Kentucky Passes Bill Outlining Multiple Sales and Use Tax Changes.

The State of Kentucky has passed H.B. 267, without the signature of the governor. The bill includes multiple tax provisions including specific items related to sales and use taxes. The bill states that notwithstanding KRS 139.340, a commercial printer or mailer engaged in business in the State of Kentucky will not be required to collect use tax on sales or printing or direct mail advertising materials that are both printed out of state and delivered out of state to the United State Postal Service for mass mailing to third-party Kentucky residents who are not purchasers of the advertising materials. This is subject to the provisions that the commercial printers or mailers: (1) maintain records relating to these sales to assist in the collection of the use tax owed; and (2) file reports as provided in KRS 139.730 if requested by the Kentucky Revenue Cabinet. If all requirements are met, the purchaser of the materials will be subject to use tax. Also contained in the bill is a maximum cap amount on the vendor compensation amount. For periods after June 30, 2005, the vendor compensation amount may not exceed $1,500. The bill also addressed the fact that effective August 1, 2005, a nonprofit institution is allowed a refund equal to 25% of the sales tax collected on the sale of donated goods if the refund is used exclusively for capital construction costs of other retail locations within Kentucky. This is subject to the following provisions: (1) the nonprofit institution must routinely sell such items; (2) the institution must provide job training and employment to disadvantaged and disabled individuals; (3) the institution spends at least 75% of its annual revenue on job training, job placement, and related community services; (4) the institution submits a refund application within 60 days after the new retail location opens for business; and (5) the institution provides records of capital construction costs for the new retail location and any other information requested. The maximum refund amount for any location is $1,000,000. Other areas of interest included in the bill relating to sales and use taxes are changes to the taxation of natural gas transmission services, enterprise zone tax incentives, energy and energy-producing fuels, and a retroactive credit for sales tax paid on business communications services. The full text of the bill can be found at the State of Kentucky’s website at (H.B. 267, Kentucky Revenue Cabinet, enacted March 19, 2005)

Posted on March 25, 2005