KENTUCKY SALES TAX FACTS

KentucKy SaleS tax FactS

A REVENUE PUBLICATION FOR THE BUSINESS OWNER MAY 2018

2018 Legislation Relating to Sales and Excise Taxes—House

Bill 487

This issue is the ﬁrst in a series highlighting various

legislative changes affecting retailers subject to Kentucky

tax law. There have been substantial changes involving tax

rates and tax bases. Unless otherwise noted, these changes

become effective July 1, 2018. Subsequent issues will cover

the changes in more detail in response to questions and

comments received from the business community.

Participatory Admissions

Effective July 1, 2018 charges for admissions including

charges or fees to participate in an activity or event are subject

to Kentucky sales tax. The underlined wording below reﬂects

additional types of admissions becoming subject to sales tax.

KRS 139.010 is amended as follows:

“Admissions” means the fees paid for:

a. The right of entrance to a display, program, sporting

event, music concert, performance, play, show, movie,

exhibit, fair, or other entertainment or amusement event

or venue; and

b. The privilege of using facilities or participating in an event

or activity, including but not limited to:

1. Bowling centers;

2. Skating rinks;

3. Health spas;

4. Swimming pools;

5. Tennis courts;

6. Weight training facilities;

7. Fitness and recreational sports centers; and

8. Golf courses, both public and private;

Regardless of whether the fee paid is per use or in any

other form, including but not limited to an initiation fee,

monthly fee, membership fee, or combination thereof.

Campsites/Campgrounds/RV Parks

Amendments to KRS 139.200 (2) (a) add rentals at campsites,

campgrounds, and recreational vehicle (RV) parks as

accommodations subject to 6% Kentucky sales tax. Sales

tax is applicable on the rental of any rooms, lodgings, or

accommodations furnished by these campsites as well as

by any hotel, motel, inn, tourist camp, tourist cabin, or any

other place in which rooms, lodgings, or accommodations

are regularly furnished to transients for a consideration. The

tax shall not apply to rooms, lodgings, or accommodations

supplied for a continuous period of thirty (30) days or more

to a person. The rental of campsites, campgrounds, and RV

parks remains exempt from the state and local transient room

taxes.

Extended Warranty Services- KRS 139.200

Effective July 1, 2018, the sales of extended warranty services

to cover tangible personal property or digital property that is

taxable at retail to the warranty holder are subject to sales and

use tax. KRS 139.010 deﬁnes “extended warranty services”

as “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: (a) the service contract agreement

is sold or purchased on or after July 1, 2018; and (b) 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.

Retailers of extended warranty services will now charge sales

and use tax on the sales price of the warranty contract. With

this law change, these sellers will claim a resale exemption

on their purchase of tangible personal property (repair parts)

they install to fulﬁll the warranty service contract.

Labor and Installation Charges

Effective July 1, 2018, labor and installation charges are

included in the deﬁnition of “gross receipts” subject to

Kentucky sales tax (KRS 139.010). However, sales tax will

apply only to charges for labor or services rendered in

installing or applying taxable tangible personal property,

digital property or service sold at retail. Stand-alone labor

and installation services are not subject to sales and use

tax unless speciﬁcally enumerated in KRS 139.200 (see next

section). In addition, charges for the installation of ﬁxtures to

real property or for labor to repair ﬁxtures to real property are

not part of gross receipts subject to sales tax. See Kentucky

Regulation 103 KAR 26:070 for more information on ﬁxtures

and building materials used in construction contracting.

Furthermore, an amendment to KRS 139.470 (23) will also

exempt charges for labor or services to apply, install, repair

or maintain tangible personal property directly used in the

manufacturing or industrial processing process, if the charges

for the labor are separately stated from the parts sold on the

invoice, bill of sale or similar document given to the purchaser.

