HB 360 — AN ACT relating to fiscal matters and declaring an emergency.

PageCHAPTER 2192 of11 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN b.

In the case of the sale of the entire, or a substantial portion of the nonretail assets of the seller, the number of previous sales of similar assets shall be disregarded in determining whether or not the current sale or sales shall qualify as an Page 22 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN occasional sale;

(29)[(28)] "Person" includes any individual, firm, copartnership, joint venture, association, social club, fraternal organization, corporation, estate, trust, business trust, receiver, trustee, syndicate, cooperative, assignee, governmental unit or Page 23 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN agency, or any other group or combination acting as a unit;

or Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 2.

Any portion of prewritten computer software that is modified or Page 24 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN enhanced in any manner, where the modification or enhancement is designed and developed to the specifications of a specific purchaser, unless there is a reasonable, separately stated charge on an invoice or other statement of the price to the purchaser for the modification or enhancement.

When performed outside this state or when the customer gives a resale Page 25 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN certificate, the producing, fabricating, processing, printing, or imprinting of tangible personal property for a consideration for consumers who furnish either directly or indirectly the materials used in the producing, fabricating, processing, printing, or imprinting;

CHAPTER 92 13 (37)[(36)] "Recycling purposes" means those activities undertaken in which materials that would otherwise become solid waste are collected, separated, or processed in order to be reused or returned to use in the form of raw materials or products;

Every person engaged in the business of making sales at auction of Page 26 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN tangible personal property or digital property owned by the person or others for storage, use or other consumption, except as provided in paragraph (c) of this subsection;

and Page 27 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN c.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (b) "Ringtones" shall not include ringback tones or other digital files that are not stored on the purchaser's communications device;

Page 28 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (b) "Sale" includes but is not limited to:

(b) "Storage" does not include the keeping, retaining, or exercising any right or power over tangible personal property for the purpose of subsequently transporting it outside the state for use thereafter solely outside the state, or for the purpose of being processed, fabricated, or manufactured into, attached to, or incorporated into, other tangible personal property to be transported Page 29 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN outside the state and thereafter used solely outside the state;

or CHAPTER 92 15 2.

Page 30 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 1.

a.[1.]Sellinga.[1.] Selling tangible personal property or digital property in the regular course of business;

or b.[2.]Subsequentlyb.[2.] Subsequently transporting tangible personal property outside the state for use thereafter solely outside the state, or for the purpose of being processed, fabricated, or manufactured into, attached to, or incorporated into, other tangible personal property to be transported outside the state and thereafter used solely outside the state;

(a) 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, or any other place in which rooms, lodgings, Page 31 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN campsites, or accommodations are regularly furnished to transients for a consideration.

Page 32 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (g) Landscaping services, including but not limited to:

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 1.

Page 33 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (t)[(u)] Lobbying services;

CHAPTER 92 17 (ae)[(af)] Personal background check services;

(ai)[(aj)] Rental of space for meetings, conventions, short-term business uses, Page 34 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN entertainment events, weddings, banquets, parties, and other short-term social events;

Required by a federal, state, or local statute, regulation, court order, or other government-relatedgovernment- related requirement;

and Page 35 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (ax)[(ay)] Prewritten computer software access services.

For the purpose of the proper administration of this chapter and to prevent evasion of the duty to collect the taxes imposed by KRS 139.200 and 139.310, it shall be presumed that all gross receipts and all tangible personal property, Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY digital property, and services sold by any person for delivery or access in this state are subject to the tax until the contrary is established.

or (b) Tangible personal property to a purchaser claiming an agriculture exemption under KRS 139.480(4) to (9), (11), (13) to (15), [or ](23) to (30), or (33) unless the person obtains from the purchaser an agriculture exemption license number or a fully completed Streamlined Sales and Use Tax Agreement Certificate of Exemption that contains an agriculture exemption license Page 36 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN number in accordance with KRS 139.270;

(1) Except as provided in KRS 139.470 and 139.480, every retailer engaged in business in this state shall collect the tax imposed by KRS 139.310 from the purchaser and give to the purchaser a receipt therefor in the manner and form prescribed by the Page 37 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN department.

CHAPTER 92 19 (b) Any retailer having any representative, agent, salesman, canvasser, or solicitor operating in this state under the authority of the retailer or its subsidiary for the purpose of selling, delivering, or the taking of orders for any tangible personal property, digital property, or any services subject to tax under KRS 139.200(2)(p) to (ax)[(ay)].

(c) Any retailer soliciting orders for tangible personal property, digital property, or any services subject to tax under KRS 139.200(2)(p) to (ax)[(ay)] from residents of this state on a continuous, regular, or systematic basis in which the solicitation of the order, placement of the order by the customer or the Page 38 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN payment for the order utilizes the services of any financial institution, telecommunication system, radio or television station, cable television service, print media, or other facility or service located in this state;

(f) Any retailer located outside Kentucky that uses a representative in Kentucky, either full-time or part-time,part- time, if the representative performs any activities that help establish or maintain a marketplace for the retailer, including receiving or exchanging returned merchandise;

The remote retailer's gross receipts derived from the sale of tangible personal property or digital property delivered or transferred electronically to a purchaser in this state in the previous Page 39 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN calendar year or current calendar year exceeds one hundred thousand dollars ($100,000).

