 1996, ch. 318, § 357, effective July 15, 1996.
This section (Enact. Acts 1964, ch. 141, § 8) was repealed by Acts 1996, ch. 318, § 357, effective July 15, 1996.
History. Enact. Acts 1964, ch. 141, § 9; 1972, ch. 316, § 1; 1990, ch. 288, § 1, effective July 13, 1990; 1996, ch. 255, § 1, effective April 4, 1996; 1996, ch. 318, § 33, effective July 15, 1996; 2005, ch. 85, § 134, effective June 20, 2005; renumbered 2017, ch. 74, § 23, effective June 29, 2017.
This section (Enact. Acts 1964, ch. 141, § 10) was repealed by Acts 1996, ch. 318, § 357, effective July 15, 1996.
History. Enact. Acts 1964, ch. 141, § 11; 1996, ch. 318, § 34, effective July 15, 1996; renumbered 2017, ch. 74, § 24, effective June 29, 2017.
This section (Enact. 1996 Ky. Acts ch. 318, § 34, effective July 15, 1996), was repealed by Acts 2017, ch. 74, § 24, effective June 29, 2017.
History. Enact. Acts 1964, ch. 141, § 12; 1968, ch. 152, § 99; 1978, ch. 233, § 33, effective June 17, 1978; 1990, ch. 140, § 1, effective July 13, 1990; 1994, ch. 65, § 21, effective July 15, 1994; 1996, ch. 318, § 35, effective July 15, 1996; renumbered 2017, ch. 74, § 25, effective June 29, 2017.
131.400. Definitions — Amnesty period — Tax liabilities and taxable periods eligible.
131.410. Circumstances for waiver of criminal prosecution and civil penalties — Exceptions — Refunds and credits.
131.420. Requirements for amnesty — Installment payments — Invalidation of amnesty — Protests.
131.425. Interest on taxes paid under amnesty.
131.430. Administration and publicizing of program.
131.435. Tax amnesty receipt account.
131.440. Cost-of-collection fees — Accrual of interest — Applicability.
131.445. Civil and criminal penalties following amnesty — Invalidation of amnesty.
KRS 131.410 to 131.445 shall be known as and may be cited as the "Kentucky Tax Amnesty Act."
The department shall develop and administer tax amnesty programs as provided in KRS 131.410 to 131.445 .
"Amnesty period" means the period of time established pursuant to subsection (4)(a) or (b) of this section during which a taxpayer may apply for tax amnesty;
"Taxpayer" means any individual, partnership, joint venture, association, corporation, receiver, trustee, guardian, executor, administrator, fiduciary, limited liability company, limited liability partnership, or any other entity of any kind subject to any tax set forth in subsection (4) of this section or any person required to collect any such tax under subsection (4) of this section;
"Account receivable" means an amount of state tax, penalty, fee, or interest which has been recorded as due and entered in the account records of the department, or which the taxpayer should reasonably expect to become due as a direct or indirect result of any pending or completed audit or investigation which the taxpayer knows is being conducted by any federal or state government taxing authority; and
"Due and owing" means an assessment which has become final and is owed to the Commonwealth due to either the expiration of the taxpayer's appeal rights pursuant to KRS 131.110 or, if an assessment has been appealed, the issuance of a final order by the board or by any court of this Commonwealth. For the purposes of KRS 131.410 to 131.445 , assessments that have been appealed shall be final, due and owing fifteen (15) days after the last unappealed or unappealable order sustaining the assessment or any part thereof has become final.
Notwithstanding the provisions of any other law to the contrary, a tax amnesty program shall be conducted by the department during the fiscal year ending June 30, 2003, for a period of not less than sixty (60) days nor more than one hundred and twenty (120) days and shall apply to all taxpayers owing taxes, penalties, fees, or interest subject to the administrative jurisdiction of the department, with the exceptions of ad valorem taxes levied on real property pursuant to KRS Chapter 132, ad valorem taxes on motor vehicles and motorboats collected by the county clerks, and ad valorem taxes on personal property levied pursuant to KRS Chapter 132 that are payable to local officials. The program shall apply to tax liabilities for taxable periods ending or transactions occurring after December 1, 1987, but prior to December 1, 2001. Amnesty tax return forms shall be in a form prescribed by the department. (4) (a) Notwithstanding the provisions of any other law to the contrary, a tax amnesty program shall be conducted by the department during the fiscal year ending June 30, 2003, for a period of not less than sixty (60) days nor more than one hundred and twenty (120) days and shall apply to all taxpayers owing taxes, penalties, fees, or interest subject to the administrative jurisdiction of the department, with the exceptions of ad valorem taxes levied on real property pursuant to KRS Chapter 132, ad valorem taxes on motor vehicles and motorboats collected by the county clerks, and ad valorem taxes on personal property levied pursuant to KRS Chapter 132 that are payable to local officials. The program shall apply to tax liabilities for taxable periods ending or transactions occurring after December 1, 1987, but prior to December 1, 2001. Amnesty tax return forms shall be in a form prescribed by the department.
Notwithstanding the provisions of any other law to the contrary, a tax amnesty program shall be conducted by the department during the fiscal year ending June 30, 2013, for a period of not less than sixty (60) days nor more than one hundred twenty (120) days. The program shall be available to all taxpayers owing taxes, penalties, fees, or interest subject to the administrative jurisdiction of the department, with the exception of:
Ad valorem taxes levied on real property pursuant to KRS Chapter 132;
Ad valorem taxes on motor vehicles and motorboats collected by the county clerks;
Ad valorem taxes on personal property levied pursuant to KRS Chapter 132 that are payable to local officials; and
Any penalties imposed under KRS 131.630 or 138.205 .
The program shall apply to tax liabilities for taxable periods ending or transactions occurring after December 1, 2001, and prior to October 1, 2011. Amnesty tax forms and submissions shall be in a form prescribed by the department.
History. Enact. Acts 1988, ch. 322, § 1, effective July 15, 1988; 2002, ch. 366, § 1, effective July 15, 2002; 2005, ch. 85, § 135, effective June 20, 2005; 2012, ch. 110, § 1, effective April 11, 2012.
For any taxpayer who meets the requirements of KRS 131.420 :
For taxes which are owed as a result of the nonreporting or underreporting of tax liabilities or the nonpayment of any account receivable owed by an eligible taxpayer, the Commonwealth shall waive criminal prosecution and all civil penalties and fees which may be assessed under any KRS chapter subject to the administrative jurisdiction of the department for the taxable years or periods for which tax amnesty is requested. (a) 1. For taxes which are owed as a result of the nonreporting or underreporting of tax liabilities or the nonpayment of any account receivable owed by an eligible taxpayer, the Commonwealth shall waive criminal prosecution and all civil penalties and fees which may be assessed under any KRS chapter subject to the administrative jurisdiction of the department for the taxable years or periods for which tax amnesty is requested.
For the amnesty periods described in KRS 131.400(4), the Commonwealth shall waive interest as provided in subsection (1) of KRS 131.425 .
Except when the taxpayer and department enter into an installment payment agreement authorized under subsection (3) of KRS 131.420 , failure to pay all taxes as shown on the taxpayer's amnesty tax return shall invalidate any amnesty granted pursuant to KRS 131.410 to 131.445 .
This section shall not apply to any taxpayer who is on notice, written or otherwise, of a criminal investigation being conducted by an agency of the state or any political subdivision thereof or the United States, nor shall this section apply to any taxpayer who is the subject of any criminal litigation which is pending on the date of the taxpayer's application in any court of this state or the United States for nonpayment, delinquency, evasion or fraud in relation to any federal taxes or to any of the taxes to which this amnesty program is applicable.
No refund or credit shall be granted for any interest, fee, or penalty paid prior to the time the taxpayer requests amnesty pursuant to KRS 131.420 .
Unless the department in its own discretion redetermines the amount of taxes due, no refund or credit shall be granted for any taxes paid under the amnesty program. Any administrative or judicial proceeding or claim seeking the refund or recovery of any amount paid under an amnesty program is hereby barred.
The provisions of KRS 131.400 to 131.445 shall apply to any eligible taxpayer who files an application for amnesty within the time prescribed by the department and does the following:
Files completed tax returns for all years or tax reporting periods as stated on the application for which returns have not previously been filed and files completed amended tax returns for all years or tax reporting periods as stated on the application for which the tax liability was underreported, except in cases in which the tax liability has been established through audit;
Pays in full the taxes due for the periods and taxes applied for at the time the application or amnesty tax returns are filed within the amnesty period and pays the amount of any additional tax owed within thirty (30) days of notification by the department;
Pays in full within the amnesty period all taxes previously assessed by the department that are due and owing at the time the application or amnesty tax returns are filed; and
With regard to the program described in KRS 131.400 (4)(b), agrees to file all tax returns when due and make all tax payments when due for three (3) years following the date amnesty is granted to the taxpayer.
An eligible taxpayer may participate in the amnesty program whether or not the taxpayer is under audit, notwithstanding the fact that the amount due is included in a proposed assessment or an assessment, bill, notice, or demand for payment issued by the department, and without regard to whether the amount due is subject to a pending administrative or judicial proceeding. An eligible taxpayer may participate in the amnesty program to the extent of the uncontested portion of any assessed liability. However, participation in the program shall be conditioned upon the taxpayer's agreement that the right to protest or initiate an administrative or judicial proceeding or to claim any refund of moneys paid under the program is barred with respect to the amounts paid under the amnesty programs.
The department may enter into an installment payment agreement as provided in KRS 131.081(9) in cases of severe hardship in lieu of the complete payment required under subsection (1) of this section. (3) (a) The department may enter into an installment payment agreement as provided in KRS 131.081(9) in cases of severe hardship in lieu of the complete payment required under subsection (1) of this section.
Failure of the taxpayer to make timely payments shall void the amnesty granted the taxpayer.
All agreements and payments under the program described in KRS 131.400(4)(a) shall include interest as provided under subsection (2) of KRS 131.425 . (c) 1. All agreements and payments under the program described in KRS 131.400(4)(a) shall include interest as provided under subsection (2) of KRS 131.425 .
All agreements and payments under the program described in KRS 131.400(4)(b) shall include interest as provided under KRS 131.425(3).
All required payments under an installment payment agreement under the program described in KRS 131.400(4)(b) shall be made on or before May 31, 2013.
If a taxpayer fails to make all required payments under paragraph (d) of this subsection by May 31, 2013, the amnesty received by the taxpayer shall be invalidated, and all civil penalties, fees, and interest waived under the amnesty agreement shall: (e) 1. If a taxpayer fails to make all required payments under paragraph (d) of this subsection by May 31, 2013, the amnesty received by the taxpayer shall be invalidated, and all civil penalties, fees, and interest waived under the amnesty agreement shall:
Be reinstated;
Be subject to immediate collection by the department; and
Not be subject to protest under KRS 131.110 .
The department may utilize any remedy allowed by law to recover the amounts reinstated, and no statute of limitations shall apply.
If, following the termination of the tax amnesty period, the department issues a deficiency assessment based upon information independent of that shown on a return filed pursuant to subsection (1) of this section, the department shall have the authority to impose penalties and criminal action may be brought where authorized by law only with respect to the difference between the amount shown on the amnesty tax return and the correct amount of tax due. The imposition of penalties or criminal action shall not invalidate any waiver granted under KRS 131.410 . With the exception of the cost-of-collection fee imposed under subsection (1) of KRS 131.440 , all assessments issued by the department under KRS 131.410 to 131.445 may be protested by the taxpayer in the same manner as other assessments pursuant to the terms of this chapter.
Notwithstanding the provisions of KRS 131.183(1), all taxes paid under an amnesty program return:
Filed under the program described in KRS 131.400(4)(a) shall bear no interest imposed under KRS 131.183(1) or other applicable statutes; and
Filed under the program described in KRS 131.400(4)(b) shall bear interest at one-half (1/2) the tax interest rate established by KRS 131.183(1) or other applicable statutes.
Notwithstanding the provisions of KRS 131.183(2) and 141.235 , if any overpayment of tax under KRS 131.410 to 131.445 is refunded or credited within one hundred eighty (180) days after the return is filed, no interest shall be allowed.
All installment payment agreements entered into pursuant to KRS 131.420 relating to the program described in KRS 131.400(4)(b) shall bear interest on the outstanding amount of tax due during the installment period at the full rate established by KRS 131.183 or other applicable provisions of the Kentucky Revised Statutes.
History. Enact. Acts 1988, ch. 322, § 4, effective July 15, 1988; 2002, ch. 366, § 4, effective July 15, 2002; 2012, ch. 110, § 4, effective April 11, 2012.
The department shall promulgate administrative regulations as necessary, issue forms and instructions, and take all actions necessary to implement the provisions of KRS 131.410 to 131.445 . The department shall extensively publicize the tax amnesty program in order to maximize the public awareness of and participation in the program.
For purposes of accounting for the revenues received pursuant to KRS 131.410 to 131.445 , the department shall establish within the general fund a separate and distinct tax amnesty receipt account. All receipts collected as a result of the amnesty program shall be paid into this account, and all transactions involving this account shall be accounted for and reported as such.
History. Enact. Acts 1988, ch. 322, § 6, effective July 15, 1988; 2009, ch. 12, § 38, effective June 25, 2009.
For purposes of the program described in KRS 131.400(4)(a), in addition to all other penalties provided under KRS 131.180 , 131.410 to 131.445 , and 131.990 and any other law, there is hereby imposed after the expiration of the tax amnesty period the following cost-of-collection fees: (1) (a) For purposes of the program described in KRS 131.400(4)(a), in addition to all other penalties provided under KRS 131.180 , 131.410 to 131.445 , and 131.990 and any other law, there is hereby imposed after the expiration of the tax amnesty period the following cost-of-collection fees:
A cost-of-collection fee of twenty-five percent (25%) on all taxes which are or become due and owing to the department for any reporting period, regardless of when due. This fee shall be in addition to any other applicable fee provided in this paragraph;
Taxes which are assessed and collected after the amnesty period for taxable periods ending or transactions occurring prior to December 1, 2001, shall be charged a cost-of-collection fee of twenty-five percent (25%) at the time of assessment; and
For any taxpayer who failed to file a return for any previous tax period for which amnesty is available and fails to file the return during the amnesty period, the cost-of-collection fee shall be fifty percent (50%) of any tax deficiency assessed after the amnesty period.
For purposes of the program described in KRS 131.400(4)(b):
In addition to all other penalties provided under KRS 131.180, 131.410 to 131.445, 131.990 and any other law, there are hereby imposed after the expiration of the tax amnesty period the following cost-of-collection fees:
Taxes which are assessed and collected after the amnesty period for taxable periods ending or transactions occurring prior to October 1, 2011, shall be charged a cost-of-collection fee of twenty-five percent (25%) at the time of assessment; and
After expiration of the tax amnesty period, an amnesty-eligible tax liability that remains unpaid and that is not covered by an installment agreement as provided in KRS 131.420 shall accrue interest at a rate that is two percent (2%) above the interest rate established by KRS 131.183 or other applicable provisions of the Kentucky Revised Statutes, beginning on the day after the tax amnesty period ends.
The commissioner shall have the right to waive any penalties or collection fees when it is demonstrated that any deficiency of the taxpayer was due to reasonable cause as defined in KRS 131.010(9). However, any taxes that cannot be paid under the amnesty program because of the exclusions in subsection (2) of KRS 131.410 shall not be subject to these fees.
The provisions of subsection (1) of this section shall not relate to any account which has been protested pursuant to KRS 131.110 as of the expiration of the amnesty period and which does not become due and owing, or to any account on which the taxpayer is remitting timely payments under a payment agreement negotiated with the department prior to or during the amnesty period.
The fee levied under subsection (1) of this section shall not apply to taxes paid pursuant to the terms of the amnesty program nor shall the judgment penalty of twenty percent (20%) levied under KRS 135.060(3) apply in any case in which the fee levied under this section is applicable.
1.Bankruptcy Proceedings.
Debt for state withholding taxes was nondischargeable, under bankruptcy proceedings; however, under federal law the penalties due on the nondischargeable withholding taxes, owed to the Kentucky Revenue Cabinet, pursuant to this section and KRS 141.990 , were dischargeable. Hardin v. United States, 140 B.R. 158, 1992 Bankr. LEXIS 704 (Bankr. E.D. Ky. 1992 ).
After the expiration of the tax amnesty period, the department shall vigorously pursue all civil, administrative, and criminal penalties authorized by state and federal law for all taxes found to be due the Commonwealth.
In addition to all other penalties provided under KRS 131.180 , 131.410 to 131.445 , 131.990 , and any other law, any taxpayer who willfully fails to make a return or willfully makes a false return, or who willfully fails to pay taxes owing or collected, with intent to evade payment of the tax or amount collected, or any part thereof, shall be guilty of a Class D felony.
Amnesty received by a taxpayer under the program described in KRS 131.400(4)(b) shall be invalidated if: (3) (a) Amnesty received by a taxpayer under the program described in KRS 131.400(4)(b) shall be invalidated if:
The taxpayer fails to timely file any tax return or timely pay any tax and interest due for any period ending after December 31, 2001, and prior to October 1, 2011; or
The taxpayer fails to timely file any tax return or timely pay any tax for any period beginning October 1, 2011, and ending within three (3) years of the date amnesty was granted to the taxpayer.
Except as provided in paragraph (d) of this subsection, if the provisions of paragraph (a) of this subsection apply, then the civil penalties, fees, and interest waived pursuant to KRS 131.410 shall:
The department may utilize any remedy permitted under the law to collect amounts due under this subsection, and no statute of limitations shall apply.
If paragraph (a) of this subsection applies to a taxpayer as the result of an audit or other investigation by the department, the amnesty shall not be invalidated until the taxpayer has had the opportunity to protest as provided in KRS 131.110 , and has failed to pay the tax within thirty (30) days of the date on which the assessment becomes final, due, and owing as provided in KRS 131.500(1).
History. Enact. Acts 1988, ch. 322, § 8, effective July 15, 1988; 1992, ch. 403, § 3, effective July 14, 1992; 2002, ch. 366, § 6, effective July 15, 2002; 2005, ch. 85, § 140, effective June 20, 2005; 2012, ch. 110, § 6, effective April 11, 2012.
Section 26 of Acts 1992, ch. 403, provided: "The provisions of this Act shall become effective for all tax returns or reports due on or after August 1, 1992 and all taxes assessed by the cabinet on or after December 31, 1992."
Class D felony, penalties, KRS 532.060 .
131.500. Demand for payment — Levy upon and sale of property of taxpayer to satisfy demand — Maintenance of property.
131.510. Notice and demand before levy — Continuous effect of levy — Prompt release of levy.
131.515. Delinquent taxes, penalties, interest, and other costs constitute lien in favor of Commonwealth — Duration — Notice.
131.520. Surrender of property upon which levy made — Effect of surrender or failure to do so.
131.530. Right of redemption.
131.540. Release or return of property.
131.550. Assessment against transferee of a fraudulent conveyance made with intent to hinder or evade collection of tax due from transferor.
In addition to any other remedy provided by the laws of the Commonwealth, if any person has been assessed for a tax the collection of which is administered by the Department of Revenue as provided by the laws of the Commonwealth and if the person has not sought administrative or judicial review of the assessment as provided for in KRS 131.110 , or if the person has sought but exhausted all administrative and judicial review so that the assessment is final, due, and owing, the commissioner of revenue or his delegate may cause a demand to be made on the person for the payment thereof. (1) (a) In addition to any other remedy provided by the laws of the Commonwealth, if any person has been assessed for a tax the collection of which is administered by the Department of Revenue as provided by the laws of the Commonwealth and if the person has not sought administrative or judicial review of the assessment as provided for in KRS 131.110 , or if the person has sought but exhausted all administrative and judicial review so that the assessment is final, due, and owing, the commissioner of revenue or his delegate may cause a demand to be made on the person for the payment thereof.
If the tax remains unpaid for thirty (30) days after the demand, the commissioner or his delegate may levy upon and sell all property and rights to property found within the Commonwealth belonging to the person or on which there is a lien provided by KRS 131.515 or 134.420 , except the property that is exempt from an execution on a judgment in favor of the Commonwealth as provided in KRS Chapter 427, for the payment of the amount of the tax, penalty, interest, fees, and cost of the levy.
As soon as practicable after seizure of property, notice in writing shall be given by the commissioner or his delegate to the owner of the property. The notice shall be given to the owner either in person or by certified mail to his or her last known address. The notice shall specify the sum demanded and shall contain, in the case of personal property, an account of the property seized and, in the case of real property, a description with reasonable certainty of the property seized.
The commissioner or his or her designee shall as soon as practicable after the seizure of the property cause a notification of the sale of the seized property to be published in the newspaper with the largest circulation within the county where the seizure is made. The notice shall be published once each week for three (3) successive weeks. In addition, the notice shall be posted at the courthouse in the county where the seizure is made for fifteen (15) days next preceding sale. The notice shall specify the property to be sold, and the time, place, manner, and condition of the sale thereof.
If any property liable to levy is not divisible, so as to enable the commissioner or the commissioner's designee by sale of a part thereof to raise the whole amount of the tax, penalty, fees, interest, and cost of the levy, the whole of the property shall be sold.
The time of sale shall not be less than thirty (30) nor more than ninety (90) days from the time the seizure is made. The place of sale shall be within the county in which the property is seized, except by special order of the commissioner.
The sale shall be conducted by public auction, or by public sale under sealed bids. In the case of the seizure of several items of property, the commissioner or his or her delegate may offer the items for sale separately, in groups, or in the aggregate and accept whichever method produces the highest aggregate amount.
The commissioner or his or her delegate shall determine whether payment in full shall be required at the time of acceptance of a bid, or whether a part of the payment may be deferred for such period, not to exceed one (1) month, as he or she may determine to be appropriate. (7) (a) The commissioner or his or her delegate shall determine whether payment in full shall be required at the time of acceptance of a bid, or whether a part of the payment may be deferred for such period, not to exceed one (1) month, as he or she may determine to be appropriate.
If payment in full is required at the time of acceptance of a bid and is not then and there paid, the commissioner or his or her delegate shall forthwith proceed to again sell the property as provided in subsection (6) of this section.
If the conditions of the sale permit part of the payment to be deferred, and if such part is not paid, within the prescribed period, suit may be instituted in the Franklin Circuit Court or the Circuit Court of the county where the sale was conducted against the purchaser for the purchase price or such part thereof as has not been paid, together with interest at the rate of twelve percent (12%) per annum from the date of the sale; or, in the discretion of the commissioner, the sale may be declared to be null and void for failure to make full payment of the purchase price and the property may again be advertised and sold as provided in this section.
If readvertisement and sale occur, any new purchaser shall receive the property or rights to property, free and clear of any claim or right of the former defaulting purchaser, of any nature whatsoever, and the amount paid upon the bid price by the defaulting purchaser shall be forfeited.
If the commissioner or his or her delegate determines that any property seized is liable to perish or become greatly reduced in price or value by keeping, or that the property cannot be kept without great expense, he or she shall appraise the value of the property and, if the owner of the property can be readily found, the commissioner or his or her delegate shall give him or her notice of the determination of the appraised value of the property. The property shall be returned to the owner if, within the time specified in the notice, the owner pays to the commissioner or his or her delegate an amount equal to the appraised value, or gives bond in the form, with the sureties, and in the amount as the commissioner or his or her delegate determines to be appropriate in the circumstances. If the owner does not pay the amount or furnish the bond in accordance with this subsection, the commissioner or his or her delegate shall as soon as practicable make public sale of the property without regard to the advertisement requirements or the time limitations contained in subsections (3) and (5) of this section.
No proceedings under this section shall be commenced more than ten (10) years after the assessment becomes final.
The term "levy" as used in this section shall include the power of distraint and seizure by any means. Except as otherwise provided in KRS 131.510(2)(a), a levy shall extend only to property possessed and obligations existing at the time thereof. In any case in which the commissioner or his or her delegate may levy upon property or rights to property, he or she may seize and sell the property or rights whether real, personal, tangible or intangible.
Notwithstanding the provisions of KRS Chapters 45, 45A, and 56, the department may take all necessary steps to provide for the protection, maintenance, or transportation of all property seized by the department pursuant to the provisions of this section, including but not limited to negotiating directly for the procurement of contractual services, including professionals, supplies, materials, equipment, or the leasing of real and personal property. Every effort shall be made to effect a competitively established price for purchases made pursuant to this section. The department shall report any procurements of contractual services, supplies, materials, equipment, or the leasing of real and personal property, to the secretary of the Finance and Administration Cabinet within sixty (60) days of the transaction. Nothing in this section shall preclude the department from complying with the provisions of KRS Chapters 45 and 56 relating to the requirements to report the purchase or lease of real property or equipment to the Capital Projects and Bond Oversight Committee.
History. Enact. Acts 1980, ch. 262, § 1, effective July 15, 1980; 1982, ch. 238, § 1, effective July 15, 1982; 1990, ch. 164, § 1, effective July 13, 1990; 1990, ch. 423, § 6, effective July 13, 1990; 1996, ch. 344, § 8, effective July 15, 1996; 2005, ch. 85, § 141, effective June 20, 2005; 2009, ch. 10, § 32, effective January 1, 2010.
Section 11 of Acts 1996, ch. 344 read, "The provisions of this Act shall apply for taxable years beginning after December 31, 1995."
The administrative collection procedure set forth in KRS 131.500 to 131.550 is not available to the county attorney for the collection of delinquent property taxes. OAG 82-250 .
The administrative collection procedures stated in this section are modeled after the collection procedures used by the federal government and many state jurisdictions, and the procedures are constitutional. OAG 82-288 .
Levy may be made with respect to any unpaid tax only after the department has given notice and demand to such person in writing of the intention to make such levy. Such notice and demand shall be given in person, or shall be sent by certified mail to such person's last known address, no less than ten (10) days before the date of levy.
The effect of a levy on salary or wages payable to or received by a person shall be continuous from the date such levy is first made until the liability out of which such levy arose is satisfied or becomes unenforceable by reason of lapse of time. (2) (a) The effect of a levy on salary or wages payable to or received by a person shall be continuous from the date such levy is first made until the liability out of which such levy arose is satisfied or becomes unenforceable by reason of lapse of time.
With respect to a levy described in paragraph (a) of this subsection, the department shall promptly release the levy when the liability out of which such levy arose is satisfied or becomes unenforceable by reason of lapse of time, and shall promptly notify the person upon whom such levy was made that such levy has been released.
If any person liable to pay any tax administered by the department, other than a tax subject to the provisions of KRS 134.420 , neglects or refuses to pay the tax after demand, the tax due together with all penalties, interest, and other costs applicable provided by law shall be a lien in favor of the Commonwealth of Kentucky. The lien shall attach to all property and rights to property owned or subsequently acquired by the person neglecting or refusing to pay the tax.
The lien imposed by subsection (1) of this section shall remain in force for ten (10) years from the date the notice of tax lien has been filed by the commissioner, or his or her designee with the county clerk of any county or counties in which the taxpayer's business or residence is located, or any county in which the taxpayer has an interest in property.
The tax lien imposed by subsection (1) of this section shall not be valid as against any purchaser, judgment lien creditor, or holder of a security interest or mechanic's lien until notice of the tax lien has been filed by the commissioner or his or her designee with the county clerk of any county or counties in which the taxpayer's business or residence is located, or in any county in which the taxpayer has an interest in property. The recording of the tax lien shall constitute notice of both the original assessment and all subsequent assessments of liability against the same taxpayer. Upon request, the department shall disclose the specific amount of liability at a given date to any interested party legally entitled to the information.
Even though notice of a tax lien has been filed as provided by subsection (3) of this section, and notwithstanding the provisions of KRS 382.520 , the tax lien imposed by subsection (1) of this section shall not be valid with respect to a security interest which came into existence after tax lien filing by reason of disbursements made within forty-five (45) days after the date of tax lien filing or the date the person making the disbursements had actual notice or knowledge of tax lien filing, whichever is earlier, provided the security interest:
Is in property which:
At the time of tax lien filing is subject to the tax lien imposed by subsection (1) of this section; and
Is covered by the terms of a written agreement entered into before tax lien filing; and
Is protected under local law against a judgment lien arising, as of the time of tax lien filing, out of an unsecured obligation.
History. Enact. Acts 2009, ch. 10, § 33, effective January 1, 2010.
Any person in possession of or obligated with respect to property or rights to property subject to levy upon which a levy has been made shall, upon demand of the commissioner or his delegate, surrender such property or rights or discharge such obligation to the commissioner or his delegate, except such part of the property or rights as is, at the time of such demand, subject to an attachment or execution under any judicial process.
Any person who fails or refuses to surrender any property or rights to property subject to levy shall be liable in his own person and estate to the Commonwealth in a sum equal to the value of the property or rights not so surrendered, but not exceeding the amount of taxes for the collection of which such levy has been made, together with costs and interest on such sum at the rate of twelve percent (12%) per annum from the date of such levy. Any amount other than costs recovered under this paragraph shall be credited against the tax liability for the collection of which such levy was made.
Any person in possession of or obligated with respect to property or rights to property subject to levy upon which a levy has been made who, upon demand by the commissioner or his delegate, surrenders such property or rights to property or discharges such obligation to the commissioner or his delegate shall be discharged from any obligation or liability to the delinquent taxpayer with respect to such property or rights to property arising from such surrender or payment.
History. Enact. Acts 1980, ch. 262, § 3, effective July 15, 1980; 1982, ch. 238, § 2, effective July 15, 1982; 2005, ch. 85, § 143, effective June 20, 2005.
Any person whose property has been levied upon shall have the right to pay the amount due, together with the expense of the proceeding, to the commissioner or his delegate at any time prior to the sale thereof and upon such payment the commissioner or his delegate shall cause such property to be restored to him and all further proceedings in connection with the levy on such property shall cease from the time of such payment.
The owner of any real property sold as provided in KRS 131.500(1), his heirs, executors, or administrators, or any person having an interest therein, or a lien thereon, or any person in his behalf, shall be permitted to redeem the real property sold or any particular tract of such property, at any time within one hundred twenty (120) days after the date of the sale. Such property or tract of property shall be permitted to be redeemed only upon payment to the purchaser, or in case he cannot be found in the county in which the property to be redeemed is situated, then to the commissioner or his delegate, for the use of the purchaser, his heirs, or assigns, the amount paid by such purchaser and interest thereon at the rate of twenty percent (20%) per annum from the date of sale.
In the case of property sold pursuant to KRS 131.500(1), the commissioner or his delegate shall give to the purchaser a certificate of sale upon payment in full of the purchase price. The certificate shall set forth a description of the property purchased, for whose taxes the property was sold, and the price paid therefor.
In all cases where property is sold pursuant to KRS 131.500(1), except real property, the certificate of sale issued pursuant to subsection (3) of this section shall have the following effect:
Shall be prima facie evidence of the rights of the commissioner or his delegate to make such sale, and of the regularity of the proceeding of the sale; and
Shall transfer to the purchaser all right, title and interest of the taxpayer in and to the property sold; and
If such property consists of stock, shall be notice, when received, to any corporation, company, or association of such transfer, and shall be authority to such corporation, company, or association to record the transfer on its books and records in the same manner as if the stocks were transferred or assigned by the party holding the same, in lieu of any prior certificate, which shall be void, whether canceled or not; and
If the subject of sale is securities or other evidences of debt, shall be a good and valid receipt to the person holding the same, as against any person holding or claiming to hold possession of such securities or other evidences of debt; and
If such property consists of a motor vehicle, shall be notice, when received by any public official charged with the registration of title to motor vehicles, of such transfer and shall be authority to such official to record the transfer on his books and records in the same manner as if title to such motor vehicle were transferred or assigned by the party holding the same, in lieu of any original or prior title, which shall be void, whether canceled or not.
In the case of any real property sold pursuant to KRS 131.500 (1) and not redeemed in the manner and within the time provided in subsection (2) of this section, the commissioner or his delegate shall execute in accordance with the laws of the Commonwealth, to the purchaser of such real property upon surrender of the certificate of sale, a deed to the real property so purchased by him, reciting the facts set forth in the certificate. The deed executed pursuant to this subsection shall have the following effect:
Shall be prima facie evidence of the rights of the commissioner or his delegate to make such sale, and of the regularity of the proceedings of the sale; and
If the proceedings of the commissioner or his delegate have been substantially in accordance with the provisions of KRS 131.500 , such deed shall be considered and operate as a conveyance of all right, title and interest the taxpayer has in and to the real property thus sold at the time the lien of the Commonwealth attached thereto.
A certificate of sale of personal property given or a deed to real property executed pursuant to this section shall discharge such property from all liens, encumbrances, and titles over which the lien of the Commonwealth, with respect to which the levy was made, had priority.
It shall be lawful for the commissioner or his delegate, under regulations prescribed by the commissioner, to release the levy upon all or part of the property or rights to property levied upon where the commissioner or his delegate determines that such action will facilitate the collection of the liability, but such release shall not operate to prevent any subsequent levy.
If the commissioner determines that property has been wrongfully levied upon, it shall be lawful for the commissioner to return the specific property levied upon, or an amount of money equal to the amount of money levied upon, or any amount of money equal to the amount of money received by the commissioner from a sale of such property.
Property may be returned at any time. An amount equal to the amount of money levied upon or received from such sale may be returned at any time before the expiration of four (4) years from the date of such levy.
When the Department of Revenue reasonably believes that any taxpayer has divested himself by gift, conveyance, assignment, transfer of, or charge upon any property, whether real, personal, tangible or intangible, with the intent to hinder or evade the collection of any tax assessed or to be assessed by the department or declared by the taxpayer on a return filed with the department, any transferee of such property may be assessed by the Department of Revenue an amount equal to the lesser of the amount of tax assessed against the transferor taxpayer or the fair market value of the property so transferred. However, no assessment shall be made pursuant to this section against a transferee who takes the property for full and valuable consideration in money or money's worth, unless it appears that such transferee had notice of the intent of the transferor taxpayer to hinder or evade the collection of any tax.
Any assessment made by the Department of Revenue against a transferee pursuant to subsection (1) of this section is, except as provided in this section, subject to the same provisions and limitations as in the case of the taxes for which the liabilities were incurred.
The period of limitation for assessment of any liability against a transferee pursuant to subsection (1) of this section shall be as follows:
In the case of an initial transferee, within one (1) year after the expiration of the period of limitation for assessment against the transferor taxpayer; and
In the case of the liability of a transferee of a transferee, within one (1) year after the expiration of the period of limitation for assessment against the preceding transferee, but not more than three (3) years after the expiration of the period of limitation for assessment against the initial transferor taxpayer.
The notice of any assessment against a transferee made pursuant to subsection (1) of this section shall be either given to the transferee in person or sent by mail to such transferee's last known address.
131.560. Withholding of individual income tax refund to satisfy certain liabilities — Priority of claims.
131.565. Definition of "state agency" — Establishment of claim by state agency pursuant to statutory provision, administrative regulation, or ordinance — Requests to withhold individual income tax refund.
131.570. Debtor to be notified that refund is subject to setoff — Hearing — Transfer of refund — Payment of excess to taxpayer.
131.575. Apportionment of refund on separate return between spouses.
131.580. Rules and regulations.
131.585. State debt offset account.
131.590. Credit to state debt offset account.
131.595. Procedure exclusive for withholding or transmitting individual income tax refund.
Notwithstanding the provisions of KRS 44.030 or 131.190 , the Department of Revenue shall withhold the Kentucky individual income tax refund otherwise due a taxpayer under KRS Chapter 141 who owes overdue child support or is indebted to any state agency, officer, board, commission, corporation, institution, cabinet, department or other state organization, or any county, city, urban-county government, consolidated local government, or charter county government duly organized in this state, which has complied with the requirements of KRS 131.565 . After satisfaction of any undisputed delinquent tax liability due the Department of Revenue from such taxpayer, the tax refund balance so withheld shall, except as provided in KRS 131.565 , be transmitted as soon as practicable to the state agency, or the county, city, urban-county government, consolidated local government, or charter county government duly organized in this state, having established a claim therefor. In the case of multiple state agency or any county, city, urban-county government, consolidated local government, or charter county government duly organized in this state claims against the same tax refund, the state agency having the larger pending claim shall have priority after satisfaction of any undisputed delinquent tax liabilities due the Department of Revenue, followed by other state agency claims. After all state agency claims have been satisfied, the claims of any county, city, urban-county government, consolidated local government, or charter county government duly organized in this state shall be satisfied with the larger pending claims satisfied first, and other claims satisfied in descending order.
History. Enact. Acts 1984, ch. 405, § 7, effective July 13, 1984; 1986, ch. 487, § 10, effective July 15, 1986; 2005, ch. 85, § 147, effective June 20, 2005; 2006, ch. 252, Pt. XVI, § 3, effective April 25, 2006.
For purposes of KRS 131.560 to 131.595 , "state agency" or "state agencies" shall include the Court of Justice and any local government, as those terms are defined in KRS 45.241 .
No state agency shall request the withholding of any individual income tax refund unless there is specific provision in statute, administrative regulation, or, in the case of a local government, ordinance, for debtor appeal and hearing rights for that particular debt.
State agencies having the statutory, regulatory, or other legal provisions described in subsection (2) of this section shall establish claims against Kentucky individual income tax refunds by notifying the commissioner of revenue in writing by a date established by the department and, by dates agreed to by the department and each state agency, shall furnish a list of all liquidated debts due the agency for which withholding is required for individual income tax refunds due to be paid to the debtor of the claimant agency. This list shall be submitted in such form and contain such information as may be required by the commissioner of revenue to facilitate identification of the refunds to be withheld. As used in this section the term "liquidated debt" means a legal debt for a sum certain, which has been certified by the claimant agency as final due and owing. The claimant agency must have made reasonable efforts to collect such debt, and must have provided the debtor the opportunity for appeal and formal hearing as provided by statute, administrative regulation, or local ordinance. The claimant agency shall send thirty (30) days' prior written notification to the debtor of the intention to submit the claim to the department for setoff as provided in KRS 131.570 .
The individual income tax refund withholding procedures provided in KRS 131.560 to 131.595 shall be in lieu of the procedures set forth in KRS 427.130 and 44.030 only with regard to sums due to a debtor from the department.
No state agency shall request the withholding of any individual income tax refund unless the debt for which withholding is requested is in a liquidated amount.
Each state agency requesting the withholding of any individual income tax refund shall indemnify the department against any and all damages, court costs, attorneys fees, and any other expenses related to litigation which arises concerning the administration of KRS 131.560 to 131.595 as it pertains to a refund withholding action requested by such agency.
Those state agencies requesting the withholding of individual income tax refunds shall, on a per unit cost or other equitable basis determined by the department, reimburse the department for all development, implementation, and administration costs incurred but not otherwise funded under the provisions of KRS 131.560 to 131.595 .
The department may decline the withholding of individual income tax refunds from agencies if the request would adversely impact the operation of the department.
History. Enact. Acts 1984, ch. 405, § 8, effective July 13, 1984; 2004, ch. 118, § 4, effective July 13, 2004; 2005, ch. 85, § 148, effective June 20, 2005; 2013, ch. 88, § 7, effective June 25, 2013.
Upon determining that a pending individual income tax refund is subject to setoff as authorized under this section, the debtor shall be notified in writing by the department of the claim made against such refund by the named claimant agency, and of the department's intention to set off the refund against the debt to the claimant agency. The notice shall provide that the debtor, within thirty (30) days from the date of the notice, may request a hearing before the claimant agency as provided by statute or local ordinance. No issues at such hearing may be considered that have been litigated previously, and the debtor, after being given due notice of rights of appeal, must exercise such rights in a timely manner. The decision of the claimant agency shall be subject to appeal as all other decisions rendered by the claimant agency. No funds shall be transferred to a claimant agency until the debtor's appeal rights have been exhausted.
Any excess of the pending refund amount over the total claim filed against such refund shall be promptly issued to the taxpayer by the department.
In the event funds transmitted to a claimant agency are subsequently determined by the claimant agency to be in excess of the liquidated debt, such claimant agency shall promptly refund the excess to the taxpayer.
In the event the department erroneously transfers funds to a claimant agency, the claimant agency shall immediately upon notification thereof reimburse the department for the amount erroneously transmitted to such agency. The department shall promptly refund to the taxpayer the appropriate amount of such returned funds with interest as provided in KRS 131.183(2).
History. Enact. Acts 1984, ch. 405, § 9, effective July 13, 1984; 2005, ch. 85, § 149, effective June 20, 2005; 2013, ch. 88, § 8, effective June 25, 2013.
Any individual income tax refund determined as a consequence of taxpayers filing separate returns on a combined Kentucky individual income tax form may be apportioned by the Department of Revenue between the spouses based on the ratio of the adjusted gross incomes of each spouse to the total adjusted gross income. The amount of the refund computed to be due the spouse who is not indebted to the claimant agency shall be refunded by the Department of Revenue to such spouse. In the event such refunded amount has been transmitted to the claimant agency, the Department of Revenue shall recover such amount from the claimant agency as provided in KRS 131.570(4).
Any individual income tax refund determined as a consequence of taxpayers filing a joint Kentucky individual income tax return shall be deemed as coupled together in interest or liability and shall be subject to transfer to a claimant agency in its entirety.
History. Enact. Acts 1984, ch. 405, § 10, effective July 13, 1984; 2005, ch. 85, § 150, effective June 20, 2005.
The Department of Revenue may promulgate rules and regulations necessary to develop, implement and administer the provisions of KRS 131.560 to 131.595 .
There is hereby created within the Department of Revenue a state debt offset account, which will be subject to the provisions of the restricted fund group, as provided in KRS 48.010(15)(f), and all funds collected under KRS 131.565(6) shall be credited thereto with only the expenses of the Department of Revenue related to development, implementation and administration of KRS 131.560 to 131.595 to be paid therefrom. This account shall not lapse.
History. Enact. Acts 1984, ch. 405, § 12, effective July 13, 1984; 2004, ch. 118, § 6, effective July 13, 2004; 2005, ch. 85, § 152, effective June 20, 2005; 2009, ch. 78, § 37, effective June 25, 2009.
To defray the cost of development and implementation of KRS 131.560 to 131.595 , there shall be credited to the state debt offset account an amount not to exceed $175,000, such amount to be derived from the amount of the Kentucky individual income tax refunds withheld under the provisions of KRS 131.560 to 131.595 for undisputed delinquent taxes due the Department of Revenue.
Except as is necessary in order to comply with exchange of information agreements with the United States Internal Revenue Service and notwithstanding the provisions of KRS 134.580 and 427.130 , no Kentucky individual income tax refund shall be withheld for or transmitted to any other person, agency, officer, board, commission, corporation, institution, cabinet, department, or other organization except as provided by KRS 131.560 to 131.595 .
131.602. Tobacco product manufacturer's options to become participating manufacturer or to contribute to qualified escrow fund on quarterly basis — Management of escrow fund — Penalties for failure to place required funds in escrow — Assignment of escrow funds to Commonwealth — Credit of assigned funds against judgment — Opinion of Attorney General required prior to assignment — Importers jointly and severally liable with non-U.S. manufacturers for escrow amounts — Posting of financial instrument.
"Adjusted for inflation" means increased in accordance with the formula for inflation adjustment set forth in Exhibit C to the master settlement agreement;
"Affiliate" means a person who directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with, another person. Solely for purposes of this definition, the terms "owns," "is owned," and "ownership" mean ownership of an equity interest, or the equivalent thereof, of ten percent (10%) or more, and the term "person" means an individual, partnership, committee, association, corporation, or any other organization or group of persons;
"Allocable share" means allocable share as that term is defined in the master settlement agreement;
"Brand family" means all styles of cigarettes sold under the same trademark and differentiated from one another by means of additional modifiers or descriptors, including but not limited to menthol, kings, and 100's, and includes any brand name alone or in conjunction with any other word, trademark, logo, symbol, motto, selling message, recognizable pattern of colors, or any other indicia of product identification identical or similar to, or identifiable with, a previously known brand of cigarettes;
"Cigarette" means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains:
Any roll of tobacco wrapped in paper or in any substance not containing tobacco;
Tobacco, in any form, that is functional in the product, which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette; or
Any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in paragraph (a) of this subsection.
