Kentucky Expands Sales Tax Base to Include Specified Services

Effective July 1, 2018, Kentucky has expanded its sales tax base to subject the following specified services to sales tax:

• Landscaping services, including but not limited to lawn care and maintenance services; tree trimming, pruning or removal services; landscape design and installation services; landscape care and maintenance services; and snow plowing or removal services
• Janitorial services, including but not limited to residential and commercial cleaning services, and carpet, upholstery, and window cleaning services
• Small animal veterinary services, excluding veterinary services for equine, cattle, swine, sheep, goats, llamas, alpacas, ratite birds, buffalo, and cervids
• Pet care services, including but not limited to grooming and boarding services, pet sitting services, and pet obedience training services
• Industrial laundry services, including but not limited to industrial uniform supply services, protective apparel supply services, and industrial mat and rug supply services
• Non-coin-operated laundry and dry cleaning services
• Linen supply services, including but not limited to table and bed linen supply services and nonindustrial uniform supply services
• Indoor skin tanning services, including but not limited to tanning booth or tanning bed services and spray tanning services
• Non-medical diet and weight reducing services
• Limousine services, if a driver is provided
• Charges for labor or services rendered in installing or applying tangible personal property, digital property, or services sold. These charges are added to the definition of “gross receipts” and “sales price.” The definition no longer excludes these charges if separately stated.
• Charges for short-term rentals of campsites, campgrounds and recreational vehicle parks.
• Extended warranty services

Per the legislation, “extended warranty services” means services provided through a service contract agreement between the contract provider and the purchaser where the purchaser agrees to pay compensation for the contract and the provider agrees to repair, replace, support, or maintain tangible personal property or digital property according to the terms of the contract if:

• The service contract agreement is sold or purchased on or after July 1, 2018; and
• The tangible personal property or digital property for which the service contract agreement is provided is subject to sales tax or motor vehicle usage tax

Additionally, the legislation revises the sales tax code to change references to tangible personal property and digital property to include extended warranty service. The legislation extends registration requirements to those who sell extended warranty services and expands “retailer engaged in business in this state” to include retailers if they (or those acting for them) engage in in-state activities involving extended warranty service. (H.B. 366, Laws 2018)