PageLegislative 40Research ofCommission 174PDF HB036020.100Version -ACTS 1414OF -THE XXXXGENERAL 3/16/2023ASSEMBLY 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (4) Gross receipts from sales of tangible personal property to a common carrier, shipped by the retailer via the purchasing carrier under a bill of lading, whether the freight is paid in advance or the shipment is made freight charges collect, to a point outside this state and the property is actually transported to the out-of-state destination for use by the carrier in the conduct of its business as a common carrier;

"Place of domicile" means the place where an individual has his or her Page 41 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN legal, true, fixed, and permanent home and principal establishment, and to which, whenever the individual is absent, the individual has the intention of returning.

Page 42 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 2.

CHAPTER 92 21 2.

This group is limited to hand tools such as jigs, dies, drills, cutters, rolls, reamers, chucks, saws, and spray guns Page 43 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN and to tools attached to a machine such as molds, grinding balls, grinding wheels, dies, bits, and cutting blades.

(11) Gross receipts from the sale of newspaper inserts or catalogs purchased for storage, use, or other consumption outside this state and delivered by the retailer's own vehicle to a location outside this state, or delivered to the United States Postal Page 44 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN Service, a common carrier, or a contract carrier for delivery outside this state, regardless of whether the carrier is selected by the purchaser or retailer or an agent or representative of the purchaser or retailer, or whether the F.O.B.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (a) As used in this subsection, "metal retail fixtures" means check stands and belted and nonbelted checkout counters, whether made in bulk or pursuant to specific purchaser specifications, that are to be used directly by the purchaser or to be distributed by the purchaser.

(b) The retailer shall be responsible for establishing that delivery was made to a non-Kentucky location through shipping documents or other credible Page 45 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN evidence as determined by the department;

or Page 46 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (b) Sold to a nonresident of Kentucky if the nonresident registers the motor vehicle in a state that:

(23) (a) For persons selling services included in KRS 139.200(2)(g) to (p) prior to January 1, 2019, gross receipts derived from the sale of those services if the Page 47 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN gross receipts were less than six thousand dollars CHAPTER 92 23 ($6,000) during calendar year 2018.

(b) For persons that first begin making sales of services included in KRS 139.200(2)(q) to (ax)[(ay)] on or after January 1, 2023, gross receipts derived Page 48 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN from the sale of those services if the gross receipts are less than six thousand dollars ($6,000) within the first calendar year of operation.

(b) Cost of production shall be computed on the basis of a plant facility, which shall include all operations within the continuous, unbroken, integrated manufacturing or industrial processing process that ends with a product Page 49 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN packaged and ready for sale.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (d) For plant facilities that begin tolling operations after July 1, 2018, the costs of tangible personal property shall be excluded from the toller's cost of production if the toller:

Maintains accounting records that show the expenses it incurs to fulfill the binding contract that include but are not limited to energy or energy-energy-producing producing fuels, materials, labor, procurement, depreciation, maintenance, taxes, administration, and office expenses;

A business purpose is a purpose other than the reduction of sales tax Page 50 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN liability for the purchases of energy and energy-producing fuels;

Page 51 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (10) Machinery for new and expanded industry;

CHAPTER 92 25 2.

The exemption shall apply but not be limited to vent board equipment, waterer and feeding systems, brooding systems, ventilation systems, alarm systems, Page 52 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN and curtain systems.

Page 53 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (19) Any property which has been certified as a fluidized bed energy production facility as defined in KRS 211.390;

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (22) Machinery or equipment purchased or leased by a business, industry, or organization in order to collect, source separate, compress, bale, shred, or otherwise handle waste materials if the machinery or equipment is primarily used for recycling purposes;

(23) Ratite birds and eggs to be used in an agricultural pursuit for the breeding and production of ratite birds, feathers, hides, breeding stock, eggs, meat, and ratite by-by-products, products, and the following items used in this agricultural pursuit:

Page 54 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (b) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals;

In addition, the exemption shall apply whether or not the seller is under contract to deliver, assemble, and incorporate into real estate the equipment, machinery, attachments, repair and replacement parts, and any materials incorporated into Page 55 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN the construction, renovation, or repair of the facilities;

CHAPTER 92 27 (a) Feed and feed additives;

Page 56 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (c) Insecticides, fungicides, herbicides, rodenticides, and other farm chemicals;

(31) (a) Repair or replacement parts for the direct operation or maintenance of a motor Page 57 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN vehicle, including any towed unit, used exclusively in interstate commerce for the conveyance of property or passengers for hire, provided the motor vehicle is licensed for use on the highway and its declared gross vehicle weight with any towed unit is forty-four thousand and one (44,001) pounds or greater.