The term "cigarette" includes "roll-your-own", i.e., any tobacco which, because of its appearance, type, packaging, or labeling is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes. For purposes of this definition of "cigarette," nine-hundredths (0.09) ounces of "roll-your-own" tobacco shall constitute one (1) individual "cigarette";
"Commissioner" means the commissioner of the department;
"Directory" means the directory as provided in KRS 131.610 ;
"Distributor" means a person, wherever residing or located, who purchases nontax-paid cigarettes and stores, sells, or otherwise disposes of the cigarettes. This includes resident wholesalers, nonresident wholesalers, and unclassified acquirers as defined in KRS 138.130 ;
"Financial instrument" has the same meaning as in KRS 138.210 ;
"Importer" has the same meaning as in KRS 248.750 ;
"Master settlement agreement" means the settlement agreement and related documents entered into on November 23, 1998, by Kentucky and leading United States tobacco product manufacturers;
"Nonparticipating manufacturer" means any tobacco product manufacturer that is not a participating manufacturer;
"Participating manufacturer" has the meaning given the term in Section II(jj) of the master settlement agreement and all amendments thereto;
"Qualified escrow fund" means an escrow arrangement with a federally or state-chartered financial institution having no affiliation with any tobacco product manufacturer and having assets of at least one billion dollars ($1,000,000,000) where such arrangement requires that such financial institution hold the escrowed funds' principal for the benefit of releasing parties and prohibits the tobacco product manufacturer placing the funds into escrow from using, accessing, or directing the use of the funds' principal except as consistent with KRS 131.602(3);
"Released claims" means released claims as that term is defined in the master settlement agreement;
"Releasing parties" means releasing parties as that term is defined in the master settlement agreement;
"Stamping agent" means a person, including a distributor, that is authorized to affix tax stamps to packages or other containers of cigarettes pursuant to KRS 138.146 or any person that is required to pay the excise tax imposed pursuant to KRS 138.155 ;
"Tobacco product manufacturer" means an entity that after June 30, 2000, directly and not exclusively through any affiliate:
Manufactures cigarettes anywhere that such manufacturer intends to be sold in the United States, including cigarettes intended to be sold in the United States through an importer, except where such importer is an original participating manufacturer, as that term is defined in the master settlement agreement, that will be responsible for the payments under the master settlement agreement with respect to such cigarettes as a result of the provisions of subsection II(mm) of the master settlement agreement and that pays the taxes specified in subsection II(z) of the master settlement agreement, and provided that the manufacturer of such cigarettes does not market or advertise such cigarettes in the United States;
Is the first purchaser anywhere for resale in the United States of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States; or
Becomes a successor of an entity described in paragraph (a) or (b) of this subsection.
The term "tobacco product manufacturer" shall not include an affiliate of a tobacco product manufacturer unless such affiliate itself falls within any of the definitions described in paragraph (a), (b), or (c) of this subsection; and
"Units sold" means the number of individual cigarettes sold in Kentucky by the applicable tobacco product manufacturer, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, during the year in question, as measured by excise taxes collected by Kentucky on packs or "roll-your-own" tobacco. The department shall promulgate administrative regulations as are necessary to ascertain the amount of state excise tax paid on the cigarettes of the tobacco product manufacturer for each year.
History. Enact. Acts 2000, ch. 342, § 1, effective June 30, 2000; 2005, ch. 85, §§ 153 and 155, effective June 20, 2005; 2006, ch. 252, Pt. XXXII, § 1, effective April 25, 2006; 2015 ch. 55, § 1, effective July 1, 2015.
1.Preemption.
KRS 131.600 and 131.602 , which implemented a settlement agreement with cigarette manufacturers regarding the manufacturers' payments to offset certain government costs for smoking-related diseases were not preempted by the Sherman Act, 15 USCS § 1, because these laws did not mandate or authorize violation of the Sherman Act in order to achieve compliance. Tritent Int'l Corp. v. Commonwealth, 2005 U.S. Dist. LEXIS 20233 (E.D. Ky. Sept. 8, 2005), aff'd, 467 F.3d 547, 2006 FED App. 0400P, 2006 U.S. App. LEXIS 26911 (6th Cir. Ky. 2006 ).
Commonwealth ex rel. Stumbo v. Philip Morris, USA, 244 S.W.3d 116, 2007 Ky. App. LEXIS 424 (Ky. Ct. App. 2007).
Any tobacco product manufacturer selling cigarettes to consumers within this state, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, after June 30, 2000, shall do one (1) of the following:
Become a participating manufacturer, as that term is defined in section II(jj) of the master settlement agreement, and generally perform its financial obligations under the master settlement agreement; or
Place into a qualified escrow fund the following amounts, as adjusted for inflation: (b) 1. Place into a qualified escrow fund the following amounts, as adjusted for inflation:
For 2000: $0.0104712 per unit sold after June 30, 2000;
For each of 2001 and 2002: $0.0136125 per unit sold;
For each of 2003 through 2006: $0.0167539 per unit sold; and
For 2007 and each year thereafter: $0.0188482 per unit sold; and
Post a financial instrument with the Attorney General as provided in subsection (10) of this section.
The nonparticipating manufacturer shall place the amount required under this section into the qualified escrow fund on a quarterly basis.
A nonparticipating manufacturer that places funds into escrow pursuant to this section shall receive the interest or other appreciation on such funds as earned. Such funds themselves shall be released from escrow only under the following circumstances:
To pay a judgment or settlement on any released claim brought against the nonparticipating manufacturer by Kentucky or any releasing party located or residing in Kentucky. Funds shall be released from escrow under this paragraph in the order in which they were placed into escrow and only to the extent and at the time necessary to make payments required under the judgment or settlement;
To the extent that a nonparticipating manufacturer establishes that the amount it was required to place into escrow on account of units sold in the state in a particular year was greater than the master settlement agreement payments, as determined pursuant to section IX(i) of that agreement, including after final determination of all adjustments, that the nonparticipating manufacturer would have been required to make on account of the units sold had it been a participating manufacturer, the excess shall be released from escrow and revert back to the nonparticipating manufacturer; or
To the extent not released from escrow under paragraph (a) or (b) of this subsection, funds shall be released from escrow and revert back to the nonparticipating manufacturer twenty-five (25) years after the date on which they were placed into escrow.
Each nonparticipating manufacturer shall annually certify to the Attorney General that it is in compliance with KRS 131.600 to 131.630 , 138.130 to 138.205 , 248.752 , and 248.754 and any administrative regulations promulgated thereunder.
In addition to subsection (10)(g) of this section, the Attorney General may bring a civil action on behalf of Kentucky against any nonparticipating manufacturer that fails in any quarter to place into escrow the funds required under this section. Any nonparticipating manufacturer that fails in any quarter to place into escrow the funds required under this section shall:
Be required within fifteen (15) days to place sufficient funds into escrow to bring it into compliance with this section. The court, upon a finding of a violation of this section, may impose a civil penalty, to be paid to the general fund of Kentucky, in an amount not to exceed five percent (5%) of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed one hundred percent (100%) of the original amount improperly withheld from escrow;
In the case of a knowing violation, be required within fifteen (15) days to place sufficient funds into escrow to bring it into compliance with this section. The court, upon a finding of a knowing violation of this section, may impose a civil penalty, to be paid to the general fund of Kentucky, in an amount not to exceed fifteen percent (15%) of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed three hundred percent (300%) of the original amount improperly withheld from escrow; and
In the case of a second knowing violation, be prohibited from selling cigarettes to consumers within Kentucky, whether directly or through a distributor, retailer, or similar intermediary, for a period not to exceed two (2) years or, if later, until fully compliant with KRS 131.600 to 131.630 , 138.130 to 138.205 , 248.752 , and 248.754 and any administrative regulations promulgated thereunder. Each failure to place sufficient funds into escrow as required under this section on a quarterly basis as required by subsection (2) of this section shall constitute a separate violation.
Notwithstanding the provisions of subsection (3) of this section, a nonparticipating manufacturer that elects to place funds into escrow pursuant to this section may make an irrevocable assignment of its interest in the funds to the benefit of the Commonwealth of Kentucky. Such assignment shall be permanent and apply to all funds in the subject qualified escrow fund or that may subsequently come into the fund, including those deposited into the qualified escrow fund prior to the assignment being executed, those deposited into the qualified escrow fund after the assignment is executed, and interest or other appreciation on the funds. The nonparticipating manufacturer, the Attorney General, and the financial institution where the qualified escrow fund is maintained may make amendments to the qualified escrow fund agreement as may be necessary to effectuate an assignment of rights executed pursuant to this subsection or a withdrawal of funds from the qualified escrow fund pursuant to subsection (7) of this section. An assignment of rights executed pursuant to this subsection shall be in writing, signed by a duly authorized representative of the nonparticipating manufacturer making the assignment, and shall become effective upon delivery of the assignment to the Attorney General and the financial institution where the qualified escrow fund is maintained.
Notwithstanding the provisions of subsection (3) of this section, any escrow funds assigned to the Commonwealth pursuant to subsection (6) of this section shall be withdrawn by the Commonwealth upon request by the Treasurer of the Commonwealth and approval of the Attorney General. Any funds withdrawn pursuant to this subsection shall be deposited in the general fund and shall be calculated on a dollar-for-dollar basis as a credit against any judgment or settlement described in subsection (3) (a) of this section which may be obtained against the nonparticipating manufacturer who has assigned the funds in the subject qualified escrow fund. Nothing in this subsection or in subsection (6) of this section shall be construed to relieve a nonparticipating manufacturer from any past, current, or future obligations the manufacturer may have pursuant to this chapter.
Notwithstanding subsections (6) and (7) of this section, no assignment of escrows created pursuant to this section shall be made by a nonparticipating manufacturer, or shall be accepted by the Treasurer of the Commonwealth, unless and until the Attorney General has provided an opinion to the Treasurer, with a copy of the opinion provided to the Governor and the Legislative Research Commission, that amendments to KRS 131.600 and subsections (6) and (7) of this section shall not substantially jeopardize the Commonwealth's payments under the master settlement agreement.
For any nonparticipating manufacturer that is located outside the United States, each importer of the nonparticipating manufacturer's cigarettes shall be jointly and severally liable with the nonparticipating manufacturer for the deposit of all escrow amounts due under subsection (1) of this section, and the payment of all civil penalties imposed under subsection (5) of this section for the units sold in this state.
A nonparticipating manufacturer shall post a financial instrument with the Attorney General as a condition of the nonparticipating manufacturer and its brand families being included in the state directory for that quarter. (10) (a) A nonparticipating manufacturer shall post a financial instrument with the Attorney General as a condition of the nonparticipating manufacturer and its brand families being included in the state directory for that quarter.
The amount of the financial instrument shall be the greater of fifty thousand dollars ($50,000) or the greatest required escrow amount due from the nonparticipating manufacturer or its predecessor for the immediately preceding twelve (12) calendar quarters.
The financial instrument shall be posted at least ten (10) days in advance of each calendar quarter.
The nonparticipating manufacturer shall be the obligor.
The State Treasurer shall be the obligee.
The financial instrument shall be conditioned on the performance by the nonparticipating manufacturer of all of its escrow deposit and other financial obligations under Kentucky law.
In addition to subsection (5) of this section, if:
The nonparticipating manufacturer fails to make its escrow deposits equal to the full amount owed for the quarter within thirty (30) days following the end of the quarter, the Attorney General may execute the financial instrument in the amount equal to any remaining amount of escrow due. The amount collected shall be deposited in the general fund and shall reduce the amount of escrow due from the nonparticipating manufacturer by the dollar amount collected. Escrow obligations that remain after the collection on the financial instrument shall remain due from the nonparticipating manufacturer and each of its importers; and
The Attorney General obtains a judgment against the nonparticipating manufacturer for its failure to make the required escrow deposit, the Attorney General may also execute on the financial instrument to recover the amount of the costs of investigation, expert witness fees, costs of action, civil penalties, and attorneys' fees obtained in that judgment. Funds collected from the financial instrument shall be counted first toward the amount of escrow due but not deposited into escrow by the nonparticipating manufacturer.
History. Enact. Acts 2000, ch. 342, § 2, effective June 30, 2000; 2004, ch. 135, § 2, effective July 13, 2004; 2006, ch. 252, Pt. XIX, § 1, effective April 25, 2006; 2015 ch. 55, § 2, effective July 1, 2015.
(7/1/2015). During codification, the Reviser of Statutes has changed the numbering of paragraph (b) of subsection (1) of this statute from the way it appeared in 2015 Ky. Act ch. 55, sec. 2. None of the text of the subsection was changed.
Acts 2015, ch. 55, § 2, amended this section and created subsection (b)(2) without a subsection (b)(1).
District Court properly granted the Commonwealth of Kentucky's motion to dismiss a lawsuit filed by a Brazilian cigarette manufacturer, an importer, and a Kentucky wholesaler, as non-participants in the Master Settlement Agreement (MSA); the Sherman Act, 15 USCS § 1 et seq., did not preempt KRS 131.602 , 131.610 , and 131.612 because the anticompetitive behavior of the participating cigarette manufacturers was neither mandated nor explicitly authorized by the statutes. The fact that the volume-based payment scale in the MSA and in KRS 131.602 (2)(b) influenced the participating manufacturers to raise their prices and lower their output was not enough to satisfy the first prong of the preemption analysis. Tritent Int'l Corp. v. Kentucky, 467 F.3d 547, 2006 FED App. 0400P, 2006 U.S. App. LEXIS 26911 (6th Cir. Ky. 2006 ).
KRS 131.602 and 131.610 , which were adopted to effectuate the Master Settlement Agreement, a voluntary agreement that has been entered into by 46 states and several tobacco companies, are not subject to preemption by the Sherman Act, 15 USCS § 1 et seq. Tritent Int'l Corp. v. Kentucky, 467 F.3d 547, 2006 FED App. 0400P, 2006 U.S. App. LEXIS 26911 (6th Cir. Ky. 2006 ).
Commonwealth v. China Tobacco Anyang Cigarette Factory, 383 F. Supp. 2d 917, 2005 U.S. Dist. LEXIS 16606 (Sept. 8, 2005); Commonwealth ex rel. Stumbo v. Philip Morris, USA, 244 S.W.3d 116, 2007 Ky. App. LEXIS 424 (Ky. Ct. App. 2007).
131.606. Legislative findings and purposes.
131.608. Annual and quarterly certifications to Attorney General by participating and nonparticipating manufacturers — Contents — Scope — Records.
131.610. Directory of certified tobacco product manufacturers and brand families — Requirements for inclusion — Removal — Notice.
131.612. Prohibition against affixing stamp to cigarettes of tobacco product manufacturer or brand family not in directory — Prohibition against selling cigarettes after manufacturer or brand family removed from directory.
131.614. Appointment of agent by nonresident nonparticipating tobacco product manufacturer and each of its importers for service of process.
131.616. Submission of documentation by stamping agent.
131.618. Disclosure of records by commissioner and Attorney General — Authority to require submission of additional information.
131.620. Proof of qualified escrow fund.
131.622. When cigarettes deemed contraband — Seizure and destruction — Injunction to compel compliance — Prohibition against sale — Penalty.
131.624. Appeal of exclusion from directory — Authority for administrative regulations.
131.626. State entitled to recover costs of enforcement action — Tobacco control special fund created.
131.628. Severability of provisions.
131.630. Revocation or suspension of distributor's or stamping agent's license — Civil penalties.
History. Enact. Acts 2003, ch. 194, § 1, effective April 6, 2003; 2005, ch. 85, § 156, effective June 20, 2005; 2009, ch. 84, § 1, effective July 1, 2009; repealed by 2015 ch. 55, § 18, effective July 1, 2015.
This section (Enact. 2009 Ky. Act ch. 84, § 1, effective July 1, 2009), was repealed by Acts 2015, ch. 138, § 18, effective July 15, 2015.
The General Assembly finds that violations of KRS 131.600 and 131.602 threaten the integrity of the tobacco master settlement agreement, the fiscal soundness of the state, and the public health. The legislature finds that enacting procedural enhancements will aid enforcement of KRS 131.600 and 131.602 and thereby safeguard the master settlement agreement, the fiscal soundness of the state, and the public health.
History. Enact. Acts 2003, ch. 194, § 2, effective April 6, 2003.
Prior to selling cigarettes in Kentucky, directly or through a distributor, retailer, or similar intermediary or intermediaries, every tobacco product manufacturer shall certify as true under penalty of perjury that, as of the date of certification, the tobacco product manufacturer is a:
Participating manufacturer; or
Nonparticipating manufacturer; in full compliance with the provisions of KRS 131.600 to 131.630 , 138.130 to 138.205 , 248.752 , and 248.754 and any administrative regulations promulgated thereunder. The participating manufacturer and the nonparticipating manufacturer shall execute and deliver an annual certification to the Attorney General on a form prescribed by the Attorney General no later than April 30 of each year. The nonparticipating manufacturer shall also submit a quarterly certification at the time and on a form prescribed by the Attorney General.
A participating manufacturer shall include in its certification a list of its brand families. The participating manufacturer shall update the list thirty (30) calendar days prior to any addition to or modification of its brand families by executing and delivering a supplemental certification to the Attorney General.
A nonparticipating manufacturer shall include in its certification:
A complete list of its brand families;
A separate list of its brand families and the number of units sold in Kentucky for each brand family during the preceding calendar year;
A separate list of all of its brand families that have been sold in Kentucky at any time during the current calendar year including:
Indicating by an asterisk any brand family sold in Kentucky during the preceding calendar year that is no longer being sold in Kentucky as of the date of the certification; and
Identifying by name and address any other manufacturer of such brand families in the preceding or current calendar year;
A full disclosure of any removals or notices of removal from other state directories, which may be used as a basis to deny certification;
A listing of and a declaration from each of its importers of any of its brand families. The declaration shall state the following:
The importer accepts joint and several liability with the nonparticipating manufacturer for all obligations to place funds into a qualified escrow fund, for payment of all civil penalties, and for payment of all reasonable costs and expenses of investigation and prosecution, including attorneys' fees, as provided in KRS 131.602 ;
The importer consents to personal jurisdiction in this state for the purpose of claims by the state for any obligation to place funds into a qualified escrow fund, for payment of all civil penalties, and for payment of any reasonable costs and expenses of investigation or prosecution, including attorneys' fees, as provided in KRS 131.602 ;
The importer has appointed a registered agent for service of process in this state according to the same requirements established for the nonparticipating manufacturer as provided in KRS 131.614 ;
The importer holds a valid permit under 26 U.S.C. sec. 5713 ;
The importer is in compliance with the federal Jenkins Act, 15 U.S.C. secs. 375 et seq., as amended by the Prevent All Cigarette Trafficking (Pact) Act, Pub. L. No. 111-154, 124 Stat. 108; and
The importer has complied with KRS 138.130 to 138.205 , 248.752 , and 248.754 and any administrative regulations promulgated thereunder; and
Verification that the nonparticipating manufacturer has provided the following:
The name, address, and telephone number of the financial institution where the nonparticipating manufacturer has established a qualified escrow fund required under KRS 131.602 and all administrative regulations promulgated thereunder;
The account number of the qualified escrow fund and any subaccount number for the state of Kentucky;
The amount the nonparticipating manufacturer placed in the fund for cigarettes sold in Kentucky during the preceding calendar year, the date and amount of each deposit and evidence or verification, as may be deemed necessary, by the Attorney General to confirm the foregoing;
The amount and date of any withdrawal or transfer of funds the nonparticipating manufacturer made at any time from the fund, or from any other qualified escrow fund into which it ever made escrow payments pursuant to KRS 131.602 and all administrative regulations promulgated thereunder.
A nonparticipating manufacturer requesting certification shall further certify that it:
Is registered to do business in Kentucky or has appointed a resident agent for service of process and provided notice as required by KRS 131.614 ;.
Holds a valid permit under 26 U.S.C. sec. 5713 ;
Has established and continues to maintain a qualified escrow fund pursuant to KRS 131.602 and has executed a qualified escrow agreement that governs the qualified escrow fund and that has been reviewed and approved by the Attorney General;
Is in full compliance with KRS 131.600 to 131.630 and 138.130 to 138.205 and any administrative regulations promulgated thereunder;
Is in compliance with the federal Jenkins Act, 15 U.S.C. secs. 375 et seq., as amended by the Prevent All Cigarette Trafficking (Pact) Act, Pub. L. No. 111-154, 124 Stat. 108; and
Whether acting as an individual, entity, or any other group or combination acting as a unit, or any partner, director, principal officer, or manager of the entity or any other group or combination acting as a unit, has not been convicted of or entered a plea of guilty or nolo contendere to:
A crime relating to the reporting, distribution, sale, or taxation of cigarettes or tobacco products; or
A crime involving fraud, falsification of records, improper business transactions, or reporting; for ten (10) years from the expiration of probation or final discharge from parole or maximum expiration of sentence.
A tobacco product manufacturer may not include a brand family in its certification unless:
In the case of a participating manufacturer, the participating manufacturer affirms that the brand family is to be deemed to be its cigarettes for purposes of calculating its payments under the master settlement agreement for the relevant year, in the volume and shares determined pursuant to the master settlement agreement; and
In the case of a nonparticipating manufacturer, the nonparticipating manufacturer affirms that the brand family is to be deemed to be its cigarettes pursuant to KRS 131.602 .
The nonparticipating manufacturer shall update all lists thirty (30) calendar days prior to any addition to or modification of its brand families by executing and delivering a supplemental certification to the Attorney General.
Nothing in this section shall be construed as limiting or otherwise affecting the state's right to maintain that a brand family constitutes cigarettes of a different tobacco product manufacturer for purposes of calculating payments under the master settlement agreement or for purposes of KRS 131.602 .
The tobacco product manufacturers shall maintain all invoices and documentation of sales and other information relied upon for a certification for a period of five (5) years.
History. Enact. Acts 2003, ch. 194, § 3, effective April 6, 2003; 2015 ch. 55, § 3, effective July 1, 2015.
The Attorney General shall develop and make available to the department for public inspection, to include publishing on the department's Web site, a listing of all tobacco product manufacturers that have provided current and accurate certifications pursuant to KRS 131.608 and all brand families that are listed in the certifications. The listing shall be referred to as the "directory" and completed no later than July 1 of each certification year.
The department shall not include or retain in the directory the name or brand families of any nonparticipating manufacturer that has failed to provide the required certification or whose certification the Attorney General determines is not in compliance with KRS 131.608 , unless the Attorney General has determined that such violation has been satisfactorily cured.
Neither a nonparticipating manufacturer nor a brand family shall be included or retained in the directory if the Attorney General determines that:
Any escrow payment required pursuant to KRS 131.602 for any period for any brand family, whether or not listed by the nonparticipating manufacturer, has not been fully paid into a qualified escrow fund governed by a qualified escrow agreement that has been approved by the Attorney General;
Any outstanding final judgment, including interest thereon, for a violation of KRS 131.602 has not been fully satisfied for the brand family or the manufacturer;
The requirements for certification under KRS 131.608 have not been met; or
The financial instrument required by KRS 131.602(10) has not been posted.
Upon receipt of information from the Attorney General, the department shall update the directory as necessary in order to correct mistakes and to add or remove a tobacco product manufacturer or brand family to keep the directory in conformity with the requirements of this section and KRS 131.608 and 131.620 .
The department shall transmit, by electronic mail or other practicable means, notice to each stamping agent and distributor of any addition to or removal from the directory of any tobacco product manufacturer or brand family. (5) (a) The department shall transmit, by electronic mail or other practicable means, notice to each stamping agent and distributor of any addition to or removal from the directory of any tobacco product manufacturer or brand family.
Within seven (7) days of receiving a removal notice from the department, each stamping agent or distributor shall forward:
A copy of the removal notice to each of the stamping agent's or distributor's retail customers; and
To the department, a list of the retail customers and any other person to whom the removal notices were sent.
The retailer shall not sell any cigarettes of a tobacco product manufacturer or brand family that has been removed from the directory.
The department shall work cooperatively with the stamping agents and distributors to develop an electronic system which will be used to notify, as soon as possible, all retail customers and any other person to whom the nonparticipating manufacturer's products were sold that:
A notice of intent to remove the nonparticipating manufacturer from the directory has been issued by the Attorney General; and
A subsequent change in that status has occurred as a result of the nonparticipating manufacturer coming into compliance prior to being removed from the directory.
Every stamping agent and distributor shall provide and update as necessary an electronic mail address to the department for the purpose of receiving any notifications that may be required by this section and KRS 131.608 , 131.616 , 131.620 , and 131.624 .
Notwithstanding the provisions of subsections (2) and (3) of this section, in the case of any nonparticipating manufacturer who has established a qualified escrow fund pursuant to KRS 131.602 that has been approved by the Attorney General, the Attorney General may not remove the nonparticipating manufacturer or its brand families from the directory unless the nonparticipating manufacturer has been given at least thirty (30) days' notice of the intended action. For the purposes of this section, notice shall be deemed sufficient if it is sent either electronically to an electronic-mail address or by first class to a postal mailing address provided by the nonparticipating manufacturer in its most recent certification filed pursuant to KRS 131.608 . The notified nonparticipating manufacturer shall have thirty (30) days from receipt of the notice to comply. At the time that the Attorney General sends notice of his or her intent to remove the nonparticipating manufacturer from the directory, the Attorney General shall post the notice in the directory.
Beginning on the day after the Attorney General posts a notice in the directory of the Attorney General's intent to remove the nonparticipating manufacturer from the directory as provided in subsection (7) of this section, a stamping agent or distributor shall not purchase cigarettes from the nonparticipating manufacturer or any of its importers unless and until the Attorney General determines that the nonparticipating manufacturer is in compliance with KRS 131.608 and posts the notification of compliance in the directory.
History. Enact. Acts 2003, ch. 194, § 4, effective April 6, 2003; 2005, ch. 85, § 157, effective June 20, 2005; 2009, ch. 84, § 2, effective July 1, 2009; 2015 ch. 55, § 4, effective July 1, 2015.
It shall be unlawful for:
Any stamping agent, distributor, or any other person to affix a stamp to a package or other container of cigarettes of a tobacco product manufacturer or brand family not included in the directory; or
Any retailer or any other person to sell cigarettes from a tobacco product manufacturer or brand family after the effective date of the removal of the tobacco product manufacturer or brand family from the directory.
HISTORY: Enact. Acts 2003, ch. 194, § 5, effective April 6, 2003; 2009, ch. 84, § 3, effective July 1, 2009; 2015 ch. 55, § 5, effective July 1, 2015.
KRS 131.612 , which implemented a settlement agreement with cigarette manufacturers regarding the manufacturers' payments to offset certain government costs for smoking-related diseases, and which made it illegal for distributors to place Kentucky tax stamps on cigarettes purchased from manufacturers that were not in compliance with other laws implementing the settlement agreement, was not preempted by the Sherman Act, 15 USCS § 1, because it did not mandate or authorize violation of the Sherman Act in order to achieve compliance. Tritent Int'l Corp. v. Commonwealth, 2005 U.S. Dist. LEXIS 20233 (E.D. Ky. Sept. 8, 2005), aff'd, 467 F.3d 547, 2006 FED App. 0400P, 2006 U.S. App. LEXIS 26911 (6th Cir. Ky. 2006 ).
Any nonresident or foreign nonparticipating manufacturer that has not registered to do business in the state as a foreign corporation or business entity shall, as a condition precedent to having its brand families included or retained in the directory:
Appoint and continually engage without interruption the services of an agent in this state to act as agent for the service of process on whom all process, and any action or proceeding against it concerning or arising out of the enforcement of KRS 131.600 to 131.630 , may be served in any manner authorized by law. The service shall constitute legal and valid service of process on the nonparticipating manufacturer. The nonparticipating manufacturer shall provide the name, address, phone number, and proof of the appointment and availability of the agent to the Attorney General; and
Cause each of its importers of each of its brand families to be sold in the state to appoint and continually engage without interruption the services of an agent in this state for the purposes outlined in paragraph (a) of this subsection.
The nonparticipating manufacturer and each of its importers shall provide notice to the Attorney General thirty (30) calendar days prior to termination of the authority of an agent and shall further provide proof of the appointment of a new agent no less than five (5) calendar days prior to the termination of an existing agent appointment. If an agent terminates an agency appointment, the nonparticipating manufacturer and each of its importers shall notify the Secretary of State and the Attorney General of the termination within five (5) calendar days and shall include proof of the appointment of a new agent.
If a nonparticipating manufacturer or any of its importers do not appoint or designate an agent as required by this section, the Secretary of State shall serve as its agent and the nonparticipating manufacturer or its importers, as the case may be, may be proceeded against in courts of this state by service of process upon the Secretary of State. The appointment of the Secretary of State as its agent shall not satisfy the condition precedent to having the nonparticipating manufacturer's brand families listed or retained in the directory.
The Attorney General may by administrative regulation establish criteria for validating the appointment of an agent for the purposes of this section.
HISTORY: Enact. Acts 2003, ch. 194, § 6, effective April 6, 2003; 2015 ch. 55, § 6, effective July 1, 2015.
On or before the twentieth day of each month, each stamping agent and distributor shall submit documentation that the commissioner requires to facilitate compliance with this section, including but not limited to a list by brand family of the total number of cigarettes for which the stamping agent or distributor affixed stamps during the previous calendar month or otherwise paid the tax due for the cigarettes. The stamping agent or distributor shall maintain, and make available to the commissioner, all invoices and documentation of sales of all nonparticipating manufacturer cigarettes and any other information relied upon in reporting to the commissioner for a period of five (5) years.
History. Enact. Acts 2003, ch. 194, § 7, effective April 6, 2003; 2005, ch. 85, § 158, effective June 20, 2005.
Notwithstanding KRS 131.190 , the commissioner is authorized to disclose to the Attorney General the name and address of a stamping agent or distributor and the number of sticks by brand name that have been purchased from a nonparticipating manufacturer and have been stamped with Kentucky stamps by that agent or distributor. The Attorney General may share this information with federal, other state, or local agencies only for the purposes of enforcement of KRS 131.600 to 131.630 or corresponding laws of other states. The Attorney General is further authorized to disclose to a nonparticipating manufacturer or its importers this information that has been provided by a stamping agent regarding the purchases from that nonparticipating manufacturer or its importers. This information provided by a stamping agent may be used in any enforcement action against the nonparticipating manufacturer or its importers by the Attorney General.
In addition to the information required to be submitted pursuant to KRS 131.608 , 131.614 , and 131.620 , the Attorney General or the commissioner may require a stamping agent, distributor, participating manufacturer, nonparticipating manufacturer, or a nonparticipating manufacturer's importers to submit any additional information including but not limited to samples of the packaging or labeling of each brand family as is necessary to enable the Attorney General to determine whether the participating manufacturer or the nonparticipating manufacturer and its importers are in compliance with KRS 131.600 to 131.630 .
HISTORY: Enact. Acts 2003, ch. 194, § 8, effective April 6, 2003; 2005, ch. 85, § 159, effective June 20, 2005; 2015 ch. 55, § 7, effective July 1, 2015.
The Attorney General may, at any time, require from the nonparticipating manufacturer proof from the financial institution in which the manufacturer has established a qualified escrow fund, for the purpose of compliance with KRS 131.600 and 131.602 , of the amount of money in the fund, exclusive of interest, the amount and date of each deposit to the fund, and the amount and date of each withdrawal from the fund.
To promote compliance with the provisions of KRS 131.602 , the Attorney General may promulgate regulations requiring a nonparticipating manufacturer subject to the requirements of KRS 131.602 to make the escrow deposits required in quarterly installments during the year in which the sales covered by such deposits are made. The Attorney General may require production of information sufficient to enable the Attorney General to determine the adequacy of the amount of the installment deposit.
History. Enact. Acts 2003, ch. 194, § 9, effective April 6, 2003; 2004, ch. 135, § 3, effective July 13, 2004.
The following shall be contraband and subject to seizure and destruction: (1) (a) The following shall be contraband and subject to seizure and destruction:
Any cigarettes that have been affixed with a stamp in this state in violation of KRS 131.612 ; or
Any cigarettes in the possession of a retailer from a tobacco product manufacturer or brand family that has been removed from the directory.
Whenever any peace officer of this state, or any representative of the department, finds any contraband cigarettes, the cigarettes shall be immediately seized and stored in a depository to be selected by the officer or representative.
The seized cigarettes shall be held for a period of twenty (20) days to allow the owner or any person having an interest in the cigarettes to protest the seizure.
At the time of seizure, the officer or representative shall:
Notify the department of the nature and quantity of the cigarettes seized; and
Deliver to the person in whose custody the cigarettes are found a receipt for the cigarettes. The receipt shall state on its face the date of seizure, and a notice that the cigarettes shall be destroyed if the seizure is not protested in writing to the Department of Revenue, Frankfort, Kentucky, within twenty (20) days from the seizure.
The owner or any person having an interest in the seized cigarettes may appeal to the Board of Tax Appeals a final determination made by the department pursuant to KRS 49.220 .
If the owner or any person having an interest in the seized cigarettes fails to protest the seizure before the end of the twenty (20) day holding period, the department shall destroy the seized cigarettes.
The Attorney General may seek an injunction to restrain a violation of KRS 131.612 or 131.616 by a distributor or stamping agent and to compel the distributor or stamping agent to comply with KRS 131.612 and 131.616 . In any action brought pursuant to this section, the state shall be entitled to recover the costs of investigation, costs of the action, and attorneys' fees from any distributor or stamping agent found to be in violation of KRS 131.612 or 131.616.
No stamping agent, distributor, retailer, or any other person shall sell or distribute cigarettes, or acquire, hold, own, possess, transport, import, or cause to be imported cigarettes that the stamping agent, distributor, retailer, or person knows are intended for distribution or sale in the state in violation of KRS 131.612 . A violation of this section is a Class A misdemeanor.
Nothing in this section shall prohibit a stamping agent or distributor from possessing unstamped containers of cigarettes held in inventory for delivery to, or for sale in, another state if in possession of proof that the cigarettes are intended for sale in another state.
In addition to or in lieu of any other civil or criminal remedy provided by law, upon a determination that a stamping agent or distributor has violated KRS 131.612 or any administrative regulation promulgated pursuant to KRS 131.600 to 131.630 , the commissioner may suspend the sale of cigarette stamps to the stamping agent or distributor for failure to comply with the provisions of KRS 131.600 to 131.630 .
History. Enact. Acts 2003, ch. 194, § 10, effective April 6, 2003; 2005, ch. 85, § 160, effective June 20, 2005; 2009, ch. 84, § 4, effective July 1, 2009; 2015 ch. 55, § 8, effective July 1, 2015; 2017 ch. 74, § 66, effective June 29, 2017; 2021 ch. 185, § 61, effective June 29, 2021.
Defendant facing a sale of contraband cigarettes charge failed to show that KRS 131.622(4) applied where he failed to show that the statute supersedes the specific excise tax provisions, including those that applied to cigarettes, and the statute only applied to KRS 121.622; it did not say that taxes due under other provisions of Kentucky law were inapplicable to such cigarettes. United States v. Cooper, 2013 U.S. Dist. LEXIS 69003 (W.D. Ky. May 15, 2013).
Any person aggrieved by a determination of the Attorney General to not include or to remove from the directory created in KRS 131.610 a brand family or tobacco product manufacturer may appeal the determination to the Franklin Circuit Court, or to the Circuit Court of the county in which the aggrieved party resides or conducts his place of business. For the purposes of a temporary injunction sought pursuant to this subsection, loss of the ability to sell tobacco products as a result of removal from the directory may be deemed to constitute irreparable harm.
No person shall be issued a license or granted a renewal of a license to act as a distributor or stamping agent unless the person is in compliance with the provisions of KRS 131.600 to 131.630 .
The Attorney General or the department may promulgate administrative regulations necessary to effect the purposes of KRS 131.600 to 131.630 .
HISTORY: Enact. Acts 2003, ch. 194, § 11, effective April 6, 2003; 2005, ch. 85, § 161, effective June 20, 2005; 2015 ch. 55, § 9, effective July 1, 2015.
In any action brought by the state to enforce KRS 131.600 to 131.630 , the state shall be entitled to recover the costs of investigation, expert witness fees, costs of the action, and attorneys' fees from any entity or person found to be in violation of KRS 131.600 to 131.630 .
If a court determines that a person has violated KRS 131.600 to 131.630 , the court shall order any profits, gain, gross receipts, or other benefit from the violation to be relinquished and paid to the State Treasurer for deposit in the tobacco control special fund, which is hereby created. Moneys in the fund shall be used for the sole purpose of enforcement of KRS 131.600 to 131.630 .
Unless otherwise expressly provided, the remedies or penalties provided by KRS 131.600 to 131.630 are cumulative to each other and to the remedies or penalties available under all other laws of this state.
History. Enact. Acts 2003, ch. 194, § 12, effective April 6, 2003; 2015 ch. 55, § 10, effective July 1, 2015.
If any section, subsection, subdivision, paragraph, sentence, clause, or phrase of KRS 131.600 to 131.630 causes KRS 131.600 and 131.602 to no longer constitute a model statute, as it is set out in Exhibit T to the master settlement agreement, then that portion of KRS 131.600 to 131.630 shall not be valid.
HISTORY: Enact. Acts 2003, ch. 194, § 13, effective April 6, 2003; 2015 ch. 55, § 11, effective July 1, 2015.
In addition to or in lieu of any other civil or criminal remedy provided by law, upon a determination that a stamping agent or distributor has violated any provision of KRS 131.600 to 131.630 or any administrative regulations promulgated thereunder, the commissioner may revoke or suspend the license of any stamping agent or distributor pursuant to KRS 138.195 and 138.205 .
Each stamp affixed in violation of KRS 131.612 shall constitute a separate violation.
The commissioner may impose a civil penalty of twenty-five dollars ($25) per violation, not to exceed five thousand dollars ($5,000), upon a determination of a violation of KRS 131.612 or any administrative regulations promulgated thereunder. The penalty shall be imposed in the manner provided by KRS 138.195 and 138.205 .
HISTORY: Enact. Acts 2003, ch. 194, § 14, effective April 6, 2003; 2005, ch. 85, § 162, effective June 20, 2005; 2015 ch. 55, § 12, effective July 1, 2015.
131.650. List of taxpayers owing delinquent taxes or fees.
131.652. Taxes and fees subject to publication.
131.654. Notice to delinquent taxpayer before publication of name.
131.656. Method of publication of list — Contents.
131.658. Removal of name from list of delinquent taxpayers.
131.660. Rights of taxpayer whose name is erroneously published.
Notwithstanding the provisions of KRS 131.190 or any other confidentiality law to the contrary, the department may publish a list or lists of taxpayers that owe delinquent taxes or fees administered by the Department of Revenue, and that meet the requirements of KRS 131.652 .
For purposes of this section, a taxpayer may be included on a list if:
The taxes or fees owed remain unpaid at least sixty (60) days after the dates they became due and payable; and
A tax lien or judgment lien has been filed of public record against the taxpayer before notice is given under KRS 131.654 .
In the case of listed taxpayers that are business entities, the Department of Revenue may also list the names of responsible persons assessed pursuant to KRS 136.565 , 138.885 , 139.185 , 141.340 , and 142.357 for listed liabilities, who are not protected from publication by subsection (2) of this section, and for whom the requirements of KRS 131.652 are satisfied with regard to the personal assessment.
Before any list is published under this section, the department shall document that each of the conditions for publication as provided in this section has been satisfied, and that procedures were followed to ensure the accuracy of the list and notice was given to the affected taxpayers.
HISTORY: Enact. Acts 2002, ch. 366, § 7, effective January 1, 2003; 2005, ch. 85, § 163, effective June 20, 2005; 2018 ch. 171, § 108, effective April 14, 2018; 2018 ch. 207, § 108, effective April 27, 2018.
The Department of Revenue may publish a list of all of the taxpayers described in KRS 131.650 .
For the purposes of this section, a tax or fee is not delinquent if:
The procedures enumerated in KRS 131.110 have not been waived or exhausted at the time when notice would be given under KRS 131.654 ; or
The liability is subject to a payment agreement and there is no delinquency in the payments required under the agreement.
Unpaid liabilities are not subject to publication if:
The department is in the process of reviewing or adjusting the liability;
The taxpayer is a debtor in a bankruptcy proceeding and the automatic stay is in effect;
The department has been notified that the taxpayer is deceased; or
The time period for enforced collection of the taxes or fees has expired.
History. Enact. Acts 2002, ch. 366, § 8, effective January 1, 2003; 2005, ch. 85, §§ 164 and 165, effective June 20, 2005.
(6/20/2005). This section was amended by 2005 Ky. Acts ch. 85, §§ 164 and 165, which are identical and have been codified together.
At least sixty (60) days before publishing the name of a delinquent taxpayer, the department shall mail a written notice to the taxpayer, detailing the amount and nature of each liability and the intended publication of the information listed in KRS 131.656 related to the liability. The notice shall be mailed by first class mail addressed to the last known address of the taxpayer. The notice shall include information regarding the exceptions listed in KRS 131.652 and shall state that the taxpayer's information will not be published if the taxpayer pays the delinquent obligation, enters into an agreement to pay, or provides information establishing that KRS 131.652 prohibits publication of the taxpayer's name.
After at least sixty (60) days have elapsed since the notice was mailed and the delinquent tax or fee has not been paid and the taxpayer has not proved to the department that KRS 131.652 prohibits publication, the department may publish in a list of delinquent taxpayers the information about the taxpayer that is listed in KRS 131.656 .
History. Enact. Acts 2002, ch. 366, § 9, effective January 1, 2003; 2009, ch. 12, § 39, effective June 25, 2009.
The list may be published by any medium or method. The list may contain the name, address, type of tax or fee, and period for which payment is due for each liability, including penalties, interest, and other charges owed by each listed delinquent taxpayer.
History. Enact. Acts 2002, ch. 366, § 10, effective January 1, 2003.
The department shall remove the name of a taxpayer from the list of delinquent taxpayers after the department receives written notice of and verifies any of the following facts about the liability in question:
The taxpayer has contacted the department and arranged resolution of the liability;
An active bankruptcy proceeding has been initiated for the liability; or
A bankruptcy proceeding concerning the liability has resulted in discharge of the liability.
History. Enact. Acts 2002, ch. 366, § 11, effective January 1, 2003; 2005, ch. 85, § 166, effective June 20, 2005.
If the department publishes a name under KRS 131.650 in error, the taxpayer whose name was erroneously published has all the rights enumerated in KRS 131.081 for an aggrieved taxpayer.
131.672. Collection of delinquent taxes or debts — Financial institution data match system — Requirements for implementation of system — Lien or levy on account assets — Notice — Fees — Erroneous lien or levy — Administrative regulations.
131.674. Financial institutions to provide department with identifying information on delinquent taxpayers and debtors with account — Fee for conducting data matches — Confidentiality of information — Limitation on liability.
131.676. Provision of identifying or asset information not to be disclosed to delinquent taxpayer or debtor — Penalty — Financial institutions not liable — General notice to account holders.
"Debt" means a liquidated debt as defined in KRS 45.241(1)(b)
"Debtor" means any person liable for a debt;
"Delinquent taxpayer" means a person who has been assessed for a tax, the collection of which is administered by the Department of Revenue, and who has not sought administrative or judicial review of the assessment as provided in KRS 131.110 , or who has sought but exhausted all administrative and judicial review so that the assessment is final, due, and owing. For a person to be considered a "delinquent taxpayer," the following conditions must also be met:
The tax remains unpaid after thirty (30) days from demand for payment by the department; and
The person is not making current timely installment payments on the tax liability under agreement with the department; and
"Financial institution" means:
A depository institution and an institution-affiliated party as defined in 12 U.S.C. sec. 1813(c) and (u);
Any federal or state credit union, including an institution-affiliated party as defined in 12 U.S.C. secs. 1752 and 1786(r); or
Any benefit association, insurance company, safe deposit company, money market mutual fund, brokerage firm, trust company, or similar entity authorized to do business in the Commonwealth.
