HB 46 — AN ACT relating to the promotion of living donor human organ and bone marrow donation.

(6) "Dependent" means those persons defined as dependents in the Internal Revenue Code;

(7) "Doing business in this state" includes but is not limited to:

(a) Being organized under the laws of this state;

(b) Having a commercial domicile in this state;

(c) Owning or leasing property in this state;

Page 12 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 (d) Having one (1) or more individuals performing services in this state;

(e) Maintaining an interest in a pass-through entity doing business in this state;

(f) Deriving income from or attributable to sources within this state, including deriving income directly or indirectly from a trust doing business in this state, or deriving income directly or indirectly from a single-member limited liability company that is doing business in this state and is disregarded as an entity separate from its single member for federal income tax purposes;

or (g) Directing activities at Kentucky customers for the purpose of selling them goods or services.

Nothing in this subsection shall be interpreted in a manner that goes beyond the limitations imposed and protections provided by the United States Constitution or Pub.

L.

No.

86-272;

(8) "Employee" has the same meaning as in Section 3401(c) of the Internal Revenue Code;

(9) "Employer" has the same meaning as in Section 3401(d) of the Internal Revenue Code;

(10) "Fiduciary" has the same meaning as in Section 7701(a)(6) of the Internal Revenue Code;

(11) "Financial institution" means:

(a) A national bank organized as a body corporate and existing or in the process of organizing as a national bank association pursuant to the provisions of the National Bank Act, 12 U.S.C.

secs.

21 et seq., in effect on December 31, 1997, exclusive of any amendments made subsequent to that date;

(b) Any bank or trust company incorporated or organized under the laws of any state, except a banker's bank organized under KRS 286.3-135;

(c) Any corporation organized under the provisions of 12 U.S.C.

secs.

611 to 631, in effect on December 31, 1997, exclusive of any amendments made Page 13 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 subsequent to that date, or any corporation organized after December 31, 1997, that meets the requirements of 12 U.S.C.

secs.

611 to 631, in effect on December 31, 1997;

or (d) Any agency or branch of a foreign depository as defined in 12 U.S.C.

sec.

3101, in effect on December 31, 1997, exclusive of any amendments made subsequent to that date, or any agency or branch of a foreign depository established after December 31, 1997, that meets the requirements of 12 U.S.C.

sec.

3101 in effect on December 31, 1997;

(12) "Fiscal year" has the same meaning as in Section 7701(a)(24) of the Internal Revenue Code;

(13) "Gross income":

(a) In the case of taxpayers other than corporations, has the same meaning as in Section 61 of the Internal Revenue Code;

and (b) In the case of corporations, means the amount calculated in KRS 141.039;

(14) "Human organ" means any part of a human intestine, kidney, liver, lung, or pancreas;

(15) "Individual" means a natural person;

(16)[(15)] "Internal Revenue Code" means:

(a) For taxable years beginning on or after January 1, 2018, but before January 1, 2019, the Internal Revenue Code in effect on December 31, 2017, including the provisions contained in Pub.

L.

No.

115-97 apply to the same taxable year as the provisions apply for federal purposes, exclusive of any amendments made subsequent to that date, other than amendments that extend provisions in effect on December 31, 2017, that would otherwise terminate;

and (b) For taxable years beginning on or after January 1, 2019, the Internal Revenue Code in effect on December 31, 2018, exclusive of any amendments made subsequent to that date, other than amendments that extend provisions in Page 14 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 effect on December 31, 2018, that would otherwise terminate;

(17)[(16)] "Limited liability pass-through entity" means any pass-through entity that affords any of its partners, members, shareholders, or owners, through function of the laws of this state or laws recognized by this state, protection from general liability for actions of the entity;

(18)[(17)] "Modified gross income" means the greater of:

(a) Adjusted gross income as defined in 26 U.S.C.

sec.

62, including any amendments in effect on December 31 of the taxable year, and adjusted as follows:

1.

Include interest income derived from obligations of sister states and political subdivisions thereof;

and 2.