Page 58 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN a.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY e.

Page 59 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (c) The exemption provided in this subsection shall apply without regard to the payment arrangement between the construction contractor, the retailer, and the entities listed in paragraph (a)1.

(a) Regularly engaged in the occupation of tilling and cultivating the soil for the Page 60 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN production of crops as a business;

CHAPTER 92 29 (3) (a) On and after January 1, 2023, persons that receive an agriculture exemption license number and choose to claim the exemptions outlined in subsection (1) of this section shall, at least one (1) time, provide the seller or retailer from whom they purchase exempt tangible personal property with one (1) of the following:

(4) (a) The department, by administrative regulation, shall develop an application form for the agriculture exemption license number and procedures by which the application form may also be submitted either electronically or by paper Page 61 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN filing.

The department shall, by Page 62 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN administrative regulation, prescribe the electronic process for renewing an agriculture exemption license number.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 2.

Page 63 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN b.

or Page 64 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 2.

and (d) Binding upon all individual partners, members, or shareholders of the pass-pass-through through entity.

CHAPTER 92 31 (c) Nonrefundable;

(4) The pass-through entity shall report to each individual partner, member, or shareholder the individual's proportionate share of the tax paid by the pass-pass-through through entity for the taxable year and for purposes of the pass-through entity tax credit created in subsection (3) of this section.

(1) "Adjusted gross income," in the case of taxpayers other than corporations, means Page 65 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN the amount calculated in KRS 141.019;

"Owned or constructively owned" means owning shares or having an ownership interest in the real estate investment trust, or owning an interest in an entity that owns shares or has an ownership Page 66 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN interest in the real estate investment trust.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (8) "Dependent" means those persons defined as dependents in the Internal Revenue Code;

(a) That has no presence in the state and conducts no business in the state, except Page 67 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN for disaster or emergency-related work during a disaster response period;

Page 68 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 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.

3101 in effect on December 31, 1997;

CHAPTER 92 33 (18) "Fiscal year" has the same meaning as in Section 7701(a)(24) of the Internal Page 69 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN Revenue Code;

Page 70 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (a) In the case of taxpayers other than corporations, means the amount calculated in KRS 141.019;

Page 71 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (33) "S corporation" has the same meaning as in Section 1361(a) of the Internal Revenue Code;

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (35) "Taxable net income":

and (37) "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) Page 72 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN and Section 3402(k), (o), (p), (q), and (s) of the Internal Revenue Code.

116-116-260, 260, secs.

(b) Exclude income from supplemental annuities provided by the Railroad Page 73 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN Retirement Act of 1937 as amended and which are subject to federal income tax by Pub.

CHAPTER 92 35 (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;

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-profit-sharing sharing plans, retirement plans, or employee savings plans.

"Annuity contract" has the same meaning as set forth in Section Page 74 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 1035 of the Internal Revenue Code;

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 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 Page 75 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN income tax purposes;

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (o) Ignore any change in the cost basis of the surviving spouse's share of property owned by a Kentucky community property trust occurring for federal income tax purposes as a result of the death of the predeceasing spouse;[ and] (p) Allow the same treatment allowed under Pub.

and Page 76 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (q) For taxable years beginning on or after January 1, 2020, but before March 11, 2023, allow the same treatment of restaurant revitalization grants in accordance with Pub.

(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, Page 77 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 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;

PageCHAPTER 7892 of37 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (g) Include the amount of deprecation deduction calculated under 26 U.S.C.

Page 79 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 4.

Any dividends-paid deduction of any captive real estate investment Page 80 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN trust;

and Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY b.

For ten (10) years beginning with the combined group's first taxable year beginning on or after January 1, 2024, a combined group shall be entitled to a deduction from the combined group's entire net income equal to one-tenth (1/10) of the amount necessary to offset the increase in the net deferred tax liability, decrease in the net deferred tax asset, or Page 81 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN aggregate change from a net deferred tax asset to a net deferred tax liability.

If the deduction under this section is greater than the combined group's entire Kentucky net income, Page 82 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN any excess deduction shall be carried forward and applied as a deduction to the combined group's entire net income in future taxable years until fully utilized.

CHAPTER 92 39 b.

"GF appropriations" means the authorization by the General Assembly Page 83 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN to expend GF moneys, excluding:

and c.[b.]Anyc.[b.] Any lump-sum appropriation to a state-administered retirement system, as defined in KRS 7A.210, that is in excess of the appropriations specifically budgeted to meet the recurring statutorily required contributions or recurring actuarially determined contributions for a state-administered retirement system under KRS 21.525, 61.565, 61.702, 78.635, 78.5536, or 161.550, as applicable;

The balance in the BRTF at the end of a fiscal year shall be equal to or greater than ten percent (10%) of the GF moneys for that Page 84 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN fiscal year;

2.[1.][Beginning2.[1.] [Beginning no later than September 1, 2022, the department, with assistance from ]The Office of State Budget Director[,] shall review the reduction conditions for the fiscal year 2022-2023 no later than September 1, 2023[as they apply to fiscal year 2020-2021 and fiscal year 2021-2022 and make a determination if the reduction conditions have been met for each fiscal year].

