For the latest news and updates on Kentucky state and local tax
January 22, 2024
Kentucky Sales Tax Facts – December 2023
Authored by: Jonathan Weinberg, JD, LLM, Principal and Ryan Schupp
The Kentucky Department of Revenue recently issued the December 2023 edition of Sales Tax Facts. The publication discusses the tax law changes that went into effect in 2023, including amendments to the treatment of non-profits, the taxability of short-term rentals for business, entertainment, or social events, and the definition of motor vehicles to now include recreational vehicles. The publication can be found at Kentucky’s Department of Revenue site under Kentucky Sales Tax Facts No. 12/01/2023.
If you have questions about sales tax, please reach out to a member of the Withum SALT Team.
October 9, 2023
Supreme Court Denies Kentucky’s Petition for Certiorari in Chandler v. Foresight Coal Sales
Authored by: Leroy Solis, MBA and Jonathan Weinberg, JD, LLM, Principal
The US Supreme Court denied Kentucky’s petition for certiorari in Chandler v. Foresight Coal Sales, LLC. The Sixth Circuit Court of Appeals previously held that Kentucky S.B. 257 violated the dormant commerce clause by evaluating contracts differently based on whether the vendor was subject to state severance taxes. The Kentucky Public Service Commission (“PSC”) is obligated to purchase coal from the lowest cost provider. S.B. 257 eliminated state severance taxes from the purchase price consideration, thus eliminating the 4.5% Kentucky severance tax when the PSC was making purchase choices. As such, the PSC could purchase in-state coal that was up to 4.5% more expensive than out-of-state coal. The Sixth Circuit determined that this violated the dormant commerce clause. As the Supreme Court has denied certiorari, the Sixth Circuit Court’s decision stands.
We anticipate that the Supreme Court’s dormant commerce clause jurisprudence will evolve, and these changes will have a direct impact on the state and local tax landscape.
April 21, 2023
Kentucky Short-Term Rentals Subject to Sales and Use Tax
Authored by: Breea Boylan, MSA, CPA and Courtney Easterday, MS
On March 24, 2023, Kentucky Gov. Breshear signed HB 360, which retroactively imposes a sales tax on short-term space rentals effective January 1, 2023. Short-term space rentals include the rental of any room or rooms, lodgings, campsites, or accommodations furnished by any hotel, motel, inn, tourist camp, tourist cabin, campgrounds, recreational vehicle parks. Taxable short-term rentals also include conference rooms, ballrooms, meeting and convention spaces, and rooms rented for business or social events.
It appears that individuals renting homes via web-portals (e.g., AirBnB, VRBO) are subject to the tax. Furthermore, landlords leasing space to pop-up stores/restaurants would likewise be obligated to collect and remit sales tax on the short-term leases.
The statute defines short-term as a period of less than 30 contiguous days. As such, individuals and businesses leasing space for more than 30 days are not subject to the tax.
Since this statute is imposed retroactively, it is possible that some vendors may have a tax obligation for rentals that have already ended, and these vendors may have difficulty collecting the tax on prior transactions.
If you have questions about whether your business needs to collect and remit sales tax, please reach out to a member of the Withum SALT Team.
April 14, 2023
Kentucky Issues Guidance on the Taxability of Testing Services
Authored by: Brandon Vance and Bonnie Susmano, JD, MBA
On April 6, 2023, the Kentucky Department of Revenue released Frequently Asked Questions (FAQs) in response to H360’s changes to the taxability of laboratory testing services. H360 indicates that sales and use tax is only applicable to laboratory testing services, except when required for medical, educational, veterinary, or government-related reasons under federal, state, or local statutes, regulations, or court orders. The FAQs provide examples of taxable laboratory testing services, including mold, radon, and carbon monoxide testing. To access the full list of taxable testing services pursuant to the Department’s FAQ, please refer to the Testing Services FAQ on the Department’s website.
If you have questions about whether your business is required to collect sales/use taxes, please reach out to a member of the Withum SALT Team.
April 10, 2023
Kentucky Legalizes Medicinal Cannabis
Authored by: Brandon Spinella and George Gonzales, MST
On March 31, 2023 Kentucky Gov. Beshear made the Commonwealth the 38th state to legalize marijuana by signing SB 47 into law. Pursuant to SB 47, Kentucky will allow the sale of medical cannabis products pursuant to a prescription issued for specified medical conditions. Specified conditions include:
- Cancer;
- Severe pain;
- Epilepsy;
- Multiple Sclerosis;
- Muscle spasms or spasticity;
- Chronic nausea;
- PTSD; and,
- Other conditions or diseases which the Kentucky Center for Cannabis deems appropriate.
Medicinal cannabis will be exempt from the Commonwealth’s sales tax and excise tax.