History. Enact. Acts 2006, ch. 252, Pt. XVII, § 1, effective April 25, 2006.
To assist the department in the collection of delinquent taxes and debts owed to the Commonwealth, the department shall implement and operate a financial institution match system for the purpose of identifying and seizing the financial assets of delinquent taxpayers and debtors as identified by the department. The provisions of KRS 131.670 to 131.676 shall be applied uniformly to all financial institutions within the Commonwealth holding accounts subject to levy as authorized by KRS 131.500 and shall not be implemented in any financial institution unless and until the department is prepared to implement the system in ninety percent (90%) of all financial institutions within a period of no longer than eighteen (18) months from June 26, 2007, or unless the financial institution in which the system will be implemented and the department agree, in writing, to implement the system sooner in that financial institution.
The department and the financial institution shall implement and operate the system identified in subsection (1) of this section by use of the data match system operated by the financial institution as required by KRS 205.772 and 205.774 for the purpose of administering the child support enforcement programs of the Commonwealth.
When the department determines that the name, record address, and either Social Security number or taxpayer identification number of an account with a financial institution matches the name, record address, and either the Social Security number or taxpayer identification number of a delinquent taxpayer or debtor, a lien or levy shall, subject to the provisions of subsection (4) of this section, arise against the assets in the account at the time of receipt of the notice by the financial institution at which the account is maintained. (3) (a) When the department determines that the name, record address, and either Social Security number or taxpayer identification number of an account with a financial institution matches the name, record address, and either the Social Security number or taxpayer identification number of a delinquent taxpayer or debtor, a lien or levy shall, subject to the provisions of subsection (4) of this section, arise against the assets in the account at the time of receipt of the notice by the financial institution at which the account is maintained.
The department shall provide notice of the following to the debtor or delinquent taxpayer and the financial institution:
The match;
The lien or levy arising therefrom; and
The action to be taken to surrender or encumber the account with the lien or levy for delinquent taxes.
Notice shall be provided to the debtor or delinquent taxpayer within two (2) business days of the date the notice is sent to the financial institution.
A financial institution ordered to surrender or encumber an account shall be entitled to collect its normally scheduled account activity fees to maintain the account during the period of time the account is seized or encumbered.
A financial institution may charge an account levied on by the department a fee of not more than twenty dollars ($20), which may be deducted from the account prior to remitting any funds to the department.
The department shall bear the cost or, if paid by the delinquent taxpayer or debtor, reimburse the delinquent taxpayer or debtor for any bank charges incurred as a result of any erroneous lien or levy by the department, provided the erroneous lien or levy was caused by department error and, prior to the issuance of the erroneous lien or levy, the delinquent taxpayer or debtor timely responded to all contacts by the department and provided information or documentation sufficient to establish his or her position.
The department shall promulgate administrative regulations to implement KRS 131.670 to 131.676 .
For purposes of this section, "financial institution" has the same meaning as provided in KRS 205.772 .
History. Enact. Acts 2006, ch. 252, Pt. XVII, § 2, effective April 25, 2006; 2007, ch. 68, § 1, effective June 26, 2007.
Financial institutions doing business in the Commonwealth shall provide identifying information each calendar quarter to the department for each delinquent taxpayer or debtor identified by the department that is indebted to the Commonwealth for delinquent taxes or debts and who maintains an account at the institution.
The financial institution shall be paid a fee for conducting data matches from the delinquent taxpayer's account, not to exceed the actual cost.
Except for the exchange of information between the department and financial institutions necessary for the enforcement of KRS 131.670 to 131.676 , any information obtained by the department from financial institutions shall be subject to confidentiality restrictions imposed on the department by KRS 131.190 .
A financial institution shall not be liable for encumbering or surrendering any assets held by the financial institution in response to a lien or notice of levy issued by the department, or any other action taken in good faith to comply with the requirements of KRS 131.670 to 131.676 .
A financial institution furnishing a report or providing asset information about a delinquent taxpayer or debtor to the department shall not disclose to the delinquent taxpayer or debtor that the name of that person has been received from or furnished to the department. A financial institution may disclose to its depositors or account holders that, under the financial institution match system, the department has the authority to request certain identifying information on certain depositors or account holders.
If a financial institution willfully violates the provisions of this section, the institution shall pay to the department the lesser of one thousand dollars ($1,000) or the amount on deposit or in the account of the person to whom the disclosure was made.
A financial institution shall incur no obligation or liability to a depositor or account holder or any other person arising from the furnishing of a report or information to the department pursuant to Sections 1 to 4 of this Part, or from the failure to disclose to a depositor or account holder that the name of the person was included in a list or report furnished by the financial institution to the department.
A financial institution shall not give notice to an account holder or customer of the financial institution that the financial institution has provided information or taken any action pursuant to Sections 1 to 4 of this Part and shall not be liable for failure to provide that notice; provided, however, that a financial institution may disclose to its depositors or account holders that, under the data match system, the department has the authority to request certain identifying information on certain depositors or account holders. The department shall notify, not less than annually, affected depositors or account holders who have not otherwise received notification.
Any person who violates the intentional unauthorized inspection provisions of KRS 131.190(1) shall be fined not more than five hundred dollars ($500) or imprisoned for not more than six (6) months, or both. (1) (a) 1. Any person who violates the intentional unauthorized inspection provisions of KRS 131.190(1) shall be fined not more than five hundred dollars ($500) or imprisoned for not more than six (6) months, or both.
Any person who violates the provisions of KRS 131.190(1) by divulging confidential taxpayer information shall be fined not more than one thousand dollars ($1,000) or imprisoned for not more than one (1) year, or both.
Any person who violates the intentional unauthorized inspection provisions of KRS 131.190(4) shall be fined not more than one thousand dollars ($1,000) or imprisoned for not more than one (1) year, or both.
Any person who violates the provisions of KRS 131.190(4) by divulging confidential taxpayer information shall be fined not more than five thousand dollars ($5,000) or imprisoned for not more than five (5) years, or both.
Any present secretary or employee of the Finance and Administration Cabinet, commissioner or employee of the department, member of a county board of assessment appeals, property valuation administrator or employee, or any other person, who violates the provisions of KRS 131.190(1) or (4) may, in addition to the penalties imposed under this subsection, be disqualified and removed from office or employment.
This subsection does not apply to any person who divulges or otherwise discloses documents, data, or other information prohibited from divulgence or disclosure pursuant to an order by a court of competent jurisdiction.
Any person who willfully fails to comply with the rules and regulations promulgated by the department for the administration of delinquent tax collections shall be fined not less than twenty dollars ($20) nor more than one thousand dollars ($1,000).
Any person who fails to do any act required or does any act forbidden by KRS 131.210 shall be fined not less than ten dollars ($10) nor more than five hundred dollars ($500).
Any person who fails to comply with the provisions of KRS 131.155 shall, unless it is shown to the satisfaction of the department that the failure is due to reasonable cause, pay a penalty of one-half of one percent (0.5%) of the amount that should have been remitted under the provisions of KRS 131.155 for each failure to comply.
Any person or financial institution that fails to comply with the provisions of KRS 131.672 and 131.674 within ninety (90) days after notification by the department shall, unless the failure is due to reasonable cause as defined in KRS 131.010 , be fined not less than one thousand dollars ($1,000) and no more than five thousand dollars ($5,000) for each full month of noncompliance. The fine shall begin on the first day of the month beginning after the expiration of the ninety (90) days. (5) (a) Any person or financial institution that fails to comply with the provisions of KRS 131.672 and 131.674 within ninety (90) days after notification by the department shall, unless the failure is due to reasonable cause as defined in KRS 131.010 , be fined not less than one thousand dollars ($1,000) and no more than five thousand dollars ($5,000) for each full month of noncompliance. The fine shall begin on the first day of the month beginning after the expiration of the ninety (90) days.
Any financial institution that fails or refuses to comply with the provisions of KRS 131.672 and 131.674 within one hundred twenty (120) days after the notification by the department shall, unless the failure is due to reasonable cause as defined in KRS 131.010, forfeit its right to do business within the Commonwealth, unless and until the financial institution is in compliance. Upon notification by the department, the commissioner of the Department of Financial Institutions shall, as applicable, revoke the authority of the financial institution or its agents to do business in the Commonwealth.
Any taxpayer or tax return preparer who fails or refuses to comply with the provisions of KRS 131.250 or an administrative regulation promulgated under KRS 131.250 shall, unless it is shown to the satisfaction of the department that the failure is due to reasonable cause, pay a return processing fee of ten dollars ($10) for each return not filed as required.
History. 4029, 4114h-3, 4114h-12, 4114h-15, 4149b-12: amend. Acts 1962, ch. 210, § 20; 1966, ch. 255, § 126; 1978, ch. 233, § 9, effective June 17, 1978; 1988, ch. 322, § 13, effective July 15, 1988; 1996, ch. 318, § 36, effective July 15, 1996; 1998, ch. 314, § 2, effective July 15, 1998; 2000, ch. 503, § 3, effective July 14, 2000; 2005, ch. 85, § 168, effective June 20, 2005; 2007, ch. 68, § 2, effective June 26, 2007; 2010, ch. 24, § 95, effective July 15, 2010; 2010, ch. 147, § 4, effective July 15, 2010; 2017 ch. 74, § 67, effective June 29, 2017; 2019 ch. 151, § 7, effective June 27, 2019.
KRS 131.190 and former subsection (3) of this section apply only to officials dealing with state and county taxes, and therefore the fact that the provision in an ordinance levying an occupational license tax penalizing the disclosure of information received by city officials through tax returns and examination of taxpayers' records imposed a penalty less than that imposed by these sections for the same offense, did not violate Ky. Const. § 168. Kohler v. Benckart, 252 S.W.2d 854, 1952 Ky. LEXIS 1025 ( Ky. 1952 ).
Tomlin v. Taylor, 290 Ky. 619 , 162 S.W.2d 210, 1942 Ky. LEXIS 468 ( Ky. 1942 ).
2011 Kentucky Survey Issue: Article: Personal Liability Regarding Taxation of Kentucky Corporations: Responsible Person Obligations Under the IRC and the KRS, 38 N. Ky. L. Rev. 285 (2011).
132.011. "Public charity" defined. [Repealed.]
132.012. "Abandoned urban property" defined — Classification as real property for tax purposes.
132.015. List of real property additions and deletions to tax rolls to be maintained by property valuation administrator.
132.017. Recall petition — Requirements and procedures — Reconsideration — Election — Tax dollars not to be used to advocate for or against public question — Second billing.
132.018. Reduction of tax rate on personal property.
132.020. State ad valorem taxes.
132.0225. Deadline for establishing final tax rate — Exemption — Procedure if increased revenue is greater than four percent.
132.023. Limits for special purpose governmental entities — Procedure for exceeding limits.
132.024. Limits for special purpose governmental entities on personal property tax rate.
132.025. Cumulative increase for 1982-83 only by taxing district — Limit — Public hearing and recall provisions not applicable.
132.027. City and urban-county government tax rate limitation — Levy exceeding compensating tax rate subject to recall vote or reconsideration.
132.028. Rate on business inventories levied by a city or urban-county government — Exception.
132.029. Limits for city and urban-county government on personal property tax rate.
132.0291. Cumulative increase for 1982-83 only by a city or urban-county government — Limit — Public hearing and recall not applicable. [Repealed.]
132.030. Financial institution deposit tax.
132.040. Financial institutions to report and pay tax — Lien.
132.043. Retirement plan, interest taxable by state — Rate — Collection — Not subject to local taxes. [Repealed.]
132.047. Credit union accounts — Taxation — Rate — Collection — Not subject to local taxes. [Repealed.]
132.050. Brokers' accounts receivable tax. [Repealed.]
132.060. Marginal accounts tax — Brokers' report to cabinet. [Repealed.]
132.070. Assessment of marginal accounts tax. [Repealed.]
132.080. Payment and collection of marginal accounts tax — Penalty. [Repealed.]
132.090. Credit to broker for services. [Repealed.]
132.095. Personal property in warehouse in transit, ad valorem tax. [Repealed.]
132.097. Exemption from state ad valorem tax of personal property held for shipment out of state.
132.098. Exemption from state and local ad valorem tax of computer software, except prewritten computer software.
132.099. Local taxation of personal property held for shipment out of state — Definitions.
132.100. Referendum on act classifying property for taxation — Petition.
132.110. Certification of petition for referendum — Publication of act.
132.120. Certification of question — Vote on referendum — Certification and publication of results — Expenses.
132.130. Distilled spirits in bonded warehouses to be reported by proprietor or custodian.
132.140. Assessment of distilled spirits by department.
132.150. Valuation of distilled spirits certified to county clerks — Local tax rate.
132.160. Taxes on distilled spirits and spirits on which federal taxes not paid, when due — Removal of spirits — Interest.
132.170. Reports on spirits on which Federal tax has been paid or is due or removed for transfer out of state; payment of taxes due. [Repealed.]
132.180. Liability for distilled spirits tax.
132.185. Optional plan for payment of distilled spirits tax and interest. [Repealed.]
132.190. Property subject to taxation — Situs.
132.191. Valid valuation methods — Minimum applicable appraisal standards.
132.192. Property tax exemption reciprocity.
132.193. Assessment of possessory interests in tax-exempt personal property — Lessee's liability.
132.195. Assessment of possessory interest in tax-exempt real or personal property — Lessee's liability.
132.200. Property subject to state tax only.
132.202. Tax on municipal solid waste disposal facility's real and tangible personal property.
132.203. KRS 132.200(11) not applicable, when. [Repealed.]
132.205. Exemption of bridges built by adjoining state, United States or commission created by Act of Congress over boundary line stream — Bonds.
132.208. Exemption of intangible personal property from state and local ad valorem taxes — Local taxation permitted.
132.210. Exemption of fraternal benefit societies' funds.
132.212. Veteran service organization qualifying as institution of public charity — Not subject to ad valorem taxation.
132.215. Right to receive income — Basis of assessment — Rate of tax. [Repealed.]
132.216. Life insurance companies to report names and addresses of residents entitled to proceeds of policies left on deposit and subject to right of withdrawal, and beneficiaries of policies taxable under KRS 132.215. [Repealed.]
132.220. Assessment dates — Listing — Owner — Liability — Exemptions, listing, annual review.
132.225. Assessment dates for ad valorem tax on motor vehicles and trailers — Valuation — Certification — Notification of registered owner — Tax payable to county clerk on or before registration renewal date. [Repealed.]
132.227. Situs of vehicle.
132.230. Information to be given in listing property for taxation — Correction of error or informality.
132.240. Face value of intangibles to be stated. [Repealed.]
132.250. Listing of property of nonresident owner. [Repealed.]
132.260. Rental space for parking mobile homes and recreational vehicles — Report — Right to inspect.
132.270. Reporting and assessment of property held in pawn or pledge — Lien.
132.275. Public utilities in county containing city of first class or consolidated local government to give property valuation administrator information concerning customers.
132.280. County tax levy to be based on state assessment — Exception for special taxing district.
132.285. Use by city of county assessment allowance for costs — City's power in adopting procedures to use county assessment — Appropriation.
132.290. Omitted property, what constitutes — Periods within which it may be assessed retroactively — Penalties and interest.
132.300. Failure to list note or bond bars action to collect. [Repealed.]
132.310. Listing and assessment of omitted property — Notice — Appeal — Penalties.
132.320. Listing of omitted property with department — Appeal — Collection and distribution of tax — Deduction of fee from distribution.
132.330. Action by Department of Revenue to assess omitted property.
132.340. Order of county judge/executive assessing omitted property — Certifying of assessment — Penalties — Collection.
132.350. County attorney shall assist in tax assessment proceedings in court — Compensation.
132.360. Reopening and increase of assessment — Notice — Protest — Certification.
132.365. Procedure for assessment of mineral properties. [Repealed.]
132.370. Property valuation administrator's status as state official — Election — Qualification — Terms — Removal — Accrued leave and compensatory time.
132.375. Designation of qualified department employee to fill vacancy.
132.380. Examination of candidates for property valuation administrator — Certificate.
132.385. Education program by department — Certification program for administrators and others.
132.390. Appointment and removal of deputies. [Repealed.]
132.400. Bond of property valuation administrator.
132.410. Office facilities for property valuation administrator — Records — Working hours.
132.420. Duties and powers of property valuation administrator.
132.425. Net assessment growth. [Repealed.]
132.430. Assessment methods. [Repealed.]
132.440. Oath of taxpayer on listing property.
132.450. Assessment — Special procedure and provision for assessing real property at agricultural or horticultural value — Election by owner.
132.452. Declaring moratorium by government units.
132.454. Tax liability when real property taxed as agricultural or horticultural is converted to another use.
132.460. Property valuation administrator, or deputy, to attend hearing on appealed assessments — Expenses.
132.470. Assessment of property of property valuation administrator and his deputies.
132.480. Monthly report of real estate conveyances by county clerk to property valuation administrator — Compensation of clerk — Inclusion of in-care-of address in records.
132.485. Motor vehicle registration as consent to assess — Exceptions — Assessment of vehicle twenty years old or older — Ownership — Assessment of vehicle purchased and registered in different years — Exemptions.
132.486. Assessment system for tangible personal property — Administrative regulations — Appeals — Effect of appeal on payment of taxes.
132.487. Centralized ad valorem tax system for all motor vehicles — General and compensating tax rates — Access to records — Property valuation administrator to assess motor vehicles.
132.488. Centralized ad valorem tax system for motorboats — Access to records.
132.490. Annual reports of recorded evidences of indebtedness, by county clerk to property valuation administrators — Compensation of clerk. [Repealed.]
132.500. Valuation of evidences of indebtedness.
132.510. Fiduciary's report of personal property held.
132.520. Mortgage assignments to be reported by banks and other companies. [Repealed.]
132.530. Preparation of tax rolls.
132.540. Assessment when lists and tax rolls destroyed or not returned. [Repealed.]
132.550. County clerk to compute amount due from each taxpayer — Compensation of clerk. [Repealed]
132.560. Family exemptions; allowance of; how applied; not transferred to tax roll. [Repealed.]
132.570. Attempts to evade taxation — Penalty.
132.580. County court shall try owner refusing to list property, and shall assess the property; discharge if not wilfully delinquent. [Repealed.]
132.585. State local finance officer to provide tax rate calculation assistance.
132.590. Compensation of administrator — Salary schedule — Salary adjustments — Advancement in grade — Biennial budget — Allowances for deputies — Payments by fiscal court.
132.591. Alternative compensation scheme for administrator, contingent on state funding. [Repealed.]
132.595. Adjustment of compensation. [Repealed.]
132.597. Expense allowance for property valuation administrators who meet stipulated requirements — Annual professional instruction.
132.600. Use of excess compensation of property valuation administrator for purchase of maps, charts, supplies, equipment and other expenses, and for costs of reappraisal project. [Repealed.]
132.601. Administrator's use of local funds accruing to office — Bank account — Expenditures — Supervision.
132.605. Purchase of assessment supplies and equipment by county — Purchase and loan by Department of Revenue — Maintenance.
132.610. Verification of property valuation administrator's claim for services — Affidavit.
132.620. Recovery of compensation or costs from property valuation administrator for unauthorized assessment or neglect of duty — Procedure — Appeal.
132.630. Compensation of property valuation administrator's office. [Repealed.]
132.635. Application of KRS 132.590 and 132.630 to urban-county governments and consolidated local governments. [Repealed]
132.640. Advancement against compensation to county tax commissioner in county containing city of first or second class. [Repealed.]
132.645. Payment of compensation to property valuation administrator.
132.650. Informality or irregularity does not vitiate assessment or tax bills — Failure of property valuation administrator to call on taxpayer or perform duties on time does not make assessment void.
132.660. Emergency assessments.
132.670. Mapping of property — Biennial review by Department of Revenue.
132.672. Mapping project account — Transfer of funds.
132.680. Public policy of state with respect to 1949 changes in ad valorem tax laws. [Repealed.]
132.690. Annual revaluation of real property — Quadrennial examination of real property — Methods of examination — Emergency revaluation.
132.700. Appraisal manual revision. [Repealed.]
132.710. Contract with sheriff to collect tax on motor vehicles; notice of lien. [Repealed.]
132.720. Definitions for KRS 132.260 and 132.751.
132.730. Mobile homes and recreational vehicles subject to ad valorem taxation — Exception.
132.740. Notification of assessment. [Repealed.]
132.750. When mobile home classified as real estate. [Repealed.]
132.751. Classification of certain mobile or manufactured homes and certain recreational vehicles as real property.
132.760. Exemption from ad valorem taxes for trucks, tractors, buses, and trailers used both in and outside Kentucky and subject to KRS 136.188 fee.
132.810. Homestead exemption — Application — Qualification.
132.815. Monthly reports from certified electrical inspectors — Use of information.
132.820. Assessment of unmined coal, oil, and gas reserves held separately from surface real property — Exceptions — Effect of appeal on payment of taxes.
132.825. Listing of property required.
"Taxpayer" means any person made liable by law to file a return or pay a tax;
"Real property" includes all lands within this state and improvements thereon;
"Personal property" includes every species and character of property, tangible and intangible, other than real property;
"Resident" means any person who has taken up a place of abode within this state with the intention of continuing to abide in this state; any person who has had his or her actual or habitual place of abode in this state for the larger portion of the twelve (12) months next preceding the date as of which an assessment is due to be made shall be deemed to have intended to become a resident of this state;
"Compensating tax rate" means that rate which, rounded to the next higher one-tenth of one cent ($0.001) per one hundred dollars ($100) of assessed value and applied to the current year's assessment of the property subject to taxation by a taxing district, excluding new property and personal property, produces an amount of revenue approximately equal to that produced in the preceding year from real property. However, in no event shall the compensating tax rate be a rate which, when applied to the total current year assessment of all classes of taxable property, produces an amount of revenue less than was produced in the preceding year from all classes of taxable property. For purposes of this subsection, "property subject to taxation" means the total fair cash value of all property subject to full local rates, less the total valuation exempted from taxation by the homestead exemption provision of the Constitution and the difference between the fair cash value and agricultural or horticultural value of agricultural or horticultural land;
"Net assessment growth" means the difference between:
The total valuation of property subject to taxation by the county, city, school district, or special district in the preceding year, less the total valuation exempted from taxation by the homestead exemption provision of the Constitution in the current year over that exempted in the preceding year, and
The total valuation of property subject to taxation by the county, city, school district, or special district for the current year;
"New property" means the net difference in taxable value between real property additions and deletions to the property tax roll for the current year. "Real property additions" shall mean:
Property annexed or incorporated by a municipal corporation, or any other taxing jurisdiction; however, this definition shall not apply to property acquired through the merger or consolidation of school districts, or the transfer of property from one (1) school district to another;
Property, the ownership of which has been transferred from a tax-exempt entity to a nontax-exempt entity;
The value of improvements to existing nonresidential property;
The value of new residential improvements to property;
The value of improvements to existing residential property when the improvement increases the assessed value of the property by fifty percent (50%) or more;
Property created by the subdivision of unimproved property, provided, that when the property is reclassified from farm to subdivision by the property valuation administrator, the value of the property as a farm shall be a deletion from that category;
Property exempt from taxation, as an inducement for industrial or business use, at the expiration of its tax exempt status;
Property, the tax rate of which will change, according to the provisions of KRS 82.085 , to reflect additional urban services to be provided by the taxing jurisdiction, provided, however, that the property shall be considered "real property additions" only in proportion to the additional urban services to be provided to the property over the urban services previously provided; and
The value of improvements to real property previously under assessment moratorium. "Real property deletions" shall be limited to the value of real property removed from, or reduced over the preceding year on, the property tax roll for the current year;
"Agricultural land" means:
Any tract of land, including all income-producing improvements, of at least ten (10) contiguous acres in area used for the production of livestock, livestock products, poultry, poultry products and/or the growing of tobacco and/or other crops including timber;
Any tract of land, including all income-producing improvements, of at least five (5) contiguous acres in area commercially used for aquaculture; or
Any tract of land devoted to and meeting the requirements and qualifications for payments pursuant to agriculture programs under an agreement with the state or federal government;
"Horticultural land" means any tract of land, including all income-producing improvements, of at least five (5) contiguous acres in area commercially used for the cultivation of a garden, orchard, or the raising of fruits or nuts, vegetables, flowers, or ornamental plants;
"Agricultural or horticultural value" means the use value of "agricultural or horticultural land" based upon income-producing capability and comparable sales of farmland purchased for farm purposes where the price is indicative of farm use value, excluding sales representing purchases for farm expansion, better accessibility, and other factors which inflate the purchase price beyond farm use value, if any, considering the following factors as they affect a taxable unit:
Relative percentages of tillable land, pasture land, and woodland;
Degree of productivity of the soil;
Risk of flooding;
Improvements to and on the land that relate to the production of income;
Row crop capability including allotted crops other than tobacco;
Accessibility to all-weather roads and markets; and
Factors which affect the general agricultural or horticultural economy, such as: interest, price of farm products, cost of farm materials and supplies, labor, or any economic factor which would affect net farm income;
"Deferred tax" means the difference in the tax based on agricultural or horticultural value and the tax based on fair cash value;
"Homestead" means real property maintained as the permanent residence of the owner with all land and improvements adjoining and contiguous thereto including but not limited to lawns, drives, flower or vegetable gardens, outbuildings, and all other land connected thereto;
"Residential unit" means all or that part of real property occupied as the permanent residence of the owner;
"Special benefits" are those which are provided by public works not financed through the general tax levy but through special assessments against the benefited property;
"Mobile home" means a structure, transportable in one (1) or more sections, which when erected on site measures eight (8) body feet or more in width and thirty-two (32) body feet or more in length, and which is built on a permanent chassis and designed to be used as a dwelling, with or without a permanent foundation, when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein. It may be used as a place of residence, business, profession, or trade by the owner, lessee, or their assigns and may consist of one (1) or more units that can be attached or joined together to comprise an integral unit or condominium structure;
"Recreational vehicle" means a vehicular type unit primarily designed as temporary living quarters for recreational, camping, or travel use, which either has its own motive power or is mounted on or drawn by another vehicle. The basic entities are: travel trailer, camping trailer, truck camper, and motor home. As used in this subsection:
"Travel trailer" means a vehicular unit, mounted on wheels, designed to provide temporary living quarters for recreational, camping, or travel use, and of a size or weight that does not require special highway movement permits when drawn by a motorized vehicle, and with a living area of less than two hundred twenty (220) square feet, excluding built-in equipment (such as wardrobes, closets, cabinets, kitchen units or fixtures) and bath and toilet rooms;
"Camping trailer" means a vehicular portable unit mounted on wheels and constructed with collapsible partial side walls which fold for towing by another vehicle and unfold at the camp site to provide temporary living quarters for recreational, camping, or travel use;
"Truck camper" means a portable unit constructed to provide temporary living quarters for recreational, travel, or camping use, consisting of a roof, floor, and sides, designed to be loaded onto and unloaded from the bed of a pick-up truck; and
"Motor home" means a vehicular unit designed to provide temporary living quarters for recreational, camping, or travel use built on or permanently attached to a self-propelled motor vehicle chassis or on a chassis cab or van which is an integral part of the completed vehicle;
"Hazardous substances" shall have the meaning provided in KRS 224.1-400 ;
"Pollutant or contaminant" shall have the meaning provided in KRS 224.1-400 ;
"Release" shall have the meaning as provided in either or both KRS 224.1-400 and KRS 224.60-115 ;
"Qualifying voluntary environmental remediation property" means real property subject to the provisions of KRS 224.1-400 and 224.1-405 , or 224.60-135 where the Energy and Environment Cabinet has made a determination that:
All releases of hazardous substances, pollutants, contaminants, petroleum, or petroleum products at the property occurred prior to the property owner's acquisition of the property;
The property owner has made all appropriate inquiry into previous ownership and uses of the property in accordance with generally accepted practices prior to the acquisition of the property;
The property owner or a responsible party has provided all legally required notices with respect to hazardous substances, pollutants, contaminants, petroleum, or petroleum products found at the property;
The property owner is in compliance with all land use restrictions and does not impede the effectiveness or integrity of any institutional control;
The property owner complied with any information request or administrative subpoena under KRS Chapter 224; and
The property owner is not affiliated with any person who is potentially liable for the release of hazardous substances, pollutants, contaminants, petroleum, or petroleum products on the property pursuant to KRS 224.1-400 , 224.1-405 , or 224.60-135 , through:
Direct or indirect familial relationship;
Any contractual, corporate, or financial relationship, excluding relationships created by instruments conveying or financing title or by contracts for sale of goods or services; or
Reorganization of a business entity that was potentially liable;
"Intangible personal property" means stocks, mutual funds, money market funds, bonds, loans, notes, mortgages, accounts receivable, land contracts, cash, credits, patents, trademarks, copyrights, tobacco base, allotments, annuities, deferred compensation, retirement plans, and any other type of personal property that is not tangible personal property;
"County" means any county, consolidated local government, urban-county government, unified local government, or charter county government; (23) (a) "County" means any county, consolidated local government, urban-county government, unified local government, or charter county government;
"Fiscal court" means the legislative body of any county, consolidated local government, urban-county government, unified local government, or charter county government; and
"County judge/executive" means the chief executive officer of any county, consolidated local government, urban-county government, unified local government, or charter county government;
"Taxing district" means any entity with the authority to levy a local ad valorem tax, including special purpose governmental entities;
"Special purpose governmental entity" shall have the same meaning as in KRS 65A.010 , and as used in this chapter shall include only those special purpose governmental entities with the authority to levy ad valorem taxes, and that are not specifically exempt from the provisions of this chapter by another provision of the Kentucky Revised Statutes;
"Broadcast" means the transmission of audio, video, or other signals, through any electronic, radio, light, or similar medium or method now in existence or later devised over the airwaves to the public in general. (26) (a) "Broadcast" means the transmission of audio, video, or other signals, through any electronic, radio, light, or similar medium or method now in existence or later devised over the airwaves to the public in general.
"Broadcast" shall not apply to operations performed by multichannel video programming service providers as defined in KRS 136.602 or any other operations that transmit audio, video, or other signals, exclusively to persons for a fee;
"Heavy equipment rental agreement" means the short-term rental contract under which qualified heavy equipment is rented without an operator for a period:
Not to exceed three hundred sixty-five (365) days; or
That is open-ended under the terms of the contract with no specified end date;
"Heavy equipment rental company" means an entity that is primarily engaged in a line of business described in Code 532412 or 532310 of the North American Industry Classification System Manual in effect on January 1, 2019;
"Qualified heavy equipment" means machinery and equipment, including ancillary equipment and any attachments used in conjunction with the machinery and equipment, that is:
Primarily used and designed for construction, mining, forestry, or industrial purposes, including but not limited to cranes, earthmoving equipment, well-drilling machinery and equipment, lifts, material handling equipment, pumps, generators, and pollution-reducing equipment; and
Held in a heavy equipment rental company's inventory for:
Rental under a heavy equipment rental agreement; or
Sale in the regular course of business; and
"Veteran service organization" means an organization wholly dedicated to advocating on behalf of military veterans and providing charitable programs in honor and on behalf of military veterans.
History. 4020a-1, 4022, 4114h-1; Acts 1964, ch. 141, § 39; 1965 (1st Ex. Sess.), ch. 2, § 11; 1970, ch. 249, § 1; 1972, ch. 285, § 1; 1976, ch. 260, § 1; 1976, ch. 315, § 1; 1979 (Ex. Sess.), ch. 25, § 1, effective February 13, 1979; 1980, ch. 319, § 1, effective July 15, 1980; 1982, ch. 327, § 5, effective July 15, 1982; 1982, ch. 395, § 1, effective July 15, 1982; 1984, ch. 111, § 72, effective July 13, 1984; repealed and reenact., Acts 1990, ch. 476, Pt. V, § 306, effective July 13, 1990; 1992, ch. 397, § 1, effective July 14, 1992; 1994, ch. 263, § 2, effective July 15, 1994; 2002, ch. 198, § 1, effective July 15, 2002; 2005, ch. 85, § 169, effective June 20, 2005; 2005, ch. 168, § 54(18), effective January 1, 2005; 2005, ch. 168, § 54(19), effective January 1, 2006; 2007, ch. 100, § 1, effective June 26, 2007; 2010, ch. 24, § 96, effective July 15, 2010; 2010, ch. 95, § 1, effective July 15, 2010; 2013, ch. 40, § 86, effective March 21, 2013; 2013, ch. 119, § 6, effective January 1, 2014; 2017 ch. 129, § 2, effective June 29, 2017; 2019 ch. 151, § 8, effective June 27, 2019; 2021 ch. 156, § 34, effective June 29, 2021.
Former KRS 132.010 (4020a-1, 4022, 4114h-1: amend. Acts 1964, ch. 141, § 39; 1965 (1st Ex. Sess.), ch. 2, § 11; 1970, ch. 249, § 1; 1972, ch. 285, § 1; 1976, ch. 260, § 1; 1976, ch. 315, § 1; 1979 (Ex. Sess.), ch. 25, § 1, effective February 13, 1979; 1980, ch. 319, § 1, effective July 15, 1980; 1982, ch. 327, § 5, effective July 15, 1982; 1982, ch. 395, § 1, effective July 15, 1982; 1984, ch. 111, § 72, effective July 13, 1984) was repealed and reenacted by Acts 1990, ch. 476, Pt. V, § 306, effective July 13, 1990.
(1/1/2014). 2013 Ky. Acts ch. 119, sec. 26, provides that the amendments to this statute in 2013 Ky. Acts ch. 119, sec. 6, shall apply to property assessed on or after January 1, 2014.
(7/15/2010). Under the authority of KRS 7.136 , the Reviser of Statutes has corrected manifest clerical or typographical errors by inserting "a" before the first occurrence of "charter county government" and "the" before "legislative body" and "chief executive officer" in subsection (23) of this section.
(6/26/2007) A manifest clerical or typographical error in subsection (21)(f)2. has been corrected by the Reviser of Statutes under the authority of KRS 7.136 .
(6/20/2005). 2005 Ky. Acts ch. 168, sec. 170, provided: "Subsection (18) of Section 54 of this Act, relating to property tax changes, take[s] effect January 1, 2006. Subsection (19) of Section 54 of this Act, relating to the voluntary environmental remediation credit, takes effect January 1, 2005." Because of the order in which the subsections become effective, the Statute Reviser, under the authority of KRS 7.136 , has codified subsection (18) of Section 54, relating to property tax changes, as KRS 132.010(19), and subsection (19) of Section 54, relating to the voluntary remediation credit, as KRS 132.010(18).
3. Property.
4. —Real.
5. —Personal.
6. —Leased.
7. Resident.
8. —Change.
9. —Declared Intention.
10. —Summer Home.
11. Compensating Tax Rate.
12. Roll Back.
13. Royalties.
14. Notice.
15. Agricultural Land.
Subsections (9) and (10) of this section and KRS 132.450(2)(a) do not violate the Constitution of Kentucky; dwelling houses are to be assessed at fair cash value, and the income and acreage standards to qualify for "agricultural land" or "horticultural land" are not unreasonable. Dolan v. Land, 667 S.W.2d 684, 1984 Ky. LEXIS 211 ( Ky. 1984 ) (decided under prior law).
In enacting subsection (1) of former KRS 160.477 and subsection (6) of this section in the same special session, the legislature was expressing its intention that the authorization for a levy of 50¢ should yet prevail notwithstanding the "roll-back" provisions also enacted. Mullen v. Board of Education, 440 S.W.2d 261, 1969 Ky. LEXIS 336 ( Ky. 1969 ) (decided under prior law).
3.Property.
"Property" means everything of value that a person owns that is or may be the subject of sale or exchange or that when offered for sale will bring some price. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ) (decided under prior law).
Amounts due whiskey warehouseman for storage on whiskey against which negotiable warehouse receipts had been issued, which amounts were due when whiskey was withdrawn from warehouse, were "property" subject to taxation. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ) (decided under prior law).
Any existing, enforceable, collectible demand that one person has against another person or against property upon which it is a lien, and out of which it can be collected, is property. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ) (decided under prior law).
In determining whether a thing is "property" within the meaning of the tax laws, the test is whether the thing has a cash value in some amount, and whether a bidder could be found who would pay a cash price, no matter how small, for it. Raydure v. Board of Sup'rs, 183 Ky. 84 , 209 S.W. 19, 1919 Ky. LEXIS 469 ( Ky. 1919 ) (decided under prior law).
4.—Real.
Where right-of-way for oil pipeline was acquired by deed granting perpetual right, rather than by lease, the right-of-way was real property, notwithstanding that grantee had right to remove line. Cumberland Pipe Line Co. v. Lewis, 17 F.2d 167, 1926 U.S. Dist. LEXIS 1652 (D. Ky. 1926 ) (decided under prior law).
Pipe imbedded in ground in right-of-way, and pumping machinery set in concrete rigidly attached to ground, were real property. Cumberland Pipe Line Co. v. Lewis, 17 F.2d 167, 1926 U.S. Dist. LEXIS 1652 (D. Ky. 1926 ) (decided under prior law).
"Real property" does not include mineral rights which the owner of the land, by lease or otherwise, has severed from the land itself. Commonwealth by Revenue Agent v. Garrett, 202 Ky. 548 , 260 S.W. 379, 1924 Ky. LEXIS 766 ( Ky. 1924 ) (decided under prior law).
Grasses, fruits and perennial crops are considered a part of the realty. Burley Tobacco Growers' Co-op. Asso. v. Carrollton, 208 Ky. 270 , 270 S.W. 749, 1925 Ky. LEXIS 268 ( Ky. 1925 ) (decided under prior law).
The interest of the lessee in a coal mining lease is real property. Commonwealth v. Elkhorn-Piney Coal Min. Co., 241 Ky. 245 , 43 S.W.2d 684, 1931 Ky. LEXIS 51 ( Ky. 1931 ) (decided under prior law).
5.—Personal.
Annual crops are generally regarded as personalty. Burley Tobacco Growers' Co-op. Asso. v. Carrollton, 208 Ky. 270 , 270 S.W. 749, 1925 Ky. LEXIS 268 ( Ky. 1925 ) (decided under prior law).
Poles and wires of rural electric cooperative corporation located on rights of way acquired under easement agreements are personal property. Inter-County Rural Electric Co-operative Corp. v. Reeves, 294 Ky. 458 , 171 S.W.2d 978, 1943 Ky. LEXIS 446 ( Ky. 1943 ) (decided under prior law).
Where an easement for a right-of-way across land does not subsist as an appurtenance to any interest in land owned by the person who owns the easement, and there is no dominant estate, the easement and any fixtures upon the right of way are personal property. Inter-County Rural Electric Co-operative Corp. v. Reeves, 294 Ky. 458 , 171 S.W.2d 978, 1943 Ky. LEXIS 446 ( Ky. 1943 ) (decided under prior law).
Distilled spirits are personal property within meaning of Ky. Const., §§ 171 and 172. Reeves v. Jefferson County, 245 S.W.2d 606, 1951 Ky. LEXIS 1263 ( Ky. 1951 ) (decided under prior law).
6.—Leased.
An oil lease giving the exclusive right of development is "property" in the hands of the lessee, even though no wells have been drilled and no oil discovered in paying quantities. Raydure v. Board of Sup'rs, 183 Ky. 84 , 209 S.W. 19, 1919 Ky. LEXIS 469 ( Ky. 1919 ) (decided under prior law).
Where land was leased for 99-year term, at a nominal rental, with covenant by lessor to renew for successive 99-year terms perpetually, the leasehold was taxable against the lessee, whether considered as real or personal property, and the leasehold was not such an interest as was required to be listed by the owner of the fee under KRS 132.220 . Purcell v. Lexington, 186 Ky. 381 , 216 S.W. 599, 1919 Ky. LEXIS 226 ( Ky. 1919 ), writ of error dismissed, 253 U.S. 476, 40 S. Ct. 583, 64 L. Ed. 1021, 1920 U.S. LEXIS 1430 (U.S. 1920).
Ordinarily, the value of the interest of the lessee in a lease of real estate is not taxable, the owner of the real estate being required to pay taxes on all interests connected with the real estate. Purcell v. Lexington, 186 Ky. 381 , 216 S.W. 599, 1919 Ky. LEXIS 226 ( Ky. 1919 ), writ of error dismissed, 253 U.S. 476, 40 S. Ct. 583, 64 L. Ed. 1021, 1920 U.S. LEXIS 1430 (U.S. 1920).
Where the owner is a municipality or for some other reason is not required to pay taxes on the fee, the interest of the lessee is taxable. Purcell v. Lexington, 186 Ky. 381 , 216 S.W. 599, 1919 Ky. LEXIS 226 ( Ky. 1919 ), writ of error dismissed, 253 U.S. 476, 40 S. Ct. 583, 64 L. Ed. 1021, 1920 U.S. LEXIS 1430 (U.S. 1920).
7.Resident.
Where a mental incompetent who had been a resident of Kentucky prior to being declared incompetent was sent by his committee to an asylum in another state for care and treatment, his residence for the purpose of taxation remained in Kentucky. Sumrall's Committee v. Commonwealth, 162 Ky. 658 , 172 S.W. 1057, 1915 Ky. LEXIS 129 ( Ky. 1915 ) (decided under prior law).
The fact that an individual purchased the controlling interest in a Kentucky corporation doing business in Louisville, maintained a personal checking account in a Louisville bank, and took a year's lease on an apartment in Louisville, did not constitute him a resident of Kentucky for the purpose of taxation, where the purchase of the corporation was for speculative purposes only, the banking account and apartment were used only for his convenience during trips to Louisville, and he spent the greater portion of his time in Texas, where he had a permanent dwelling and which he always claimed as his home. Semple v. Commonwealth, 181 Ky. 675 , 205 S.W. 789, 1918 Ky. LEXIS 601 ( Ky. 1918 ) (decided under prior law).
The fact that a person who was originally a resident of Tennessee bought a farm in Kentucky, improved and furnished the house on the farm and resided there a substantial portion of his time, personally managed the farm, kept a bank account in a Kentucky bank and occasionally referred to the farm as his "home," did not fix his legal residence in Kentucky, where he continued to maintain a home for his mother, brothers and sisters in Tennessee, where he kept his personal belongings, participated in church and lodge affairs in Tennessee, purchased a family cemetery lot there, and always claimed to be a resident of Tennessee. Millett's Ex'r v. Commonwealth, 184 Ky. 193 , 211 S.W. 562, 1919 Ky. LEXIS 39 ( Ky. 1919 ) (decided under prior law).
A person may have more than one actual residence but he can have but one domicile or legal residence. The place where a person is born is his legal residence until he establishes another by choice, and when a legal residence has been established by choice it continues indefinitely until he establishes a new one, which may be done by actual residence and intention. Millett's Ex'r v. Commonwealth, 184 Ky. 193 , 211 S.W. 562, 1919 Ky. LEXIS 39 ( Ky. 1919 ) (decided under prior law).
The question of residence is one of fact and intention. The fact of actual residence joined with the intention fixes legal residence. But the fact is more powerful than the intention, for intention may be inferred from the fact, whereas the fact cannot be shown by or inferred from intention. Where one's residence is shown by his conduct to be in one place, his expressed intention that it shall be in another will not control. Pettit's Ex'x v. Lexington, 193 Ky. 679 , 237 S.W. 391, 1922 Ky. LEXIS 64 ( Ky. 1922 ) (decided under prior law).