3.[2.]After3.[2.] After reviewing the reduction conditions under subparagraph 2.[1.] of this paragraph, the Office of State Budget Director[department] shall, [:

and PageLegislative 85Research ofCommission 174PDF HB036020.100Version -ACTS 1414OF -THE XXXXGENERAL 3/16/2023ASSEMBLY 11:06b.[ii.] PMThe Engrossed UNOFFICIAL COPY 23 RS HB 360/EN b.[ii.]The amounts associated with each item within the reduction conditions used for making that determination[;

If the reduction conditions have been met for fiscal year 2022-2022-2023, 2023, the General Assembly may take action to reduce the rate in paragraph (c) of this subsection for the taxable year beginning January 1, 2025.

a.[(c)1.]a.[(c) 1.] The Office of State Budget Director[department] shall implement an annual process to review and report future reduction conditions at the same time and in the same manner for each fiscal year subsequent to the fiscal year 2022-2023 and each taxable year subsequent to the taxable year beginning January 1, 2025.

The annual process shall continue until the income tax rate is zero[as under paragraph (b) of this subsection, except that the department shall use the next succeeding year related to the dates for review and reporting and the next succeeding fiscal year data Page 86 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN to evaluate the reduction conditions].

For taxable years beginning on or after January 1, 2014, and Page 87 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN before January 1, 2018, ten dollars ($10) for an unmarried individual;

or forty dollars ($40) for married persons filing a CHAPTER 92 41 joint return, provided neither spouse is the dependent of another taxpayer.

and Page 88 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN b.

However, in the case of a married nonresident taxpayer with Page 89 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN income from Kentucky sources, whose spouse has no income from Kentucky sources, the taxpayer shall determine allowable tax credit(s) by either:

A nonresident individual shall be taxable only upon the amount of income received by the individual from labor performed, business done, or from other activities in this state, from tangible property located in this state, and from intangible property which Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY has acquired a business situs in this state;

For taxable years beginning on or after January 1, 2021, but before January 1, 2025, the tax imposed by this section shall not apply to a disaster response employee or to a disaster Page 90 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN response business.

(b) The economic development credits computed under KRS 141.347, 141.381, 141.384, 141.3841, 141.400, 141.401, 141.403, 141.407, 141.415, 154.12-154.12-207, 207, and 154.12-2088;

Page 91 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (j) The research facilities credit permitted by KRS 141.395;

CHAPTER 92 43 (2) After the application of the nonrefundable credits in subsection (1) of this section, the nonrefundable personal tax credits against the tax imposed by KRS 141.020 shall be taken in the following order:

(e) The income gap credit permitted by KRS 141.066;[ and] (f) The Education Opportunity Account Program tax credit permitted by KRS Page 92 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 141.522;

(a) The economic development credits computed under KRS 141.347, 141.381, 141.384, 141.3841, 141.400, 141.401, 141.403, 141.407, 141.415, 154.12-154.12-207, 207, and 154.12-2088;

Page 93 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (h) The enterprise zone credit permitted by KRS 154.45-090, for taxable periods ending prior to January 1, 2008;

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (p) The cellulosic ethanol credit permitted by KRS 141.4244;

and (aa) The Education Opportunity Account Program tax credit permitted by KRS Page 94 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 141.522.

The exemption authorized by this subsection shall in no manner preclude the department[ of Revenue] from requiring any information reports under[pursuant to] Page 95 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN KRS 141.150(2).

(4) Any resident individual that is a partner, member, or shareholder of a pass-pass-through through entity doing business in another state in which the tax is assessed and paid at the entity level shall be allowed a credit in accordance with subsection (1) of this section.

CHAPTER 92 45 (2) (a) Pass-through entities shall calculate net income in the same manner as in the case of an individual under KRS 141.019 and the adjustment required under Sections 703(a) and 1363(b) of the Internal Revenue Code.

(a) For S corporations under KRS 141.040;[ and] Page 96 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (b) For a partnership level audit under KRS 141.211;

If a partner, member, or shareholder who has been exempted from Page 97 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN withholding does not file a return or pay the tax due, the department may require the pass-through entity to pay to the department the amount that should have been withheld, up to the amount of the partner's, member's, or shareholder's ownership interest in the entity.

If the pass-through entity is doing business only in this state, the partner's, member's, or shareholder's total distributive share of the pass-pass-through through entity's items of income, loss, and deduction;

If the pass-through entity is doing business both within and without this state, the partner's, member's, or shareholder's distributive share of the pass-through entity's items of income, loss, Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY and deduction multiplied by the apportionment fraction of the pass-through entity as prescribed in subsection (11) of this section;

Page 98 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (a) 1.