Include lump-sum pension distributions taxed under the special transition rules of Pub.

L.

No.

104-188, sec.

1401(c)(2);

or (b) Adjusted gross income as defined in subsection (1) of this section and adjusted to include lump-sum pension distributions taxed under the special transition rules of Pub.

L.

No.

104-188, sec.

1401(c)(2);

(19)[(18)] "Net income":

(a) In the case of taxpayers other than corporations, means the amount calculated in KRS 141.019;

and (b) In the case of corporations, means the amount calculated in KRS 141.039;

(20)[(19)] "Nonresident" means any individual not a resident of this state;

(21)[(20)] "Number of withholding exemptions claimed" means the number of withholding exemptions claimed in a withholding exemption certificate in effect under KRS 141.325, except that if no such certificate is in effect, the number of withholding exemptions claimed shall be considered to be zero;

(22)[(21)] "Part-year resident" means any individual that has established or abandoned Kentucky residency during the calendar year;

Page 15 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 (23)[(22)] "Pass-through entity" means any partnership, S corporation, limited liability company, limited liability partnership, limited partnership, or similar entity recognized by the laws of this state that is not taxed for federal purposes at the entity level, but instead passes to each partner, member, shareholder, or owner their proportionate share of income, deductions, gains, losses, credits, and any other similar attributes;

(24)[(23)] "Payroll period" has the same meaning as in Section 3401(b) of the Internal Revenue Code;

(25)[(24)] "Person" has the same meaning as in Section 7701(a)(1) of the Internal Revenue Code;

(26)[(25)] "Qualified organ donation expenses" means unreimbursed travel expenses, lodging expenses, child care expenses, and lost wages incurred by a taxpayer as a direct result of the taxpayer's donation, while living, of all or part of one (1) or more of the taxpayer's human organs for purposes of being transplanted into another human being;

(27) "Resident" means an individual domiciled within this state or an individual who is not domiciled in this state, but maintains a place of abode in this state and spends in the aggregate more than one hundred eighty-three (183) days of the taxable year in this state;

(28)[(26)] "S corporation" has the same meaning as in Section 1361(a) of the Internal Revenue Code;

(29)[(27)] "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States;

(30)[(28)] "Taxable net income":

(a) In the case of corporations that are taxable in this state, means "net income" as defined in subsection (19)[(18)] of this section;

(b) In the case of corporations that are taxable in this state and taxable in another Page 16 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 state, means "net income" as defined in subsection (19)[(18)] of this section and as allocated and apportioned under KRS 141.120;

(c) For homeowners' associations as defined in Section 528(c) of the Internal Revenue Code, means "taxable income" as defined in Section 528(d) of the Internal Revenue Code.

Notwithstanding the provisions of subsection (15) of this section, the Internal Revenue Code sections referred to in this paragraph shall be those code sections in effect for the applicable tax year;

and (d) For a corporation that meets the requirements established under Section 856 of the Internal Revenue Code to be a real estate investment trust, means "real estate investment trust taxable income" as defined in Section 857(b)(2) of the Internal Revenue Code, except that a captive real estate investment trust shall not be allowed any deduction for dividends paid;

(31)[(29)] "Taxable year" means the calendar year or fiscal year ending during such calendar year, upon the basis of which net income is computed, and in the case of a return made for a fractional part of a year under the provisions of this chapter or under administrative regulations prescribed by the commissioner, "taxable year" means the period for which the return is made;

and (32)[(30)] "Wages" has the same meaning as in Section 3401(a) of the Internal Revenue Code and includes other income subject to withholding as provided in Section 3401(f) and Section 3402(k), (o), (p), (q), and (s) of the Internal Revenue Code.

Section 5.

KRS 141.019 is amended to read as follows:

For taxable years beginning on or after January 1, 2018, in the case of taxpayers other than corporations:

(1) Adjusted gross income shall be calculated by subtracting from the gross income of those taxpayers the deductions allowed individuals by Section 62 of the Internal Revenue Code and adjusting as follows:

(a) Exclude income that is exempt from state taxation by the Kentucky Page 17 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 Constitution and the Constitution and statutory laws of the United States;

(b) Exclude income from supplemental annuities provided by the Railroad Retirement Act of 1937 as amended and which are subject to federal income tax by Pub.