Where taxpayer maintained a permanent dwelling for himself and family in Lexington, his legal residence was there, although he owned a farm in the county where he spent part of the time each summer, reserved rooms in the farm house in leasing it, voted in the county rather than in the city, and publicly declared that his residence was in the county. Pettit's Ex'x v. Lexington, 193 Ky. 679 , 237 S.W. 391, 1922 Ky. LEXIS 64 ( Ky. 1922 ) (decided under prior law).
Where person resided part of time each year in Florida, where he paid personal property taxes and was a registered voter, and resided balance of time in Kentucky, he was not taxable as a Kentucky resident in absence of proof that during years tax was sought to be imposed he resided in Kentucky more than six months. Utz v. Wallace's Adm'x, 249 Ky. 296 , 60 S.W.2d 614, 1933 Ky. LEXIS 510 ( Ky. 1933 ) (decided under prior law).
8.—Change.
Where resident of Kentucky announced his intention to move to Texas and make his home there, and left Kentucky for that purpose a few days before the date as of which property is assessed in Kentucky, but did not reach Texas until several days after such date, he was a legal resident of Kentucky on the assessment date, his Texas residence not becoming effective until he reached that state. Boyd's Ex'r v. Commonwealth, 149 Ky. 764 , 149 S.W. 1022, 1912 Ky. LEXIS 716 ( Ky. 1912 ) (decided under prior law).
In order to change residence there must be an intention to make the change and the taking up of an actual abode at the place selected as the new domicile. Boyd's Ex'r v. Commonwealth, 149 Ky. 764 , 149 S.W. 1022, 1912 Ky. LEXIS 716 ( Ky. 1912 ) (decided under prior law).
The committee of an incompetent has no power to change the legal residence of the incompetent from one state to another, although it may change his local residence. Sumrall's Committee v. Commonwealth, 162 Ky. 658 , 172 S.W. 1057, 1915 Ky. LEXIS 129 ( Ky. 1915 ) (decided under prior law).
The fact that the purpose of a taxpayer in changing his residence is to avoid taxation does not affect the validity of the change. Covington v. Shinkle, 175 Ky. 530 , 194 S.W. 766, 1917 Ky. LEXIS 351 ( Ky. 1917 ) (decided under prior law).
9.—Declared Intention.
The declared intention of a person as to his residence will control unless his acts or conduct are inconsistent therewith. Semple v. Commonwealth, 181 Ky. 675 , 205 S.W. 789, 1918 Ky. LEXIS 601 ( Ky. 1918 ) (decided under prior law).
10.—Summer Home.
Where taxpayer owned home in city of Covington, farm in Kenton County, and summer home in Rhode Island, and divided his time between those places and Florida, it was held that his legal residence was at the farm in Kenton County, based on his repeated declarations, voting, and tax listing, although he had a business office in Covington and in one or two deeds was described as a resident of Covington. Covington v. Shinkle, 175 Ky. 530 , 194 S.W. 766, 1917 Ky. LEXIS 351 ( Ky. 1917 ) (decided under prior law).
11.Compensating Tax Rate.
Where the legislation established a maximum of 50¢ and the district had obtained a 50¢ authorization by a 1953 election, the effect of the 1965 "roll back" legislation was to reduce that authorization from 50¢ to 13.8¢ leaving the school board with an unused authorization of 36.2¢. Mullen v. Board of Education, 440 S.W.2d 261, 1969 Ky. LEXIS 336 ( Ky. 1969 ) (decided under prior law).
The special school tax election was proper as being within the unused statutory authorization for the special tax where 13.8¢ already being levied and the 15¢ to be levied still fell short of the 50¢ statutory maximum. Mullen v. Board of Education, 440 S.W.2d 261, 1969 Ky. LEXIS 336 ( Ky. 1969 ) (decided under prior law).
12.Roll Back.
Although the "roll back" prevented the governmental body from levying a greatly increased tax by application of an old voted rate to greatly increased assessments, the voters possessed power to impose upon themselves an additional tax, levied pursuant to current assessments so long as the rate of the combined voted taxes did not exceed the statutorily permitted limit of 50¢ per $100. Mullen v. Board of Education, 440 S.W.2d 261, 1969 Ky. LEXIS 336 ( Ky. 1969 ) (decided under prior law).
A tax voted in 1968 after enactment of the "roll back" provision, was not subject to being "rolled back." Mullen v. Board of Education, 440 S.W.2d 261, 1969 Ky. LEXIS 336 ( Ky. 1969 ) (decided under prior law).
The roll-back provisions of this chapter apply to tax levies to maintain public libraries. Under this chapter, a taxing district's revenue from ad valorem taxes is limited; this chapter has the effect of rolling back the tax rate to maintain a constant revenue. Taxes levied to support a library created under KRS 173.310 or KRS 173.450 would have to comply with this chapter; however, where the library is not maintained by a tax levy, but by appropriation of funds from the local government, KRS 173.310 does not mandate a levy to maintain libraries created under that section. Lexington-Fayette Urban County Government v. Hayse, 684 S.W.2d 301, 1984 Ky. App. LEXIS 586 (Ky. Ct. App. 1984) (decided under prior law).
13.Royalties.
Royalties due owner of real estate from oil lease were taxable, as against contention that the value of the royalty interest could not be separately assessed from the land itself. Commonwealth by Revenue Agent v. Garrett, 202 Ky. 548 , 260 S.W. 379, 1924 Ky. LEXIS 766 ( Ky. 1924 ) (decided under prior law).
14.Notice.
Where the new property valuation administrator had attempted to reassess, upward, property valuations, but had only sent notices to about 40 percent of the affected property owners, but where some owners had actual notice and had appealed their valuations, the proper remedy would be to allow the increase as to those owners who had notice or had actual notice and appealed, subject to the outcome of those appeals, and to void the increases as to those property owners without notice and who had not appealed their reassessments. Layson v. Brady, 576 S.W.2d 223, 1978 Ky. App. LEXIS 651 (Ky. Ct. App. 1978) (decided under prior law).
15.Agricultural Land.
Housing located on farm property occupied by a nonowner and used in income-producing activity of the farm as dwellings for tenant farmers and farm workers is not a "residential unit"; such dwellings are "income-producing improvements" and a part of the agricultural land for ad valorem assessment purposes. Dolan v. Land, 667 S.W.2d 684, 1984 Ky. LEXIS 211 ( Ky. 1984 ) (decided under prior law).
Breathitt County Board of Sup'rs v. Ware Cannel Coal Co., 297 Ky. 117 , 179 S.W.2d 225, 1944 Ky. LEXIS 691 ( Ky. 1944 ); Jefferson County Fiscal Court v. Trager, 302 Ky. 361 , 194 S.W.2d 851, 1946 Ky. LEXIS 686 ( Ky. 1946 ); Boggs v. Reep, 404 S.W.2d 24, 1966 Ky. LEXIS 286 ( Ky. 1966 ); Fayette County Board of Education v. White, 410 S.W.2d 612, 1966 Ky. LEXIS 37 ( Ky. 1966 ); Board of Education v. Harville, 416 S.W.2d 730, 1967 Ky. LEXIS 280 ( Ky. 1967 ); Kelley v. Ashland, 562 S.W.2d 312, 1978 Ky. LEXIS 325 ( Ky. 1978 ); Home Folks Mobile Homes, Inc. v. Revenue Cabinet, 700 S.W.2d 75, 1985 Ky. App. LEXIS 686 (Ky. Ct. App. 1985); Dean v. Commonwealth ex rel. Revenue Cabinet, 967 S.W.2d 594, 1998 Ky. App. LEXIS 34 (Ky. Ct. App. 1998); Campbell County Fiscal Court v. Nash, — S.W.3d —, 2008 Ky. App. LEXIS 373 (Ky. Ct. App. 2008); Dep't of Revenue, Fin. & Admin. Cabinet v. Shinin' B Trailer Sales, LLC, 2015 Ky. App. LEXIS 131 (Sept. 4, 2015).
A soldier stationed in Kentucky did not acquire residence in the state for purposes of taxation by reason of being stationed there until he acted affirmatively to make the state his permanent residence. OAG 61-354 .
A watershed conservancy district which is comprised of parts of four (4) counties is a "taxing district" within the meaning of this section and must make a determination of one uniform standard tax rate to be applied against all of the real property within the district. OAG 66-386 .
For the 1966 assessment, all of the property in the city, including merchants' inventories, is subjected to the city tax rate but the rate must be computed so that the amount of total revenue produced in 1966 will be no more than that produced in 1965 plus a ten per cent (10%) increase. OAG 67-13 .
Tax rate for tangible personal property cannot be separated for rates from all other property subject to ad valorem property taxes in the city; the same rate must be applied to such property as is applied to real property in the city. OAG 67-101 .
A city which did not levy a public works cumulative reserve fund in 1965 could do so in a later year by allocating or earmarking a portion of its overall compensating tax rate for that purpose. OAG 67-351 .
Where a fire protection district came into existence after the roll-back provisions on tax rates and budgets, the tax rate could be computed on the current assessed value of property in the district. OAG 68-244 .
Where after the rollback a library district did not have sufficient funds to operate, under KRS 173.610 a petition could be filed putting the question of an increased tax levy to a vote of the people, and if the vote was affirmative the tax could be raised to exceed the roll-back rate. OAG 68-606 .
The compensating tax rate provisions of this section apply to the assessed value of automobiles in the city as it does to all other property subject to ad valorem tax. OAG 68-610 .
Each year the library district tax rate must be so adjusted, assuming a change in assessment valuation, in connection with the current property assessment, that the amount of revenue produced in the particular tax year is approximately equal to that produced in 1965. OAG 69-330 .
The property valuation administrator may, under the direction and supervision of the Department of Revenue, keep a record of the property of public utility corporations, but this does not constitute an assessment. OAG 71-249 .
Where a city failed to include or omitted in its 1965 property assessment a class of personal property, it could not for a subsequent year assess such personal property and not include the property value in arriving at the compensating tax rate as defined in this section. OAG 71-395 .
A city may increase its general fund tax rate to offset a revenue loss occasioned by property being exempted from property tax by the homestead exemption amendment to Ky. Const., § 170. OAG 71-537 .
The rollback provision of subsection (6) of this section applies to a proposed five cent ($0.05) levy on property in a fourth-class city under KRS 97.590 for the purpose of purchasing and maintaining a public park in the city limits. OAG 72-193 .
Under the terms of this section and KRS 132.425 (repealed), it is clear that the legislature intended to guarantee to the taxing districts and authorities a level of tax revenue approximately equal to that produced in 1971, excluding net assessment growth. OAG 72-726 .
After a city has sufficient revenue in a sinking fund bonds for which a specific tax has been levied, the city would then be bound by subsection (6) of this section and KRS 132.027 with respect to the tax rate which could be applied for general municipal purposes and it would be a violation of KRS 92.330 and 92.340 to continue to levy the specific tax and divert it to general municipal purposes. OAG 74-368 .
Once funding bonds have been paid off, levy must be discontinued. OAG 75-162 .
The 65-year-old or older owner-occupant of a mobile home, which is a single-unit residence, placed on a rented lot is entitled to the homestead exemption if the mobile home qualifies as real property under KRS 132.750 (now repealed) by resting on a permanent fixed foundation and having the wheels or mobile parts removed. OAG 75-264 .
This section, which sets out the compensating tax rate, is locked in as of 1972, since it does not provide for a "compensating tax rate" for any year subsequent to 1972, and therefore the city may not raise its tax rate as a result of the decline in value of stored whiskey which is stored in the city. OAG 75-433 .
Even though "net assessment growth," as defined in KRS 132.425 (repealed), refers only to the county or a school district, this section encompasses a taxing district and KRS 132.023 and 132.027 clearly show that KRS 132.425 (repealed) is by reference made applicable to cities so that any city which levied a poll tax in 1973 may adjust its compensating tax rate to reflect the loss in poll tax revenue. OAG 75-544 .
On the basis of subsection (6) of this section, cities presumably have the authority to reduce their tax rates for the following school year and increase it in a subsequent year so long as the increased rate does not go above the compensating tax rate established in 1972. OAG 75-677 .
Where a third-class city operates jointly with the county a system of parks under a city-county parks and recreation board, under KRS 97.080 (repealed) such a city may provide funds for park and recreation purposes controlled by the revenue limitations set out in KRS 132.027 and this section. OAG 76-85 .
There would not be a substantial increase in revenue from real estate tax simply by increasing the assessed value of property in a city. OAG 79-90 .
Insofar as they are used in KRS 132.023 and KRS 132.027 , as amended by Acts 1979 (Ex. Sess.), ch. 25, for those governmental units operating on a calendar basis: (1) " . . . . . a tax rate for 1979-80 . . . . . " means that unit's tax rate for the 1980 calendar year; (2) " . . . . . application of the maximum tax rate that could have been levied in 1978-79 . . . . . " means the unit's compensating tax rate for the 1979 calendar year, calculated in accordance with KRS 132.010(6) as it read prior to February 13, 1979; and (3) " . . . . . the 1978-79 assessment" means the unit's assessment as of January 1, 1979, assuming that the unit's assessment date is January 1. OAG 79-217 .
KRS 132.023(1)(a) and (2) (now (2)(a) and (3)) makes the compensating tax rate provisions of subsection (6) of this section apply specifically to public health taxing districts. OAG 79-344 .
This section and KRS 132.023 apply to the tax rate to be set by a county hospital board for setting a tax rate for 1979-1980 and thereafter. OAG 79-422 .
The compensating tax rate would be computed on the rate passed by the voters of a county library district, whatever that rate may be for the previous year. OAG 79-597 .
A special tax assessment to pay a tort judgment can be levied by a city where the city has levied its statutory maximum assessment pursuant to this chapter, under the basic principle that to hold otherwise would permit cities to take advantage of their own negligence by depriving a person who has been injured of all effective remedies. OAG 80-253 .
Because the clear and unambiguous intent of the general assembly was to place a ceiling upon real property tax rates while specifically exempting personal property tax rates, the unavoidable conclusion is that the county fiscal court may establish two separate tax rates—one for real property and one for personal property. OAG 80-545 .
If the city governing body proposes to impose the same tax rate for the succeeding year as the preceding year but due to increased assessments more than four percent (4%) revenue is produced in the succeeding year than had been produced in the preceding year, that portion of the tax rate which causes a breach in the four percent (4%) ceiling is subject to recall. OAG 80-558 .
If the proposed county tax rate used to fund emergency ambulance service is more than four percent (4%) over the amount of revenue produced by the compensating tax rate, as defined in this section, a recall vote or reconsideration by the county voters, as provided in KRS 132.017 , shall be advertised as directed in KRS 68.245(6)(b); however, upon a recall petition being filed, the fiscal court may cancel an election on the question of exceeding four percent (4%) over the compensating tax rate by simply reducing the tax rate so as not to exceed four percent (4%). OAG 81-344 .
Where a court decision greatly increased a 1981 city tax assessment so that the application of 1980 tax rates would result in a tax revenue increase greater than four percent (4%) over the previous year, the city must comply with the recall vote or reconsideration provisions of KRS 132.027 , since an assessment increase resulting from a court decision is not the type of increase contemplated in the definition of "net assessment growth" under subsection (7) of this section and the resulting revenue cannot, therefore, be excluded under subdivision (1)(b) of KRS 132.027 . OAG 81-425 (Opinion prior to 1990 amendment).
Acts 1979 (Ex. Sess.), ch. 25, which limits a county's increase in property taxes, does not limit in effect the public health district tax which is levied by a county pursuant to either KRS 212.725 or 212.755 . OAG 82-151 .
This section and KRS 132.750 (now repealed) concerning the treatment of mobile homes as real estate do not abrogate the requirement that in order for tangible personal property to become an improvement to the land it must be attached to or built upon the soil. In the case of mobile homes, this occurs when the utilities are connected or when some other relatively permanent attachment to the land is formed. The amendments of former KRS 132.750 are intended to allow, and effectuate the purpose of allowing, similar tax treatment for similarly situated mobile homes regardless of vestigial differences between them. OAG 82-584 .
The recall provisions of KRS 68.245(6) are only triggered when a real property tax rate exceeds, by more than four percent, the compensating tax rate as defined in KRS 132.010(6). In calculating the compensating tax rate, personal property must be included when applying a rate to "all classes of taxable property" to determine whether use of a substitute rate is required by KRS 132.010(6). OAG 10-005 .
Assessments by Department of Revenue, protest against; when final; appeal from, KRS 131.110 .
City taxes, levy and assessment of:
Cities of first class, KRS 91.200 , 91.260 , 91.310 .
Cities of second class, KRS 92.280 , 92.330 .
Cities of third class, KRS 92.280 , 92.290 .
Cities of fourth class, KRS 92.280 .
Cities of fifth class, KRS 92.280 , 92.290 .
Cities of sixth class, KRS 92.280 , 92.290 .
Classification of property for taxation, referendum, Ky. Const., § 171.
Corporate property to pay same rate as individual property, Ky. Const., § 174.
County revenue limits, procedure for increase, KRS 68.245 .
County road bonds, retirement, local tax levy, KRS 178.200 .
County taxes, levy of, KRS 68.090 .
Department of Revenue, powers and duties in tax assessment, KRS 131.030 , 131.130 , 131.140 .
District cooperative extension education tax, local tax levy, KRS 164.655 .
Finance and revenue of cities of other than the first class, KRS ch. 92.
Flood control districts, local tax levy, KRS 104.670 .
Governor's cabinet to prepare long range financial programs, real property inventories, tax maps, KRS 147.100 .
Jefferson County children's home, local tax levy, KRS 201.160 , 201.170 .
Levees, local tax levy, KRS 266.150 , 266.190 .
License and excise taxes on distilled spirits, KRS ch. 243.
Municipal band or orchestra, local tax levy, KRS 97.610 .
Municipal universities and colleges, local tax levy, KRS 165.030 , 165.160 , 165.170 .
Payment, collection, and refund of taxes, KRS ch. 134.
Power to tax may be conferred on local authorities, Ky. Const., § 181.
Purposes for which county and city taxes are levied must be specified, KRS 68.100 , 92.330 , 92.340 .
"Real estate" and "land" defined, KRS 446.010 .
Roads, local tax levy, Ky. Const., § 157a; KRS 178.210 .
Sanitation districts, local tax levy, KRS 220.360 .
Schools, local tax levy, KRS 160.460 to 160.530 .
Uniformity of taxes on property required, Ky. Const., § 171.
Value of property for taxation, how estimated, tax to be based on value, Ky. Const., §§ 172, 174.
Combs, Taxation — Constitutionality of Ad Valorem Taxes on Annuities Arising Out of Insurance Policies in Kentucky, 34 Ky. L.J. 316 (1946).
Property Tax Revenue Assessment Levels and Taxing Rate: The Kentucky Rollback Law, 60 Ky. L.J. 105 (1971).
Public Schools: Serrano v. Priest — A Challenge to Kentucky, 60 Ky. L.J. 156 (1971).
The Property Tax — A Withering Vine, 60 Ky. L.J. 174 (1971).
Kentucky Law Survey, Whiteside and Buechel, Kentucky Taxation, 65 Ky. L.J. 425 (1976-77).
Bratt, Material Participation and the Valuation of Farm Land for Estate Tax Purposes Under the Tax Reform Act of 1976, 66 Ky. L.J. 848 (1977-78).
Kentucky Law Survey, Whiteside and Harman, Kentucky Taxation, 67 Ky. L.J. 739 (1978-79).
Note, Historic Preservation — An Individual's Perspective, 67 Ky. L.J. 1018 (1978-1979).
Kentucky Law Survey, Vasek and Bradley, Kentucky Taxation, 68 Ky. L.J. 777 (1979-1980).
Caldwell's Kentucky Form Book, 5th Ed., Practice Context for Homestead Exemption, § 155.00.
Former KRS 132.011 (Enact. Acts 1988, ch. 252, § 1, effective July 15, 1988) was repealed and reenacted by Acts 1990, ch. 476, Pt. V, § 307, effective July 13, 1990.
This section (Repealed and reenact. Acts 1990, ch. 476, Pt. V, § 307, effective July 13, 1990) was repealed by Acts 1992, ch. 338, § 21, effective July 14, 1992.
As used in this section and in KRS 92.305 and 91.285 , unless the context otherwise requires:
"Abandoned urban property" means any vacant structure or vacant or unimproved lot or parcel of ground in a predominantly developed urban area which has been vacant or unimproved for a period of at least one (1) year and which:
Because it is dilapidated, unsanitary, unsafe, vermin infested, or otherwise dangerous to the safety of persons, it is unfit for its intended use;
By reason of neglect or lack of maintenance has become a place for the accumulation of trash and debris, or has become infested with rodents or other vermin;
Has been tax delinquent for a period of at least three (3) years;
Has had a methamphetamine contamination notice posted as provided in KRS 224.1-410 for a period of at least ninety (90) days, and the owner has neither appealed the notice nor provided a certificate of decontamination during the ninety (90) days; or
Is located within a development area established under KRS 65.7049 , 65.7051 , and 65.7053 .
For purposes of local taxation in cities of any class or consolidated local governments, there shall be a classification of real property known as abandoned urban property. The legislative body of a city of any class, county containing a city of the first class, or consolidated local government may levy a rate of taxation on abandoned urban property higher than the prevailing rate of taxation on other real property in the city, county containing a city of the first class, or consolidated local government. The limitation upon tax rates established by KRS 132.027 shall not apply to the rate of taxation on abandoned urban property.
History. Enact. Acts 1990, ch. 513, § 1, effective July 13, 1990; 2002, ch. 346, § 160, effective July 15, 2002; 2004, ch. 76, § 2, effective July 13, 2004; 2007, ch. 95, § 25, effective March 23, 2007; 2019 ch. 52, § 3, effective June 27, 2019.
The property valuation administrator shall maintain lists of all real property additions and real property deletions to the property tax rolls for the county, consolidated local government, or urban-county, and each city, school district, and special district in the county, consolidated local government, or urban-county, and shall certify such lists to the Department of Revenue, the city clerk of each city in the county which elects to use the annual county assessment as provided for in KRS 132.285 , the treasurer or chief officer of each special district in the county, and the chief administrative officer of the urban-county and the consolidated local government at the time he files his recapitulation of property assessed on the tax roll with the Department of Revenue.
History. Enact. Acts 1979 (Ex. Sess.), ch. 25, § 2, effective February 13, 1979; 1980, ch. 319, § 2, effective July 15, 1980; 2002, ch. 346, § 161, effective July 15, 2002; 2005, ch. 85, § 170, effective June 20, 2005.
The zoning ordinances assisted the county clerk and the Property Valuation Administrator (PVA) in properly performing their statutorily required duties, including the county clerk's duty to record lawful deeds under KRS 382.110 and KRS 382.335 , and the PVA's duty to maintain lists of all real property additions to the property tax rolls for the county under KRS 132.015 . A ruling that the ordinances interfered with those duties ignored that, under KRS 100.277 , a planning commission was authorized to approve plats of subdivisions of land, such approval had to be obtained before plats may be recorded, and instruments referring to unapproved plats or subdivisions were void. Campbell County Fiscal Court v. Nash, 2008 Ky. App. LEXIS 373 (Ky. Ct. App. Dec. 12, 2008), review granted, transferred, 2010 Ky. LEXIS 40 (Ky. Jan. 13, 2010), aff'd in part and rev'd in part, 345 S.W.3d 811, 2011 Ky. LEXIS 57 ( Ky. 2011 ).
As used in this section, "local governmental entity" includes a county fiscal court and legislative body of a city, urban-county government, consolidated local government, charter county government, unified local government, or other taxing district.
Except as provided in subparagraph 2. of this paragraph, the portion of a tax rate levied by an ordinance, order, resolution, or motion of a local governmental entity or district board of education subject to recall as provided for in KRS 68.245 , 132.023 , 132.027 , and 160.470 , shall go into effect forty-five (45) days after its passage. (2) (a) 1. Except as provided in subparagraph 2. of this paragraph, the portion of a tax rate levied by an ordinance, order, resolution, or motion of a local governmental entity or district board of education subject to recall as provided for in KRS 68.245 , 132.023 , 132.027 , and 160.470 , shall go into effect forty-five (45) days after its passage.
When a tax rate is levied by a district board of education or other taxing district that is primarily located in a county containing an urban-county government or a consolidated local government, the portion of a tax rate levied by an ordinance, order, resolution, or motion of a district board of education or other taxing district subject to recall as provided for in KRS 68.245, 132.023, 132.027, and 160.470, shall go into effect fifty (50) days after its passage.
During the same forty-five (45) day or fifty (50) day time period provided by paragraph (a) of this subsection, any five (5) qualified voters, who reside in the area where the tax levy will be imposed, may commence petition proceedings to protest the passage of the ordinance, order, resolution, or motion by filing an affidavit with the county clerk. The affidavit shall state:
The five (5) qualified voters constitute the members of the petition committee;
The petition committee will be responsible for circulating the petition;
The petition committee will file the petition in the proper form within the same forty-five (45) day or fifty (50) day time period provided by paragraph (a) of this subsection;
The names and addresses of the petition committee members;
The address to which all notices to the committee are to be sent; and
For petition committees filing petitions in response to a tax rate levied by a district board of education or other taxing district that is primarily located in a county containing an urban-county government or a consolidated local government, whether or not the petition committee is willing to incur all of the expenses associated with electronic petition signatures. If the petition committee is not willing to incur all of the expenses, then electronic petition signatures shall not be allowed for the petition.
Upon receipt of the affidavit, the county clerk shall immediately:
Notify the petition committee of all statutory requirements for the filing of a valid petition under this section;
Notify the petition committee that the clerk will publish a notice identifying the tax levy being challenged and providing the names and addresses of the petition committee in a newspaper of general circulation within the county, if:
There is a newspaper within the county in which to publish the notice; and
The petition committee remits an amount equal to the cost of publishing the notice determined in accordance with the provisions of KRS 424.160 at the time of the filing of the affidavit. If the petition committee elects to have the notice published, the clerk shall publish the notice within five (5) days of receipt of the affidavit; and
Deliver a copy of the affidavit to the appropriate local governmental entity or district board of education.
The petition shall be filed with the county clerk within the same forty-five (45) day or fifty (50) day time period provided by paragraph (a) of this subsection and meet the following requirements:
All papers of the petition shall be substantially uniform in size and style and shall be assembled in one (1) instrument for filing;
For a district board of education or other taxing district that is primarily located in a county containing an urban-county government or a consolidated local government, each sheet of the petition may contain the names of voters from more than one (1) voting precinct, and for a district board of education or other taxing district that is not primarily located in a county containing an urban-county government or a consolidated local government, each sheet of the petition shall contain the names of voters from one (1) voting precinct;
Each nonelectronic petition signature shall be executed in ink or indelible pencil;
Each electronic petition signature shall comply with the requirements of the Uniform Electronic Transactions Act, KRS 369.101 to 369.120 ;
Each electronic and nonelectronic petition signature shall be followed by the printed name, street address, Social Security number or birth month, and the name and number of the designated voting precinct of the person signing; and
The petition shall be signed by a number of registered and qualified voters residing in the affected jurisdiction equal to at least ten percent (10%) of the total number of votes cast in the last preceding presidential election. 6. a. The petition shall be signed by a number of registered and qualified voters residing in the affected jurisdiction equal to at least ten percent (10%) of the total number of votes cast in the last preceding presidential election.
Electronic petition signatures shall be included in determining whether the required number of petition signatures has been obtained when the expenses associated with the electronic petition signatures have been incurred in accordance with paragraph (b)6. of this subsection, the electronic petition signatures comply with the requirements of this subsection, and the petition was filed in response to a tax rate levied by a district board of education or other taxing district that is primarily located in a county containing an urban-county government or a consolidated local government. The inclusion of an invalid electronic or nonelectronic petition signature on a page shall not invalidate the entire page of the petition, but shall instead result in the invalid petition signature being stricken and not counted.
Notwithstanding subdivision a. of this subparagraph if a petition is filed in response to a tax rate levied by a district board of education, the petition shall be signed by at least five thousand (5,000) registered and qualified voters residing in the affected jurisdiction, or signed by a number of registered and qualified voters residing in the affected jurisdiction equal to at least ten percent (10%) of the total number of votes cast in the last preceding presidential election, whichever is less.
Upon the filing of the petition with the county clerk, the ordinance, order, resolution, or motion shall be suspended from going into effect until after the election referred to in subsection (3) of this section is held, or until the petition is finally determined to be insufficient and no further action may be taken pursuant to paragraph (i) of this subsection.
The county clerk shall immediately notify the presiding officer of the appropriate local governmental entity or district board of education that the petition has been received and shall, within thirty (30) days of the receipt of the petition, make a determination of whether the petition contains enough signatures of qualified voters to place the ordinance, order, resolution, or motion before the voters.
If the county clerk finds the petition to be sufficient, the clerk shall certify to the petition committee and the local governmental entity or district board of education within the thirty (30) day period provided for in paragraph (f) of this subsection that the petition is properly presented and in compliance with the provisions of this section, and that the ordinance, order, resolution, or motion levying the tax will be placed before the voters for approval.
If the county clerk finds the petition to be insufficient, the clerk shall, within the thirty (30) day period provided for in paragraph (f) of this subsection, notify, in writing, the petition committee and the local governmental entity or district board of education of the specific deficiencies found. Notification shall be sent by certified mail and shall be published at least one (1) time in a newspaper of general circulation within the county containing the local governmental entity or district board of education levying the tax. If there is not a newspaper within the county in which to publish the notification, then the notification shall be posted at the courthouse door.
A final determination of the sufficiency of a petition shall be subject to final review by the Circuit Court of the county in which the local governmental entity or district board of education is located, and shall be limited to the validity of the county clerk's determination. Any petition challenging the county clerk's final determination shall be filed within ten (10) days of the issuance of the clerk's final determination.
The local governmental entity or district board of education may cause the cancellation of the election by reconsidering and amending the ordinance, order, resolution, or motion to levy a tax rate which will produce no more revenue from real property, exclusive of revenue from new property as defined in KRS 132.010 , than four percent (4%) over the amount of revenue produced by the compensating tax rate defined in KRS 132.010 from real property. The action by the local governmental entity or district board of education shall be valid only if taken within fifteen (15) days following the date the clerk finds the petition to be sufficient.
If an election is necessary under the provisions of subsection (2) of this section, the local governmental entity shall cause to be submitted to the voters of the district at the next regular election, the question as to whether the property tax rate shall be levied. The question shall be submitted to the county clerk not later than the second Tuesday in August preceding the regular election. (3) (a) If an election is necessary under the provisions of subsection (2) of this section, the local governmental entity shall cause to be submitted to the voters of the district at the next regular election, the question as to whether the property tax rate shall be levied. The question shall be submitted to the county clerk not later than the second Tuesday in August preceding the regular election.
If an election is necessary for a school district under the provisions of subsection (2) of this section, the district board of education may cause to be submitted to the voters of the district in a called common school election not less than thirty-five (35) days nor more than forty-five (45) days from the date the signatures on the petition are validated by the county clerk, or at the next regular election, at the option of the district board of education, the question as to whether the property tax rate shall be levied. If the election is held in conjunction with a regular election, the question shall be submitted to the county clerk not later than the second Tuesday in August preceding the regular election. The cost of a called common school election shall be borne by the school district holding the election. Any called common school election shall comply with the provisions of KRS 118.025 .
In an election held under paragraph (a) or (b) of this subsection, the question shall be so framed that the voter may by his or her vote answer "for" or "against." If a majority of the votes cast upon the question oppose its passage, the ordinance, order, resolution, or motion shall not go into effect. If a majority of the votes cast upon the question favor its passage, the ordinance, order, resolution, or motion shall become effective.
If the ordinance, order, resolution, or motion fails to pass pursuant to an election held under paragraph (a) or (b) of this subsection, the property tax rate which will produce four percent (4%) more revenues from real property, exclusive of revenue from new property as defined in KRS 132.010 , than the amount of revenue produced by the compensating tax rate defined in KRS 132.010 , shall be levied without further approval by the local governmental entity or district board of education.
Local, state, and federal tax dollars shall not be used to advocate, in partial terms, for or against any public question that appears on the ballot in this subsection. For purposes of this section, "local" means and includes any city, county, urban-county government, consolidated local government, unified local government, charter county, or special district.
Notwithstanding any statutory provision to the contrary, if a local governmental entity or district board of education has not established a final tax rate as of September 15, due to the recall provisions of this section, KRS 68.245 , 132.027 , or 160.470 , regular tax bills shall be prepared as required in KRS 133.220 for all districts having a tax rate established by that date; and a second set of bills shall be prepared and collected in the regular manner, according to the provisions of KRS Chapter 132, upon establishment of final tax rates by the remaining districts.
If a second billing is necessary, the collection period shall be extended to conform with the second billing date.
All costs associated with the second billing shall be paid by the taxing district or districts requiring the second billing.
History. Enact. Acts 1979 (Ex. Sess.), ch. 25, § 8, effective February 13, 1979; 1980, ch. 270, § 2, effective July 15, 1980; 1980, ch. 319, § 7, effective July 15, 1980; 1990, ch. 48, § 83, effective July 13, 1990; 1990, ch. 476, Pt. V, § 308, effective July 13, 1990; 1996, ch. 195, § 54, effective July 15, 1996; 2002, ch. 346, § 162, effective July 15, 2002; 2005, ch. 121, § 1, effective June 20, 2005; 2019 ch. 83, § 1, effective June 27, 2019; 2021 ch. 149, § 1, effective June 29, 2021; 2021 ch. 197, § 79, effective June 29, 2021.
(6/20/2005). 2005 Ky. Acts ch. 121, § 6, provides: "The provisions of this Act shall apply to ordinances, orders, resolutions or motions passed after July 15, 2005."
(7/13/90) The Act amending this section prevails over the repeal and reenactment in House Bill 940, Acts Ch. 476, pursuant to Section 653(1) of Acts Ch. 476.
1. Timeliness.
2. Sufficiency of Recall Petition.
1.Timeliness.
As to the timing of filing tax protest petitions, because KRS 132.017(1)(a) specifically governs the levy and assessment of property taxes, it controls over the general statute in KRS 118.365(7), concerning the conduct of elections; therefore, the trial court correctly determined that the taxpayers had 45 days in which to file their recall petition, and that the petition was valid and timely filed even though it did not specify "that portion" of the rate subject to recall. Daviess County Pub. Library Taxing Dist. v. Boswell, 185 S.W.3d 651, 2005 Ky. App. LEXIS 263 (Ky. Ct. App. 2005).
2.Sufficiency of Recall Petition.
Circuit court erred in granting summary judgment to a board of education and declaring that the county clerk erred in certifying a tax recall petition because "petition committee" was merely a convenient way to refer to the individuals who initiated the petition and did not deprive them of standing, although there were technical flaws, given the liberal construction afforded to statutes, the petition substantially complied with the statutory requirements, and the county clerk properly determined that because the committee did not request publication of notice, none was required. Petition Comm. v. Bd. of Educ., 509 S.W.3d 58, 2016 Ky. App. LEXIS 109 (Ky. Ct. App. 2016).
Insofar as they are used in KRS 132.023 and KRS 132.027 , as amended by Acts 1979 (Ex. Sess.), ch. 25, for those governmental units operating on a calendar basis: (1) " . . . . . a tax rate for 1979-80 . . . . . " means that unit's tax rate for the 1980 calendar year; (2) " . . . . . application of the maximum tax rate that could have been levied in 1978-79 . . . . . " means the unit's compensating tax rate for the 1979 calendar year, calculated in accordance with subsection (6) of this section as it read prior to February 13, 1979; and (3) " . . . . . the 1978-79 assessment" means the unit's assessment as of January 1, 1979, assuming that the unit's assessment date is January 1. OAG 79-217 .
Under the literal language of KRS 133.220 , when read together with this section, a county clerk was not required to wait until the library board established a final tax rate in order to get out the tax bills in the regular way envisioned by KRS 133.220 but should make up the tax bills, based upon the already established tax rates relating to the state, county, school and other taxing districts, and place the bills with the sheriff; in connection with the library district tax levy, which had not been established because of the recall provisions, a second set of bills must be prepared in the regular manner upon the establishment of the final tax rate by any remaining districts and all costs associated with the second billing must be paid by the taxing district or districts requiring the second billing. OAG 80-503 .
If the proposed county tax rate used to fund emergency ambulance service is more than four percent over the amount of revenue produced by the compensating tax rate as defined in KRS 132.010 , a recall vote or reconsideration by the county voters, as provided in this section, shall be advertised as directed in subsection (6)(b) of KRS 68.245 ; however, upon a recall petition being filed, the fiscal court may cancel an election on the question of exceeding four percent over the compensating tax rate by simply reducing the tax rate so as not to exceed four percent. OAG 81-344 .
Even though, due to a delay in certifying the county assessment, the advertising and hearing requirements necessary to levying a school district's tax rate would not be completed 45 days before the date of the next regular election, the school district, of its own volition, could waive the petition and place the question on the ballet. OAG 82-485 .
If a Board of Education desires to increase the rate of tax levied pursuant to KRS 160.477 (now repealed), it must comply with the terms of KRS 160.470 . This provides for hearings and in certain cases makes the setting of the rate subject to a recall vote or reconsideration as provided for in this section. OAG 83-201 .
If the tax rate applicable to real property levied by a county fiscal court, district board of education, or legislative body of a city, consolidated local government, urban-county government, or other taxing district is reduced as a result of reconsideration by the county fiscal court, district board of education, or legislative body of a city, consolidated local government, urban-county government, or other taxing district under the provisions of KRS 132.017(2)(j), the tax rate applicable to personal property levied under the provisions of KRS 68.248(1), 132.024(1), 132.029(1), and 160.473(1) shall be reduced by the respective county fiscal court, district board of education, or legislative body of a city, consolidated local government, urban-county government, or other taxing district to an amount which will produce the same percentage increase in revenue from personal property as the percentage increase in revenue from real property resulting from the reduced tax rate applicable to real property.
If the tax rate applicable to real property levied by a county fiscal court, district board of education, or legislative body of a city, consolidated local government, urban-county government, or other taxing district is reduced, under the provisions of KRS 132.017(3), as a result of a majority of votes cast in an election being opposed to such a rate, the tax rate applicable to personal property levied by the respective county fiscal court, district board of education, or legislative body of a city, consolidated local government, urban-county government, or other taxing district shall be reduced, without further action by the levying body, to an amount which will produce the same percentage increase in revenue from personal property as the percentage increase in revenue from real property resulting from the reduced tax rate applicable to real property.
History. Enact. Acts 1982, ch. 397, § 9, effective July 15, 1982; repealed and reenact., Acts 1990, ch. 476, Pt. V, § 309, effective July 13, 1990; 2002, ch. 346, § 163, effective July 15, 2002; 2005, ch. 121, § 5, effective June 20, 2005; 2019 ch. 83, § 2, effective June 27, 2019.
(6/20/2005). The paragraph in KRS 132.017(2) that is referred to in subsection (1) of this section has been changed in codification by the Reviser of Statutes under the authority of KRS 7.136 to reflect the correct lettering of paragraphs in 2005 Ky. Acts ch. 121, § 1, subsec. (2).
The owner or person assessed shall pay an annual ad valorem tax for state purposes at the rate of:
Thirty-one and one-half cents ($0.315) upon each one hundred dollars ($100) of value of all real property directed to be assessed for taxation;
Twenty-five cents ($0.25) upon each one hundred dollars ($100) of value of all motor vehicles qualifying for permanent registration as historic motor vehicles under KRS 186.043 ;
Fifteen cents ($0.15) upon each one hundred dollars ($100) of value of all:
Machinery actually engaged in manufacturing;
Commercial radio and television equipment used to receive, capture, produce, edit, enhance, modify, process, store, convey, or transmit audio or video content or electronic signals which are broadcast over the air to an antenna, including radio and television towers used to transmit or facilitate the transmission of the signal broadcast and equipment used to gather or transmit weather information, but excluding telephone and cellular communication towers; and
Tangible personal property which has been certified as a pollution control facility as defined in KRS 224.1-300 . In the case of tangible personal property certified as a pollution control facility which is incorporated into a landfill facility, the tangible personal property shall be presumed to remain tangible personal property for purposes of this paragraph if the tangible personal property is being used for its intended purposes;
Ten cents ($0.10) upon each one hundred dollars ($100) of value on the operating property of railroads or railway companies that operate solely within the Commonwealth;
Five cents ($0.05) upon each one hundred dollars ($100) of value of goods held for sale in the regular course of business, which includes:
Machinery and equipment held in a retailer's inventory for sale or lease originating under a floor plan financing arrangement;
Motor vehicles:
Held for sale in the inventory of a licensed motor vehicle dealer, including licensed motor vehicle auction dealers, which are not currently titled and registered in Kentucky and are held on an assignment pursuant to KRS 186A.230 ; or
That are in the possession of a licensed motor vehicle dealer, including licensed motor vehicle auction dealers, for sale, although ownership has not been transferred to the dealer;
Raw materials, which includes distilled spirits and distilled spirits inventory;
In-process materials, which includes distilled spirits and distilled spirits inventory, held for incorporation in finished goods held for sale in the regular course of business; and
Qualified heavy equipment;
One and one-half cents ($0.015) upon each one hundred dollars ($100) of value of all:
Privately owned leasehold interests in industrial buildings, as defined under KRS 103.200 , owned and financed by a tax-exempt governmental unit, or tax-exempt statutory authority under the provisions of KRS Chapter 103, upon the prior approval of the Kentucky Economic Development Finance Authority, except that the rate shall not apply to the proportion of value of the leasehold interest created through any private financing;
Qualifying voluntary environmental remediation property, provided the property owner has corrected the effect of all known releases of hazardous substances, pollutants, contaminants, petroleum, or petroleum products located on the property consistent with a corrective action plan approved by the Energy and Environment Cabinet pursuant to KRS 224.1-400 , 224.1-405 , or 224.60-135 , and provided the cleanup was not financed through a public grant or the petroleum storage tank environmental assurance fund. This rate shall apply for a period of three(3) years following the Energy and Environment Cabinet's issuance of a No Further Action Letter or its equivalent, after which the regular tax rate shall apply;
Tobacco directed to be assessed for taxation;
Unmanufactured agricultural products;
Aircraft not used in the business of transporting persons or property for compensation or hire;
Federally documented vessels not used in the business of transporting persons or property for compensation or hire, or for other commercial purposes; and
Privately owned leasehold interests in residential property described in KRS 132.195(2)(g);
One-tenth of one cent ($0.001) upon each one hundred dollars ($100) of value of all:
Farm implements and farm machinery owned by or leased to a person actually engaged in farming and used in his farm operations;
Livestock and domestic fowl;
Tangible personal property located in a foreign trade zone established pursuant to 19 U.S.C. sec. 81 , provided that the zone is activated in accordance with the regulations of the United States Customs Service and the Foreign Trade Zones Board; and
Property which has been certified as an alcohol production facility as defined in KRS 247.910 , or as a fluidized bed energy production facility as defined in KRS 211.390 ; and
Forty-five cents ($0.45) upon each one hundred dollars ($100) of value of all other property directed to be assessed for taxation shall be paid by the owner or person assessed, except as provided in KRS 132.030 , 132.200 , 136.300 , and 136.320 , providing a different tax rate for particular property.
Notwithstanding subsection (1)(a) of this section, the state tax rate on real property shall be reduced to compensate for any increase in the aggregate assessed value of real property to the extent that the increase exceeds the preceding year's assessment by more than four percent (4%), excluding:
The assessment of new property as defined in KRS 132.010(8);
The assessment from property which is subject to tax increment financing pursuant to KRS Chapter 65; and
The assessment from leasehold property which is owned and financed by a tax-exempt governmental unit, or tax-exempt statutory authority under the provisions of KRS Chapter 103 and entitled to the reduced rate of one and one-half cents ($0.015) pursuant to subsection (1)(f) of this section. In any year in which the aggregate assessed value of real property is less than the preceding year, the state rate shall be increased to the extent necessary to produce the approximate amount of revenue that was produced in the preceding year from real property.