For taxable years beginning on or after January 1, 2007, but prior to January 1, 2018, shall include the proportionate share of the sales, property, and payroll of the limited liability pass-throughpass- through entity or general partnership in computing its own apportionment factor;

(d) The attribution to the pass-through entity of the pro rata share of property, payroll and sales from its role as a partner or member in another pass-through entity will also apply when determining the pass-throughpass- through entity's ultimate Page 99 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN apportionment factor for property, payroll and sales as required under subsection (11) of this section.

(11) (a) For taxable years beginning prior to January 1, 2018, a pass-through entity doing business within and without the state shall compute an apportionment fraction, the numerator of which is the property factor, representing twenty-twenty-five five percent (25%) of the fraction, plus the payroll factor, representing twenty-five percent (25%) of the fraction, plus the sales factor, representing fifty percent (50%) of the fraction, with each factor determined in the same manner as provided in KRS 141.901, and the denominator of which is four (4), reduced by the number of factors, if any, having no denominator, provided that if the sales factor has no denominator, then the denominator shall be reduced by two (2).

For purposes of this subsection, a "qualified investment partnership" means a pass-through entity that, during Page 100 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN the taxable year, holds only investments that produce income that would not be taxable to a nonresident individual if held or owned individually.

CHAPTER 92 47 (b) A qualified investment partnership shall be subject to all other provisions relating to a pass-through entity under this section and shall not be subject to the tax imposed under KRS 141.040 or 141.0401.

Page 101 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (c) The authorities granted by KRS 148.851 to 148.860 are proper governmental and public purposes for which public moneys may be expended;

In any year, including the first year of operation, the entertainment Page 102 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN destination center project shall:

Maintain at least one (1) major theme restaurant and at least three (3) additional entertainment venues, including but not limited to live entertainment, multiplex theaters, large-format theater, motion simulators, family entertainment centers, concert halls, Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY virtual reality or other interactive games, museums, exhibitions, or other cultural and leisure-time activities;

and Page 103 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 4.

(e) Any tourism development project shall not be eligible for incentives if it Page 104 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN includes material determined to be lewd, offensive, or deemed to have a negative impact on the tourism industry in the Commonwealth;

and CHAPTER 92 49 (b) 1.

The sales tax incentive shall not exceed the lesser of the total amount of the sales tax liability of the approved company and its lessees or a percentage of the approved costs as specified by the Page 105 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN agreement, not to exceed thirty percent (30%);

The term of a tourism development agreement entered into with a tourism attraction project that was in effect on January 1, 2020, shall Page 106 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN be extended for one (1) year if the tourism attraction project:

Failed to be open to the public at least one hundred (100) days during the calendar year 2020 solely as a result of complying with one (1) or more executive orders issued by the Governor under the authority of KRS 39A.090 that prevented the tourism attraction project from being open to the public for at least one hundred (100) days during its normal operating season;

and Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY d.

and (b) For signature projects approved under KRS 154.30-050(2)(a), the date Page 107 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN established any time within a ten (10) year period after the commencement date.

Page 108 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (f) Street lighting;

and CHAPTER 92 51 (p) Riverbank modifications and improvements;

(a) Obligations incurred for labor and to contractors, subcontractors, builders, and materialmen in connection with the acquisition, construction, installation, Page 109 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN equipping, and rehabilitation of a project;

(11) "CPI" means the nonseasonally adjusted Consumer Price Index for all urban consumers, all items, base year computed for 1982 to 1984 equals one hundred Page 110 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (100), published by the United States Department of Labor, Bureau of Labor Statistics;

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (17) "Governing body" means the body possessing legislative authority in a city or county;

or (b) The amount of revenues received by the Commonwealth as determined by subtracting old revenues from new revenues in a calendar year with respect to Page 111 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN the footprint;

(a) The amount of local tax revenues received by a taxing district with respect to Page 112 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN a development area as of December 31 of the year of preliminary approval;

CHAPTER 92 53 (26)[(24)] "Outstanding" means increment bonds that have been issued, delivered, and paid for by the purchaser, except any of the following:

(a) Increment bonds canceled upon surrender, exchange, or transfer, or upon Page 113 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN payment or redemption;

and (d) Meeting the additional requirements established by KRS 154.30-040, 154.30-154.30-050, 050, or 154.30-060;

(30)[(28)] "State real property ad valorem tax" means real property ad valorem taxes Page 114 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN levied under KRS 132.020(1)(a);

However, the termination date for a tax incentive agreement shall in no event be more than forty Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (40) years from the establishment date of the development area to which Page 115 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN the tax incentive agreement relates;

and (d) "Qualifying decontamination property" includes qualifying voluntary environmental remediation property as defined in KRS 141.418 and shall also Page 116 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN include real property under the Brownfield Redevelopment Program as established in KRS 224.1-415, if the guidelines in KRS 141.418(1)(e) are met.

Page 117 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 2.

CHAPTER 92 55 (5) The decontamination or remediation shall not be financed through a public grant program or the petroleum storage tank environmental assurance fund under KRS 224.60-115.

