Kentucky Releases Detailed Guidance on the Applicability of Upcoming Changes to Taxable Services for Impacted Industries

Following the passage of House Bill 8 this spring, as of January 1st, 2023, many services that were not subject to sales tax in Kentucky will become taxable. The state Department of Revenue has now released additional guidance, breaking out how these changes will affect different industries and service providers and providing more clarity.

Photographers are currently treated as service providers for the process of taking photographs, and retailers who must charge tax on sales of prints. When the new regulations come into effect, charges for sitting fees, developing and printing photographs, and photo editing services will be added to the tax base. The state has clarified that, under the new rules, charges for family portraits, wedding photography, and athletic pictures will now be subject to tax.

Many services or fees that were previously excluded from the state’s expanded admissions tax in 2018 will now be taxable under new rules, including rental fees for hotel conference rooms, convention center space, picnic spaces, and private dining areas, as well as youth sports fees, summer camps, and personal training.

Interior designers, who were previously categorized as contractors and required to pay sales tax on their purchases, will now be categorized as vendors of a taxable service and required to collect tax from their customers. Interior designers will be able to purchase materials under a resale certificate, and will collect tax on the cost of their entire service, including the cost of any property that passes to the customer.

Repairs and extended warranties, which are currently treated as bundled transactions, are now taxable services in some circumstances. Repairs or alterations to apparel, footwear, watches, and jewelry will be subject to tax regardless of the cost of the materials used. Service calls for commercial refrigeration equipment, regardless of whether or not repair parts are used, will now be taxable. Extended warranty services, which are currently taxable if performed on taxable tangible personal property, will be taxable across the board, including warranties on exempt property and real property. Kentucky Department of Revenue, Sales Tax Facts, September 2022.

Posted on October 11, 2022