By July 1 each year, the department shall compute the state tax rate applicable to real property for the current year in accordance with the provisions of subsection (2) of this section and certify the rate to the county clerks for their use in preparing the tax bills. If the assessments for all counties have not been certified by July 1, the department shall, when either real property assessments of at least seventy-five percent (75%) of the total number of counties of the Commonwealth have been determined to be acceptable by the department, or when the number of counties having at least seventy-five percent (75%) of the total real property assessment for the previous year have been determined to be acceptable by the department, make an estimate of the real property assessments of the uncertified counties and compute the state tax rate.
If the tax rate set by the department as provided in subsection (2) of this section produces more than a four percent (4%) increase in real property tax revenues, excluding:
The revenue resulting from new property as defined in KRS 132.010(8);
The revenue from property which is subject to tax increment financing pursuant to KRS Chapter 65; and
The revenue from leasehold property which is owned and financed by a tax-exempt governmental unit, or tax-exempt statutory authority under the provisions of KRS Chapter 103 and entitled to the reduced rate of one and one-half cents ($0.015) pursuant to subsection (1) of this section;
the rate shall be adjusted in the succeeding year so that the cumulative total of each year's property tax revenue increase shall not exceed four percent (4%) per year.
The provisions of subsection (2) of this section notwithstanding, the assessed value of unmined coal certified by the department after July 1, 1994, shall not be included with the assessed value of other real property in determining the state real property tax rate. All omitted unmined coal assessments made after July 1, 1994, shall also be excluded from the provisions of subsection (2) of this section. The calculated rate shall, however, be applied to unmined coal property, and the state revenue shall be devoted to the program described in KRS 146.550 to 146.570 , except that four hundred thousand dollars ($400,000) of the state revenue shall be paid annually to the State Treasury and credited to the Office of Energy Policy for the purpose of public education of coal-related issues.
History. 4019: amend. Acts 1948, ch. 95, § 1; 1950, ch. 186; 1954, ch. 161; 1965 (1st Ex. Sess.), ch. 2, § 1; 1968, ch. 207, § 1; 1976, ch. 84, § 7, effective March 29, 1976; 1976, ch. 93, § 9, effective January 1, 1977; 1978, ch. 116, § 3, effective January 1, 1979; 1978, ch. 404, § 1, effective March 30, 1978; 1979 (Ex. Sess.), ch. 3, § 1, effective May 12, 1979; 1979 (Ex. Sess.), ch. 25, § 3, effective February 13, 1979; 1980, ch. 188, § 102, effective July 15, 1980; 1980, ch. 210, § 6, effective July 15, 1980; 1980, ch. 317, § 1, effective July 15, 1980; 1980, ch. 319, § 3, effective July 15, 1980; 1980, ch. 395, § 1, effective July 15, 1980; 1982, ch. 229, § 1, effective July 15, 1982; 1984, ch. 169, § 1, effective July 13, 1984; Acts 1985 (1st Ex. Sess.), ch. 6, part 1, § 1, effective July 29, 1985; 1986, ch. 359, § 1, effective July 15, 1986; 1986, ch. 431, § 16, effective July 15, 1986; 1986, ch. 476, § 5, effective July 15, 1986; 1990, ch. 345, § 1, effective July 13, 1990; 1990, ch. 437, § 4, effective July 13, 1990; 1990, ch. 461, § 1, effective July 13, 1990; 1990, ch. 476, Pt. V, § 310, effective July 13, 1990; 1992, ch. 338, § 21, effective July 14, 1992; 1994, ch. 65, § 2, effective July 15, 1994; 1994, ch. 263, § 3, effective July 15, 1994; 1994, ch. 328, § 4, effective July 15, 1994; 1996, ch. 254, § 22, effective July 15, 1996; 1998, ch. 55, § 1, effective July 15, 1998; 1998, ch. 72, § 1, effective July 15, 1998; 1998, ch. 266, § 1, effective July 15, 1998; 1998, ch. 385, § 1, effective July 15, 1998; 2000, ch. 2, § 2, effective July 14, 2000; 2000, ch. 327, § 1, effective July 14, 2000; 2002, ch. 324, § 1, effective July 15, 2002; 2002, ch. 338, § 17, effective July 15, 2002; 2005, ch. 85, § 171, effective June 20, 2005; 2005, ch. 168, § 55, effective January 1, 2006; 2006, ch. 152, § 3, effective April 5, 2006; 2007, ch. 100, § 2, effective June 26, 2007; 2010, ch. 24, § 97, effective July 15, 2010; 2013, ch. 94, § 1, effective June 25, 2013; 2013, ch. 119, § 7, effective January 1, 2014; 2016 ch. 93, § 2, effective July 15, 2016; 2018 ch. 29, § 4, effective July 14, 2018; 2019 ch. 151, § 9, effective June 27, 2019; 2020 ch. 91, § 61, effective April 15, 2020.
Section 4 of Acts 1994, ch. 263, provided that the 1994 amendment to this section "shall apply for the 1994 tax assessment year."
(4/15/2020). 2020 Ky. Acts ch. 91, sec. 79 provides that the changes made to this statute in Section 61 of that Act apply to privately owned leasehold interests in residential property assessed on or after January 1, 2021.
(6/27/2019). Section 81 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 9 of that Act apply to tangible personal property assessed on or after January 1, 2020.
(1/1/2014). 2013 Ky. Acts ch. 119, sec. 26, provides that the amendments to this statute in 2013 Ky. Acts, ch. 119, sec. 7, shall apply to property assessed on or after January 1, 2014.
(1/1/2014). 2013 Ky. Acts ch. 119, sec. 24, provides, "It is the intent of the General Assembly that the changes made in [this statute and KRS 132.200 ], relating to tangible personal property which has been certified as a pollution control facility, are to clarify existing provisions in the law, as follows:
"(1) That the tax rate of fifteen cents ($0.15) upon each one hundred dollars ($100) of value only applies to tangible personal property which has been certified as a pollution control facility; and
(2) That only tangible personal property certified as a pollution control facility is subject to taxation for state purposes only while being exempt from taxation in the county, city, school, or other taxing district in which it has a taxable situs."
(3/18/2005). 2005 Ky. Acts ch. 168, § 171, provides that: "Sections 55 (KRS 132.020 ) and 57 (KRS 132.200 of this Act, relating to property tax changes, take effect on January 1, 2006, except the changes made to paragraph (c) of subsection (1) of Section 55, relating to the voluntary environmental remediation credit, paragraph (a) of subsection (2) of Section 55, and paragraph (a) of subsection (4) of Section 55 of this Act, relating to new property and the state property assessment, and subsection (21) of Section 57 of this Act, which shall take effect on the effective date of this Act and which shall apply to tax years beginning on or after January 1, 2005."
3. Insurance Beneficiary.
4. Bank Deposits.
5. Federal Postal Savings Deposits.
6. Legislative Power.
7. Industrial Loan Corporations.
8. State Tax Rate.
9. Real Property.
10. Priorities.
11. Refunds.
12. Industrial Buildings.
Law which repealed law providing for state ad valorem taxes and enacted a new law in its place, exempting real estate from taxation, was unconstitutional because the legislature has no power to exempt property from state taxation and as a result the law remained in force as it was prior to the attempted repeal. Martin v. High Splint Coal Co., 268 Ky. 11 , 103 S.W.2d 711, 1937 Ky. LEXIS 421 ( Ky. 1937 ).
Intent of the Legislature in passing Corporate Shares Tax (KRS 132.020 ) and Exemptions Statutes (former KRS 136.030(1) (now repealed)) was to avoid double taxation of both a corporation and its shareholders. St. Ledger v. Revenue Cabinet, 942 S.W.2d 893, 1997 Ky. LEXIS 17 ( Ky. 1997 ), modified, 1997 Ky. LEXIS 45 (Ky. Apr. 24, 1997), reprinted, 942 S.W.2d 893 ( Ky. 1997 ), limited, Dawson v. Birenbaum, 968 S.W.2d 663, 1998 Ky. LEXIS 56 ( Ky. 1998 ).
It is not unconstitutional to tax deposits in out-of-state banks at 50¢ per $100 under this section, while deposits in domestic banks are taxed at only 10¢ per $100 under KRS 132.030 . Madden v. Kentucky, 309 U.S. 83, 60 S. Ct. 406, 84 L. Ed. 590, 1940 U.S. LEXIS 956 (U.S. 1940).
Former subsection (5) of this section, creating a separate tax classification for unmined coal by treating it differently from all other interests in real estate, including other interests with similar characteristics such as oil and gas in its natural state, is a classification that is not related to a constitutionally permissible classification for the purpose of raising revenue and is therefore unconstitutional. Gillis v. Yount, 748 S.W.2d 357, 1988 Ky. LEXIS 13 ( Ky. 1988 ).
Having declared former subsection (10) of this section unconstitutional the court properly used its discretion, and chose not to apply the general tax rate retroactively to distilled spirits but to impose the increased rate prospectively only. Yount v. Calvert, 826 S.W.2d 833, 1991 Ky. App. LEXIS 102 (Ky. Ct. App. 1991).
Subsection (10) (since repealed) of this section is repugnant to the Kentucky Constitution. It is a manifest violation of both the letter and the spirit of the law. Accordingly, the judgment of the Circuit Court declaring KRS 132.020(10) to be an unconstitutional infringement upon the Constitution and mandating that the Kentucky Revenue Cabinet tax distilled spirits at the rate provided for under the general provisions set forth in this section was proper. Yount v. Calvert, 826 S.W.2d 833, 1991 Ky. App. LEXIS 102 (Ky. Ct. App. 1991).
The corporate shares tax, KRS 132.020 and the exemption statute, former KRS 136.030(1) (now repealed), are inseparable because the striking of the exemption statute would result in the taxation not only of corporations, but their shareholders which result would be in direct contravention of the expressed intent of the General Assembly; thus both statutes are invalid as they discriminate against interstate commerce and thus violate the Commerce Clause of the United States Constitution under the reasoning of Fulton Corp. v. Faulkner, 516 U.S. 325, 116 S. Ct. 848, 133 L. Ed. 2d 796, 1996 U.S. LEXIS 1379 (1996). St. Ledger v. Revenue Cabinet, 942 S.W.2d 893, 1997 Ky. LEXIS 17 ( Ky. 1997 ), modified, 1997 Ky. LEXIS 45 (Ky. Apr. 24, 1997), reprinted, 942 S.W.2d 893 ( Ky. 1997 ), limited, Dawson v. Birenbaum, 968 S.W.2d 663, 1998 Ky. LEXIS 56 ( Ky. 1998 ).
3.Insurance Beneficiary.
Where widow beneficiary had the right to withdraw the entire principal of insurance policy on deceased husband, such right was much more than a "right to receive income" under former KRS 132.215 and this section governs. Luckett v. Fergerson, 302 S.W.2d 114, 1957 Ky. LEXIS 174 ( Ky. 1957 ).
4.Bank Deposits.
Bank deposits of a resident of Kentucky in banks outside of Kentucky are subject to the rate of 50¢ per $100 imposed by this section, and not the rate of 10¢ per $100 imposed by KRS 132.030 . Madden v. Kentucky, 309 U.S. 83, 60 S. Ct. 406, 84 L. Ed. 590, 1940 U.S. LEXIS 956 (U.S. 1940).
5.Federal Postal Savings Deposits.
Federal postal savings deposits could not be subjected to tax imposed by this section, since to do so would result in unjust discrimination against federal instrumentality in favor of domestic banks, whose deposits are taxable at only 10¢ per $100 under KRS 132.030 . In re Kentucky Fuel Gas Corp., 127 F.2d 657, 1942 U.S. App. LEXIS 3945 (6th Cir. Ky.), cert. denied, 317 U.S. 593, 63 S. Ct. 71, 87 L. Ed. 485, 1942 U.S. LEXIS 185 (U.S. 1942).
6.Legislative Power.
The Legislature has no power to substitute a license tax for an ad valorem tax. Raydure v. Board of Sup'rs, 183 Ky. 84 , 209 S.W. 19, 1919 Ky. LEXIS 469 ( Ky. 1919 ).
Absent the element of arbitrariness, the legislature is free to provide various classes, especially in the field of taxation. Paducah v. T.C.B., Inc., 817 S.W.2d 234, 1991 Ky. App. LEXIS 119 (Ky. Ct. App. 1991).
7.Industrial Loan Corporations.
Although the business of an industrial loan corporation resembles the operation of part of the usual business of a bank, the resemblance did not entitle it to be regarded as a bank under former KRS 136.270 (now repealed) and former KRS 136.280 (now repealed) and it was liable for payment of a tax on intangibles imposed by this section. First Industrial Plan v. Kentucky Board of Tax Appeals, 500 S.W.2d 70, 1973 Ky. LEXIS 203 ( Ky. 1973 ).
8.State Tax Rate.
KRS 133.185 , which relates to the imposition of a tax rate for a taxing district, such as a city, county or school, has no relationship to Ky. Const., § 171 which requires that the General Assembly shall provide an annual tax sufficient to defray the estimated expenses of the commonwealth; the state tax rate on all personal property, including motor vehicles, is not fixed by the processes outlined in KRS 133.185 , 132.487(2), or 132.487(6) which provide for submission of a proposal, recapitulation of motor vehicles by the property valuation administrator, and certification by the Department of Revenue, but rather, the state tax rate is fixed by the General Assembly and is currently embodied in this section. There is no conflict between KRS 132.487(2) and 132.487(6) with the constitutional provision that the taxes shall be sufficient to defray the expenses of the state. Kling v. Geary, 667 S.W.2d 379, 1984 Ky. LEXIS 216 ( Ky. 1984 ).
9.Real Property.
Where a taxpayer held equitable title in real estate consisting of all incidents of ownership except legal title and the taxpayer paid ad valorem tax on the property, former KRS 134.060 (now repealed), Ky. Const., § 172 and this section did not require the taxation of the power to dispose of the property as an intangible, separate and distinct from the underlying real property. Kentucky Power Co. v. Revenue Cabinet, 705 S.W.2d 904, 1985 Ky. LEXIS 293 ( Ky. 1985 ).
10.Priorities.
Ad valorem taxes assessed after a duly recorded mortgage do not become liens until assessed, but are given priority over mortgages. Liberty Nat'l Bank & Trust Co. v. Vanderkraats, 899 S.W.2d 511, 1995 Ky. App. LEXIS 114 (Ky. Ct. App. 1995).
11.Refunds.
Where suit challenged the constitutionality of an exemption statute (former KRS 136.030(1) (now repealed)), a corporate shares tax statute (KRS 132.020 ), and involved the Revenue Cabinet and such statutes were declared unconstitutional, taxpayers were required to file for a refund for taxes paid under such statutes within two (2) years of payment of such taxes as provided in KRS 134.590(1) and (2), not two (2) years from the date of filing the lawsuit challenging the constitutionality of the statutes as provided in KRS 134.590(6). St. Ledger v. Revenue Cabinet, 942 S.W.2d 893, 1997 Ky. LEXIS 17 ( Ky. 1997 ), modified, 1997 Ky. LEXIS 45 (Ky. Apr. 24, 1997), reprinted, 942 S.W.2d 893 ( Ky. 1997 ), limited, Dawson v. Birenbaum, 968 S.W.2d 663, 1998 Ky. LEXIS 56 ( Ky. 1998 ).
12.Industrial Buildings.
It is not clear whether the exemption for an industrial building that is "owned and financed" by a tax-exempt entity (KRS 132.200(8)) (now (7)) was intended to apply after the collateral is no longer financed; therefore, the statute must be construed against the taxpayers and they are not permitted to take advantage of the exemption and the reduced state rate pursuant to this section. Owens-Illinois Labels, Inc. v. Commonwealth, 27 S.W.3d 798, 2000 Ky. App. LEXIS 48 (Ky. Ct. App. 2000).
Kentucky Finance Co. v. McCord, 290 S.W.2d 481, 1956 Ky. LEXIS 324 ( Ky. 1956 ); Kentucky Dep't of Revenue v. Bomar, 486 S.W.2d 532, 1972 Ky. LEXIS 111 , 59 A.L.R.3d 830 ( Ky. 1972 ); Parrent v. Fannin, 616 S.W.2d 501, 1981 Ky. LEXIS 250 ( Ky. 1981 ); Allphin v. Butler, 619 S.W.2d 483, 1981 Ky. LEXIS 259 ( Ky. 1981 ); Revenue Cabinet v. Barbour, 836 S.W.2d 418, 1992 Ky. App. LEXIS 14 (Ky. Ct. App. 1992).
A fifth-class city must, by ordinance, levy an annual tax rate, prepare an annual budget and publish both the budget or summary thereof together with the rate in the local newspaper. OAG 70-630 .
A mortgage and deed of trust secured by real estate and other tangible property is not a property interest subject to ad valorem property tax under this section nor intangible property subject to tax under subsection (1) of KRS 132.190 . OAG 74-352 .
Payments made, pursuant to a lease for a building constructed by a city beyond its boundaries under the provisions of KRS 103.200 et seq., are in lieu of all other taxes except those under this section, and, as such payments are not technically city revenue, the city is free to designate the local school district as beneficiary of the contract if it so desires. OAG 79-132 .
"Money in hand," under former subsection (1) of this section, means literally what it says: money in the personal control or possession of the taxpayer. OAG 79-140 .
The state tax rate computed by the Revenue Cabinet pursuant to former subsection (8) of this section is a single tax rate applicable to all counties and the limitation on the increase of real property tax revenues to four percent in any single year provided for by former subsections (7) and (9) of this section is a limitation in the aggregate so that, in determining whether the four percent limit has been violated, one must look at the real property tax revenues of the state as a whole. Thus, the percentage increase or decrease in real property tax revenues in any particular county as a result of the application of the state tax rate is irrelevant in determining whether the four percent rule has been violated. OAG 83-17 .
Investments of the Kenton-Boone Cable Television Board in time deposits in an Ohio bank are subject to the intangible property tax levied by subsection (1) of this section since intangibles, like other personalty, are generally sitused at the domicile of their owner. OAG 84-296 .
The words "actually engaged in manufacturing," as used in subsection (1) of this section and KRS 132.200(4) modify "individuals or corporations," not "machinery." OAG 90-5 .
Machinery owned by an individual or corporation, which individual or corporation is actually engaged in manufacturing, awaiting to be installed and put into use in the manufacturing plant should be classified as manufacturing machinery at the state rate of 15¢ per $100 of assessed valuation and is exempt from local taxation. OAG 90-5 .
State taxes shall be levied by general laws and for public purposes only, uniformity required, Ky. Const., § 171.
Surrender of power to tax, Ky. Const., § 175.
Tax rate of local taxing units, Ky. Const., § 157.
Taxes to be paid into state treasury and credited to general fund, KRS 47.010 .
Journal of Mineral Law & Policy.
Comments, Constitutional Validity of the Kentucky Unmined Coal Tax: Gillis v. Yount, 4 J.M.L. & P. 159 (1988).
Tobergte, The Impact of Kentucky's Present Constitution Upon Business Growth & Development, Volume 51, No. 3, Summer 1987 Ky. Bench & B. 21.
A taxing district that does not elect to attempt to set a rate that will produce more than four percent (4%) in additional revenue, exclusive of revenue from new property as defined in KRS 132.010 , over the amount of revenue produced by the compensating tax rate as defined in KRS 132.010 shall establish a final tax rate within forty-five (45) days of the department's certification of the county's property tax roll. A city that does not elect to have city ad valorem taxes collected by the sheriff as provided in KRS 91A.070(1) shall be exempt from this deadline. Any nonexempt taxing district that fails to meet this deadline shall be required to use the compensating tax rate for that year's property tax bills.
A taxing district that elects to attempt to set a rate that will produce more than four percent (4%) in additional revenue, exclusive of revenue from new property as defined in KRS 132.010 , over the amount of revenue produced by the compensating tax rate as defined in KRS 132.010 shall follow the provisions of KRS 132.017 .
History. Enact. Acts 1994, ch. 9, § 3, effective July 15, 1994; 2009, ch. 69, § 1, effective June 25, 2009.
Section 4 of Acts 1994, ch. 9, provided that this section and the 1994 amendment to KRS 132.487 "shall be effective for property assessed on or after January 1, 1995."
(10/21/2005). 2005 Ky. Acts chs. 11, 85, 95, 97, 99, 123, and 181 instruct the Reviser of Statutes to correct statutory references to agencies and officers whose names have been changed in 2005 legislation confirming the reorganization of the executive branch. Such a correction has been made in this section.
Even though KRS 132.0225 requires all taxing districts to levy their tax rates within forty-five (45) days, cities that have elected to adopt a county's assessment are empowered by KRS 132.285 to fix the time for levying their tax rates, notwithstanding any other statutory provisions to the contrary. Light v. City of Louisville, 248 S.W.3d 559, 2008 Ky. LEXIS 68 ( Ky. 2008 ).
As the more specific language of KRS 132.285 controlled over the more general language in KRS 132.0225 , a city did not violate KRS 132.0225 when it adopted its ad valorem tax rates more than 45 days after county assessments had been certified. Once the city elected to operate under KRS 132.285 , the city could set its own date for levying its taxes. Light v. City of Louisville, 248 S.W.3d 559, 2008 Ky. LEXIS 68 ( Ky. 2008 ).
No special purpose governmental entity shall levy a tax rate which exceeds the compensating tax rate until the taxing district has complied with the provisions of KRS 65A.110 and subsection (2) of this section.
A special purpose governmental entity proposing to levy a tax rate which exceeds the compensating tax rate shall submit the proposed rate as required by KRS 65A.110 and shall hold a public hearing to hear comments from the public regarding the proposed tax rate. The hearing shall be held in the same location where the governing body of the city or county where the largest number of citizens served by the special purpose governmental entity reside meets, and shall be held immediately before a regularly scheduled meeting of that governing body. (2) (a) A special purpose governmental entity proposing to levy a tax rate which exceeds the compensating tax rate shall submit the proposed rate as required by KRS 65A.110 and shall hold a public hearing to hear comments from the public regarding the proposed tax rate. The hearing shall be held in the same location where the governing body of the city or county where the largest number of citizens served by the special purpose governmental entity reside meets, and shall be held immediately before a regularly scheduled meeting of that governing body.
The special purpose governmental entity shall advertise the hearing by causing to be published at least twice in two (2) consecutive weeks, in the newspaper of largest circulation in the county, a display type advertisement of not less than twelve (12) column inches, the following:
The tax rate levied in the preceding year, and the revenue produced by that rate;
The tax rate proposed for the current year and the revenue expected to be produced by that rate;
The compensating tax rate and the revenue expected from it;
The revenue expected from new property and personal property;
The general areas to which revenue in excess of the revenue produced in the preceding year is to be allocated;
A time and place for the public hearing which shall be held not less than seven (7) days, nor more than ten (10) days, after the day that the second advertisement is published;
The purpose of the hearing; and
A statement to the effect that the General Assembly has required publication of the advertisement and the information contained therein.
In lieu of the two (2) published notices, a single notice containing the required information may be sent by first-class mail to each person owning real property in the special purpose governmental entity, addressed to the property owner at his residence or principal place of business as shown on the current year property tax roll.
The hearing shall be open to the public. All persons desiring to be heard shall be given an opportunity to present oral testimony. The special purpose governmental entity may set reasonable time limits for testimony.
That portion of a tax rate levied by an action of a special purpose governmental entity which will produce revenue from real property, exclusive of revenue from new property, more than four percent (4%) over the amount of revenue produced by the compensating tax rate shall be subject to a recall vote or reconsideration by the special purpose governmental entity, as provided for in KRS 132.017 , and shall be advertised as provided in paragraph (b) of this subsection. (3) (a) That portion of a tax rate levied by an action of a special purpose governmental entity which will produce revenue from real property, exclusive of revenue from new property, more than four percent (4%) over the amount of revenue produced by the compensating tax rate shall be subject to a recall vote or reconsideration by the special purpose governmental entity, as provided for in KRS 132.017 , and shall be advertised as provided in paragraph (b) of this subsection.
The special purpose governmental entity shall, within seven (7) days following adoption of an ordinance, order, resolution, or motion to levy a tax rate which will produce revenue from real property, exclusive of revenue from new property, more than four percent (4%) over the amount of revenue produced by the compensating tax rate, cause to be published, in the newspaper of largest circulation in the county, a display type advertisement of not less than twelve (12) column inches the following:
The fact that the taxing district has adopted a rate;
The fact that the part of the rate which will produce revenue from real property, exclusive of new property, in excess of four percent (4%) over the amount of revenue produced by the compensating tax rate is subject to recall; and
The name, address, and telephone number of the county clerk of the county in which the special purpose governmental entity is located, with a notation to the effect that that official can provide the necessary information about the petition required to initiate recall of the tax rate.
History. Enact. Acts 1965 (1st Ex. Sess.), ch. 2, § 13; 1966, ch. 62, § 1; 1972, ch. 285, § 2; 1979 (Ex. Sess.), ch. 25, § 4, effective February 13, 1979; 1980, ch. 319, § 8, effective July 15, 1980; 1990, ch. 343, § 5, effective July 13, 1990; 1990, ch. 476, Pt. V, § 311, effective July 13, 1990; 2002, ch. 346, § 164, effective July 15, 2002; 2013, ch. 40, § 87, effective March 21, 2013; 2020 ch. 90, § 2, effective January 1, 2021.
Section 11 of Acts 1990, ch. 343 provided: "The provisions of this Act shall be effective for tax years with assessment dates on or after January 1, 1991."
(3/21/2013). Two manifest clerical or technical errors have been corrected in this statute. When the statute was amended in 2013 Ky. Acts ch. 40, sec. 87, the phrase "as defined in KRS 132.010 ," including the comma, was deleted twice in subsection (3)(b). Under the authority of KRS 7.136 , the Reviser of Statutes has restored both of the deleted commas.
(7/13/90). The Act amending this section prevails over the repeal and reenactment in House Bill 940, Acts Ch. 476, pursuant to Section 653(1) of Acts Ch. 476.
1. Motor Vehicles.
2. Library districts.
1.Motor Vehicles.
The language of KRS 132.487(3), governing a centralized ad valorem tax system for motor vehicles, clearly and unequivocally removes all valuations of and tax revenues from motor vehicles from the base amount used in determining the compensating tax rate and maximum possible tax rate envisioned under the provisions of this section and KRS 68.245 , 132.027 , and 160.470 . Kling v. Geary, 667 S.W.2d 379, 1984 Ky. LEXIS 216 ( Ky. 1984 ).
2.Library districts.
Circuit courts erred in rendering summary judgments in favor of two library districts because, while the applicable statutes were facially in conflict, they were both applicable to library districts formed by petition and could be harmonized in their application, where, if revenue from ad valorem taxes was to be increased above four percent, the increase had to be approved by petition of the voters. Campbell County Library Bd. of Trs. v. Coleman, 475 S.W.3d 40, 2015 Ky. App. LEXIS 39 (Ky. Ct. App. 2015).
Baker v. Strode, 348 F. Supp. 1257, 1971 U.S. Dist. LEXIS 14893 (W.D. Ky. 1971 ); Miller v. Nunnelley, 468 S.W.2d 298, 1971 Ky. LEXIS 334 ( Ky. 1971 ).
Public health taxing districts are limited to a compensating tax rate based on the actual 1965 levy and not the maximum voted for the county. OAG 66-22 .
Since extension service districts have not been excepted from the compensating tax rate defined in KRS 132.010 , the rate should be applied to the tax imposed by such districts. OAG 66-229 .
A public health taxing district is a taxing district within the meaning of this section despite the fact that the voters had previously approved a higher rate. OAG 66-356 .
A county soil conservation district board may request and the fiscal court of such county may levy a tax of two cents ($0.02) per acre, even though such tax rate is an increase from the rate levied in previous years. OAG 67-346 .
Where after the roll back a library district did not have sufficient funds to operate, under KRS 173.610 a petition could be filed putting the question of an increased tax levy to a vote of the people, and if the vote was affirmative the tax could be raised to exceed the roll back rate. OAG 68-606 .
This section does not apply to a county library established under KRS 173.310 . OAG 69-394 .
In view of the fact that the present rollback statutes in effect provide a maximum revenue level, the library tax rate may be adjusted and applied against the assessment base such as to produce the maximum revenue provided by the rollback law as if the homestead exemption to § 170 of the Kentucky Constitution had never come into being. OAG 72-124 .
As the 1972 amendment to this section was passed before the 1972 amendment to KRS 75.040 , the provisions of the latter section as to the tax rate for fire prevention districts will prevail. OAG 72-646 .
Even though "net assessment growth," as defined in KRS 132.425 (repealed), refers only to the county or a school district, KRS 132.010 encompasses a taxing district and this section and KRS 132.027 clearly show that KRS 132.425 (repealed) is by reference made applicable to cities so that any city which levied a poll tax in 1973 may adjust its compensating tax rate to reflect the loss in poll tax revenue. OAG 75-544 .
Insofar as they are used in this section and KRS 132.027 , as amended by Acts 1979 (Ex. Sess.), ch. 25, for those governmental units operating on a calendar basis: (1) " . . . . . a tax rate for 1979-80 . . . . . " means that unit's tax rate for the 1980 calendar year; (2) " . . . . . application of the maximum tax rate that could have been levied in 1978-79 . . . . . " means the unit's compensating tax rate for the 1979 calendar year, calculated in accordance with KRS 132.010(6) as it read prior to February 13, 1979; and (3) " . . . . . the 1978-79 assessment" means the unit's assessment as of January 1, 1979, assuming that the unit's assessment date is January 1. OAG 79-217 .
Hearings held pursuant to this section must be held by the board of directors of an extension district, and by a fiscal court, in the case of a county health district. OAG 79-365 .
In the case of a county extension district the responsibility to set tax rates in compliance with the law is that of the board of directors of the district, while in the case of a county health district, it is the fiscal court's responsibility. OAG 79-365 .
KRS 132.010 and this section apply to the tax rate to be set by a county hospital board for setting a tax rate for 1979-1980 and thereafter. OAG 79-422 .
In determining the net assessment growth, "revenue" does not include moneys earned from interest, special fees, contributions, or any other nontaxing revenue. OAG 79-478 .
Former subsection (4)(a) of this section applies to the first fiscal year 1979-80 and the maximum tax rate allowed is something less than 10 cents per $100 of assessed valuation. OAG 79-478 (Opinion prior to 1990 amendment).
This section applies to fire protection districts and volunteer fire departments. OAG 79-478 .
Acts 1979 (Ex. Sess.), ch. 25, amending this section, applies to the 1979-1980 tax rate for a county library district established pursuant to KRS 173.450 et seq. OAG 79-479 .
An ambulance district, created under KRS 108.100 , may levy a tax rate that does not exceed the rate voted on in creating the district, without being subject to the special tax limitations of this section. OAG 81-99 .
Where an ambulance district is created pursuant to KRS 108.105 , the statutory tax rate limits of this section would apply to the special district, since no voted levy is involved. OAG 81-99 .
The amendment of subsection (4) of KRS 262.200 to limit the maximum total tax revenue from real property millage tax to $25,000 per year does not unconstitutionally impact upon this section, since the General Assembly may constitutionally levy rates which lessen taxes. OAG 81-174 .
If there is any conflict between KRS 75.040(1) and this section, it relates to what tax rate may be set initially; there is no inconsistency between the statutes and this section applies whenever an already established rate is increased. OAG 82-323 .
If the tax rate applicable to real property levied by a special purpose governmental entity will produce a percentage increase in revenue from personal property less than the percentage increase in revenue from real property, the special purpose governmental entity may levy a tax rate applicable to personal property which will produce the same percentage increase in revenue from personal property as the percentage increase in revenue from real property.
The tax rate applicable to personal property levied by a special purpose governmental entity under the provisions of subsection (1) of this section shall not be subject to the public hearing provisions of KRS 132.023(2) and to the recall provisions of KRS 132.023(3).
History. Enact. Acts 1982, ch. 397, § 3, effective July 15, 1982; 1990, ch. 343, § 6, effective July 13, 1990; 1990, ch. 476, Pt. V, § 312, effective July 13, 1990; 2013, ch. 40, § 88, effective March 21, 2013.
Subsection (2) of former KRS 68.249 (now repealed), limiting the increase in the county tax rate on personal property, means that the tax rate levied under KRS 68.248 on such property for 1982-83 cannot exceed the tax rate levied in 1981-82; additionally, the tax rate levied under subsection (1) of former KRS 68.249 cannot exceed the tax rate levied in 1981-82; however, the two rates collectively may exceed such rate. This determination is extended to all similar provisions of Acts 1982, ch. 397, i.e., KRS 132.024 , 132.025 , 132.029 , 132.029 1, 160.473 and 160.474 . OAG 83-221 (Opinion prior to 1990 amendment to KRS 68.249 and 132.024 , 132.025 , 132.029, 160.473 and repeal of KRS 132.0291 and 160.474 ).
In the event that the tax rate levied by an action of a taxing district, other than the state, counties, school districts, cities, and urban-county governments, for 1979-80, 1980-81, or 1981-82 produced a percentage increase in revenue from personal property less than the percentage increase in revenue from real property for the respective year, the taxing district, other than the state, counties, school districts, cities, and urban-county governments, may levy a tax rate applicable to personal property for 1982-83 only, which will produce the same cumulative percentage increase in revenue from personal property as was produced from real property in 1979-80, 1980-81 and 1981-82. Such a tax rate may be in addition to the tax rate levied under the provisions of KRS 132.024 .
The tax rate levied under the provision of KRS 132.024 and subsection (1) of this section shall not exceed the tax rate applicable to personal property levied by the respective taxing district, other than the state, counties, school districts, cities, and urban-county governments, in 1981-82.
The tax rate applicable to personal property levied by a taxing district, other than the state, counties, school districts, cities, and urban-county governments shall not be subject to the public hearing provisions of KRS 132.023(2) and to the recall provisions of KRS 132.023(3).
History. Enact. Acts 1982, ch. 397, § 4, effective July 15, 1982; repealed and reenact., Acts 1990, ch. 476, Pt. V, § 313, effective July 13, 1990; 2020 ch. 90, § 3, effective January 1, 2021.
(7/13/90) Pursuant to Section 653(2) of 1990 House Bill 940, Acts Ch. 476, the repeal and reenactment of this section in that Act prevails over its repeal in another Act (ch. 343, § 10) of the 1990 Regular Session.
Subsection (2) of former KRS 68.249 (now repealed), limiting the increase in the county tax rate on personal property, means that the tax rate levied under KRS 68.248 on such property for 1982-83 cannot exceed the tax rate levied in 1981-82; additionally, the tax rate levied under subsection (1) of former KRS 68.249 cannot exceed the tax rate levied in 1981-82; however, the two rates collectively may exceed such rate. This determination is extended to all similar provisions of Acts 1982, ch. 397, i.e., KRS 132.024 , 132.025 , 132.029 , 132.029 1, 160.473 and 160.474 . OAG 83-221 (Opinion prior to 1990 amendment of KRS 68.249, 132.024 , 132.025 , 132.029, 160.473 and the repeal of KRS 132.0291 and 160.474 ).
No city or urban-county government shall levy a tax rate which exceeds the compensating tax rate defined in KRS 132.010 until the city or urban-county government has complied with the provisions of subsection (2) of this section.
Cities or urban-county governments proposing to levy a tax rate which exceeds the compensating tax rate defined in KRS 132.010 shall hold a public hearing to hear comments from the public regarding the proposed tax rate. The hearing shall be held in the principal office of the taxing district, or, in the event the taxing district has no office, or the office is not suitable for a hearing, the hearing shall be held in a suitable facility as near as possible to the geographic center of the district. (2) (a) Cities or urban-county governments proposing to levy a tax rate which exceeds the compensating tax rate defined in KRS 132.010 shall hold a public hearing to hear comments from the public regarding the proposed tax rate. The hearing shall be held in the principal office of the taxing district, or, in the event the taxing district has no office, or the office is not suitable for a hearing, the hearing shall be held in a suitable facility as near as possible to the geographic center of the district.
The city or urban-county government shall advertise the hearing by causing to be published at least twice in two (2) consecutive weeks, in the newspaper of largest circulation in the county, a display type advertisement of not less than twelve (12) column inches, the following:
A time and place for the public hearing which shall be held not less than seven (7) days nor more than ten (10) days after the day the second advertisement is published;
In lieu of the two (2) published notices, a single notice containing the required information may be sent by first-class mail to each person owning real property in the taxing district, addressed to the property owner at his residence or principal place of business as shown on the current year property tax roll.
The hearing shall be open to the public. All persons desiring to be heard shall be given an opportunity to present oral testimony. The taxing district may set reasonable time limits for testimony.
That portion of a tax rate levied by an action of a city or urban-county government which will produce revenue from real property, exclusive of revenue from new property, more than four percent (4%) over the amount of revenue produced by the compensating tax rate defined in KRS 132.010 shall be subject to a recall vote or reconsideration by the taxing district, as provided for in KRS 132.017 , and shall be advertised as provided for in paragraph (b) of this subsection. (3) (a) That portion of a tax rate levied by an action of a city or urban-county government which will produce revenue from real property, exclusive of revenue from new property, more than four percent (4%) over the amount of revenue produced by the compensating tax rate defined in KRS 132.010 shall be subject to a recall vote or reconsideration by the taxing district, as provided for in KRS 132.017 , and shall be advertised as provided for in paragraph (b) of this subsection.
The city or urban-county government shall, within seven (7) days following adoption of an ordinance to levy a tax rate which will produce revenue from real property, exclusive of revenue from new property as defined in KRS 132.010, more than four percent (4%) over the amount of revenue produced by the compensating tax rate defined in KRS 132.010, cause to be published, in the newspaper of largest circulation in the county, a display type advertisement of not less than twelve (12) column inches the following:
The fact that the city or urban-county government has adopted a rate;
The fact that the part of the rate which will produce revenue from real property, exclusive of new property as defined in KRS 132.010, in excess of four percent (4%) over the amount of revenue produced by the compensating tax rate defined in KRS 132.010 is subject to recall, and
The name, address, and telephone number of the county clerk of the county or urban-county in which the taxing district is located, with a notation to the effect that that official can provide the necessary information about the petition required to initiate recall of the tax rate.
History. Enact. Acts 1965 (1st Ex. Sess.), ch. 2, § 14; 1972, ch. 285, § 3; 1974, ch. 316, § 5; 1979 (Ex. Sess.), ch. 25, § 5, effective February 13, 1979; 1980, ch. 319, § 9, effective July 15, 1980; 1990, ch. 343, § 7, effective July 13, 1990; 1990, ch. 476, Pt. V, § 314, effective July 13, 1990.
(7/13/90) The Act amending this section prevails over its repeal and reenactment in House Bill 940, Acts Ch. 476, pursuant to Section 653(1) of Acts Ch. 476.
This section does not unconstitutionally discriminate against cities' taxation powers even though the counties are allowed "net assessment growth" while the cities are not, since no constitutional provision requires cities to be treated the same as counties as far as concerns the extent of their tax-levying powers. Ashland v. Webb, 470 S.W.2d 604, 1971 Ky. LEXIS 279 ( Ky. 1971 ) (decision prior to 1972 amendment).
The limitation on indebtedness imposed by this section is not applicable to limit the rate at which taxes must necessarily be levied to pay an indebtedness incurred by authority of a vote of the people under Ky. Const., § 157. Raque v. Louisville, 402 S.W.2d 697, 1966 Ky. LEXIS 375 ( Ky. 1966 ).
The limitation on indebtedness imposed by this section was intended by the Legislature to safeguard against unintended tax burdens and not those that are specifically intended and authorized. Raque v. Louisville, 402 S.W.2d 697, 1966 Ky. LEXIS 375 ( Ky. 1966 ).
Kelley v. Ashland, 562 S.W.2d 312, 1978 Ky. LEXIS 325 ( Ky. 1978 ); Bischoff v. Newport, 733 S.W.2d 762, 1987 Ky. App. LEXIS 525 (Ky. Ct. App. 1987).
KRS 95.627 and 95.629 supersede and provide an exception to this section. OAG 66-562 .
A city of the third class may levy a tax in excess of the compensating tax rate to the extent that it is necessary to do so in order to maintain the alternative pension plan authorized by KRS 95.621 to 95.629 . OAG 66-562 .
For the 1966 assessment, all of the property in the city, including merchants' inventories, is subject to the city tax rate but the rate must be computed so that the amount of total revenue produced in 1966 will be no more than that produced in 1965 plus a ten percent (10%) increase. OAG 67-13 .
The general intent of the 1965 legislation establishing a "compensating tax rate" was to limit property tax revenue (and the burden of the taxpayers) to the same level in existence before 100 per cent assessments were put into effect (plus two (2) permissible percentage increases) and other revenue derived from property newly added to the tax rolls. OAG 67-40 .
Tax rates for tangible personal property cannot be separated from all other property subject to ad valorem property taxes in the city; the same rate must be applied to such property as is applied to all property in the city. OAG 67-101 .
A city which was levying a public works cumulative reserve fund property tax in 1965 could continue to do so in 1966 and subsequent years at the appropriate compensating tax rate or at such other rate as the city chose provided the overall tax rate did not exceed the compensating rate applicable to the overall levy. OAG 67-351 .
The fact that a town did not collect taxes in 1965 would not prevent it from collecting taxes in subsequent years using Ky. Const., § 157 to find the base rate and applying the compensating factor of this section to it. OAG 67-449 .
If a city failed to increase its tax rate by ten percent (10%) increases in each of the years 1966 and 1967, it is bound by the tax rate it now has in effect. OAG 68-222 .
The ten percent (10%) increases permitted by subsection (2) of this section, if not taken in the years 1966-67 and 1967-68, were waived. OAG 68-246 .
The tax rate levied by a municipality for library services under subsection (1) of KRS 173.360 is subject to the compensating tax rate provisions of this section even when this section would require a lower tax levy than the minimum established in subsection (1) of KRS 173.360 . OAG 68-259 .
A library created under KRS 173.310 is not a separate taxing district. The library tax must be included in the city's general tax levy and the city's legislative body establishes the library tax, under the provisions of KRS 173.360 , at a rate which cannot be lower than five cents, subject to the roll-back provisions of KRS 132.027 . OAG 68-320 .
Where libraries were established under KRS 173.310 , prior to the 1965 roll-back legislation, the city or county which established such libraries must reduce its respective library tax to the applicable compensating tax rate, or restricted budget, regardless of whether that rate or revenue would be less than five cents on the 100. OAG 69-590 .
A city would be barred under this section from taking any increase in its tax rate to become effective in 1971. OAG 70-576 .
Initiative and referendum cannot be used to increase the tax rate in a fourth-class city with the councilmanic form of government. OAG 70-576 .
The rollback provision of this section applies to a proposed five cent levy on property in a fourth-class city under KRS 97.590 for the purpose of purchasing and maintaining a public park in the city limits. OAG 72-193 .
After a city has sufficient revenue in a sinking fund to retire bonds for which a specific tax has been levied, the city would then be bound by KRS 132.010 and this section with respect to the tax rate which could be applied for general municipal purposes and it would be a violation of KRS 92.330 and 92.340 to continue to levy the specific tax and divert it to general municipal purposes. OAG 74-368 .
A third-class city may levy a tax in excess of the compensating tax rate where such is necessary to provide support for the alternative pension plan provided for in KRS 95.621 to 95.629 . OAG 75-203 .
Even though "net assessment growth," as defined in KRS 132.425 (repealed), refers only to the county or a school district, KRS 132.010 encompasses a taxing district and KRS 132.023 and this section clearly show that KRS 132.425 (repealed) is by reference made applicable to cities so that any city which levied a poll tax in 1973 may adjust its compensating tax rate to reflect the loss in poll tax revenue. OAG 75-544 .
A city cannot raise its tax rate by a referendum vote. OAG 77-112 .