The projected amount of total capital investment and qualifying Page 118 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN expenditures associated with the property.

Page 119 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (a) One (1) private director representing the interests of financial lending institutions located within the Commonwealth;

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (d) One (1) private director representing the interests of the homeless population within the Commonwealth;

(6) The Governor may remove any private director whom he or she may appoint in Page 120 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN case of incompetency, neglect of duty, gross immorality, or malfeasance in office, and the Governor[he] may declare the[his] office vacant and may appoint a person for the vacancy as provided in this section.

(11) Action shall be taken by the corporation upon a vote of a majority of the directors Page 121 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN present at a meeting at which a quorum shall exist called upon three (3) days' written notice to each director or upon the concurrence of at least eight (8) directors.

and CHAPTER 92 57 (4) "Trust fund" means the rural housing trust fund created in Section 31 of this Act.

and (3) It is in the public interest to establish a continuously renewable resource known as a rural housing trust fund to assist moderate income individuals in meeting Page 122 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN basic housing needs.

(a) Acquisition of housing units for the purpose of preservation of or Page 123 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN conversion to rural housing units;

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (4) Housing units provided to moderate income individuals or families under Sections 29 to 34 of this Act shall be deed restricted under the following conditions:

(5) In the development of rural housing under Sections 29 to 34 of this Act, displacement of moderate income individuals or families shall not be permitted Page 124 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN unless the project pays all reasonable relocation costs as defined by the corporation in administrative regulations promulgated under KRS Chapter 13A.

(b) All repayment, interest, or other return on the investment of trust fund moneys are required to be returned to the trust fund and used for eligible trust fund activities in accordance with Sections 29 to 34 of this Act.

(3) After consultation with the Rural Housing Trust Fund Advisory Committee created in Section 34 of this Act, approve or deny properly submitted and Page 125 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN completed applications within ninety (90) days of their receipt;

CHAPTER 92 59 (7) Provide technical assistance to eligible recipients seeking to construct, rehabilitate, or finance housing-relatedhousing- related services for moderate income individuals.

Page 126 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (d) Maximizing local government contributions to project development in the form of land donations, infrastructure improvements, waivers of development fees, local and state managed funds, zoning variances, density bonuses for low-rise multifamily projects, or creative local planning;

(b) A vacancy on the advisory committee shall be filled following the Page 127 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN requirements and procedures for original appointments.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (1) On or before April 1 of each odd-numbered year, representatives designated by the Governor, the Chief Justice, and the Legislative Research Commission for their respective branches shall propose drafts of uniform forms to be used by all budget units in submitting their budget estimates, requests and recommendations, and shall recommend to the Legislative Research Commission such rules and regulations Page 128 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN deemed necessary for the preparation of such budget estimates, requests and recommendations.

(3) (a) On or before August 15 of each odd-numbered year, each of the state-state-administered administered retirement systems as defined by KRS 6.350(5) shall submit to the state budget director's office and the Legislative Research Commission a preliminary projection of the actuarially required contribution rates payable for the budget biennium that begins in the following fiscal year.

(b) On or before October 1[November 15] of each odd-numbered year, the state-state-administered administered retirement systems as defined by KRS 6.350(5) shall submit revised projections to the state budget director's office and the Legislative Research Commission, based upon the most recently completed actuarial valuation, of the actuarially required contribution rates payable for the budget biennium that begins in the following fiscal year.

(5) Upon request, the Finance and Administration Cabinet shall provide such additional Page 129 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN assistance to each branch of government as may be required.

and[ to] (4) The Legislative Research Commission[, not later than November 15 of each odd-odd-numbered numbered year].

(b) The statements of income and estimated income shall be itemized by budget Page 130 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN unit and fund, and shall show separately receipts from:

CHAPTER 92 61 1.

Page 131 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (a) Recommendations of the branch of government for appropriations for the next two (2) fiscal years, and drafts of such revenue and other acts as may be recommended for implementing the proposed financial plan;

A recommended state capital projects program and a recommended Page 132 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN program for the purchase of major items of equipment.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY i.

Page 133 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 5.

The sum of existing appropriation-supported debt and recommended new appropriation-supportedappropriation- supported debt, as a percentage of estimated state total personal income.

Page 134 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN iii.

The branch budget bill for the executive branch shall contain only a complete list of each specific item of major equipment recommended for purchase during CHAPTER 92 63 the biennium and, for each item, the information specified in subparagraph 6.b.iii., iv., and v.

The Governor shall have ten (10) working days after submission of the branch budget recommendation and the recommended biennial highway construction plan to submit the six (6) Page 135 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN year road plan.

(b) Any potential consequences of the analysis and projections for the Page 136 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN Commonwealth's fiscal condition;

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (4) Appropriations made in the branch budget bills enacted for each branch of government shall be based upon the official revenue estimates presented to the Legislative Research Commission[General Assembly] by the Office of State Budget Director under subsection (3) of this section, as modified by the General Assembly.