L.

No.

89-699;

(c) Include interest income derived from obligations of sister states and political subdivisions thereof;

(d) Exclude employee pension contributions picked up as provided for in KRS 6.505, 16.545, 21.360, 61.523, 61.560, 65.155, 67A.320, 67A.510, 78.610, and 161.540 upon a ruling by the Internal Revenue Service or the federal courts that these contributions shall not be included as gross income until such time as the contributions are distributed or made available to the employee;

(e) Exclude Social Security and railroad retirement benefits subject to federal income tax;

(f) Exclude any money received because of a settlement or judgment in a lawsuit brought against a manufacturer or distributor of "Agent Orange" for damages resulting from exposure to Agent Orange by a member or veteran of the Armed Forces of the United States or any dependent of such person who served in Vietnam;

(g) 1.

a.

For taxable years beginning after December 31, 2005, but before January 1, 2018, exclude up to forty-one thousand one hundred ten dollars ($41,110) of total distributions from pension plans, annuity contracts, profit-sharing plans, retirement plans, or employee savings plans;

and b.

For taxable years beginning on or after January 1, 2018, exclude up to thirty-one thousand one hundred ten dollars ($31,110) of total distributions from pension plans, annuity contracts, profit- sharing plans, retirement plans, or employee savings plans.

Page 18 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 2.

As used in this paragraph:

a.

"Annuity contract" has the same meaning as set forth in Section 1035 of the Internal Revenue Code;

b.

"Distributions" includes but is not limited to any lump-sum distribution from pension or profit-sharing plans qualifying for the income tax averaging provisions of Section 402 of the Internal Revenue Code;

any distribution from an individual retirement account as defined in Section 408 of the Internal Revenue Code;

and any disability pension distribution;

and c.

"Pension plans, profit-sharing plans, retirement plans, or employee savings plans" means any trust or other entity created or organized under a written retirement plan and forming part of a stock bonus, pension, or profit-sharing plan of a public or private employer for the exclusive benefit of employees or their beneficiaries and includes plans qualified or unqualified under Section 401 of the Internal Revenue Code and individual retirement accounts as defined in Section 408 of the Internal Revenue Code;

(h) 1.

a.

Exclude the portion of the distributive share of a shareholder's net income from an S corporation subject to the franchise tax imposed under KRS 136.505 or the capital stock tax imposed under KRS 136.300;

and b.

Exclude the portion of the distributive share of a shareholder's net income from an S corporation related to a qualified subchapter S subsidiary subject to the franchise tax imposed under KRS 136.505 or the capital stock tax imposed under KRS 136.300.

2.

The shareholder's basis of stock held in an S corporation where the S corporation or its qualified subchapter S subsidiary is subject to the Page 19 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 franchise tax imposed under KRS 136.505 or the capital stock tax imposed under KRS 136.300 shall be the same as the basis for federal income tax purposes;

(i) Exclude income received for services performed as a precinct worker for election training or for working at election booths in state, county, and local primaries or regular or special elections;

(j) Exclude any capital gains income attributable to property taken by eminent domain;

(k) 1.

Exclude all income from all sources for members of the Armed Forces who are on active duty and who are killed in the line of duty, for the year during which the death occurred and the year prior to the year during which the death occurred.

2.

For the purposes of this paragraph, "all income from all sources" shall include all federal and state death benefits payable to the estate or any beneficiaries;

(l) Exclude all military pay received by members of the Armed Forces while on active duty;

(m) 1.

Include the amount deducted for depreciation under 26 U.S.C.

sec.

167 or 168;

and 2.

Exclude the amounts allowed by KRS 141.0101 for depreciation;[ and] (n) Include the amount deducted under 26 U.S.C.

sec.

199A;

and (o) 1.