If the sinking fund rate is a part of the overall general fund rate, it would appear that the only thing that is being done is a shifting of a part of the sinking fund rate to the main general fund rate, and if so it could be added to the general fund rate maintaining the overall tax rate at the same level. OAG 78-797 .
Insofar as they are used in KRS 132.023 and this section, as amended by Acts 1979 (Ex. Sess.), ch. 25, for those governmental units operating on a calendar basis: (1) " . . . . . a tax rate for 1979-80 . . . . . " means that unit's tax rate for the 1980 calendar year; (2) " . . . . . application of the maximum tax rate that could have been levied in 1978-79 . . . . . " means the unit's compensating tax rate for the 1979 calendar year, calculated in accordance with KRS 132.010(6) as it read prior to February 13, 1979; and (3) " . . . . . the 1978-79 assessment" means the unit's assessment as of January 1, 1979, assuming that the unit's assessment date is January 1. OAG 79-217 .
So long as the limitations imposed by this section are complied with, a city which wishes to increase the tax rate and return a portion of the increase to the taxpayers is free to do so. OAG 79-484 .
Acts 1979 (Ex. Sess.), ch. 25 cannot be applied retroactively to taxing districts operating on a calendar basis which had prepared their budgets prior to the effective date of that act. OAG 79-486 .
If a city applied its 1980 tax rate to its 1981 assessment, which greatly increased as a result of a court decision, and if the resulting increase in tax revenues was greater than four percent (4%) over the previous year, the city must comply with the recall vote or reconsideration provisions of former subsection (4) of this section, since it appears that the general assembly intended to limit revenues from property tax when assessments have increased. OAG 81-425 .
A city's maximum tax rate is dependent upon the amount of revenue which would have been raised if the rate of the preceding year was applied to the preceding year's assessment before it was adjusted for the homestead exemption. OAG 82-186 .
The language of former subdivision (4)(b) of this section indicates that the assessed valuations used in computing the limitations must be determinable at the time the city ordinance levying the rate is enacted. OAG 82-186 .
The limitations on the ad valorem tax rate which a city can levy are determined, in part, by applying the proposed rate levied by the city to the assessments certified by the Department of Revenue as provided in KRS 133.180 ; subsequent corrections in valuations made by the department as the result of adjustments to certain properties which were in the appeal process at the time the certification was made are not relevant in computing the limitations. OAG 82-186 .
In a year of negative net assessment growth, the maximum rate which a city or urban-county government can levy is that rate which, when applied to its current year assessments, will produce the same amount of revenue that would have been produced in the preceding tax year if all the property taxes the city or urban-county government actually levied had been collected. In such an instance, the maximum rate as provided in former subsection (1) (deleted by amendment) of this section would be greater than the rate levied in the preceding year. OAG 82-456 .
The Attorney General is not charged with the duty to interpret and enforce the requirements for legal notices codified in KRS Chapter 132, and in particular KRS 132.027 , in an open meetings appeal. OAG 04-OMD-230.
Subject to the provisions of KRS 132.027 , a city or urban-county government may levy a rate on business inventories equal to or less than the prevailing rate of taxation on other tangible personal property in the respective city or urban-county government.
The tangible personal property tax shall not be levied upon:
The inventories of licensed motor vehicle dealers, including licensed motor vehicle auction dealers; or
Motor vehicles that are in the possession of a licensed motor vehicle dealer, including licensed motor vehicle auction dealers, for sale, although ownership has not been transferred to the dealer.
History. Enact. Acts 1980, ch. 319, § 11, effective July 15, 1980; 1990, ch. 106, § 1, effective July 13, 1990; 2013, ch. 94, § 2, effective June 25, 2013.
In the event that the tax rate applicable to real property levied by a city or urban-county government will produce a percentage increase in revenue from personal property less than the percentage increase in revenue from real property, the city or urban-county government may levy a tax rate applicable to personal property which will produce the same percentage increase in revenue from personal property as the percentage increase in revenue from real property.
The tax rate applicable to personal property levied by a city or urban-county government under the provisions of subsection (1) of this section shall not be subject to the public hearing provisions of KRS 132.027(2) and to the recall provisions of KRS 132.027(3).
Every person having a deposit in any financial institution, as defined in KRS 136.500 , on January 1 of any year shall pay an annual tax to the state equal to one-thousandth of one percent (0.001%) upon the amount of the deposit, and no deduction shall be made for any indebtedness. The deposit tax shall be paid to the department by the financial institution with which the deposit is made, as the agent of the depositor, on or before March 1 following the date of the report provided for in KRS 132.040 .
No other tax shall be assessed by the state or any county, city, or other taxing district on the deposits or against the depositor on account of the deposits, except as provided in KRS 136.575 .
History. 4019a-1, 4019a-2; Acts 1949 (Ex. Sess.), ch. 4, § 1; 1960, ch. 186, Art. I, § 1, effective June 16, 1960; repealed and reenact., Acts 1990, ch. 476, Pt. V, § 315, effective July 13, 1990; 1996, ch. 254, § 23, effective July 15, 1996; 2005, ch. 85, § 172, effective June 20, 2005.
Former KRS 132.030 (4019a-1, 4019a-2: amend. Acts 1949 (Ex. Sess.), ch. 4, § 1; 1960, ch. 186, Art. I, § 1, effective June 16, 1960) was repealed and reenacted by Acts 1990, ch. 476, Pt. V, § 315, effective July 13, 1990.
2. Out-of-State Deposits.
4. Bank Agent.
5. Taxing Determination Upheld.
It is not unconstitutional to tax deposits in out-of-state banks at 50¢ per $100 under KRS 132.020 , while deposits in domestic banks are taxed at 10¢ per $100. Madden v. Kentucky, 309 U.S. 83, 60 S. Ct. 406, 84 L. Ed. 590, 1940 U.S. LEXIS 956 (U.S. 1940).
The placing of domestic bank deposits in a separate class, and according them a more favorable rate of taxation than other intangible property, is reasonable and valid. Madden v. Kentucky, 309 U.S. 83, 60 S. Ct. 406, 84 L. Ed. 590, 1940 U.S. LEXIS 956 (U.S. 1940).
2.Out-of-State Deposits.
Bank deposits of a resident of Kentucky in banks outside of Kentucky are subject to the rate imposed by KRS 132.020 , and not the rate imposed by this section. Madden's Ex'r v. Commonwealth, 277 Ky. 343 , 126 S.W.2d 463, 1939 Ky. LEXIS 655 ( Ky. 1939 ), aff'd, 309 U.S. 83, 60 S. Ct. 406, 84 L. Ed. 590, 1940 U.S. LEXIS 956 (U.S. 1940).
Federal postal savings deposits are not taxable under this section. In re Kentucky Fuel Gas Corp., 127 F.2d 657, 1942 U.S. App. LEXIS 3945 (6th Cir. Ky.), cert. denied, 317 U.S. 593, 63 S. Ct. 71, 87 L. Ed. 485, 1942 U.S. LEXIS 185 (U.S. 1942).
4.Bank Agent.
Since a bank deposit is in reality the property of the depositor, a bank cannot be compelled to pay taxes on its deposits except as agent for the depositors. Commonwealth v. Bank of Commerce, 118 Ky. 547 , 81 S.W. 679, 26 Ky. L. Rptr. 407 , 1904 Ky. LEXIS 71 ( Ky. 1904 ).
5.Taxing Determination Upheld.
KRS 132.030 , 132.200 , 136.300 , 136.320 are not related to public service companies or to franchise; it is clear that the general assembly considered the types of property that should be exempt from the "catch-all" rate, and it did not include franchise of a public service company-although it identified seventeen other categories of property. Dayton Power & Light Co. v. Dep't of Revenue, 405 S.W.3d 527, 2012 Ky. App. LEXIS 232 (Ky. Ct. App. 2012).
First Industrial Plan v. Kentucky Board of Tax Appeals, 500 S.W.2d 70, 1973 Ky. LEXIS 203 ( Ky. 1973 ); St. Ledger v. Revenue Cabinet, 942 S.W.2d 893, 1997 Ky. LEXIS 17 ( Ky. 1997 ).
Bank franchise and local deposit tax, KRS 136.500 to 136.575 .
Eifler, Kentucky Taxation of Banking Institutions (1802-1996): An Historical Overview, 90 Ky. L.J. 567 (2001-02).
Each financial institution, as defined in KRS 136.500 , shall file with the department on or before March 1 of each year, a report setting forth the total amount of its deposits as of the preceding January 1 that are taxable in the name of the depositor under the laws of this state, and shall, on or before March 1 of each year, pay to the department one-thousandth of one percent (.001%) of the amount of the deposits, and may charge to and deduct from the deposit of each depositor the amount of the tax paid on his behalf. Financial institutions shall have liens on the funds belonging to the respective depositors on which the tax has been paid. Any claim for taxes against the depositor by the financial institution paying the taxes shall be asserted within six (6) months after the payment of the taxes to the department, and no claims or liens shall be asserted after that time.
History. 4019a-3, 4019a-4: amend. Acts 1949 (Ex. Sess.), ch. 4, § 2; 1960, ch. 186, Art. I, § 2, effective June 16, 1960; 1976 (Ex. Sess.), ch. 14, § 143, effective January 2, 1978; 1996, ch. 254, § 24, effective July 15, 1996; 2002, ch. 89, § 4, effective July 15, 2002; 2005, ch. 85, § 173, effective June 20, 2005.
This section (Enact. Acts 1966, ch. 179, § 1; 1982, ch. 141, § 57, effective July 1, 1982) was repealed by Acts 2005, ch. 168, § 158, effective January 1, 2006.
This section (Enact. Acts 1966, ch. 179, § 2; 2005, ch. 85, § 174, effective June 20, 2005) was repealed by Acts 2005, ch. 168, § 158, effective January 1, 2006.
This section (4042-1: amend. Acts 1948, ch. 95, § 2; 1949 (Ex. Sess.), ch. 4, § 3; 1968, ch. 152, § 100) was repealed by Acts 2005, ch. 168, § 158, effective January 1, 2006.
This section (4042-2: amend. Acts 1949 (Ex. Sess.), ch. 4, § 4; 1968, ch. 152, § 101; 2000, ch. 327, § 2, effective July 14, 2000; 2005, ch. 85, § 175, effective June 20, 2005) was repealed by Acts 2005, ch. 168, § 158, effective January 1, 2006.
This section (4042-2: impl. amend. Acts 1960, ch. 186, Art. I, §§ 31, 32; 2005, ch. 85, § 176, effective June 20, 2005) was repealed by Acts 2005, ch. 168, § 158, effective January 1, 2006.
This section (4042-2: amend. Acts 1982, ch. 452, § 4, effective July 1, 1982; 2005, ch. 85, § 177, effective June 20, 2005) was repealed by Acts 2005, ch. 168, § 158, effective January 1, 2006.
This section (4042-2) was repealed by Acts 2005, ch. 168, § 158, effective January 1, 2006.
This section (Enact. Acts 1964, ch. 172, §§ 1, 2; 1966, ch. 41, § 2; 1985 (1st Ex. Sess.), ch. 6, part 1, § 2, effective July 29, 1985; 1998, ch. 509, § 9, effective July 15, 1998) was repealed by Acts 2000, ch. 274, § 4, effective July 14, 2000. For present law, see KRS 132.097 and 132.099 .
There shall be exempt from ad valorem tax for state purposes, personal property placed in a warehouse or distribution center for the purpose of subsequent shipment to an out-of-state destination. Personal property shall be deemed to be held for shipment to an out-of-state destination if the owner can reasonably demonstrate that the personal property will be shipped out of state within the next six (6) months.
1.Interpretation.
Word "destination" does not denote or require permanence; moreover, neither exemption statute requires a sale, exempts leased or rented property from its purview, or requires a property owner to prove to any high degree of certainty that the property will even leave Kentucky. Therefore, in case involving a warehouse for leased textbooks, exemptions from personal property taxes should have been given because the word "destination" did not denote or require permanence. Dep't of Revenue v. Chegg, Inc., 497 S.W.3d 771, 2016 Ky. App. LEXIS 28 (Ky. Ct. App. 2016).
For assessment dates beginning on or after January 1, 2019, computer software, except prewritten computer software, shall be exempt from state and local ad valorem taxes, including the county, city, school, or other taxing district in which it has a taxable situs.
As used in this section, "prewritten computer software" has the same meaning as in KRS 139.010 .
HISTORY: 2018 ch. 207, § 122, effective April 27, 2018.
The tax rate levied by cities, counties, charter counties, urban-counties, and school districts on personal property placed in a warehouse or distribution center for the purpose of subsequent shipment to an out-of-state destination shall be as follows:
Eighty percent (80%) of the tax rate levied on other tangible personal property for tax assessments made on January 1, 2000; and
Fifty percent (50%) of the tax rate levied on other tangible personal property for tax assessments made on January 1, 2001.
Personal property placed in a warehouse or distribution center for the purpose of subsequent shipment to an out-of-state destination shall be exempt from the ad valorem tax levied by cities, counties, charter counties, urban-counties, and school districts for tax assessments made on or after January 1, 2002.
Any fire district or other special taxing district may exempt from the ad valorem tax personal property placed in a warehouse or distribution center for the purpose of subsequent shipment to an out-of-state destination.
As used in this subsection: (4) (a) As used in this subsection:
"Affiliate" means a partnership, limited liability entity, corporation, or any other business entity that directly or indirectly owns or controls, or is owned or controlled by, or is under common ownership or control with, another partnership, limited liability entity, corporation, or other business entity;
"Drug" means a compound, substance, or preparation and any component of a compound, substance, or preparation that is recognized in the official United States Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, or a supplement to any of them, or is:
Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans; or
Intended to affect the structure or any function of the human body; and
"Pharmaceutical manufacturer" means any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis; but does not include a drug wholesaler or a retail pharmacy.
For assessments made on and after January 1, 2012, the maximum ad valorem tax rate that may be levied by any special taxing district on drugs held by a pharmaceutical manufacturer or by an affiliate of a pharmaceutical manufacturer in a warehouse or distribution center for the purpose of subsequent shipment to an out-of-state destination shall not exceed three cents ($0.03) upon each one hundred dollars ($100) of value. This subsection shall not apply to any fire district.
For the purpose of this section, personal property shall be deemed to be held for shipment to an out-of-state destination if the owner can reasonably demonstrate that the personal property will be shipped out of state within the next six (6) months.
History. Enact. Acts 2000, ch. 274, § 3, effective July 14, 2000; 2012, ch. 110, § 11, effective April 11, 2012.
If the General Assembly enacts any act pursuant to Section 171 of the Constitution as amended, classifying property and providing a lower rate of taxation on personal property than on real property, the provisions of the act shall be subject to a referendum upon the written petition of qualified voters equal to at least five percent (5%) of the votes cast in the state for a slate of candidates for Governor and Lieutenant Governor at the last preceding regular election. The petition shall be filed with the Secretary of State not more than four (4) months after the final adjournment of the General Assembly that passed the act on which the referendum is demanded, and shall specify the act or the item, section or part of the act on which the referendum is demanded. The petition shall be uniform in size and style and shall be assembled in one (1) instrument for filing. Each sheet of the petition shall contain the names of voters from one (1) voting precinct only, and shall include the name, number and designation of the precinct in which the voters signing the petition live. The inclusion of an invalid signature on a page shall not invalidate the entire page of the petition, but shall instead result in the invalid signature being stricken and not counted. Each signature shall be executed in ink or indelible pen and shall be followed by the printed name, residence address, and Social Security number or date of birth of legal voters.
History. 4019b-1: amend. Acts 2005, ch. 121, § 2, effective June 20, 2005.
Within five (5) days after the filing of the petition for referendum, the Secretary of State shall transmit to the county judge/executive of each county in which petitioners reside the sheets containing the names of the petitioners of that county. The county judge/executive shall thereupon set a date not less than ten (10) nor more than fifteen (15) days thereafter when interested persons may appear and present proof as to the genuineness of signatures and the qualification of petitioners. After hearing proof, the county judge/executive shall determine the number of legal voters of his county who have signed the petition, cause the same to be entered upon the order book and certify it to the Secretary of State.
Within thirty (30) days after receiving from the county judges/executive certification that a number of legal voters constituting in the aggregate five percent (5%) of the vote of the entire state have signed a petition for referendum, the Secretary of State shall cause the proposed act or the parts thereof affected and the fact that the act will be submitted to the voters for their acceptance or rejection at the next general election to be published pursuant to KRS Chapter 424.
History. 4019b-2, 4019b-3: amend. Acts 1966, ch. 239, § 133; 1976 (Ex. Sess.), ch. 20, § 6, effective January 2, 1978; 1978, ch. 384, § 257, effective June 17, 1978.
The Secretary of State shall certify to the county clerk of each county, not less than twenty (20) days before the next general election, the substance of the act or the parts of the act that are to be voted upon, and the county clerk shall have the same, as certified by the Secretary of State, appear before the voters. The elector shall designate his vote by a "Yes" or "No" vote. The votes cast for and against the measure shall be counted, canvassed and certified to the State Board of Elections in the same manner as the votes upon constitutional amendments.
If it is found that a majority of votes cast on the measure are in favor thereof, the act or the part of the act voted upon shall become effective. The result of the vote shall be published by the Secretary of State pursuant to KRS Chapter 424. The expense of the publications required by this section and by KRS 132.110 shall be paid as the expense of other publications that the Secretary of State is required to make in connection with elections.
History. 4019b-4, 4019b-5: amend. Acts 1968, ch. 152, § 102; 1982, ch. 360, § 43, effective July 15, 1982.
Canvassing and certification of votes on constitutional amendment, KRS 118.415 .
Effective January 1, 1967, every owner, proprietor, or custodian of a bonded warehouse or of premises under the control and supervision of the United States Internal Revenue Service, in which distilled spirits are stored shall between January 1 and February 1 of each year file with the Department of Revenue a report sworn to by him showing the quantity and kind of distilled spirits in the bonded warehouse or premises as of January 1 of that year; the quantity and kind of spirits on which the federal tax has been paid or is due; what distilled spirits have been removed from the bonded warehouse or premises for transfer in bond out of this state during the preceding twelve (12) months; the county, city, and taxing district in which such distilled spirits were certified for taxation; the fair cash value of the distilled spirits estimated at a price it would bring at a fair voluntary sale; and such other facts pertaining to the distilled spirits as the department may require.
On January 1, May 1, and September 1, after the federal tax has been paid or becomes due, or after any of the distilled spirits are removed from the bonded warehouse or premises for transfer in bond out of this state, every owner, proprietor, or custodian of a bonded warehouse or premises in which distilled spirits are stored upon which taxes have accrued on assessments prior to January 1, 1967, shall file with the Department of Revenue and the county clerk, in which county the distilled spirits were at the time of the assessment, a statement, sworn to by him, showing the quantity of the distilled spirits on which the federal tax has been paid or is due; what distilled spirits have been removed from the bonded warehouse or premises or transferred in bond out of this state during the preceding four (4) months; the years in which such distilled spirits were assessed for taxation; and the county, city, or taxing district in which the distilled spirits were stored at the time of the assessment. At the same time, all taxes and interest on such distilled spirits due the state, county, or other taxing district shall be paid to the officers entitled to receive them. The report required by this section shall be made whether or not any distilled spirits are stored in the bonded warehouse or premises at the time the report is due.
History. 4105; Acts 1949 (Ex. Sess.), ch. 4, § 4 1/2; 1966, ch. 254, § 1; 1978, ch. 384, § 258, effective June 17, 1978; repealed and reenact., Acts 1990, ch. 476, Pt. V, § 316, effective July 13, 1990; 2005, ch. 85, § 178, effective June 20, 2005.
Former KRS 132.130 (4105: amend. Acts 1949 (Ex. Sess.), ch. 4, § 4 1/2; 1966, ch. 254, § 1; 1978, ch. 384, § 258, effective June 17, 1978) was repealed and reenacted by Acts 1990, ch. 476, Pt. V, § 316, effective July 13, 1990.
3. Right to Tax.
5. Involuntary Report Filing.
6. Unconstitutional Tax.
KRS 132.130 to 132.180 do not violate the federal Constitution. Thompson v. Kentucky, 209 U.S. 340, 28 S. Ct. 533, 52 L. Ed. 822, 1908 U.S. LEXIS 1708 (U.S. 1908).
KRS 132.130 to 132.180 are constitutional. Jetts Bros. Distilling Co. v. Carrollton, 178 Ky. 561 , 199 S.W. 37, 1917 Ky. LEXIS 758 ( Ky. 1917 ), writ of error dismissed, 252 U.S. 1, 40 S. Ct. 255, 64 L. Ed. 421, 1920 U.S. LEXIS 1654 (U.S. 1920).
Law providing for assessment and taxation of distilled spirits applied to any bonded warehouse in which whiskey was stored, whether owned by a distiller or by some other person, and whether or not located on the premises of a distiller. Louisville v. Louisville Public Warehouse Co., 107 Ky. 184 , 53 S.W. 291, 21 Ky. L. Rptr. 867 , 1899 Ky. LEXIS 156 ( Ky. 1899 ) (decided under prior law).
3.Right to Tax.
The fact that whiskey in bond is under the control and supervision of the federal government, and that often a substantial portion of the whiskey is owned by nonresidents does not deprive Kentucky of the right to levy ad valorem taxes on such whiskey. Thompson v. Kentucky, 209 U.S. 340, 28 S. Ct. 533, 52 L. Ed. 822, 1908 U.S. LEXIS 1708 (U.S. 1908).
4.Nonresident.
Where nonresident owner of warehouse made report under this section, and made no objection to assessment of spirits in his warehouse, he could not maintain that he was beyond jurisdiction of Kentucky and therefore not subject to personal liability for tax on spirits. Greenbaum v. Commonwealth, 147 Ky. 450 , 144 S.W. 45, 1912 Ky. LEXIS 245 ( Ky. 1912 ).
5.Involuntary Report Filing.
The fact that there is a criminal penalty for violating this section does not make the filing of a report an involuntary act to the extent that a nonresident filing a report could maintain that he had not thereby subjected his person to the taxing jurisdiction of Kentucky. Greenbaum v. Commonwealth, 147 Ky. 450 , 144 S.W. 45, 1912 Ky. LEXIS 245 ( Ky. 1912 ).
6.Unconstitutional Tax.
A law which imposed a tax of 50¢ on a gallon of whiskey withdrawn from bond in this state or transferred in bond to another state, and which was designated a "license" tax on the business of owning and storing whiskey, was in fact a property tax and therefore violated Ky, Const., § 171. Dawson v. Kentucky Distilleries & Warehouse Co., 255 U.S. 288, 41 S. Ct. 272, 65 L. Ed. 638, 1921 U.S. LEXIS 1825 (U.S. 1921) (decided under prior law). See Craig v. E. H. Taylor, Jr. & Sons, 192 Ky. 36 , 232 S.W. 395, 1921 Ky. LEXIS 28 ( Ky. 1921 ).
Louisville v. Martin, 284 Ky. 490 , 144 S.W.2d 1034, 1940 Ky. LEXIS 505 ( Ky. 1940 ); Schenley Distillers, Inc. v. Franklin County Board of Education, 249 S.W.2d 810, 1952 Ky. LEXIS 877 ( Ky. 1952 ).
The Department of Revenue shall fix the value of the distilled spirits for the purpose of taxation, assess the same at its fair cash value, estimated at the price it would bring at a fair voluntary sale, and keep a record of its valuations and assessments. The department shall immediately notify the owner or proprietor of the bonded warehouse or premises of the amount fixed.
If any owner, proprietor, or custodian of a bonded warehouse or premises fails to make the report required by KRS 132.130 , the department shall ascertain the necessary facts required to be reported. For that purpose the department shall have access to the records of the owner, proprietor, or custodian; and the assessment shall be made and taxes collected thereon, with interest and penalties, as though regularly reported.
The assessment made under (1) of this section shall be reviewed according to KRS 131.110 .
History. 4106, 4107, 4113; Acts 1964, ch. 141, § 33; 1966, ch. 254, § 2; repealed and reenact., Acts 1990, ch. 476, Pt. V, § 317, effective July 13, 1990; 2005, ch. 85, § 179, effective June 20, 2005.
Former KRS 132.140 (4106, 4107, 4113: amend. Acts 1964, ch. 141, § 33; 1966, ch. 254, § 2) was repealed and reenacted by Acts 1990, ch. 476, Pt. V, § 317, effective July 13, 1990.
2. Estoppel.
Assessment of all whiskey in warehouse at flat or blanket rate regardless of age did not show arbitrary conduct or abuse of discretion by tax commission, it being common knowledge that warehouses have whiskeys of various ages and brands and that while whiskey increases in value with age some brands are of greater value than others, and fixing of average value for spirits of different ages is most feasible method of making assessment. Louisville v. Martin, 284 Ky. 490 , 144 S.W.2d 1034, 1940 Ky. LEXIS 505 ( Ky. 1940 ).
In making assessment tax commission has broad discretion and mere error in judgment as to fair cash value would not authorize court to substitute its judgment for that of commission. Louisville v. Martin, 284 Ky. 490 , 144 S.W.2d 1034, 1940 Ky. LEXIS 505 ( Ky. 1940 ).
2.Estoppel.
Where city through its assessor made an assessment of distilled spirits and tax based on it was paid, city was not estopped thereafter from repudiating such assessment and could levy additional taxes by reason of assessment made under this section which assessment was higher and which was the only assessment the city had a legal right to use. Jetts Bros. Distilling Co. v. Carrollton, 178 Ky. 561 , 199 S.W. 37, 1917 Ky. LEXIS 758 ( Ky. 1917 ), writ of error dismissed, 252 U.S. 1, 40 S. Ct. 255, 64 L. Ed. 421, 1920 U.S. LEXIS 1654 (U.S. 1920).
Reeves v. Jefferson County, 245 S.W.2d 606, 1951 Ky. LEXIS 1263 ( Ky. 1951 ); Ballard County v. Citizens State Bank, 261 S.W.2d 420, 1953 Ky. LEXIS 1011 ( Ky. 1953 ); Commonwealth ex rel. Allphin v. Heaven Hill Distilleries, Inc., 279 S.W.2d 11, 1955 Ky. LEXIS 501 ( Ky. 1955 ).
Review of assessment, KRS 131.110 .
Immediately after the valuation of the distilled spirits has been finally fixed, the department shall certify to the county clerks of the respective counties the amount liable for county, city, or district taxation, and the date when the bonded period will expire on the spirits. The report shall be filed by the county clerk in his office, and certified by him to the proper collecting officer of the county, city, or taxing district for collection. The spirits, in addition to the tax for state purposes, shall be taxed for county, school, and city purposes at the prevailing rates of taxation on tangible personal property in the respective counties, school districts, and cities in which the spirits are stored, but the combined rate of taxation for city and school purposes in cities of the first class shall not exceed one dollar and twenty-five cents ($1.25) on each one hundred dollars ($100) of assessed value of the spirits.
History. 4108; repealed and reenact., Acts 1990, ch. 476, Pt. V, § 318, effective July 13, 1990; 2005, ch. 85, § 180, effective June 20, 2005.
Former KRS 132.150 (4108) was repealed and reenacted by Acts 1990, ch. 476, Pt. V, § 318, effective July 13, 1990.
1. Basis of Assessment.
2. Tax Rate.
3. Collector.
4. City Taxation.
1.Basis of Assessment.
Cities must tax on basis of assessment made by the tax commission; they cannot make their own assessment. Jetts Bros. Distilling Co. v. Carrollton, 178 Ky. 561 , 199 S.W. 37, 1917 Ky. LEXIS 758 ( Ky. 1917 ), writ of error dismissed, 252 U.S. 1, 40 S. Ct. 255, 64 L. Ed. 421, 1920 U.S. LEXIS 1654 (U.S. 1920).
2.Tax Rate.
This section clearly provides that the prevailing tax rate applied to distilled spirits for all local purposes shall not be different from that levied on all tangible personalty. National Distillers Products Corp. v. Board of Education, 256 S.W.2d 481, 1952 Ky. LEXIS 1151 ( Ky. 1952 ).
3.Collector.
The sheriff is the collector of the tax on distilled spirits. Anderson County v. Collins, 142 Ky. 394 , 134 S.W. 463, 1911 Ky. LEXIS 203 ( Ky. 1911 ).
Taxes due city of third class on distilled spirits in bond could be collected by action brought by city attorney, city not being restricted to procedure prescribed in subsection (4) of KRS 92.780 (repealed). Kraver v. Henderson, 155 Ky. 633 , 160 S.W. 257, 1913 Ky. LEXIS 331 ( Ky. 1913 ).
4.City Taxation.
Distilled spirits in bonded warehouses are subject to city taxation. Jetts Bros. Distilling Co. v. Carrollton, 178 Ky. 561 , 199 S.W. 37, 1917 Ky. LEXIS 758 ( Ky. 1917 ), writ of error dismissed, 252 U.S. 1, 40 S. Ct. 255, 64 L. Ed. 421, 1920 U.S. LEXIS 1654 (U.S. 1920).
Where county clerk had neglected for several years to certify valuation of distilled spirits to tax collector of city in which warehouses were located, and city therefore had never attempted to collect taxes on spirits, city had right, upon discovering clerk's omission and obtaining certification for years in question, to maintain action to recover taxes for such years, no estoppel arising from its failure to make previous demand. Kraver v. Henderson, 155 Ky. 633 , 160 S.W. 257, 1913 Ky. LEXIS 331 ( Ky. 1913 ).
Where a city, for several years, levied and collected taxes on distilled spirits under an assessment made by the city assessor, instead of the one made by the tax commission, it was not estopped from subsequently bringing action to recover the additional taxes due for such years by reason of the fact that the tax commission assessment was higher than the city assessment as tax commissioner's assessment was the only assessment the city had a legal right to use. Jetts Bros. Distilling Co. v. Carrollton, 178 Ky. 561 , 199 S.W. 37, 1917 Ky. LEXIS 758 ( Ky. 1917 ), writ of error dismissed, 252 U.S. 1, 40 S. Ct. 255, 64 L. Ed. 421, 1920 U.S. LEXIS 1654 (U.S. 1920).
George v. Bernheim Distilling Co., 300 Ky. 179 , 188 S.W.2d 321, 1945 Ky. LEXIS 519 ( Ky. 1945 ); Reeves v. Jefferson County, 245 S.W.2d 606, 1951 Ky. LEXIS 1263 ( Ky. 1951 ).
Taxes on distilled spirits that shall be assessed while in a bonded warehouse or premises as of January 1, 1967, and January 1 of each year thereafter, shall become due September 15 following the assessment date and shall become delinquent on January 1. Delinquent taxes on such distilled spirits shall be subject to the same penalties as provided by law for other tangible personal property, and the collecting officer shall have all the powers and duties to collect such delinquent taxes, penalties, and interest as provided by law for other tangible personal property in such taxing jurisdiction. (1) (a) Taxes on distilled spirits that shall be assessed while in a bonded warehouse or premises as of January 1, 1967, and January 1 of each year thereafter, shall become due September 15 following the assessment date and shall become delinquent on January 1. Delinquent taxes on such distilled spirits shall be subject to the same penalties as provided by law for other tangible personal property, and the collecting officer shall have all the powers and duties to collect such delinquent taxes, penalties, and interest as provided by law for other tangible personal property in such taxing jurisdiction.
Taxes and interest on distilled spirits assessed while in a bonded warehouse or premises for each year prior to January 1, 1967, on which the federal tax has not been paid, shall be due on January 1, May 1, and September 1 next after the federal tax becomes due or is paid, or after the distilled spirits are removed from the bonded warehouse or premises for transfer in bond out of this state. Provided, however, the remaining state taxes and interest on distilled spirits assessed while in a bonded warehouse or premises as of January 1, 1966, and January 1, 1965, shall be due on or before January 15, 1968; the remaining state taxes and interest on distilled spirits assessed while in a bonded warehouse or premises as of January 1, 1964, shall be due on or before January 15, 1969; the remaining state taxes and interest on distilled spirits assessed while in a bonded warehouse or premises as of January 1, 1963, shall become due on or before January 15, 1970; the remaining state taxes and interest on distilled spirits assessed while in a bonded warehouse or premises as of January 1, 1962, and all prior years shall become due on or before January 15, 1971. After July 1, 1970, any owner or proprietor, or custodian of a bonded warehouse or premises may elect to pay at one (1) time all accrued ad valorem taxes and interest. Such taxes and interest paid under this subsection shall be used for capital outlay by all local taxing jurisdictions.
The taxes shall not become due by reason of a mere removal of the distilled spirits from one bonded warehouse or premises to another bonded warehouse or premises within this state, but in that event the owner or proprietor from whose bonded warehouse or premises the distilled spirits are moved shall execute a bond with good and sufficient surety conditioned upon a payment of all taxes that have accrued upon the distilled spirits prior to removal from the county, city, or taxing district from which the distilled spirits are removed. The bond shall be in an amount sufficient to protect the county, city, or taxing district and shall be approved by the county judge/executive for the county, the mayor for the city, the superintendent of any school district involved, and by the person whose duty it is to collect taxes for any other taxing district. Prior to removal of any distilled spirits, the owner or proprietor from whose bonded warehouse or premises they are to be removed shall give written notice of such intention to the county, city, or taxing district, addressed to the officer thereof abovementioned and stating the quantity of distilled spirits to be moved and the name and address of the bonded warehouse or premises to which they are to be taken. After the distilled spirits are moved, the owner or proprietor shall notify the same officers of the county, city, or taxing district of the amount of accrued taxes on the distilled spirits, together with interest on the taxes. After any distilled spirits have once been moved as provided in this section and are moved again, all taxes that have accrued thereon up to the time of the second removal shall immediately become due and payable to any county, city, or taxing district to which any taxes have accrued.
The taxes on each year's assessment shall bear interest at the tax interest rate as defined in KRS 131.010(6) until paid.
History. 4110; Acts 1949 (Ex. Sess.), ch. 4, § 5; 1966, ch. 254, § 3; 1982, ch. 452, § 5, effective July 1, 1982; repealed and reenact., Acts 1990, ch. 476, Pt. V, § 319, effective July 13, 1990.
Former KRS 138.160 (4110: amend. Acts 1949 (Ex. Sess.), ch. 4, § 5; 1966, ch. 254, § 3; 1982, ch. 452, § 5, effective July 1, 1982) was repealed and reenacted by Acts 1990, ch. 476, Pt. V, § 319, effective July 13, 1990.
1. Lien.
2. Interest.
3. Time of Collection.
4. Destruction.
1.Lien.
The state and county have a lien on the spirits for the taxes assessed against them. Blanton v. Kentucky Distilleries & Warehouse Co., 120 F. 318, 1902 U.S. App. LEXIS 5315 (6th Cir. 1902), aff'd, 149 F. 31, 1906 U.S. App. LEXIS 4413 (6th Cir. 1906), aff'd, Kentucky Distilleries & Warehouse Co. v. Blanton, 149 F. 31, 1906 U.S. App. LEXIS 4413 (6th Cir. 1906), cert. denied, 205 U.S. 543, 27 S. Ct. 790, 51 L. Ed. 922, 1907 U.S. LEXIS 1433 (1907), cert. denied, Kentucky Distilleries & Warehouse Co. v. Blanton, 205 U.S. 543, 27 S. Ct. 790, 51 L. Ed. 922, 1907 U.S. LEXIS 1433 (1907) (decided under prior law).
The state has a lien upon the real estate owned by a warehouseman at the time of assessment of taxes against spirits in his warehouse, for the amount of such taxes, but it has no lien upon a parcel of land sold by the warehouseman before the assessment date. Commonwealth v. Walker, 80 S.W. 185, 25 Ky. L. Rptr. 2122 (1904) (decided under prior law).
2.Interest.
The taxes on each year's assessment bear interest not from the date they are due, but from the date the penalty for delinquency attaches to other ad valorem taxes assessed for the same year. The warehouseman may avoid paying interest by paying the taxes before that time, without waiting until the taxes become due. Commonwealth v. Rosenfield Bros. & Co., 118 Ky. 374 , 80 S.W. 1178, 25 Ky. L. Rptr. 2229 , 1904 Ky. LEXIS 52 ( Ky. 1904 ) (decided under prior law).
The fact that the state taxing authorities had for several years construed the law as not requiring the payment of interest on annual assessments of bonded whiskey, and had permitted warehousemen to withdraw whiskey on payment of the principal of the tax without interest, did not prevent the state from subsequently collecting interest from the warehousemen, notwithstanding that the warehousemen, by reason of the withdrawal of the whiskey, had lost the lien given them by KRS 132.180 and therefore might never be able to recover the interest from the owners of the whiskey. Thompson v. Kentucky, 209 U.S. 340, 28 S. Ct. 533, 52 L. Ed. 822, 1908 U.S. LEXIS 1708 (U.S. 1908) (decided under prior law).
3.Time of Collection.
Tax on distilled spirits may be collected when spirits are removed from bond or federal tax is paid, notwithstanding that purpose for which tax was levied has been accomplished prior to that time, so long as purpose had not been accomplished at time assessments were made. Wathen v. Young, 103 Ky. 36 , 44 S.W. 115, 19 Ky. L. Rptr. 1678 , 1898 Ky. LEXIS 25 ( Ky. 1898 ) (decided under prior law).
4.Destruction.
Warehouseman was liable for taxes on spirits in his warehouse destroyed by fire, the destruction being treated as a removal, and his liability included the taxes due on whiskey owned by others, for which he had issued warehouse receipts, as well as whiskey owned by him. Commonwealth ex rel. Sheriff of Woodford County v. Greenbaum, 139 Ky. 138 , 129 S.W. 555, 1910 Ky. LEXIS 16 (Ky.), modified, 140 Ky. 221 , 130 S.W. 982, 1910 Ky. LEXIS 193 ( Ky. 1910 ) (decided under prior law).
National Distillers Products Corp. v. Board of Education, 256 S.W.2d 481, 1952 Ky. LEXIS 1151 ( Ky. 1952 ); Patterson v. Board of Educ., 269 S.W.2d 739, 1954 Ky. LEXIS 1020 ( Ky. 1954 ); Commonwealth ex rel. Allphin v. Heaven Hill Distilleries, Inc., 279 S.W.2d 11, 1955 Ky. LEXIS 501 ( Ky. 1955 ); Caywood v. Stivers, 430 S.W.2d 327, 1968 Ky. LEXIS 398 ( Ky. 1968 ).
Since KRS 45.150 (repealed) states that capital outlays may be authorized to alter, reconstruct, or repair any road, the surfacing of county roads with bituminous asphalt with gravel base would constitute "capital outlay." OAG 67-410 .
"Capital outlay" may include: interior reconstruction or decorating of a permanent nature (which becomes a structural part of the building) of a courthouse building, or the construction or reconstruction of a permanent nature of roads and bridges. OAG 68-91 .
Tax receipts used for road construction and reconstruction purposes do not violate Ky. Const., § 180. OAG 68-233 .
Any person having custody of distilled spirits in a bonded warehouse or premises on the day as of which the assessment is made shall be liable for all taxes due thereon, together with all interest and penalties that may accrue. Any owner, proprietor, or custodian of such distilled spirits who pays the taxes, interest and penalties on the distilled spirits shall have a lien thereon for the amount paid, with legal interest from day of payment.
Taxes on distilled spirits which are subject to the provisions of KRS 132.160(1)(a) shall become due and payable in the manner provided by KRS 134.015 , except that taxes due the state shall be paid directly to the Department of Revenue.
History. 4109, 4112: amend. Acts 1949 (Ex. Sess.), ch. 4, § 51/2; 1966, ch. 254, § 4; 2002, ch. 89, § 5, effective July 15, 2002; 2005, ch. 85, § 181, effective June 20, 2005; 2010, ch. 75, § 13, effective April 7, 2010.
2. Collection.
3. —Limitation on Action.
6. Warehouseman.
7. Penalty.
Where warehouseman, for several years, promptly paid city taxes levied under ordinance which based taxes on city assessment, rather than on state assessment as required by KRS 132.150 , and city subsequently corrected its ordinance and sought to collect additional taxes due by reason of fact that state assessment was higher than city assessment, warehouseman who refused to pay such additional taxes became delinquent as of date of refusal, and the eight percent (8%) penalty attached as of that date. Jetts Bros. Distilling Co. v. Carrollton, 178 Ky. 561 , 199 S.W. 37, 1917 Ky. LEXIS 758 ( Ky. 1917 ), writ of error dismissed, 252 U.S. 1, 40 S. Ct. 255, 64 L. Ed. 421, 1920 U.S. LEXIS 1654 (U.S. 1920).
The eight percent (8%) penalty provided by this section applies only when the tax is collected without suit. If action to collect is brought under KRS 135.060 , the 20 percent penalty provided by that section is in lieu of the eight percent (8%) penalty. Jetts Bros. Distilling Co. v. Carrollton, 178 Ky. 561 , 199 S.W. 37, 1917 Ky. LEXIS 758 ( Ky. 1917 ), writ of error dismissed, 252 U.S. 1, 40 S. Ct. 255, 64 L. Ed. 421, 1920 U.S. LEXIS 1654 (U.S. 1920).
2.Collection.
When judgment was entered in favor of state against warehouseman for taxes due on spirits withdrawn from his warehouse, and execution was returned "no property found," state had right to commence equitable proceedings to subject warehouseman's real estate to payment of the judgment, without first attempting to collect the judgment out of whiskey still in the warehouse. Commonwealth v. Walker, 80 S.W. 185, 25 Ky. L. Rptr. 2122 (1904) (decided under prior law).
Taxes due city of third class on distilled spirits in bond could be collected by action brought by city attorney, city not being restricted to procedure prescribed in subsection (4) of KRS 92.780 (repealed). Kraver v. Henderson, 155 Ky. 633 , 160 S.W. 257, 1913 Ky. LEXIS 331 ( Ky. 1913 ) (decided under prior law).
3.—Limitation on Action.
Action to collect interest on taxes on distilled spirits in bonded warehouses was barred by limitations at the expiration of five (5) years after the cause of action arose. Commonwealth v. Rosenfield Bros. & Co., 118 Ky. 374 , 80 S.W. 1178, 25 Ky. L. Rptr. 2229 , 1904 Ky. LEXIS 52 ( Ky. 1904 ) (decided under prior law).
On sale of warehouse, purchaser, if liable for taxes on spirits stored in warehouse and removed subsequent to sale, would have lien on spirits for amount of taxes, regardless of terms of warehouse receipts issued by seller. Blanton v. Kentucky Distilleries & Warehouse Co., 120 F. 318, 1902 U.S. App. LEXIS 5315 (6th Cir. 1902), aff'd, 149 F. 31, 1906 U.S. App. LEXIS 4413 (6th Cir. 1906), cert. denied, Kentucky Distilleries & Warehouse Co. v. Blanton, 205 U.S. 543, 27 S. Ct. 790, 51 L. Ed. 922, 1907 U.S. LEXIS 1433 (1907) (decided under prior law).
Warehouseman was liable for taxes on whiskey which had been destroyed by fire after assessment was made, including taxes on whiskey owned by others, for which he had issued warehouse receipts, as well as whiskey owned by him. Commonwealth ex rel. Sheriff of Woodford County v. Greenbaum, 139 Ky. 138 , 129 S.W. 555, 1910 Ky. LEXIS 16 (Ky.), modified, 140 Ky. 221 , 130 S.W. 982, 1910 Ky. LEXIS 193 ( Ky. 1910 ) (decided under prior law).
6.Warehouseman.
The warehouseman is not merely the agent for collection, but is primarily liable for the tax, and his liability does not depend upon his ability to collect the tax from the owner of the spirits. Commonwealth ex rel. Sheriff of Woodford County v. Greenbaum, 139 Ky. 138 , 129 S.W. 555, 1910 Ky. LEXIS 16 (Ky.), modified, 140 Ky. 221 , 130 S.W. 982, 1910 Ky. LEXIS 193 ( Ky. 1910 ) (decided under prior law).
