Kentucky House Bill 487 – A Brief Look

For Kentucky retailers, July 1, 2018, was the official start date for new Legislation related to Sales and Excise Taxes. House Bill 487 includes substantial changes involving tax rates and tax bases for retailers’ subject to Kentucky tax law.

This is a brief look at some of those changes.

Amendments to KRS 139.010 now require retailers to collect sales tax on admissions including charges or fees to participate in an activity or event. Admissions mean the fees paid for the right to entrance and the privilege of using facilities or participating in an event or activity regardless of whether the fee paid is per use or in any other form. Some retailers affected by this amendment include but are not limited to bowling centers, skating rinks, health spas, weight training facilities, fitness and recreation sports centers, both public and private golf courses, swimming pools and tennis courts.

Amendments to KRS 139.200 (2) (a) adds rentals of rooms, lodgings or accommodations furnished by campsites, campgrounds and recreation vehicle parks as accommodations subject to 6% Kentucky Sales Tax. This tax does not apply to room, lodgings or accommodations supplied for continuous periods of 30 days or longer to a person. Rental of campsites, campgrounds and RV Parks remain exempts from state and local transient room taxes.

KRS 139.200 now taxes the sale of extended warranties services to cover tangible personal property or digital property that is taxable at retail to the warranty holder. With the law change retailers of warranty, services will claim an exemption on their purchase of tangible personal property (repair parts) they install to fulfill the warranty service contract.

Labor and installation charges are now included in the definition of “gross receipts” (KRS 139.010). However, sales tax will only apply to charges for labor or services rendered in installing or applying taxable tangible personal property, digital property or service sold at retail.

Charges for the provision of services for landscape, janitorial, industrial laundry, non-coin operated laundry and dry cleaning, indoor tanning, non-medical diet and weight loss reducing, limousine, and pet care are now subject to sales tax. Small animal veterinary services, excluding veterinary services for equine, cattle, swine, sheep, goats, llamas, alpacas, ratite birds, buffalo and cervcids. Retailers for these services will now charge sales tax on the full sales price charged to their customers.

KRS 139.480 Certified Pollution Control Facilities are no longer be able to claim resale exemption for the purchases of tangible personal property. Other property and corporate tax incentives associated with pollution control facilities remain in place (KRS 224.1-310)

Waste tire fees imposed on new motor vehicle tires increased from $1 to $2 per tire. The retailer may pass the fee on to the purchaser and include it in the gross receipts subject to sales tax.

The Department of Revenue is not accepting new applications for motion pictures tax credits. Additionally, the sales and use tax incentive is no longer available for companies filming or producing motion pictures in the Commonwealth until July 1, 2022.

Modifications to the Tobacco Tax increase the cigarette tax by 50 cents to $1.10. This legislative also establishes an inventory floor stock tax based on inventory as of June 30, 2018 at 11:59 pm. Retailers may contact the Division of Miscellaneous Taxes at 502-564-6823 or KRC.WEBRresponseTobaccoTax.ky.gov.

TaxAnswers.ky.gov is now available for guidance and more information on 2018 General Assembly tax law changes.

Source Kentucky Sales Tax Facts

About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.

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