Taxable Services—KRS 139.200

Effective July 1, 2018, charges for the provision of the following

services become subject to sales tax:

1. 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 and removal services;

2. Janitorial services, including but not limited to residential

and commercial cleaning services, and carpet, upholstery,

and window cleaning services;

3. Small animal veterinary services, excluding veterinary

services for equine, cattle, swine, sheep, goats, llamas,

alpacas, ratite birds, buffalo, and cervids;

MAY 2018 PAGE 2

4. Pet care services, including but not limited to grooming

and boarding services, pet sitting services, and obedience

training services;

5. Industrial laundry services, including but not limited to

industrial uniform supply services, protective apparel

supply services, and industrial mat and rug supply

services;

6. Non-coin-operated laundry and dry cleaning services;

7. Linen supply services, including but not limited to table

and bed linen supply services and nonindustrial uniform

supply services;

8. Indoor skin tanning services, including but not limited to

tanning booth or tanning bed services and spray tanning

services;

9. Non-medical diet and weight reducing services;

10. Limousine services, if a driver is provided; and

11. Extended warranty services to cover tangible personal

property or digital property that is taxable at retail to the

warranty holder.

Retailers that make sales of these services will now charge

sales tax on the full sales price charged to their customers

and may claim a resale exemption on their purchase of items

provided to the customer as part of the service. This resale

exemption is limited to tangible personal property or digital

property sold to and received by the customers as part of the

retail sale.

Pollution Control Facilities—KRS 139.480

For transactions on or after July 1, 2018, the sales and use

tax exemption for property certiﬁed as a pollution control

facility no longer applies. Retailers may no longer accept

the pollution control tax-exemption certiﬁcate Form 51A149

from locations designated as a pollution control facility for

purchases of tangible personal property. Other property and

corporate tax incentives associated with pollution control

facilities remain in place (KRS 224.1-310).

Motion Picture Refund Credit—KRS 139.538

For transactions on or after July 1, 2018, the sales and use

tax incentive is no longer available for companies ﬁlming or

producing motion pictures in the Commonwealth until July

1, 2022. The Department of Revenue is not accepting new

applications for motion picture tax credits.

Tire Tax Fee—KRS 224.50-868

Effective July 1, 2018, the waste tire fee imposed on each new

motor vehicle tire sold in Kentucky increases from $1 to $2.

The retailer may pass the fee on to the purchaser of the new

tire and any collections of the tire fee from the customers are

part of the retailer’s gross receipts subject to sales tax. The

retailer shall include the tire fee in the total purchase price of

the new tire and collect sales tax on the total charge for the

new tire as follows:

Price of new tire $120

Tire Fee $ 2

Total purchase price $122

6% KY sales tax $7.32

Total price including

Sales tax $129.32

Tobacco Tax Modiﬁcations

Effective July 1, 2018, the cigarette tax will increase by 50

cents to $1.10. This legislative change also establishes an

inventory ﬂoor stock tax. All cigarette licensees and retailers

of cigarettes must take a physical inventory as of June 30,

2018, at 11:59 p.m. and ﬁle and pay the inventory ﬂoor stock

tax. The Department will provide additional information and

return guidance prior to the ﬁling due date of July 10, 2018.

The inventory ﬂoor stock tax liability may be paid in three

installments with due dates of July 10, August 10 and September

10 respectively. For further assistance with any tobacco tax

question, please contact the Division of Miscellaneous Taxes

at (502)-564-6823 or KRC.WEBResponseTobaccoTax@ky.gov .

Now Available...

TaxAnswers.ky.gov to provide guidance and information

on recent tax law changes made during the 2018 General

Assembly.

This newsletter is intended to provide practical information to

assist persons in fulﬁlling their sales and use tax obligations to

the Commonwealth.

This newsletter is archived on the Department of Revenue website

at www.revenue.ky.gov

and future editions may be accessed at the website.

To submit additional questions or suggestions for future topics,

please write to:

Kentucky Sales Tax Facts, Division of Sales and Use Tax,

Station 53, P.O. Box 181, Frankfort, KY 40602-0181

or call (502) 564-5170, Fax (502) 564-2041,

website www.revenue.ky.gov.

The Kentucky Department of Revenue does not discriminate on the

basis of race, color, national origin, sex, age, religion, disability,

sexual orientation, gender identity, veteran status, genetic

information or ancestry in employment or the provision of services.

Matthew G. Bevin, Governor

Commonwealth of Kentucky

William M. Landrum III, Secretary

Finance and Administration Cabinet

Daniel P. Bork, Commissioner

Department of Revenue

Printed on recycled paper and paid for with state funds.