For more information on Kentucky’s legalization of medicinal cannabis, please refer to Kentucky SB 47. If you have questions about the state taxation of cannabis products, please reach out to a member of the Withum SALT Team.
April 10, 2023
Excise Tax Law Related to Sports Wagering Tax Signed by Governor of Kentucky
Authored by: Brandon Spinella and George Gonzales, MST
On March 30, 2023 Kentucky Gov. Beshear enacted HB551 creating excise tax on sports gambling. The enacted excise tax includes the following provisions:
- A 9.75% excise tax is imposed on licensed sports wagering conducted at licensed racetracks;
- A 14.25% excise tax is imposed on on-line wagers;
- Online wagering technology must be approved by the Horse Racing Commission;
- Tax remittances are due monthly on or before the twentieth day of the following month; and,
- Taxpayers having negative revenue may carry forward losses to subsequent months’ returns for up to twelve months.
For additional information, please see HB551.
If you have questions on this topic, please reach out to a member of the Withum SALT Team.
March 31, 2023
Kentucky Enacts Legislation Affecting Various State Taxes
Authored by: Katie Szymanski, CPA and Katerine Velasquez
On March 24, 2023, Kentucky Gov. Beshear signed House Bill 360, which includes the following state tax provisions:
- The Commonwealth’s IRC conformity date is updated to January 1, 2023 (previously, Kentucky conformed to the IRC in effect as of January 1, 2022).
- The Commonwealth enacted a passthrough entity tax election where passthrough may elect to pay the tax at the entity level for tax years beginning on or after January 1, 2022. The tax paid at the entity level is allocated to the partners based on their share of the taxable income. The election is due by the 15th day of the fourth month following the close of the tax year or the 15th day of the tenth month for taxpayers filing extensions.
- The Commonwealth is phasing out the personal income tax. Beginning on January 1, 2023, the personal income tax tax rate is 4.5%. Each year the personal income tax rate will be reduced by 0.5% until it reaches 0%.
- Sales and Use Tax clarifications. Specifically, the Commonwealth stated marketing services and security guard services are excluded from the definition of taxable services.
If you have questions about how Kentucky’s legislation affects you or your business, please reach out to a member of the Withum SALT Team.
September 9, 2022
Kentucky Adds 35 New Services To Impose Sales and Use Tax On
Authored by: Jessie Racioppi and Courtney Easterday, MSA
Thirty-five new services will be subject to sales and use tax in Kentucky, effective January 1, 2023. Some of the major services added to the list include photography services, marketing services, telemarketing services, website design and development services, website hosting services, process server services, prewritten computer software access services, executive employee recruitment services, and private investigation services. For the full list of specifically enumerated services that will become taxable on January 1, 2023 see Kentucky House Bill 8. If you have questions about whether your business’ services are subject to sales tax, please contact a member of Withum’s SALT Team.
September 10, 2021
Kentucky – Extension for Hurricane Ida Victims
The Kentucky Department of Revenue (DOR) announced the state will honor the recent Internal Revenue Service (IRS) special tax relief for individual or business taxpayers qualifying for assistance due to the effects of Hurricane Ida within designated Federal Emergency Management Agency (FEMA) disaster zones. This declaration allows for taxpayers who reside or have a business in the disaster area with certain tax-filing and tax-payment deadlines falling on or after August 26, 2021, to be postponed to January 3, 2022. This includes the filing and paying of tax due for the extended deadline for 2020 individual income tax returns due on October 15, 2021, and the normal deadline for income tax quarterly payments due on September 15, 2021. The tax types that qualify for this relief include individual income tax, corporate income tax, income tax withholdings, and limited liability entity tax. Late filing and penalties will be waived for those affected taxpayers seeking relief and taxpayers have been advised to file the forms with large, red letters stating “Hurricane Ida Relief” in the top margin. The extension to file and pay taxes does not apply to sales tax and other tax types however, taxpayers may contact the DOR to request an extension or waiver of penalties if affected by disaster-related delays.
March 23, 2021
Kentucky Update on Extension of Filing Deadline
The 2020 Kentucky individual income tax filing deadline is extended until May 17, 2021. This extension follows the income tax relief provisions issued March 17 by the federal Internal Revenue Service in response to delays and disruptions caused by the ongoing response to the novel coronavirus worldwide health pandemic. Individual taxpayers can also postpone Kentucky individual income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies only to individual taxpayers. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17. This relief does not apply to 2021 estimated tax payments that are due on April 15, 2021. Kentucky’s tax filing relief does not apply to corporation income tax, limited liability entity tax, withholding tax, sales and use tax, or other types of state taxes. ( Kentucky Individual Income Tax Return Filing Deadline Extended to May 17, 03/18/2021 .)
April 1, 2020
Individual and Corporate Deadline
The individual income and corporate tax return filing and payment deadline has been extended to July 15, 2020.
More on Taxes and the Coronavirus Pandemic.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.