For taxable years beginning on or after January 1, 2021, and before January 1, 2025, exclude an amount equal to the amount of qualified organ donation expenses incurred by the taxpayer during the taxable year, not to exceed ten thousand dollars ($10,000).

2.

The purpose of the deduction for qualified organ donation expenses provided in subparagraph 1.

of this paragraph is to encourage and Page 20 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 support human organ donation.

3.

The department shall provide to the Interim Joint Committee on Appropriations and Revenue no later than December 1, 2022, and on or before each December 1 thereafter as long as the deduction provided in subparagraph 1.

of this paragraph is claimed on any return filed:

a.

The number of tax returns claiming the deduction for each taxable year;

b.

The total amount of the deductions claimed;

c.

The cumulative total of the reduced tax liability by the type of organ donated;

d.

The cumulative total of the reduced tax liability by county, based on the mailing address on the return claiming the deduction, for each taxable year;

and e.

Based on ranges of adjusted gross income of no larger than five thousand dollars ($5,000), the total amount of the reduced tax liability for each adjusted gross income range for each taxable year;

and (2) Net income shall be calculated by subtracting from adjusted gross income all the deductions allowed individuals by Chapter 1 of the Internal Revenue Code, as modified by KRS 141.0101, except:

(a) Any deduction allowed by 26 U.S.C.

sec.

164 for taxes;

(b) Any deduction allowed by 26 U.S.C.

sec.

165 for losses, except wagering losses allowed under Section 165(d) of the Internal Revenue Code;

(c) Any deduction allowed by 26 U.S.C.

sec.

213 for medical care expenses;

(d) Any deduction allowed by 26 U.S.C.

sec.

217 for moving expenses;

(e) Any deduction allowed by 26 U.S.C.

sec.

67 for any other miscellaneous Page 21 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 deduction;

(f) Any deduction allowed by the Internal Revenue Code for amounts allowable under KRS 140.090(1)(h) in calculating the value of the distributive shares of the estate of a decedent, unless there is filed with the income return a statement that the deduction has not been claimed under KRS 140.090(1)(h);

(g) Any deduction allowed by 26 U.S.C.

sec.

151 for personal exemptions and any other deductions in lieu thereof;

(h) Any deduction allowed for amounts paid to any club, organization, or establishment which has been determined by the courts or an agency established by the General Assembly and charged with enforcing the civil rights laws of the Commonwealth, not to afford full and equal membership and full and equal enjoyment of its goods, services, facilities, privileges, advantages, or accommodations to any person because of race, color, religion, national origin, or sex, except nothing shall be construed to deny a deduction for amounts paid to any religious or denominational club, group, or establishment or any organization operated solely for charitable or educational purposes which restricts membership to persons of the same religion or denomination in order to promote the religious principles for which it is established and maintained;

and (i) A taxpayer may elect to claim the standard deduction allowed by KRS 141.081 instead of itemized deductions allowed pursuant to 26 U.S.C.

sec.

63 and as modified by this section.

Section 6.

KRS 131.190 is amended to read as follows:

(1) No present or former commissioner or employee of the department, present or former member of a county board of assessment appeals, present or former property valuation administrator or employee, present or former secretary or employee of the Finance and Administration Cabinet, former secretary or employee of the Revenue Page 22 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 Cabinet, or any other person, shall intentionally and without authorization inspect or divulge any information acquired by him of the affairs of any person, or information regarding the tax schedules, returns, or reports required to be filed with the department or other proper officer, or any information produced by a hearing or investigation, insofar as the information may have to do with the affairs of the person's business.

(2) The prohibition established by subsection (1) of this section shall not extend to:

(a) Information required in prosecutions for making false reports or returns of property for taxation, or any other infraction of the tax laws;

(b) Any matter properly entered upon any assessment record, or in any way made a matter of public record;

(c) Furnishing any taxpayer or his properly authorized agent with information respecting his own return;

(d) Testimony provided by the commissioner or any employee of the department in any court, or the introduction as evidence of returns or reports filed with the department, in an action for violation of state or federal tax laws or in any action challenging state or federal tax laws;

(e) Providing an owner of unmined coal, oil or gas reserves, and other mineral or energy resources assessed under KRS 132.820, or owners of surface land under which the unmined minerals lie, factual information about the owner's property derived from third-party returns filed for that owner's property, under the provisions of KRS 132.820, that is used to determine the owner's assessment.