The fact that warehouseman was a nonresident did not limit state to lien on spirits for taxes due, or prevent state from obtaining judgment for taxes against warehouseman in action where personal service in this state was made, at least where warehouseman had voluntarily made reports under law requiring such reports. Greenbaum v. Commonwealth, 147 Ky. 450 , 144 S.W. 45, 1912 Ky. LEXIS 245 ( Ky. 1912 ) (decided under prior law).
7.Penalty.
The court in an action to collect the tax has no discretion as to whether the eight percent (8%) penalty shall be attached; the penalty is mandatory. Commonwealth v. Rosenfield Bros. & Co., 118 Ky. 374 , 80 S.W. 1178, 25 Ky. L. Rptr. 2229 , 1904 Ky. LEXIS 52 ( Ky. 1904 ) (decided under prior law).
The penalty is to be computed on the principal of the tax, not on the tax plus interest. Commonwealth ex rel. Sheriff of Woodford County v. Greenbaum, 139 Ky. 138 , 129 S.W. 555, 1910 Ky. LEXIS 16 (Ky.), modified, 140 Ky. 221 , 130 S.W. 982, 1910 Ky. LEXIS 193 ( Ky. 1910 ) (decided under prior law).
Walker v. Dowling, 68 S.W. 135, 24 Ky. L. Rptr. 179 (1902); National Distillers Products Corp. v. Board of Education, 256 S.W.2d 481, 1952 Ky. LEXIS 1151 ( Ky. 1952 ).
Under this section the person having custody of distilled spirits in a bonded warehouse on the assessment date is liable for the tax thereon even though the warehouse and its contents are destroyed by fire or other cause after the assessment date. OAG 66-384 .
All property shall be subject to taxation, unless it is exempted by the Constitution or in the case of personal property unless it is exempted by the Constitution or by statute. Twenty-five (25) domestic fowl to each family shall be exempt from taxation for any purpose.
All intangible personal property of corporations organized under the laws of this state, unless it has acquired a business situs without this state, shall be considered and estimated in fixing the valuation of corporate franchises.
Property shall be assessed for taxation at its fair cash value, estimated at the price it would bring at a fair voluntary sale, except: real property qualifying for an assessment moratorium shall not have its fair cash value assessment changed while under the assessment moratorium unless the assessment moratorium expires or is otherwise canceled or revoked.
Nothing contained in this section shall affect the liability for franchise taxes payable by corporations organized under the laws of this state.
History. 4019a-5, 4020, 4020a-1, 4023; Acts 1948, ch. 33; 1960, ch. 186, Art. I, § 3; 1966, ch. 255, § 127; 1982, ch. 141, § 58, effective July 1, 1982; 1982, ch. 327, § 6, effective July 15, 1982; repealed and reenact., Acts 1990, ch. 476, Pt. V, § 320, effective July 13, 1990; 1996, ch. 254, § 25, effective July 15, 1996; 2000, ch. 274, § 1, effective July 14, 2000; 2005, ch. 168, § 56, effective January 1, 2006; 2019 ch. 196, § 6, effective June 27, 2019.
Former KRS 132.190 (4019a-5, 4020, 4020a-1, 4023: amend. Acts 1948, ch. 33; 1960, ch. 186, Art. I, § 3; 1966, ch. 255, § 127; 1982, ch. 141, § 58, effective July 1, 1982; 1982, ch. 327, § 6, effective July 15, 1982) was repealed and reenacted by Acts 1990, ch. 476, Pt. V, § 320, effective July 13, 1990.
Section 5 of Acts 2000, ch. 274, effective July 14, 2000, read: "The provisions of Section 1 of this Act [this section] shall apply for tax assessments made on or after January 1, 2000."
4. Contemporaneous Construction.
5. County Tax.
7. —Lease.
9. —Intangible.
10. — —Debts.
11. — —Corporate.
12. — —Royalties.
13. —Tangible.
14. —Nonresident.
15. —Taxable.
16. —Exemption.
17. —Mineral Leases.
18. —Mineral and Surface Estates.
19. —Bank Deposits.
20. —Claim in Litigation.
21. —Railroad Rolling Stock.
22. —Nonresident Business.
23. —Interstate Commerce.
24. Residence.
25. —Personal Representative.
26. —Beneficial Owner.
27. Apportioning Taxes.
28. Situs.
29. —Determination.
30. —Property at Marketing Point.
31. —Temporary.
32. —Settlement of Estate.
35. —Patent.
36. —Ocean-going Steamship.
37. —Unequal.
38. Fair Cash Value.
39. —Reduction to Percentage of Value.
40. —Private Sale.
41. Taxation by Another State.
The oil production license tax imposed by KRS 137.120 is not a substitute for the ad valorem tax on oil leases, and could not constitutionally be such a substitute. Raydure v. Board of Sup'rs, 183 Ky. 84 , 209 S.W. 19, 1919 Ky. LEXIS 469 ( Ky. 1919 ).
The provision of this section that the situs of intangible personalty shall be at the residence of the real or beneficial owner and not at the residence of the fiduciary or agent having custody or possession, and the provision that a resident fiduciary or agent shall not be liable for taxes on intangible personalty held by him if the real or beneficial owner is a nonresident, do not violate Ky. Const., §§ 170, 171 or 172, although the effect of such provisions is to exempt some property which the legislature could make subject to taxation. Henderson v. Barrett's Ex'r, 152 Ky. 648 , 153 S.W. 992, 1913 Ky. LEXIS 718 ( Ky. 1913 ).
The assessment of one piece of property at its fair cash value, while other property is assessed at only a percentage of its value, violates the constitutional requirement of uniformity. Eminence Distillery Co. v. Henry County Board of Sup'rs, 178 Ky. 811 , 200 S.W. 347, 1918 Ky. LEXIS 473 ( Ky. 1918 ).
The provision of this section that intangible personalty is subject to taxation in this state if the owner resides in this state is constitutional, and such property may be taxed in this state even though it is employed in business wholly in another state and is also taxed by such other state. Bingham's Adm'r v. Commonwealth, 199 Ky. 402 , 251 S.W. 936, 1923 Ky. LEXIS 907 ( Ky. 1923 ).
Intangible personalty beneficially owned by a resident of this state may constitutionally be taxed in this state, despite the fact that the management of such property and the possession of the paper evidences of the property have been entrusted to a nonresident agent or fiduciary for employment in a business conducted wholly outside of this state, and regardless of whether the management and possession were entrusted to the nonresident agent or trustee by the present beneficial owner or by a previous owner from whom the beneficial title was obtained by the present owner. Bingham's Adm'r v. Commonwealth, 199 Ky. 402 , 251 S.W. 936, 1923 Ky. LEXIS 907 ( Ky. 1923 ).
A stockholder in a corporation may constitutionally be required to pay taxes on his stock, even though the property of the corporation, including its franchise, is also taxed. Shinkle's Estate v. Kenton County Board of Sup'rs, 216 Ky. 59 , 287 S.W. 209, 1926 Ky. LEXIS 829 ( Ky. 1926 ). See Siler v. Board of Sup'rs, 221 Ky. 100 , 298 S.W. 189, 1927 Ky. LEXIS 669 ( Ky. 1927 ).
The state cannot constitutionally levy an ad valorem tax upon the accounts and notes receivable and bank deposits of a Kentucky corporation where the intangibles in question admittedly have a business situs in other states. Standard Oil Co. v. Commonwealth, 311 S.W.2d 372, 1957 Ky. LEXIS 8 ( Ky. 1957 ).
The legislative taxing power extends to all kinds of intangible property, whether consisting of privileges, franchises, contracts or obligations. Wolfe County v. Beckett, 127 Ky. 252 , 105 S.W. 447, 32 Ky. L. Rptr. 167 , 1907 Ky. LEXIS 136 ( Ky. 1907 ).
4.Contemporaneous Construction.
Failure of assessing officers to assess a particular class of property does not amount to a contemporaneous construction that such property is not subject to taxation. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ). See Baltimore & O. S. W. R. Co. v. Commonwealth, 177 Ky. 566 , 198 S.W. 35, 1917 Ky. LEXIS 655 ( Ky. 1917 ).
5.County Tax.
Definite and specific legislation is not necessary in order to permit counties to levy ad valorem tax on personalty, for counties under their general taxing power to assess personalty for taxation could apportion or allocate to themselves a part or share of the value of an item or unit of personalty and thus they could levy such tax on towboats and barges of company where boats and barges had acquired tax situs in Kentucky and in the several counties. Reeves v. Island Creek Fuel & Transp. Co., 313 Ky. 400 , 230 S.W.2d 924, 1950 Ky. LEXIS 859 (Ky.), cert. denied, 340 U.S. 853, 71 S. Ct. 82, 95 L. Ed. 625, 1950 U.S. LEXIS 1535 (U.S. 1950).
Only "property" is taxable, but anything constituting property that is not exempted from taxation is taxable. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ).
"Property" means everything of value that a person owns that is or may be the subject of sale or exchange or that when offered for sale will bring some price. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ).
Amounts due whiskey warehouseman for storage on whiskey against which negotiable warehouse receipts had been issued, which amounts were due when whiskey was withdrawn from warehouse, were "property" subject to taxation. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ).
Every character and species of property not exempted from taxation by the constitution is subject to taxation, although it is not specifically mentioned in the schedule prepared for the guidance of the assessor and taxpayer. Raydure v. Board of Sup'rs, 183 Ky. 84 , 209 S.W. 19, 1919 Ky. LEXIS 469 ( Ky. 1919 ).
In determining whether a thing is "property" within the meaning of the tax laws, the test is whether the thing has a cash value in some amount, and whether a bidder could be found who would pay a cash price, no matter how small, for it. Raydure v. Board of Sup'rs, 183 Ky. 84 , 209 S.W. 19, 1919 Ky. LEXIS 469 ( Ky. 1919 ).
The state may tax only such property as is subject to its sovereignty, and has a taxable situs in the state. Commonwealth by Mays v. Union P. R. Co., 214 Ky. 339 , 283 S.W. 119, 1926 Ky. LEXIS 337 ( Ky. 1926 ).
7.—Lease.
Ordinarily, real property held under a lease is not taxable in the hands of the lessee. Wolfe County v. Beckett, 127 Ky. 252 , 105 S.W. 447, 32 Ky. L. Rptr. 167 , 1907 Ky. LEXIS 136 ( Ky. 1907 ).
An oil lease giving the exclusive right of development is taxable property in the hands of the lessee, even though no wells have been drilled and no oil discovered in paying quantities. Raydure v. Board of Sup'rs, 183 Ky. 84 , 209 S.W. 19, 1919 Ky. LEXIS 469 ( Ky. 1919 ).
Oil and gas leases and the rights conferred thereby are "property" and are subject to taxation at their fair cash value, estimated at the price they would bring at a fair voluntary sale. Estill County v. Superior Oil Corp., 210 Ky. 539 , 276 S.W. 527, 1925 Ky. LEXIS 724 ( Ky. 1925 ).
All personal property of persons residing in this state is taxable here except tangible personalty located and having a taxable situs outside of this state. Commonwealth v. Bingham's Adm'r, 188 Ky. 616 , 223 S.W. 999, 1920 Ky. LEXIS 331 ( Ky. 1920 ).
The idea of permanency, with respect to personal property, seems generally to be that for such property to acquire a taxable situs it must have a more or less permanent location as distinguished from a transient or temporary one; however, permanency in the sense that it must be fixed like real property is not essential to the establishment of the taxable situs, it seems to be sufficient that when, in the ordinary course of business, property is present and being used and employed with a consistent continuity and not spasmodically and temporarily. Reeves v. Island Creek Fuel & Transp. Co., 313 Ky. 400 , 230 S.W.2d 924, 1950 Ky. LEXIS 859 (Ky.), cert. denied, 340 U.S. 853, 71 S. Ct. 82, 95 L. Ed. 625, 1950 U.S. LEXIS 1535 (U.S. 1950).
9.—Intangible.
The intangible personal property of a franchise-paying corporation is subject to assessment and taxation only as it constitutes part of the value of the franchise, and not separately. Commonwealth v. Cumberland Tel. & Tel. Co., 124 Ky. 535 , 99 S.W. 604, 30 Ky. L. Rptr. 723 , 1907 Ky. LEXIS 208 ( Ky. 1907 ).
The Kentucky Constitution does not prohibit the taxing of intangible personal property owned by nonresidents, where such property has a situs in this state. Higgins v. Commonwealth, 126 Ky. 211 , 103 S.W. 306, 31 Ky. L. Rptr. 653 , 1907 Ky. LEXIS 44 ( Ky. 1907 ).
The location of the paper evidences of the ownership of intangible property is of no importance in determining the situs of such property for purposes of taxation. Commonwealth v. Peebles, 134 Ky. 121 , 119 S.W. 774, 1909 Ky. LEXIS 364 ( Ky. 1909 ). See Commonwealth ex rel. Auditor's Agent v. Northwestern Mut. Life Ins. Co., 107 S.W. 233, 32 Ky. L. Rptr. 796 (1908).
Interest of seller in contract for sale of mining property was taxable property, notwithstanding that deed tendered pursuant to contract had not been accepted, no purchase notes had been executed, and contract was involved in litigation, such factors only affecting the value of the contract and not its taxability. Gish v. Shaver, 140 Ky. 647 , 131 S.W. 515, 1910 Ky. LEXIS 344 ( Ky. 1910 ).
Storage accounts due for whiskey in bonded warehouses against which warehouse receipts had been issued were taxable in Kentucky, notwithstanding that warehouse owner was a foreign corporation, where warehouses and main business office of corporation were in Kentucky. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ).
An account, though not due or collectible on the assessing date, may be the subject of assessment and taxation. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ).
Any enforceable, collectible demand that one person has against another, or against property upon which it is a lien and out of which it can be collected, is taxable property. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ). See Fayette Realty & Finance Co. v. Commonwealth, 229 Ky. 556 , 17 S.W.2d 722, 1929 Ky. LEXIS 810 ( Ky. 1929 ).
Choses in action, although representing debts owed by residents of this state, are not taxable here if the owner is a nonresident, unless they have acquired a business situs here. Commonwealth v. Prudential Life Ins. Co., 149 Ky. 380 , 149 S.W. 836, 1912 Ky. LEXIS 633 ( Ky. 1912 ).
Fact that bonds are secured by a mortgage on Kentucky property and their collection must be enforced in the Kentucky courts, if suit for that purpose is necessary, does not make them subject to taxation therein if owned by a nonresident. Commonwealth v. Consolidated Casualty Co., 170 Ky. 103 , 185 S.W. 508, 1916 Ky. LEXIS 18 ( Ky. 1916 ).
Intangible personalty has a situs for the purpose of taxation at the legal residence of the owner. Millett's Ex'r v. Commonwealth, 184 Ky. 193 , 211 S.W. 562, 1919 Ky. LEXIS 39 ( Ky. 1919 ).
Where a decedent was a resident of Kentucky at the time of her death, her intangible personalty was taxable in Kentucky in the hands of her personal representative, although she died before the assessment date and the personal representative was not appointed until after that date, and the paper evidences of ownership of the property were in a New York bank. Commonwealth v. Bingham's Adm'r, 188 Ky. 616 , 223 S.W. 999, 1920 Ky. LEXIS 331 ( Ky. 1920 ).
The fact that substantially all stock of selling corporation was owned by manufacturing corporation organized after the selling corporation does not make selling corporation a mere agent so as to subject intangible receivables transferred by selling corporation to Kentucky ad valorem taxes. Board of Tax Supervisors v. Baldwin Piano Co., 296 Ky. 673 , 178 S.W.2d 212, 1944 Ky. LEXIS 613 ( Ky. 1944 ).
If intangibles are only temporarily in this state in the agent's or fiduciary's possession and he does not use them in the owner's business in Kentucky and has no control over them except to forward the intangibles to the owner within a reasonable time or in the ordinary course of business, then such intangibles do not become an integral part of the owner's business and are not localized in Kentucky and are not taxable. Board of Tax Supervisors v. Baldwin Piano Co., 296 Ky. 673 , 178 S.W.2d 212, 1944 Ky. LEXIS 613 ( Ky. 1944 ).
Intangible personal property has its legal situs at the domicile of its owner, except where the property is so employed in business in a state other than that of the owner's domicile as to acquire a business situs therein. Commonwealth ex rel. Luckett v. Radio Corp. of America, 299 Ky. 44 , 184 S.W.2d 250, 1944 Ky. LEXIS 1029 ( Ky. 1944 ).
While a railroad company did have the power to buy and sell securities to facilitate its corporate purposes as a common carrier, the company could not maintain that it was operating an independent and separate securities business having a business situs in New York to exempt it from ad valorem taxation in Kentucky. Commonwealth ex rel. Luckett v. Louisville & N. R. Co., 479 S.W.2d 15, 1972 Ky. LEXIS 286 (Ky.), cert. denied, 409 U.S. 949, 93 S. Ct. 269, 34 L. Ed. 2d 219, 1972 U.S. LEXIS 957 (U.S. 1972).
Foreign corporation, which conducted mercantile, manufacturing operations on leased premises in this state and did not offer evidence to show that its manufacturing operations in Kentucky were not local to Kentucky and independent of its manufacturing concerns at its domicile, failed to prove that the lease did not have a business situs within this State so as to avoid taxation of its intangible personal property, including a leasehold interest. Kentucky Dep't of Revenue v. Hobart Mfg. Co., 549 S.W.2d 297, 1977 Ky. LEXIS 408 ( Ky. 1977 ).
10.— —Debts.
Debts due to a resident of Kentucky are taxable in Kentucky, notwithstanding that the debtor is a nonresident and the debt can be enforced only in the courts of the state in which the debtor resides. Fidelity & Columbia Trust Co. v. Louisville, 245 U.S. 54, 38 S. Ct. 40, 62 L. Ed. 145, 1917 U.S. LEXIS 1787 (U.S. 1917).
A debt secured by a lien is taxable, but the lien itself is not taxable. A lien given merely for the purpose of indemnity against future loss is not taxable. Fayette Realty & Finance Co. v. Commonwealth, 229 Ky. 556 , 17 S.W.2d 722, 1929 Ky. LEXIS 810 ( Ky. 1929 ).
11.— —Corporate.
Intangible property of a domestic corporation is taxable for local purposes only at the place where the corporation has its principal office in the state, and not at places where it has branch offices. Covington v. Standard Oil Co., 137 Ky. 837 , 127 S.W. 480, 1910 Ky. LEXIS 636 ( Ky. 1910 ).
Where lessee of oil rights in land sold his interest in the lease to another, but reserved as part of the consideration the right to one-sixteenth of the oil produced from the lease, the right so reserved was taxable property. Mt. Sterling Oil & Gas Co. v. Ratliff, 127 Ky. 1 , 104 S.W. 993, 31 Ky. L. Rptr. 1229 , 1907 Ky. LEXIS 109 ( Ky. 1 907).
Royalties due owner of real estate from oil lease were taxable against him, as against contention that the value of the royalty interest could not be separately assessed from the land itself. Commonwealth by Revenue Agent v. Garrett, 202 Ky. 548 , 260 S.W. 379, 1924 Ky. LEXIS 766 ( Ky. 1924 ).
13.—Tangible.
Where tangible personal property has been exported to a foreign country, the state cannot inquire into the motives of the exporter, or levy a tax on the property on the theory that the sole purpose of the exporter was to avoid state taxation and therefore the property never lost its taxable situs in this state. Commonwealth v. Selliger, 126 Ky. 66 , 30 Ky. L. Rptr. 451 , 98 S.W. 1040, 1907 Ky. LEXIS 11 ( Ky. 1907 ), rev'd, Selliger v. Kentucky, 213 U.S. 200, 29 S. Ct. 449, 53 L. Ed. 761, 1909 U.S. LEXIS 1867 (1909) (on other grounds).
Tangible personal property permanently located outside of this state is not taxable in this state, though the owner resides in this state. Commonwealth v. Selliger, 126 Ky. 66 , 30 Ky. L. Rptr. 451 , 98 S.W. 1040, 1907 Ky. LEXIS 11 ( Ky. 1907 ), rev'd, Selliger v. Kentucky, 213 U.S. 200, 29 S. Ct. 449, 53 L. Ed. 761, 1909 U.S. LEXIS 1867 (1909) (on other grounds).
Tangible personal property having merely a temporary location at a place other than the domicile of the owner is not taxable at such place. Hill v. Caldwell, 134 Ky. 99 , 119 S.W. 749, 1909 Ky. LEXIS 357 ( Ky. 1909 ). See Semple v. Commonwealth, 181 Ky. 675 , 205 S.W. 789, 1918 Ky. LEXIS 601 ( Ky. 1918 ); John Ross & Co. v. Board of Sup'rs, 186 Ky. 589 , 217 S.W. 677, 1920 Ky. LEXIS 4 ( Ky. 1920 ); Commonwealth by Mays v. Union P. R. Co., 214 Ky. 339 , 283 S.W. 119, 1926 Ky. LEXIS 337 ( Ky. 1926 ); Cumberland Pipe Line Co. v. Commonwealth, 258 Ky. 90 , 79 S.W.2d 366, 1934 Ky. LEXIS 575 ( Ky. 1934 ).
There is a presumption that all tangible personal property in this state on the assessment date is subject to assessment at the place where it is located, and the owner seeking to avoid assessment has the burden of proving that the property was located at such place for only a temporary purpose. John Ross & Co. v. Board of Sup'rs, 186 Ky. 589 , 217 S.W. 677, 1920 Ky. LEXIS 4 ( Ky. 1920 ).
Tangible personal property that has no permanent location, or is transient, is taxable at the domicile of the owner. Cumberland Pipe Line Co. v. Commonwealth, 258 Ky. 90 , 79 S.W.2d 366, 1934 Ky. LEXIS 575 ( Ky. 1934 ).
The more modern rule is that the actual situs of visible tangible personal property, and not the domicile of the owner, determines the place of taxation, and that tangible personal property may be taxed in the state where it is physically located. Reeves v. Island Creek Fuel & Transp. Co., 313 Ky. 400 , 230 S.W.2d 924, 1950 Ky. LEXIS 859 ( Ky. 1950 ), cert. denied, 340 U.S. 853, 71 S. Ct. 82, 95 L. Ed. 625, 1950 U.S. LEXIS 1535 (1950)
If it is determined that tangible personal property has a taxable situs within the state it is irrelevant that the property is employed in interstate transportation either by water or by land. Reeves v. Island Creek Fuel & Transp. Co., 313 Ky. 400 , 230 S.W.2d 924, 1950 Ky. LEXIS 859 (Ky.), cert. denied, 340 U.S. 853, 71 S. Ct. 82, 95 L. Ed. 625, 1950 U.S. LEXIS 1535 (U.S. 1950).
14.—Nonresident.
Tobacco which was purchased by a nonresident with the intention of shipping it to England in fulfillment of contracts made to deliver it to merchants there, but which was stored in warehouses in Kentucky on the assessment date and for several months prior and subsequent thereto awaiting the obtention of shipping facilities, had a taxable situs in Kentucky. John Ross & Co. v. Board of Sup'rs, 186 Ky. 589 , 217 S.W. 677, 1920 Ky. LEXIS 4 ( Ky. 1920 ).
Property sent into a state by a nonresident to be used or employed permanently there, must bear its fair share of the burden of taxation, although no one unit of such property is ever more than temporarily located within the taxing state, thus where the specific and individual items of property used and employed in the state are not continuously the same, but are constantly changing according to the exigencies of business, the tax should be fixed by an appraisement and valuation of the average amount of the property thus habitually used and employed. Reeves v. Island Creek Fuel & Transp. Co., 313 Ky. 400 , 230 S.W.2d 924, 1950 Ky. LEXIS 859 (Ky.), cert. denied, 340 U.S. 853, 71 S. Ct. 82, 95 L. Ed. 625, 1950 U.S. LEXIS 1535 (U.S. 1950).
15.—Taxable.
Warehouse receipts for whiskey are not taxable property, since they represent only a right of access to the warehoused goods. Selliger v. Kentucky, 213 U.S. 200, 29 S. Ct. 449, 53 L. Ed. 761, 1909 U.S. LEXIS 1867 (U.S. 1909). See Baltimore & O. S. W. R. Co. v. Commonwealth, 177 Ky. 566 , 198 S.W. 35, 1917 Ky. LEXIS 655 ( Ky. 1917 ).
Where a refrigerator car company leased most of its cars to railroad companies for operation in other states, but operated some cars in Kentucky, those operated in Kentucky were taxable in Kentucky. Morrell Refrigerator Car Co. v. Commonwealth, 128 Ky. 447 , 108 S.W. 926, 32 Ky. L. Rptr. 1383 , 32 Ky. L. Rptr. 1389 , 1908 Ky. LEXIS 86 ( Ky. 1908 ).
The shares of federal joint stock land banks are taxable. Land v. Kentucky Joint Stock Land Bank, 279 Ky. 645 , 131 S.W.2d 838, 1939 Ky. LEXIS 327 ( Ky. 1939 ).
16.—Exemption.
Trade-marks are not taxable property. Commonwealth v. Kentucky Distilleries & Warehouse Co., 132 Ky. 521 , 116 S.W. 766, 1909 Ky. LEXIS 130 ( Ky. 1909 ).
Where a foreign corporation doing business in Kentucky does not receive sufficient income from its Kentucky business to defray expenses, money sent to Kentucky to pay expenses, and placed on deposit in Kentucky banks for that purpose, is not taxable in Kentucky. Hillman Land & Iron Co. v. Commonwealth, 148 Ky. 331 , 146 S.W. 776, 1912 Ky. LEXIS 453 ( Ky. 1912 ) ( Ky. 1912 ).
Notes given to mutual insurance company by its policyholders, which merely secured the obligation of the policyholders to pay assessments, were not taxable property in the hands of the company, the liability on such notes being contingent. Kentucky & Louisville Mut. Ins. Co. v. Commonwealth, 153 Ky. 824 , 156 S.W. 897, 1913 Ky. LEXIS 934 ( Ky. 1913 ).
The fact that a foreign insurance company had an executive office in this state, and its officers resided in this state, did not make subject to taxation in this state real estate mortgage bonds purchased by the company with funds derived from sources other than business done in this state, such bonds being kept at its home office in West Virginia. Commonwealth v. Consolidated Casualty Co., 170 Ky. 103 , 185 S.W. 508, 1916 Ky. LEXIS 18 ( Ky. 1916 ).
An unliquidated claim for damages for breach of contract is not taxable property. Commonwealth by Byars v. Travelers' Ins. Mach. Co., 181 Ky. 596 , 205 S.W. 561, 1918 Ky. LEXIS 550 ( Ky. 1918 ).
The agreement of the purchaser of mortgaged property to pay the mortgage and to indemnify the vendor against loss has no taxable value. Fayette Realty & Finance Co. v. Commonwealth, 229 Ky. 556 , 17 S.W.2d 722, 1929 Ky. LEXIS 810 ( Ky. 1929 ).
Where a corporation whose sole asset consisted of a piece of real estate mortgaged the real estate to a trustee to secure the amounts due the holders of its preferred stock, and then conveyed the real estate to a person who assumed the mortgage and agreed to pay the purchase price to the holders of the preferred stock in retirement of such stock, the deed reserving a lien to the corporation to secure it against any liability to the holders of its preferred stock which should not be paid by the purchaser of the real estate, the obligation of the purchaser to the corporation, and the lien securing such obligation, had no taxable value. Fayette Realty & Finance Co. v. Commonwealth, 229 Ky. 556 , 17 S.W.2d 722, 1929 Ky. LEXIS 810 ( Ky. 1929 ).
The fact that excursion steamers were used in coastwise traffic would not exempt them from an excise tax on their admissions, since the tax is upon the business done and is not upon navigation. Shannon v. Streckfus Steamers, Inc., 279 Ky. 649 , 131 S.W.2d 833, 1939 Ky. LEXIS 326 ( Ky. 1939 ).
The fact that excursion steamers were registered in another state would not exempt them from the ordinary rules respecting taxation of property or its use wholly within this state. Shannon v. Streckfus Steamers, Inc., 279 Ky. 649 , 131 S.W.2d 833, 1939 Ky. LEXIS 326 ( Ky. 1939 ).
17.—Mineral Leases.
Oil or gas leases are to be listed by the lessee for taxation in the county in which the leased premises are located. Mt. Sterling Oil & Gas Co. v. Ratliff, 127 Ky. 1 , 104 S.W. 993, 31 Ky. L. Rptr. 1229 , 1907 Ky. LEXIS 109 ( Ky. 1 907). See Wolfe County v. Beckett, 127 Ky. 252 , 105 S.W. 447, 32 Ky. L. Rptr. 167 , 1907 Ky. LEXIS 136 ( Ky. 1907 ).
Oil or gas leases, under which all property rights to the oil or gas that may be found in paying quantities on the leased premises are vested in the lessee, are taxable to the lessee. Wolfe County v. Beckett, 127 Ky. 252 , 105 S.W. 447, 32 Ky. L. Rptr. 167 , 1907 Ky. LEXIS 136 ( Ky. 1907 ).
The interest of the lessor in a coal mining lease is subject to taxation, notwithstanding that the interest of the lessee in the lease, and the money received by the lessor in the way of royalties, are also taxed. Stepp v. Pike County Board of Sup'rs, 194 Ky. 176 , 238 S.W. 408, 1922 Ky. LEXIS 132 ( Ky. 1922 ).
The ordinary mining lease with a reserved royalty in the lessor has the effect to create distinct items of property for purposes of taxation in both the lessor and the lessee as to the minerals or mineral rights as distinguished from the ownership of the surface, and the lessor is liable not only for the taxes on the surface of his land but likewise upon the mineral rights reserved or created in him by the lease. Moss v. Board of Sup'rs, 203 Ky. 813 , 263 S.W. 368, 1924 Ky. LEXIS 1021 ( Ky. 1924 ).
18.—Mineral and Surface Estates.
The owner of land in fee is liable for taxes on both the mineral and surface estates. Kentucky River Coal Corp. v. Knott County, 245 Ky. 822 , 54 S.W.2d 377, 1932 Ky. LEXIS 687 ( Ky. 1932 ).
19.—Bank Deposits.
Bank accounts in a Missouri bank, representing the profits of a business conducted in Missouri, were taxable in Kentucky where the owner of the accounts was a resident of Kentucky. Fidelity & Columbia Trust Co. v. Louisville, 245 U.S. 54, 38 S. Ct. 40, 62 L. Ed. 145, 1917 U.S. LEXIS 1787 (U.S. 1917).
20.—Claim in Litigation.
County bond was taxable property in hands of holder, notwithstanding that its value was questionable because of pending litigation in which county was seeking to avoid payment of bond. Boyd v. Commonwealth, 149 Ky. 656 , 149 S.W. 914, 1912 Ky. LEXIS 666 ( Ky. 1912 ).
21.—Railroad Rolling Stock.
Where foreign railroad company operated daily trains in and out of Kentucky, the average number of units of its rolling stock that were in Kentucky at all times were taxable in Kentucky. Baltimore & O. S. W. R. Co. v. Commonwealth, 177 Ky. 566 , 198 S.W. 35, 1917 Ky. LEXIS 655 ( Ky. 1917 ).
22.—Nonresident Business.
Where a nonresident established a business in Kentucky, which was managed by agents permanently residing in Kentucky, the bank accounts and business accounts of such business were taxable in Kentucky. Commonwealth v. R. G. Dun & Co., 126 Ky. 108 , 102 S.W. 859, 31 Ky. L. Rptr. 561 , 1907 Ky. LEXIS 19 ( Ky. 1907 ).
23.—Interstate Commerce.
Property in possession of common carriers in transit in interstate commerce is not taxable, at least as against the carrier. Cumberland Pipe Line Co. v. Commonwealth, 258 Ky. 90 , 79 S.W.2d 366, 1934 Ky. LEXIS 575 ( Ky. 1934 ).
The fact that property is in the possession of a common carrier does not exempt it from taxation as against the owner, if the property is not moving in interstate commerce. Cumberland Pipe Line Co. v. Commonwealth, 258 Ky. 90 , 79 S.W.2d 366, 1934 Ky. LEXIS 575 ( Ky. 1934 ).
Oil in the possession of a pipeline company, and in actual transit in interstate commerce, is not taxable against the company. Cumberland Pipe Line Co. v. Commonwealth, 258 Ky. 90 , 79 S.W.2d 366, 1934 Ky. LEXIS 575 ( Ky. 1934 ).
24.Residence.
Where resident of Kentucky announced his intention to move to Texas and make his home there, and left Kentucky for that purpose a few days before the date as of which property is assessed in Kentucky, but did not reach Texas until several days after such date, he was a legal resident of Kentucky on the assessment date, his Texas residence not becoming effective until he reached that state. Boyd's Ex'r v. Commonwealth, 149 Ky. 764 , 149 S.W. 1022, 1912 Ky. LEXIS 716 ( Ky. 1912 ).
The committee of an incompetent has no power to change the legal residence of the incompetent from one state to another, although it may change his local residence. Sumrall's Committee v. Commonwealth, 162 Ky. 658 , 172 S.W. 1057, 1915 Ky. LEXIS 129 ( Ky. 1915 ).
Where a mental incompetent who had been a resident of Kentucky prior to being declared incompetent was sent by his committee to an asylum in another state for care and treatment, his residence for the purpose of taxation remained in Kentucky. Sumrall's Committee v. Commonwealth, 162 Ky. 658 , 172 S.W. 1057, 1915 Ky. LEXIS 129 ( Ky. 1915 ).
The fact that an individual purchased the controlling interest in a Kentucky corporation doing business in Louisville, maintained a personal checking account in a Louisville bank, and took a year's lease on an apartment in Louisville, did not constitute him a resident of Kentucky for the purpose of taxation, where the purchase of the corporation was for a speculative purpose only, the banking account and apartment were used only for his convenience during trips to Louisville, and he spent the greater portion of his time in Texas, where he had a permanent dwelling and which he always claimed as his home. Semple v. Commonwealth, 181 Ky. 675 , 205 S.W. 789, 1918 Ky. LEXIS 601 ( Ky. 1918 ).
The fact that a person who was originally a resident of Tennessee bought a farm in Kentucky, improved and furnished the house on the farm and resided there a substantial portion of his time, personally managed the farm, kept a bank account in a Kentucky bank, and occasionally referred to the farm as his "home," did not fix his legal residence in Kentucky, where he continued to maintain a home for his mother, brothers and sisters in Tennessee, where he kept his personal belongings, participated in church and lodge affairs, purchased a family cemetery lot there, and always claimed to be a resident of Tennessee. Millett's Ex'r v. Commonwealth, 184 Ky. 193 , 211 S.W. 562, 1919 Ky. LEXIS 39 ( Ky. 1919 ).
The fact that person who moved from Kentucky to Florida registered as a voter in Florida, listed his property for taxation there, and spent around half of his time there for a number of years, was sufficient to overcome the presumption, arising from the fact that he returned to Kentucky for several months each year, that he did not intend to establish a permanent residence in Florida. Utz v. Wallace's Adm'x, 249 Ky. 296 , 60 S.W.2d 614, 1933 Ky. LEXIS 510 ( Ky. 1933 ).
25.—Personal Representative.
In the case of the personal representative of an estate, his residence for the purpose of determining the situs of intangible property of the estate is in the state in which he was appointed as personal representative and to whose courts he is accountable, regardless of his actual residence as an individual. Commonwealth v. Peebles, 134 Ky. 121 , 119 S.W. 774, 1909 Ky. LEXIS 364 ( Ky. 1909 ).
26.—Beneficial Owner.
The provision of this section that a fiduciary or agent is not liable for taxes on intangible personalty held by him if the real or beneficial owner "resides" outside of this state refers to legal residence of the real or beneficial owner. Sumrall's Committee v. Commonwealth, 162 Ky. 658 , 172 S.W. 1057, 1915 Ky. LEXIS 129 ( Ky. 1915 ).
27.Apportioning Taxes.
Where foreign railroad company operated daily trains in and out of Kentucky, the average number or units of rolling stock was taxable according to its value, and not according to a percentage based on the ratio of mileage in Kentucky to out-of-state mileage. Baltimore & O. S. W. R. Co. v. Commonwealth, 177 Ky. 566 , 198 S.W. 35, 1917 Ky. LEXIS 655 ( Ky. 1917 ).
If the statutes imposing the tax provided a method of apportionment that method would be exclusive, but where the statutes did not prescribe any scheme for assessment, in taxing company's towboats and barges court must look to see if the mileage basis was a fair and just method of calculating the aliquot part of company's boats and barges which had acquired a tax situs in Kentucky and several taxing districts. Reeves v. Island Creek Fuel & Transp. Co., 313 Ky. 400 , 230 S.W.2d 924, 1950 Ky. LEXIS 859 (Ky.), cert. denied, 340 U.S. 853, 71 S. Ct. 82, 95 L. Ed. 625, 1950 U.S. LEXIS 1535 (U.S. 1950).
Where company conducted its operations throughout the year with relatively few interruptions and its tugs and barges moved along a route of 162 miles 94.6 percent of which was in Kentucky and thus had a taxable situs in Kentucky, to apportion the taxes against the company's boats and barges in proportion to the length of the line operated and location in each state, county and other taxing jurisdictions was logical and fair. Reeves v. Island Creek Fuel & Transp. Co., 313 Ky. 400 , 230 S.W.2d 924, 1950 Ky. LEXIS 859 (Ky.), cert. denied, 340 U.S. 853, 71 S. Ct. 82, 95 L. Ed. 625, 1950 U.S. LEXIS 1535 (U.S. 1950).
28.Situs.
Cattle temporarily in pasture in a county other than that in which the owner resided were not taxable in such county. Hill v. Caldwell, 134 Ky. 99 , 119 S.W. 749, 1909 Ky. LEXIS 357 ( Ky. 1909 ).
Where resident managers and agents of foreign life insurance company collected premiums from policies issued to Kentucky residents, and placed them in Kentucky banks to the account of the company, and the money in such accounts was promptly transferred to the home office of the company by drafts drawn by the home office on the Kentucky banks, the resident managers having no authority to draw on the accounts and their expenses being paid by money forwarded from the home office, such bank accounts did not have a taxable situs in Kentucky. Commonwealth v. Prudential Life Ins. Co., 149 Ky. 380 , 149 S.W. 836, 1912 Ky. LEXIS 633 ( Ky. 1912 ).
Ordinarily intangible personal property follows the person of the owner, but its situs may be fixed elsewhere by the legislature. The legislature has the power to fix the situs of intangible property held in trust at the residence of the trustee or at the residence of the beneficial owner. Henderson v. Barrett's Ex'r, 152 Ky. 648 , 153 S.W. 992, 1913 Ky. LEXIS 718 ( Ky. 1913 ).
Real estate mortgage bonds secured by real estate located in Kentucky, purchased by a foreign insurance company with funds not accumulated from business done in Kentucky, did not have a taxable situs in Kentucky. Commonwealth v. Consolidated Casualty Co., 170 Ky. 103 , 185 S.W. 508, 1916 Ky. LEXIS 18 ( Ky. 1916 ).
The situs of tangible personal property is at the place where it has a permanent physical location, regardless of the residence of the owner. Millett's Ex'r v. Commonwealth, 184 Ky. 193 , 211 S.W. 562, 1919 Ky. LEXIS 39 ( Ky. 1919 ). See Commonwealth ex rel. Alexander v. Haggin, 99 S.W. 906, 30 Ky. L. Rptr. 788 (1907).
Intangible property, including bank accounts, held and managed in another state by a trustee residing in that state, for the benefit of a beneficiary residing in Kentucky, had a taxable situs in Kentucky. Bingham's Adm'r v. Commonwealth, 199 Ky. 402 , 251 S.W. 936, 1923 Ky. LEXIS 907 ( Ky. 1923 ).
Tobacco in the hands of a cooperative marketing association was subject to city taxation in the city in which the tobacco was warehoused. Burley Tobacco Growers' Co-op. Asso. v. Carrollton, 208 Ky. 270 , 270 S.W. 749, 1925 Ky. LEXIS 268 ( Ky. 1925 ).
Chattels transiently present in the transactions of commercial operations do not have a taxable situs within this state. Commonwealth by Mays v. Union P. R. Co., 214 Ky. 339 , 283 S.W. 119, 1926 Ky. LEXIS 337 ( Ky. 1926 ).
Oil in the possession of a pipeline company, awaiting shipment, was taxable at the domicile of the owner. Cumberland Pipe Line Co. v. Commonwealth, 258 Ky. 90 , 79 S.W.2d 366, 1934 Ky. LEXIS 575 ( Ky. 1934 ).
Interest of Kentucky resident in assets of partnership engaged in operations on New York Stock Exchange was not taxable in Kentucky, where partnership accounts were carried with brokers in New York, securities traded in were carried in name of New York brokers, and trading was almost universally carried on in person by the Kentucky partner at the brokerage offices in New York, he spending more time there than in Kentucky. Commonwealth v. Madden's Ex'r, 265 Ky. 684 , 97 S.W.2d 561, 1936 Ky. LEXIS 551 ( Ky. 1936 ).
Life estate in trust created in another state for Kentucky resident who was to receive the income therefrom for life had its situs in Kentucky and said resident was required to list and pay taxes thereon. Commonwealth ex rel. Martin v. Sutcliffe, 283 Ky. 274 , 140 S.W.2d 1028, 1940 Ky. LEXIS 310 ( Ky. 1940 ).
Where boats and barges of company in carrying out business of company distributing annually approximately 500,000 tons of coal along a 162-mile route, 94.6 percent of which was within Kentucky, and the tugs and the barges, an indispensable part of the whole as designed by the company in the operation of its business, were as necessarily present in Kentucky as the loading and unloading facilities that had their situs in Ohio and West Virginia respectively, this continuity and consistency of presence in Kentucky attached such permanency as to take it out of the area of mere transiency or a sporadic and temporary presence and the parts of the whole received protection in Kentucky and thus they had acquired tax situs in Kentucky. Reeves v. Island Creek Fuel & Transp. Co., 313 Ky. 400 , 230 S.W.2d 924, 1950 Ky. LEXIS 859 (Ky.), cert. denied, 340 U.S. 853, 71 S. Ct. 82, 95 L. Ed. 625, 1950 U.S. LEXIS 1535 (U.S. 1950).
Where a Kentucky resident entered into a trust agreement with a Georgia bank whereby she retained the right to control all purchases and sales which the trustee might make and to amend or revoke the trust agreement at any time, the trust did not become an integral portion of the business activity of Georgia so that it became identified with the economic structure of that state and was not exempt from taxation under the provisions of this statute. Kentucky Dep't of Revenue v. Bomar, 486 S.W.2d 532, 1972 Ky. LEXIS 111 ( Ky. 1972 ).
29.—Determination.
The situs of intangible personal property for purposes of taxation depends altogether on legislative enactment or judicial construction. Higgins v. Commonwealth, 126 Ky. 211 , 103 S.W. 306, 31 Ky. L. Rptr. 653 , 1907 Ky. LEXIS 44 ( Ky. 1907 ).
The situs of intangible personalty may be fixed by the legislature at a place other than the residence of the owner, but until the legislature chooses to exercise that power such property is taxable only at the residence of the owner. Commonwealth ex rel. Auditor's Agent v. Northwestern Mut. Life Ins. Co., 107 S.W. 233, 32 Ky. L. Rptr. 796 (1908).
The Legislature has the power to fix the taxable situs of intangible personal property, if it does not act arbitrarily in so doing. Exemption from taxation of intangible personal property owned by nonresidents did not violate Ky. Const., § 172. Commonwealth v. Sun Life Assurance Co., 294 Ky. 19 , 170 S.W.2d 890, 1943 Ky. LEXIS 376 ( Ky. 19 43 ).
30.—Property at Marketing Point.
