The Kentucky Department of Revenue (KYDOR) frequently sends out notices to taxpayers that they owe additional taxes because a particular expense or itemized deduction has been disallowed, for example. This is a frustrating practice for tax professionals and taxpayers alike for many reasons; mainly because it is often more cost effective for our clients to pay the tax than pay our fees to protest or respond to these notices. It is the reality we all know and live by, as does the KYDOR.
Kentucky’s sales tax is not just a sales tax on tangible personal property. Beginning in 2018 and most recently in 2022, Kentucky has expanded its sales tax to more and more services. Do developments in the 2023 legislative session portend a slowdown or a pull back?
H.B. 8 recently passed in the state legislature and it has big implications, especially for software. What is the big issue with prewritten computer software now? It is prewritten computer software access services, which is one of the services made subject to sales tax by 2022 H.B. 8. Notably, unlike downloaded prewritten computer software which is taxed as tangible personal property, prewritten computer software access services are taxed as services. KRS 139.200(2)(ay).
Countless retirement provisions will take effect in the coming years because of the act. This article outlines the ones to take note of during your 2023 planning, including: RMD age increase RMD excise tax reduced Qualified charitable distribution rules eased Longevity annuity contract limits lifted Roth treatment allowed for matching or non-elective contributions Credits increased for small-employer retirement plans
The prevalence of occupational license taxes on wages and net profits imposed by local tax districts in Kentucky underscores Kentucky local tax districts’ dependence on these taxes for revenue. The Commonwealth has historically been dependent on taxes based on income as well but has recently moved away from income-based taxes to become more competitive. Local occupational taxes are significant. For Kentucky to become competitive, should not local taxes be addressed as well?
The Inflation Reduction Act of 2022 includes significant climate-related provisions that may impact some of your tax clients. This article covers: Provisions for sustainable energy households Nonbusiness energy property credit Residential energy-efficient property credit Energy-efficient home credit Clean vehicle credits
Manufacturing supplies matter! Manufacturers across the Commonwealth use manufacturing supplies in their manufacturing operations to produce many kinds of products. The Kentucky Supreme Court recently granted discretionary review in Century Aluminum of Kentucky, GP v. Department of Revenue, 2020-CA-0301-MR (Ky. App. July 9, 2021), discretionary review granted, 2021-SC-0300 (Ky. Feb. 16, 2022). This case involves the manufacturing supplies exemption of KRS 139.470(9)(b)2.b. The Court of Appeals relied upon an exception from the supplies exemption, i.e., “‘Supplies’ does not include repair, replacement, or spare parts of any kind…” and “The exemption … does not include repair, replacement, or spare parts[.]”, Id. at 2-3 (emphasis in original, quoting KRS 139.470(9)(b)2.b & (e)), to hold that the involved items were not tax-exempt. The Court of Appeals, borrowing heavily from the Circuit Court, focused its analysis on whether each item at issue, a repair, replacement, or spare part was because it was (or was not) “tangible personal property used to maintain, restore, mend, or repair machinery or equipment”. Id. at 3-4.
Everyone dreams of waking up without alarm clocks, on sunny beaches and no longer having to go to work. People have realized that they can make this a reality without working into their sixties and seventies through the FIRE lifestyle. FIRE stands for Financial Independence, Retire Early.
Kentucky’s ad valorem real property tax is perhaps the oldest tax on the books in the Commonwealth, adopted in 1792. Real property tax is rooted in the Kentucky Constitution, which requires that all non-exempt property be assessed annually by January 1, at its fair cash value, estimated at the price the property would bring at a fair voluntary sale. Ky. Const. § 172; KRS 132.191(1). Valuation is the heart of real property taxation.
By Mark A. Loyd, JD, CPA - A lot is going on with Kentucky taxes of which businesses should be aware, from actual and potential changes to Kentucky’s tax system to changes in tax regulations to tax case developments.