This information shall be provided to the owner on a confidential basis, and the owner shall be subject to the penalties provided in KRS 131.990(2).

The third-party filer shall be given prior notice of any disclosure of information to the owner that was provided by the third-party filer;

(f) Providing to a third-party purchaser pursuant to an order entered in a Page 23 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 foreclosure action filed in a court of competent jurisdiction, factual information related to the owner or lessee of coal, oil, gas reserves, or any other mineral resources assessed under KRS 132.820.

The department may promulgate an administrative regulation establishing a fee schedule for the provision of the information described in this paragraph.

Any fee imposed shall not exceed the greater of the actual cost of providing the information or ten dollars ($10);

(g) Providing information to a licensing agency, the Transportation Cabinet, or the Kentucky Supreme Court under KRS 131.1817;

(h) Statistics of gasoline and special fuels gallonage reported to the department under KRS 138.210 to 138.448;

(i) Providing any utility gross receipts license tax return information that is necessary to administer the provisions of KRS 160.613 to 160.617 to applicable school districts on a confidential basis;

(j) Providing documents, data, or other information to a third party pursuant to an order issued by a court of competent jurisdiction;

or (k) Providing information to the Legislative Research Commission under:

1.

KRS 139.519 for purposes of the sales and use tax refund on building materials used for disaster recovery;

2.

KRS 141.436 for purposes of the energy efficiency products credits;

3.

KRS 141.437 for purposes of the ENERGY STAR home and the ENERGY STAR manufactured home credits;

4.

KRS 148.544 for purposes of the film industry incentives;

5.

KRS 154.26-095 for purposes of the Kentucky industrial revitalization tax credits and the job assessment fees;

6.

KRS 141.068 for purposes of the Kentucky investment fund;

7.

KRS 141.396 for purposes of the angel investor tax credit;

Page 24 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 8.

KRS 141.389 for purposes of the distilled spirits credit;

9.

KRS 141.408 for purposes of the inventory credit;[ and] 10.

KRS 141.390 for purposes of the recycling and composting credit;

and 11.

Section 3 of this Act for purposes of the human organ donation tax deduction.

(3) The commissioner shall make available any information for official use only and on a confidential basis to the proper officer, agency, board or commission of this state, any Kentucky county, any Kentucky city, any other state, or the federal government, under reciprocal agreements whereby the department shall receive similar or useful information in return.

(4) Access to and inspection of information received from the Internal Revenue Service is for department use only, and is restricted to tax administration purposes.

Information received from the Internal Revenue Service shall not be made available to any other agency of state government, or any county, city, or other state, and shall not be inspected intentionally and without authorization by any present secretary or employee of the Finance and Administration Cabinet, commissioner or employee of the department, or any other person.

(5) Statistics of crude oil as reported to the Department of Revenue under the crude oil excise tax requirements of KRS Chapter 137 and statistics of natural gas production as reported to the Department of Revenue under the natural resources severance tax requirements of KRS Chapter 143A may be made public by the department by release to the Energy and Environment Cabinet, Department for Natural Resources.

(6) Notwithstanding any provision of law to the contrary, beginning with mine-map submissions for the 1989 tax year, the department may make public or divulge only those portions of mine maps submitted by taxpayers to the department pursuant to KRS Chapter 132 for ad valorem tax purposes that depict the boundaries of mined- out parcel areas.

These electronic maps shall not be relied upon to determine actual Page 25 of 26 BR017900.100 - 179 - XXXX Jacketed UNOFFICIAL COPY 20 RS BR 179 boundaries of mined-out parcel areas.

Property boundaries contained in mine maps required under KRS Chapters 350 and 352 shall not be construed to constitute land surveying or boundary surveys as defined by KRS 322.010 and any administrative regulations promulgated thereto.

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