In addition to the requirements set forth in this chapter, the standing[appropriations] Page 137 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN committees of each house or interim joint committees of the Legislative Research Commission, as appropriate, may require additional information and shall[may] prescribe the form in which such additional information shall be submitted as a part of, or in support of, a branch budget recommendation.

Each[ program] cabinet, the Department for Local Government, the Department of Military Affairs, and the Commonwealth Office of Technology shall develop and submit a four (4) year strategic plan to meet the broad goals outlined by the Governor and shall submit an electronic copy of the full plan and an electronic copy of a brief summary of that plan to the state budget director, the secretary of the Executive Cabinet, and the Page 138 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN Legislative Research Commission with each biennial budget request.

CHAPTER 92 65 (3) The state budget director shall designate an entity to develop and implement a methodology for strategic planning and progress reporting for use by[ program] cabinets and administrative entities submitting strategic plans and progress reports Page 139 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN pursuant to this section.

Page 140 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (a) The submission of budget unit requests and branch budget recommendations;

The Finance and Administration Cabinet selection committee established by KRS 45A.810 shall meet at least quarterly during each fiscal year to review and make recommendations to the commissioner of the Department for Facilities Management for qualification of Page 141 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN interested firms.

and Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 3.

(3) Notwithstanding any provision of the Kentucky Revised Statutes, no price contract Page 142 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN shall be awarded under the provisions of this section before completion of the review procedure provided for in KRS 45A.695 and 45A.705.

Semitrailers or trailers required to be registered under KRS 186.655 that are used only in this state shall be subject to the ad valorem tax imposed by KRS Page 143 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 132.487;

CHAPTER 92 67 1.

Page 144 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN Section 46.

Page 145 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (e) Five cents ($0.05) upon each one hundred dollars ($100) of value of goods held for sale in the regular course of business, which includes:

PageLegislative 146Research ofCommission 174PDF HB036020.100Version -ACTS 1414OF -THE XXXXGENERAL 3/16/2023ASSEMBLY 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 2.

81, provided that the zone is activated in Page 147 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN accordance with the regulations of the United States Customs Service and the Foreign Trade Zones Board;

(3) By July 1 each year, the department shall compute the state tax rate applicable to real property for the current year in accordance with the provisions of subsection (2) of this section and certify the rate to the county clerks for their use in preparing Page 148 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN the tax bills.

CHAPTER 92 69 (b) The revenue from property which is subject to tax increment financing pursuant to KRS Chapter 65;

and (c) The revenue from leasehold property which is owned and financed by a tax-tax-exempt exempt governmental unit, or tax-exempt statutory authority under the provisions of KRS Chapter 103 and entitled to the reduced rate of one and one-half cents ($0.015) pursuant to subsection (1) of this section;

The calculated rate shall, however, be applied to unmined coal property, and the state revenue shall be devoted to the program described in KRS 146.550 to 146.570, except that four Page 149 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN hundred thousand dollars ($400,000) of the state revenue shall be paid annually to the State Treasury and credited to the Office of Energy Policy for the purpose of public education of coal-related issues.

They shall be exempt from taxation for state purposes to the extent of the value, or amount, of any unpaid nonrecourse Page 150 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN loans thereon granted by the United States government or any agency thereof, and except that cities and counties may each impose an ad valorem tax of not exceeding one and one-half cents ($0.015) on each one hundred dollars ($100) of the fair cash value of all unmanufactured tobacco and not exceeding four and one-half cents ($0.045) on each one hundred dollars ($100) of the fair cash value of all other unmanufactured agricultural products, subject to taxation within their limits that are not actually on hand at the plants of manufacturing concerns for the purpose of manufacture, nor in the hands of the producer or any agent of the producer to whom the products have been conveyed or assigned for the purpose of sale;

(5)[(7)] All privately owned leasehold interest in industrial buildings, as defined under KRS 103.200, owned and financed by a tax-exempt governmental unit, or tax-tax-exempt exempt statutory authority under the provisions of KRS Chapter 103, except that the rate shall not apply to the proportion of value of the leasehold interest created through any private financing;

In the case of tangible personal property certified as a pollution control facility which is incorporated into a landfill facility, the tangible personal property shall be presumed to remain tangible Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY personal property for purposes of this subsection if the tangible personal property is being used for its intended purposes;[ (9) Property which has been certified as an alcohol production facility as defined in KRS 247.910;] (7)[(10)] On and after January 1, 1977, the assessed value of unmined coal shall be included in the formula contained in KRS 132.590(9) in determining the amount of county appropriation to the office of the property valuation administrator;[ (11) Tangible personal property located in a foreign trade zone established pursuant to 19 U.S.C.

81, provided that the zone is activated in accordance with the Page 151 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN regulations of the United States Customs Service and the Foreign Trade Zones Board;] (8)[(12)] Motor vehicles qualifying for permanent registration as historic motor vehicles under the provisions of KRS 186.043.