Tobacco in warehouses of a tobacco processing and marketing corporation was taxable in the city in which the warehouses were situated, unless there for only a temporary purpose, regardless of the residence of the owners of the tobacco, so long as the owners had not listed and paid taxes on the tobacco at the place of their residence. Paris v. Burley Tobacco Soc., 154 Ky. 320 , 157 S.W. 705, 1913 Ky. LEXIS 78 ( Ky. 1913 ).
31.—Temporary.
An automobile and some furniture, kept in Louisville by a resident of Texas for his comfort and convenience when temporarily sojourning in Louisville, did not have a taxable situs in Kentucky. Semple v. Commonwealth, 181 Ky. 675 , 205 S.W. 789, 1918 Ky. LEXIS 601 ( Ky. 1918 ).
Property in transit, whether it is actually moving or has come to rest temporarily within the limits of a taxing district, does not acquire a taxable situs in such district. Cumberland Pipe Line Co. v. Commonwealth, 258 Ky. 90 , 79 S.W.2d 366, 1934 Ky. LEXIS 575 ( Ky. 1934 ).
32.—Settlement of Estate.
When a decedent's estate is in the hands of a personal representative for settlement and distribution, and before the estate has been or should have been settled or distributed, the personal representative should list the estate for taxation and pay taxes thereon in the state in which he qualified as personal representative, regardless of the residence of the beneficiaries of the estate and without reference to the extent of the debts or demands against the estate. Commonwealth v. Camden, 142 Ky. 365 , 134 S.W. 914, 1911 Ky. LEXIS 242 ( Ky. 1911 ).
Railroad freight cars owned by foreign railroad companies which neither owned nor operated any lines in Kentucky, but which cars were operated by other railroads in Kentucky from time to time under the customary per diem arrangement between railroads for the exchange of freight cars, did not have a taxable situs in Kentucky. Commonwealth by Mays v. Union P. R. Co., 214 Ky. 339 , 283 S.W. 119, 1926 Ky. LEXIS 337 ( Ky. 1926 ).
Bank deposits owned by nonresidents are not taxable in Kentucky unless the money represented by the deposits has a business situs in Kentucky arising from the use of the money in permanent business operations in Kentucky. Hillman Land & Iron Co. v. Commonwealth, 148 Ky. 331 , 146 S.W. 776, 1912 Ky. LEXIS 453 ( Ky. 1912 ) ( Ky. 1912 ).
Money on deposit in a New York bank to the joint credit of a Kentucky resident and her New York agent, which agent had the power to draw on the account and used the money to make investments for the Kentucky resident, had a taxable situs in Kentucky. Bingham's Adm'r v. Commonwealth, 199 Ky. 402 , 251 S.W. 936, 1923 Ky. LEXIS 907 ( Ky. 1923 ).
35.—Patent.
A patent right is an intangible, incorporeal right granted by the federal government and is as broad as the government's jurisdiction, but it has no situs apart from the domicile of the owner. Commonwealth ex rel. Luckett v. Radio Corp. of America, 299 Ky. 44 , 184 S.W.2d 250, 1944 Ky. LEXIS 1029 ( Ky. 1944 ).
Where Delaware corporation, holding a patent on radio tubes, entered into a contract in New York with another Delaware corporation, which had its principal office and manufacturing plant in Kentucky, under which contract the manufacturing corporation was licensed to manufacture tubes under the patent in consideration of the payment of royalties, neither the debt for royalties due under the contract, nor the patent right, acquired a business situs in Kentucky. Commonwealth ex rel. Luckett v. Radio Corp. of America, 299 Ky. 44 , 184 S.W.2d 250, 1944 Ky. LEXIS 1029 ( Ky. 1944 ).
36.—Ocean-going Steamship.
Ocean-going steamships plying between New York and Havana, New York and New Orleans, and New York and Galveston were held not to have a permanent situs at either of such places, notwithstanding that they were enrolled at the port of New York, and they were therefore taxable at the domicile of the owner in Kentucky. Southern Pacific Co. v. Kentucky, 222 U.S. 63, 32 S. Ct. 13, 56 L. Ed. 96, 1911 U.S. LEXIS 1857 (U.S. 1911).
Evidence consisting of federal census reports, reports of state board of equalization, reports of state tax commissioner (now property valuation administrator), and affidavits of individuals from different counties, was sufficient to support finding that property was being intentionally, systematically and notoriously assessed at only a percentage of its value, and to overcome presumption that assessing officers did their duty. Louisville & N. R. Co. v. Greene, 244 U.S. 522, 37 S. Ct. 683, 61 L. Ed. 1291, 1917 U.S. LEXIS 1661 (U.S. 1917), overruled in part, Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 104 S. Ct. 900, 79 L. Ed. 2d 67, 1984 U.S. LEXIS 4 (U.S. 1984).
Assessment of the franchise of a public service corporation at its full value may be enjoined if other intangible property is being uniformly assessed by local assessing officers at only a percentage of its value. Louisville & N. R. Co. v. Greene, 244 U.S. 522, 37 S. Ct. 683, 61 L. Ed. 1291, 1917 U.S. LEXIS 1661 (1917), overruled in part, Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 104 S. Ct. 900, 79 L. Ed. 2d 67, 1984 U.S. LEXIS 4 (1984). See Greene v. Louisville & I. R. Co., 244 U.S. 499, 37 S. Ct. 673, 61 L. Ed. 1280, 1917 U.S. LEXIS 1660 (U.S. 1917), overruled in part, Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 104 S. Ct. 900, 79 L. Ed. 2d 67, 1984 U.S. LEXIS 4 (U.S. 1984).
Collection of state taxes based upon an assessment at full value may be enjoined in a suit in federal court against the state assessing and collecting officers, where other property is being uniformly assessed at only a percentage of its value. Louisville & N. R. Co. v. Greene, 244 U.S. 522, 37 S. Ct. 683, 61 L. Ed. 1291, 1917 U.S. LEXIS 1661 (U.S. 1917), overruled in part, Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 104 S. Ct. 900, 79 L. Ed. 2d 67, 1984 U.S. LEXIS 4 (U.S. 1984).
Where the lease provides that a portion of the oil or gas shall be received by the lessor as royalty, the value of such portion is to be deducted in fixing the value of the lease. Wolfe County v. Beckett, 127 Ky. 252 , 105 S.W. 447, 32 Ky. L. Rptr. 167 , 1907 Ky. LEXIS 136 ( Ky. 1907 ).
Amounts due whiskey warehouseman for storage of whiskey had an ascertainable market value, notwithstanding that amounts were not payable at time of assessment and persons owning whiskey might elect to abandon it. Commonwealth ex rel. Huntsman v. Kentucky Distilleries & Warehouse Co., 143 Ky. 314 , 136 S.W. 1032, 1911 Ky. LEXIS 466 ( Ky. 1911 ).
In assessing mining property for taxation the lack of a willing purchaser does not necessarily import that the property has no taxable value at that time for in such cases other factors such as net revenue, dividends, or profit that may be realized upon the operation of a going mine, its prospects of continuing such operation and the prospective length of time thereof, the material that had to be mined, and the physical condition of the property may be looked to for the purpose of fixing a correct market value for valuation. Carr's Fork Coal Co. v. Perry County Board of Supervisors, 263 Ky. 642 , 93 S.W.2d 359, 1936 Ky. LEXIS 232 ( Ky. 1936 ). See Letcher County Fiscal Court v. State Tax Com., 211 Ky. 609 , 277 S.W. 988, 1925 Ky. LEXIS 933 ( Ky. 1925 ); Board of Sup'rs v. Swift Coal & Timber Co., 238 Ky. 21 , 36 S.W.2d 664, 1931 Ky. LEXIS 176 ( Ky. 1931 ); Kentucky River Coal Corp. v. Knott County, 245 Ky. 822 , 54 S.W.2d 377, 1932 Ky. LEXIS 687 ( Ky. 1932 ); Atlantic States Coal Corp. v. Letcher County, 246 Ky. 549 , 55 S.W.2d 408, 1932 Ky. LEXIS 810 ( Ky. 1932 ); Kenmont Coal Co. v. Perry County Board of Sup'rs, 262 Ky. 764 , 91 S.W.2d 47, 1936 Ky. LEXIS 95 ( Ky. 1936 ).
In the case of a going plant, it is not proper to value each separate item of property constituting a part of the plant at the price it would bring if it were sold separately, and then add the separate values together. The plant should be treated as a unit, and the parts composing the unit should be assessed at the value they have as parts of the unit. Carr's Fork Coal Co. v. Perry County Board of Supervisors, 263 Ky. 642 , 93 S.W.2d 359, 1936 Ky. LEXIS 232 ( Ky. 1936 ).
Assessed valuation of property was fixed by court at 60 percent of fair cash value, where county and city had adopted that standard for assessing property, since all taxpayers must be treated alike. Prestonsburg Water Co. v. Prestonsburg Board of Sup'rs, 279 Ky. 551 , 131 S.W.2d 451, 1939 Ky. LEXIS 305 ( Ky. 1939 ), overruled, Department of Revenue ex rel. Luckett v. Allied Drum Service, Inc., 561 S.W.2d 323, 1978 Ky. LEXIS 318 ( Ky. 1978 ).
37.—Unequal.
Taxpayer could not obtain relief from assessment of his intangible property at its full value without showing that other intangible property was being uniformly and knowingly assessed throughout the state at only a percentage of its value. It was not enough to show that tangible property, or other intangibles in the same county, was being assessed at a percentage of its value. Siler v. Board of Sup'rs, 221 Ky. 100 , 298 S.W. 189, 1927 Ky. LEXIS 669 ( Ky. 1927 ).
In order to obtain relief from an assessment of his property at its full value, the taxpayer must show that there has been an intentional assessment of other property in the same class at only a percentage of its value. Siler v. Board of Sup'rs, 221 Ky. 100 , 298 S.W. 189, 1927 Ky. LEXIS 669 ( Ky. 1927 ).
38.Fair Cash Value.
In determining the fair cash value of a manufacturing plant, such as a distillery, where it is difficult to determine the sale value because of the infrequency of sales of that kind of property, the limited number of persons who have the financial ability to become purchasers, the small number of such plants in comparison with other species of property, and the dissimilarity in size and equipment of the various plants, the assessors must take into consideration the conditions and circumstances that surround the particular case, such as the extent and location of the property, its accessibility to market, transportation facilities, cost of equipment and construction, and its adaptability for the purpose. Eminence Distillery Co. v. Henry County Board of Sup'rs, 178 Ky. 811 , 200 S.W. 347, 1918 Ky. LEXIS 473 ( Ky. 1918 ).
The price that a piece of property would bring at a forced or involuntary sale is not to be considered as a basis for determining the fair cash value of the property, but the willingness of the owner to sell, the presence of a person desiring to buy, and the contemplation of a sale being made, must all be considered. Eminence Distillery Co. v. Henry County Board of Sup'rs, 178 Ky. 811 , 200 S.W. 347, 1918 Ky. LEXIS 473 ( Ky. 1918 ).
Property is taxable if it has a cash value. It has value if at a fair, voluntary sale it would bring anything. Estill County v. Superior Oil Corp., 210 Ky. 539 , 276 S.W. 527, 1925 Ky. LEXIS 724 ( Ky. 1925 ).
It was error to fix value of oil leases at a percentage of the gross income from the leases for the taxing period; the only permissible basis of valuation is the price the leases would bring at a fair, voluntary sale. Estill County v. Superior Oil Corp., 210 Ky. 539 , 276 S.W. 527, 1925 Ky. LEXIS 724 ( Ky. 1925 ).
The value of property for tax purposes is its fair cash value as of the assessment date, and not what it was worth in the past or might be worth in the future. Atlantic States Coal Corp. v. Letcher County, 246 Ky. 549 , 55 S.W.2d 408, 1932 Ky. LEXIS 810 ( Ky. 1932 ).
The fact that a willing purchaser is not obtainable at the time of assessment does not import that the property has no taxable value. In such a case, the net revenue that may be realized from the operation of the property, the prospects of continued operation, its physical condition, and the value of the various components of which the property consists, may be considered in fixing the value. Carr's Fork Coal Co. v. Perry County Board of Supervisors, 263 Ky. 642 , 93 S.W.2d 359, 1936 Ky. LEXIS 232 ( Ky. 1936 ).
Amount paid for purchase of property and amount expended in improvements are not a proper criterion in fixing fair value, but are elements to be considered. Prestonsburg Water Co. v. Prestonsburg Board of Sup'rs, 279 Ky. 551 , 131 S.W.2d 451, 1939 Ky. LEXIS 305 ( Ky. 1939 ), overruled, Department of Revenue ex rel. Luckett v. Allied Drum Service, Inc., 561 S.W.2d 323, 1978 Ky. LEXIS 318 ( Ky. 1978 ).
It is the legislative intent that all property be assessed at its fair cash value, which should be the controlling standard to which all other considerations must yield. Rogers v. Pike County Bd. of Sup'rs., 288 Ky. 742 , 157 S.W.2d 346, 1941 Ky. LEXIS 199 ( Ky. 1941 ).
The value, for taxation purposes, of a life estate paying the holder $900 a month should be determined by mortality tables and the fact that such are used to arrive at value rather than speculative opinion evidence as to the cash value such an estate estimated at the price it would bring at a fair voluntary sale does not violate the spirit or intent of this section. Evans v. Boyle County Board of Sup'rs, 296 Ky. 353 , 177 S.W.2d 137, 1944 Ky. LEXIS 538 ( Ky. 1944 ).
39.—Reduction to Percentage of Value.
Where the circuit court, on appeal from the county board of supervisors, found that the fair cash value of the property involved was a certain sum, but it was established by proof that all other property in the county was uniformly assessed at only 60 percent of its value, it was the duty of the court to fix the value of the property in question at only 60 percent of its actual value, thus affording the only practical remedy available. Eminence Distillery Co. v. Henry County Board of Sup'rs, 178 Ky. 811 , 200 S.W. 347, 1918 Ky. LEXIS 473 ( Ky. 1918 ).
40.—Private Sale.
Where land was sold at private sale shortly before the assessment date, and there was nothing to indicate that the sale was not a fair, voluntary sale, the price paid for the land should have been considered as the fair cash value of the land for tax purposes. Westova Gas Co. v. Knott County Board of Sup'rs, 246 Ky. 334 , 55 S.W.2d 21, 1932 Ky. LEXIS 764 ( Ky. 1932 ).
41.Taxation by Another State.
The fact that property is taxed in one state does not necessarily exclude such property from taxation in another state. Fidelity & Columbia Trust Co. v. Louisville, 245 U.S. 54, 38 S. Ct. 40, 62 L. Ed. 145, 1917 U.S. LEXIS 1787 (U.S. 1917).
Planters Bank & Trust Co. v. Hopkinsville, 289 Ky. 451 , 159 S.W.2d 25, 1942 Ky. LEXIS 584 ( Ky. 1942 ); County Board of Tax Sup'rs v. Helm, 297 Ky. 803 , 181 S.W.2d 452, 1944 Ky. LEXIS 832 ( Ky. 1944 ); Atlantic C. L. R. Co. v. Commonwealth, 302 Ky. 36 , 193 S.W.2d 749, 1946 Ky. LEXIS 597 ( Ky. 1946 ); Reeves v. Island Creek Fuel & Transp. Co., 313 Ky. 400 , 230 S.W.2d 924, 1950 Ky. LEXIS 859 ( Ky. 1950 ); Kentucky Tax Com. v. Jefferson Motel, Inc., 387 S.W.2d 293, 1965 Ky. LEXIS 465 ( Ky. 1965 ); Koehler v. Commonwealth, 432 S.W.2d 397, 1968 Ky. LEXIS 325 ( Ky. 1968 ).
The fact that the equipment of a West Virginia contractor doing a job in Kentucky could be assessed for taxation in both states does not constitute prohibited double taxation. OAG 61-975 .
Stock in a bank which is domiciled in Tennessee is an intangible and is taxable under this section irrespective of the fact that the owner may also have to pay a tax on the same stock in Tennessee. OAG 63-216 .
Property held in trust for the DAR, the Glasgow Garden Club, the Glasgow Business and Professional Women's Club, and the Glasgow Matinee Music Club, is assessable under this section since the beneficial owners of the property do not qualify for an exemption as institutions of purely public charity under Ky. Const., § 170. OAG 66-122 .
A mortgage and deed of trust secured by real estate and other tangible property is not a property interest subject to ad valorem property tax under subsection (2) of KRS 132.020 nor intangible property subject to tax under this section. OAG 74-352 .
There is a presumption that all tangible personal property, such as motor vehicles, in the city on the assessment date is subject to assessment for taxes by the city, and the owner who seeks to avoid the assessment has the burden of proving that the property is located in the city for only a temporary purpose and was listed for taxes at some other place. OAG 74-369 .
If the property currently used for parking purposes by a church group is in excess of the applicable acre limitation, any excess is not exempt from taxation under the laws of this Commonwealth as long as it is not used also for worship services or as a parsonage. OAG 78-180 .
Under this section, all real and personal property within this state is subject to taxation, unless exempted by the Constitution and while household goods of a person used in his home are exempt from taxation, under § 170 of the Kentucky Constitution, the personal property of the taxpayer used in his business or profession is not exempt, which means a lawyer would have to list for taxes the personal tangible property in his law office, which could include law library, bookcases, typewriters, filing cabinets and other items of equipment used in that office. OAG 79-140 .
In connection with transfer of notes secured by mortgages on single-family dwellings within this state, where neither the corporation owning and holding the notes nor the corporation proposing to purchase them was a resident of Kentucky, the secured notes would not be subject to state or local ad valorem taxation. OAG 82-264 .
Where the property to be assessed has recently been sold and thus the assessment is being made not on the basis of an estimate but on the basis of the actual consideration recently paid, no deduction should be made for broker's commissions, financing costs or other similar items. OAG 83-13 .
The tax assessor is not restricted to one specific method for assessing real property so long as the assessment is fair and equitable. OAG 83-13 .
Generally, Ky. Const., §§ 3, 170.
Airport revenue bonds, KRS 183.650 .
Airports, city and county, KRS 97.252 .
Bonds of housing authorities, KRS 80.560 .
Bonds of public road districts, KRS 184.260 .
Bonds of state, counties, cities and taxing districts, Ky. Const., § 171.
Electric and water plant of a third-class city may pay tax equivalent, KRS 96.179 .
Parks, recreational projects, memorials and federal areas, KRS 97.130 , 97.160 , 97.252 , 97.670 , 97.750 .
Power to tax, general assembly may confer on local authorities, Ky. Const., § 181.
Power to tax property, surrender of, Ky. Const., § 175.
Property exempt from taxation:
School building bonds, KRS 162.190 , 162.300 .
Sewer district for city of first class and surrounding area, property and bonds of, KRS 76.210 .
Special and local legislation regarding taxation not permitted, Ky. Const., § 59(15).
State fair board bonds, KRS 247.180 .
State teachers college building bonds, KRS 162.350 .
State warrants, KRS 41.200 .
Teacher retirement system funds and rights, KRS 161.700 .
Turnpikes, properties of and bonds for, KRS 177.510 .
The General Assembly recognizes that Section 172 of the Constitution of Kentucky requires all property, not exempted from taxation by the Constitution, to be assessed at one hundred percent (100%) of the fair cash value, estimated at the price the property would bring at a fair voluntary sale, and that it is the responsibility of the property valuation administrator to value property in accordance with the Constitution.
The General Assembly further recognizes that property valuation may be determined using a variety of valid valuation methods, including but not limited to:
A cost approach, which is a method of appraisal in which the estimated value of the land is combined with the current depreciated reproduction or replacement cost of improvements on the land;
An income approach, which is a method of appraisal based on estimating the present value of future benefits arising from the ownership of the property;
A sales comparison approach, which is a method of appraisal based on a comparison of the property with similar properties sold in the recent past; and
A subdivision development approach, which is a method of appraisal of raw land:
When subdivision and development are the highest and best use of the parcel of raw land being appraised; and
When all direct and indirect costs and entrepreneurial incentives are deducted from the estimated anticipated gross sales price of the finished lots, and the resultant net sales proceeds are then discounted to present value at a market-derived rate over the development and absorption period.
The valuation of a residential, commercial, or industrial tract development shall meet the minimum applicable appraisal standards established by:
The Kentucky Department of Revenue, as stated in its Guidelines for Assessment of Vacant Lots, dated March 26, 2008; or
The International Association of Assessing Officers.
To be appraised using the subdivision development approach, a subdivision development shall consist of five (5) or more units. The appraisal of the development shall reflect deductions and discounts for:
Holding costs, including interest and maintenance;
Marketing costs, including commissions and advertising; and
Entrepreneurial profit.
1.Income Generation Method.
Unpublished decision: Property Valuation Administrator did not err in its valuation of commercial real property under Ky. Const. § 172 and Ky. Rev. Stat. Ann. § 132.690 where the payments under the leasehold were indisputably benefits that arose out of the ownership of the property, and thus, it was not error to consider those payments in determining the property's fair cash value under the income generation approach of Ky. Rev. Stat. Ann. § 132.191(2)(b). Wilgreens, LLC v. O'Neill, 2016 Ky. App. Unpub. LEXIS 893 (Ky. Ct. App. Sept. 23, 2016), review denied, ordered not published, 2017 Ky. LEXIS 101 (Ky. Mar. 15, 2017).
All real and personal property owned by another state or a political subdivision of another state that is used exclusively for public purposes shall be exempt from taxation under this chapter if a comparable exemption is provided in that state or political subdivision for property owned by the Commonwealth of Kentucky or its political subdivisions.
History. Enact. Acts 2005, ch. 173, Pt. XXIII, § 1, effective March 20, 2005.
Leased personal property exempt from taxation when held by a natural person, association, or corporation in connection with a business conducted for profit, shall be subject to taxation in the same amount and to the same extent as though the lessee were the owner of the property, except personal property used in vending stands operated by blind persons under the auspices of the Division of Kentucky Business Enterprise.
Taxes shall be assessed to lessees of exempt personal property and collected in the same manner as taxes assessed to owners of other personal property, except that taxes due under this section shall not become a lien against the personal property. When due, such taxes shall constitute a debt due from the lessee to the state, county, school district, special district, city, urban-county government, charter county, consolidated local government, or unified local government for which the taxes were assessed and if unpaid shall be recoverable by the state as provided in KRS Chapter 134.
History. Enact. Acts 1988, ch. 146, § 1, effective July 15, 1988; repealed and reenact., Acts 1990, ch. 476, Pt. V, § 321, effective July 13, 1990; 2006, ch. 211, § 16, effective July 12, 2006; 2009, ch. 10, § 34, effective January 1, 2010; 2019 ch. 146, § 7, effective June 27, 2019.
This section (Enact. Acts 1988, ch. 146, § 1, effective July 15, 1988) was also repealed by Acts 1990, ch. 415, § 2, effective July 13, 1990.
(7/13/90) Pursuant to Section 653(2) of 1990 House Bill 940, Acts Ch. 476, the repeal and reenactment of this section by that Act prevails over its repeal in another Act of the 1990 Regular Session.
When any real or personal property which is exempt from taxation is leased or possession is otherwise transferred to a natural person, association, partnership, or corporation in connection with a business conducted for profit, the leasehold or other interest in the property shall be subject to state and local taxation at the rate applicable to real or personal property levied by each taxing jurisdiction.
Subsection (1) of this section shall not apply to interests in:
Industrial buildings, as defined under KRS 103.200 , owned and financed by a tax-exempt governmental unit or tax-exempt statutory authority under the provisions of KRS Chapter 103, the taxation of which is provided for under the provisions of KRS 132.020 and 132.200 ;
Federal property for which payments are made in lieu of taxes in amounts equivalent to taxes which might otherwise be lawfully assessed;
Property of any state-supported educational institution;
Vending stand locations and facilities operated by blind persons under the auspices of the Division of Kentucky Business Enterprise, regardless of whether the property is owned by the federal, state, or a local government;
Property of any free public library;
Property in Fayette County, Kentucky, administered by the Department of Military Affairs, Bluegrass Station Division;
All privately owned leasehold interests in residential property when the residential property is owned in fee simple by a purely public charity as of July 1, 2020:
When the real property includes a residential property unit that is:
Leased by the purely public charity for a period of at least one (1) year to an individual person who is fifty-five (55) years of age or older;
Maintained as the individual person's permanent residence under a lease agreement that:
Prohibits the lessee from subleasing the unit; and
Provides that the lessee's possessory interest in the unit is terminable by the lessor upon the death of the lessee, the physical or mental inability of the lessee to continue to reside in the unit, or the lessee's relocation to a nursing home or similar assisted living facility; and
Constructed on or before July 1, 2020, or constructed after July 1, 2020, on land that was privately owned in fee simple by the purely public charity on or before July 1, 2020;
If the fee simple ownership is transferred by the purely public charity after July 1, 2020, it shall be transferred to another purely public charity and the requirements established for the residential property unit in subparagraph 1. of this paragraph shall be maintained; and
The taxation of which is provided for under KRS 132.020 and 132.200 ; or
All privately owned leasehold interests in residential property owned in fee simple by a purely public charity, which is exempt from ad valorem taxation under Kentucky Constitution Section 170, when the residential property unit is leased by the purely public charity to an individual person who is:
Receiving medical or educational supportive services from the purely public charity; and
A postsecondary educational participant; 2. a. A postsecondary educational participant;
A minor;
Sick, disabled, or impoverished; or
Over the age of sixty-five (65).
Taxes shall be assessed to lessees of exempt real or personal property and collected in the same manner as taxes assessed to owners of other real or personal property, except that taxes due under this section shall not become a lien against the property. When due, such taxes shall constitute a debt due from the lessee to the state, county, school district, special district, or urban-county government for which the taxes were assessed and if unpaid shall be recoverable by the state as provided in KRS Chapter 134.
History. Enact. Acts 1988, ch. 146, § 2, effective July 15, 1988; 1990, ch. 415, § 1, effective July 13, 1990; 1990, ch. 476, Pt. V, § 322, effective July 13, 1990; 2006, ch. 211, § 17, effective July 12, 2006; 2009, ch. 10, § 35, effective January 1, 2010; 2013, ch. 32, § 159, effective March 19, 2013; 2019 ch. 146, § 8, effective June 27, 2019; 2020 ch. 91, § 60, effective April 15, 2020.
1.Nonprofit Use.
2.—No Exemption.
It was error to adjudge individuals' leasehold interests in airport property to be used for building and maintaining an airplane hangar exempt from taxation because no profit was earned in connection with such property. No exemption is provided for exempt property held by nonprofit natural persons, associations or partnerships. Pike County Bd. of Assessment Appeals & Revenue Cabinet v. Friend, 932 S.W.2d 378, 1996 Ky. App. LEXIS 110 (Ky. Ct. App. 1996).
Real property owned by a charity, but exclusively occupied by several residents, was not entitled to the charitable exemption in the Kentucky Constitution because the residences were not occupied by tax exempt entities; the residents' respective possessory interests was subject to ad valorem taxation. However, the fair market value of each resident's respective possessory interest was improperly assessed; the fair market value was obtained by subtracting the fair market value of the particular unit with the resident's leasehold from the fair market value of the unit without the leasehold. Grand Lodge of Ky. Free & Accepted Masons v. City of Taylor Mill, 2017 Ky. App. LEXIS 28 (Ky. Ct. App. Feb. 10, 2017, sub. op., 2017 Ky. App. Unpub. LEXIS 949 (Ky. Ct. App. Feb. 10, 2017).
Subsection (1) of this section attempts to levy an ad valorem tax on the fair cash value of the property against the lessee of the property and, accordingly, this section is unconstitutional and unenforceable. OAG 89-89 (opinion prior to 1990 amendment).
This section sets up an irrebutable presumption that the fair cash value of any leasehold interest will always equal the fair cash value of the fee, and this is patently unconstitutional. OAG 89-89 .
All property subject to taxation for state purposes shall also be subject to taxation in the county, city, school, or other taxing district in which it has a taxable situs, except the class of property described in KRS 132.030 and the following classes of property, which shall be subject to taxation for state purposes only:
Farm implements and farm machinery owned by or leased to a person actually engaged in farming and used in his farm operation;
Livestock, ratite birds, and domestic fowl;
Capital stock of savings and loan associations;
Machinery actually engaged in manufacturing, products in the course of manufacture, and raw material actually on hand at the plant for the purpose of manufacture. The printing, publication, and distribution of a newspaper or operating a job printing plant shall be deemed to be manufacturing;
Commercial radio and television equipment used to receive, capture, produce, edit, enhance, modify, process, store, convey, or transmit audio or video content or electronic signals which are broadcast over the air to an antenna; (5) (a) Commercial radio and television equipment used to receive, capture, produce, edit, enhance, modify, process, store, convey, or transmit audio or video content or electronic signals which are broadcast over the air to an antenna;
Equipment directly used or associated with the equipment identified in paragraph (a) of this subsection, including radio and television towers used to transmit or facilitate the transmission of the signal broadcast, but excluding telephone and cellular communications towers; and
Equipment used to gather or transmit weather information;
Unmanufactured agricultural products. They shall be exempt from taxation for state purposes to the extent of the value, or amount, of any unpaid nonrecourse loans thereon granted by the United States government or any agency thereof, and except that cities and counties may each impose an ad valorem tax of not exceeding one and one-half cents ($0.015) on each one hundred dollars ($100) of the fair cash value of all unmanufactured tobacco and not exceeding four and one-half cents ($0.045) on each one hundred dollars ($100) of the fair cash value of all other unmanufactured agricultural products, subject to taxation within their limits that are not actually on hand at the plants of manufacturing concerns for the purpose of manufacture, nor in the hands of the producer or any agent of the producer to whom the products have been conveyed or assigned for the purpose of sale;
All privately owned leasehold interest in industrial buildings, as defined under KRS 103.200 , owned and financed by a tax-exempt governmental unit, or tax-exempt statutory authority under the provisions of KRS Chapter 103, except that the rate shall not apply to the proportion of value of the leasehold interest created through any private financing;
Tangible personal property which has been certified as a pollution control facility as defined in KRS 224.1-300 . In the case of tangible personal property certified as a pollution control facility which is incorporated into a landfill facility, the tangible personal property shall be presumed to remain tangible personal property for purposes of this subsection if the tangible personal property is being used for its intended purposes;
Property which has been certified as an alcohol production facility as defined in KRS 247.910 ;
On and after January 1, 1977, the assessed value of unmined coal shall be included in the formula contained in KRS 132.590(9) in determining the amount of county appropriation to the office of the property valuation administrator;
Tangible personal property located in a foreign trade zone established pursuant to 19 U.S.C. sec. 81 , provided that the zone is activated in accordance with the regulations of the United States Customs Service and the Foreign Trade Zones Board;
Motor vehicles qualifying for permanent registration as historic motor vehicles under the provisions of KRS 186.043 . However, nothing herein shall be construed to exempt historical motor vehicles from the usage tax imposed by KRS 138.460 ;
Property which has been certified as a fluidized bed energy production facility as defined in KRS 211.390 ;
All motor vehicles:
Held for sale in the inventory of a licensed motor vehicle dealer, including motor vehicle auction dealers, which are not currently titled and registered in Kentucky and are held on an assignment pursuant to the provisions of KRS 186A.230 ;
That are in the possession of a licensed motor vehicle dealer, including licensed motor vehicle auction dealers, for sale, although ownership has not been transferred to the dealer; and
With a salvage title held by an insurance company;
Machinery or equipment owned by a business, industry, or organization in order to collect, source separate, compress, bale, shred, or otherwise handle waste materials if the machinery or equipment is primarily used for recycling purposes as defined in KRS 139.010 ;
New farm machinery and other equipment held in the retailer's inventory for sale under a floor plan financing arrangement by a retailer, as defined under KRS 365.800 ;
New boats and new marine equipment held for retail sale under a floor plan financing arrangement by a dealer registered under KRS 235.220 ;
Aircraft not used in the business of transporting persons or property for compensation or hire if an exemption is approved by the county, city, school, or other taxing district in which the aircraft has its taxable situs;
Federally documented vessels not used in the business of transporting persons or property for compensation or hire or for other commercial purposes, if an exemption is approved by the county, city, school, or other taxing district in which the federally documented vessel has its taxable situs;
Any nonferrous metal that conforms to the quality, shape, and weight specifications set by the New York Mercantile Exchange's special contract rules for metals, and which is located or stored in a commodity warehouse and held on warrant, or for which a written request has been made to a commodity warehouse to place it on warrant, according to the rules and regulations of a trading facility. In this subsection:
"Commodity warehouse" means a warehouse, shipping plant, depository, or other facility that has been designated or approved by a trading facility as a regular delivery point for a commodity on contracts of sale for future delivery; and
"Trading facility" means a facility that is designated by or registered with the federal Commodity Futures Trading Commission under 7 U.S.C. secs. 1 et seq. "Trading facility" includes the Board of Trade of the City of Chicago, the Chicago Mercantile Exchange, and the New York Mercantile Exchange;
Qualifying voluntary environmental remediation property for a period of three (3) years following the Energy and Environment Cabinet's issuance of a No Further Action Letter or its equivalent, pursuant to the correction of the effect of all known releases of hazardous substances, pollutants, contaminants, petroleum, or petroleum products located on the property consistent with a corrective action plan approved by the Energy and Environment Cabinet pursuant to KRS 224.1-400 , 224.1-405 , or 224.60-135 , and provided the cleanup was not financed through a public grant program of the petroleum storage tank environmental assurance fund;
Biotechnology products held in a warehouse for distribution by the manufacturer or by an affiliate of the manufacturer. For the purposes of this section:
"Biotechnology products" means those products that are applicable to the prevention, treatment, or cure of a disease or condition of human beings and that are produced using living organisms, materials derived from living organisms, or cellular, subcellular, or molecular components of living organisms. Biotechnology products does not include pharmaceutical products which are produced from chemical compounds;
"Warehouse" includes any establishment that is designed to house or store biotechnology products, but does not include blood banks, plasma centers, or other similar establishments;
"Affiliate" means an individual, partnership, or corporation that directly or indirectly owns or controls, or is owned or controlled by, or is under common ownership or control with, another individual, partnership, or corporation;
Recreational vehicles held for sale in a retailer's inventory; and
A privately owned leasehold interest in residential property described in KRS 132.195(2)(g), if an exemption is approved by the county, city, school, or other taxing district in which the residential property is located.
History. 4019a-5, 4019a-10, 4019a-16: amend. Acts 1948, ch. 207; 1954, ch. 159, § 1; 1965 (1st Ex. Sess.), ch. 2, § 12; 1968, ch. 152, § 103; 1970, ch. 185, § 1; 1974, ch. 137, § 5, effective June 21, 1974; 1976, ch. 84, § 5, effective March 29, 1976; 1978, ch. 116, § 1, effective June 17, 1978; 1978, ch. 404, § 2, effective March 30, 1978; 1980, ch. 210, § 7, effective July 15, 1980; 1982, ch. 229, § 2, effective July 15, 1982; 1984, ch. 169, § 2, effective July 13, 1984; 1986, ch. 359, § 2, effective July 15, 1986; 1986, ch. 431, § 17, effective Ju1y 15, 1986; 1986, ch. 476, § 6, effective July 15, 1986; 1990, ch. 106, § 3, effective July 13, 1990; 1990, ch. 461, § 2, effective July 13, 1990; 1990, ch. 476, Pt. V, § 323, effective July 13, 1990; 1991 (1st Ex. Sess.), ch. 12, § 47, effective February 26, 1991; 1992, ch. 8, § 1, effective July 14, 1992; 1992, ch. 338, § 22, effective July 14, 1992; 1994, ch. 68, § 3, effective July 15, 1994; 1996, ch. 254, § 26, effective July 15, 1996; 1998, ch. 55, § 2, effective July 15, 1998; 1998, ch. 168, § 2, effective July 15, 1998; 1998, ch. 266, § 2, effective July 15, 1998; 1998, ch. 385, § 2, effective July 15, 1998; 1998, ch. 600, § 9, effective April 14, 1998; 2000, ch. 327, § 3, effective July 14, 2000; 2001, ch. 55, § 1, effective June 21, 2001; 2002, ch. 324, § 2, effective July 15, 2002; 2005, ch. 25, § 1, effective June 20, 2005; 2005, ch. 168, § 57, effective January 1, 2006; 2007, ch. 100, § 3, effective June 26, 2007; 2008, ch. 81, § 1, effective July 15, 2008; 2008, ch. 95, § 18, effective August 1, 2008; 2010, ch. 24, § 98, effective July 15, 2010; 2013, ch. 94, § 3, effective June 25, 2013; 2013, ch. 119, § 8, effective January 1, 2014; 2014, ch. 128, § 5, effective July 15, 2014; 2016 ch. 93, § 3, effective July 15, 2016; 2020 ch. 91, § 62, effective April 15, 2020.
Section 2 of Chapter 55 of the Acts of the 2001 Regular Session read: "This Act shall apply for property assessed on or after January 1, 2001."
(7/15/2014). 2014 Ky. Acts ch. 128, sec. 8 provides that the amendments to this statute made in 2014 Ky. Acts ch. 128, sec. 5, shall apply to property assessed on or after January 1, 2015.
(6/8/2011). The Reviser of Statutes has corrected a manifest clerical or typographical error in subsection (16) of this statute by changing the citation at the end of that subsection from "KRS 139.010 " to "KRS 365.800 ." This error occurred during the merger of amendments to this statute in 2008 Ky. Acts ch. 81, sec. 1, and ch. 95, sec. 18.
(7/15/2008). 2008 Ky. Acts ch. 81, sec. 2, provides that the amendments to this section in 2008 Ky. Acts ch. 81, sec. 1, apply to assessments made on or after January 1, 2009.
(6/20/2005). 2005 Ky. Acts ch. 25, § 2, provides that the amendments to subsection (23) of this section shall apply for tax assessment dates on or after January 1, 2002.
(3/18/2005). 2000 Ky. Acts ch. 168, § 171, provides that: "Sections 55 (KRS 132.020 ) and 57 (132.200) of this Act, relating to property tax changes, take effect on January 1, 2006, except the changes made to paragraph (c) of subsection (1) of Section 55, relating to the voluntary environmental remediation credit, paragraph (a) of subsection (2) of Section 55, and paragraph (a) of subsection (4) of Section 55 of this Act, relating to new property and the state property assessment, and subsection (21) of Section 57 of this Act (subsection (22) of this version) which shall take effect on the effective date of this Act and which shall apply to tax years beginning on or after January 1, 2005."
(6/21/2001). Under KRS 446.280 , the words "or leased to" have been restored to subsection (1) of this statute after the words "owned by." The phrase was added to subsection (1) by 1986 Ky. Acts ch. 359, sec. 2, but was inavertently omitted from the drafting database. Because of this, several subsequent acts amending this statute failed to include the phrase, and it mistakenly was not included in some codifications of this statute, although it had not been deleted by legislative action using the requisite brackets and strikethrough.
(7/13/90) The two Acts amending this section prevail over the repeal and reenactment in House Bill 940, Acts Ch. 476, pursuant to Section 653(1) of Acts ch. 476. The amending acts do not appear to conflict and have been compiled together.
2. Manufacturing.
3. —Machinery.
4. Electronic Broadcasting Equipment.
5. Unmanufactured Agricultural Products.
6. Industrial Development.
7. Raw Material.
8. Exemption.
9. —Strict Construction.
10. —Discriminatory.
12. Injunction Against Collection.
13. Taxing Determination Upheld.
The exemption of unmanufactured agricultural products from local taxation, when in the hands of the producers or his agent for the purpose of sale, is constitutional. Owensboro v. Dark Tobacco Growers' Ass'n, 222 Ky. 164 , 300 S.W. 350, 1927 Ky. LEXIS 879 ( Ky. 1927 ).
2.Manufacturing.
Where company gathered tobacco together by buying it from the farmer either directly or through a loose leaf warehouse and then rehandled, assorted and classified it by ordinary hand labor preparatory to its shipment to company's various manufacturing plants situated in other cities, its texture remaining the same and unchanged as when bought and where it was subjected to no treatment or process which could have been said to have changed the character of the tobacco from its original state to a new and different article it was evident that nothing was manufactured at the plant and such plant was not a manufacturing establishment within the meaning of this section and thus such tobacco was not exempt from local taxation. American Tobacco Co. v. Bowling Green, 181 Ky. 416 , 205 S.W. 570, 1918 Ky. LEXIS 558 ( Ky. 1918 ). See Henderson v. George Delker Co., 193 Ky. 248 , 235 S.W. 732, 1921 Ky. LEXIS 219 ( Ky. 1921 ); Ayer & Lord Tie Co. v. Commonwealth, 208 Ky. 606 , 271 S.W. 693, 1925 Ky. LEXIS 344 ( Ky. 1925 ); Hughes & Co. v. Lexington, 211 Ky. 596 , 277 S.W. 981, 1925 Ky. LEXIS 930 ( Ky. 1925 ); Commonwealth use of Rockcastle County v. W. J. Sparks Co., 222 Ky. 606 , 1 S.W.2d 1050, 1928 Ky. LEXIS 209 ( Ky. 1928 ), limited, Colley v. Eastern Coal Corp., 470 S.W.2d 338, 1971 Ky. LEXIS 275 ( Ky. 1971 ); Lexington v. Lexington Leader Co., 193 Ky. 107 , 235 S.W. 31, 1921 Ky. LEXIS 203 ( Ky. 1921 ).
The phrases "actually engaged in manufacturing" and "actually on hand at their plants for the purpose of manufacture" mean manufacturing at the place of taxation and not at some other place. American Tobacco Co. v. Bowling Green, 181 Ky. 416 , 205 S.W. 570, 1918 Ky. LEXIS 558 ( Ky. 1918 ). See Henderson v. George Delker Co., 193 Ky. 248 , 235 S.W. 732, 1921 Ky. LEXIS 219 ( Ky. 1921 ); Ayer & Lord Tie Co. v. Commonwealth, 208 Ky. 606 , 271 S.W. 693, 1925 Ky. LEXIS 344 ( Ky. 1925 ); Hughes & Co. v. Lexington, 211 Ky. 596 , 277 S.W. 981, 1925 Ky. LEXIS 930 ( Ky. 1925 ); Commonwealth use of Rockcastle County v. W. J. Sparks Co., 222 Ky. 606 , 1 S.W.2d 1050, 1928 Ky. LEXIS 209 ( Ky. 1928 ), limited, Colley v. Eastern Coal Corp., 470 S.W.2d 338, 1971 Ky. LEXIS 275 ( Ky. 1971 ); Lexington v. Lexington Leader Co., 193 Ky. 107 , 235 S.W. 31, 1921 Ky. LEXIS 203 ( Ky. 1921 ).
This section contemplates manufacturing at the place of taxation in order to exempt the raw material from local taxation. American Tobacco Co. v. Bowling Green, 181 Ky. 416 , 205 S.W. 570, 1918 Ky. LEXIS 558 ( Ky. 1918 ). See Henderson v. George Delker Co., 193 Ky. 248 , 235 S.W. 732, 1921 Ky. LEXIS 219 ( Ky. 1921 ); Ayer & Lord Tie Co. v. Commonwealth, 208 Ky. 606 , 271 S.W. 693, 1925 Ky. LEXIS 344 ( Ky. 1925 ); Hughes & Co. v. Lexington, 211 Ky. 596 , 277 S.W. 981, 1925 Ky. LEXIS 930 ( Ky. 1925 ); Commonwealth use of Rockcastle County v. W. J. Sparks Co., 222 Ky. 606 , 1 S.W.2d 1050, 1928 Ky. LEXIS 209 ( Ky. 1928 ), limited, Colley v. Eastern Coal Corp., 470 S.W.2d 338, 1971 Ky. LEXIS 275 ( Ky. 1971 ); Lexington v. Lexington Leader Co., 193 Ky. 107 , 235 S.W. 31, 1921 Ky. LEXIS 203 ( Ky. 1921