(13)[(18)] Aircraft not used in the business of transporting persons or property for Page 152 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN compensation or hire if an exemption is approved by the county, city, school, or other taxing district in which the aircraft has its taxable situs;

(16)[(21)] Qualifying voluntary environmental remediation property for a period of three (3) years following the Energy and Environment Cabinet's issuance of a No Further Action Letter or its equivalent, pursuant to the correction of the effect of all known releases of hazardous substances, pollutants, contaminants, petroleum, or petroleum products located on the property consistent with a corrective action plan approved by the Energy and Environment Cabinet pursuant to KRS 224.1-400, 224.1-405, or 224.60-135, and provided the cleanup was not financed through a public grant Page 153 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN program of the petroleum storage tank environmental assurance fund;

CHAPTER 92 71 (17)[(22)] Biotechnology products held in a warehouse for distribution by the manufacturer or by an affiliate of the manufacturer.

(2) The department may relieve certain retailers from the requirement in[provisions of] subsection (1) of this section of separate display of the tax when the circumstances Page 154 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN of the retailer make compliance impracticable.

Page 155 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (a) Any vehicle that is propelled by other than muscular power and that is used for transportation of persons or property over the public highways of the state, except road rollers, mopeds, vehicles that travel exclusively on rails, and vehicles propelled by electric power obtained from overhead wires;

or Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (b) Recreational vehicles;

and (c) The value of any items that are not equipment or accessories including but not Page 156 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN limited to extended warranties, service contracts, and items that are given away as part of a promotional sales campaign;

Page 157 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (16) (a) "Retail price" for:

means the total consideration given, excluding any amount allowed as a trade-trade-in in allowance by the seller, as attested to in a notarized affidavit, provided that the retail price established by the notarized affidavit shall not be less than fifty percent (50%) of the difference between the trade-in value, as established by the reference manual, of the motor vehicle offered for registration and the trade-in value, CHAPTER 92 73 as established by the reference manual, of any motor vehicle offered in trade as part of the total consideration given.

Page 158 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (19) "Retail price" for motor vehicles titled pursuant to KRS 186A.520, 186A.525, 186A.530, or 186A.555 means the total consideration given as attested to in a notarized affidavit;

any person who has had his or her actual or habitual place of abode in this state for the larger portion of the twelve (12) months next preceding the date as of which an assessment is due to be made Page 159 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN shall be deemed to have intended to become a resident of this state;

(6) "Compensating tax rate" means that rate which, rounded to the next higher one-one-tenth tenth of one cent ($0.001) per one hundred dollars ($100) of assessed value and applied to the current year's assessment of the property subject to taxation by a taxing district, excluding new property and personal property, produces an amount of revenue approximately equal to that produced in the preceding year from real property.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (a) The total valuation of property subject to taxation by the county, city, school district, or special district in the preceding year, less the total valuation exempted from taxation by the homestead exemption provision of the Constitution in the current year over that exempted in the preceding year;

however, this definition shall not apply to property acquired through the merger or consolidation of school districts, or the Page 160 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN transfer of property from one (1) school district to another;

(a) Any tract of land, including all income-producing improvements, of at least ten (10) contiguous acres in area used for the production of livestock, Page 161 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN livestock products, poultry, poultry products and/or the growing of tobacco and/or other crops including timber;

CHAPTER 92 75 (e) Row crop capability including allotted crops other than tobacco;

(12) "Deferred tax" means the difference in the tax based on agricultural or horticultural Page 162 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN value and the tax based on fair cash value;

(17) "Mobile home" means a structure manufactured on or before June 15, 1976, that was not required to be constructed in accordance with the National Manufactured Housing Construction and Safety Standards Act, transportable in one (1) or more sections, which when erected on site measures eight (8) body feet or more in width and thirty-two (32) body feet or more in length, and which is built on a permanent chassis and designed to be used as a dwelling, with or without a permanent Page 163 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN foundation, when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein.

(18) "Modular home" means a structure which is certified by its manufacturer as being constructed in accordance with all applicable provisions of the Kentucky Building Code and standards adopted by the local authority which has jurisdiction, transportable in one (1) or more sections, and designed to be used as a dwelling on a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning,air- conditioning, and electrical systems contained therein;

(b) "Camping trailer" means a vehicular portable unit mounted on wheels and constructed with collapsible partial side walls which fold for towing by Page 164 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN another vehicle and unfold at the camp site to provide temporary living quarters for recreational, camping, or travel use;

and Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (d) "Motor home" means a vehicular unit designed to provide temporary living quarters for recreational, camping, or travel use built on or permanently attached to a self-propelled motor vehicle chassis or on a chassis cab or van which is an integral part of the completed vehicle;

(d) The property owner is in compliance with all land use restrictions and does Page 165 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN not impede the effectiveness or integrity of any institutional control;

Page 166 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (28) "Special purpose governmental entity" shall have the same meaning as in KRS 65A.010, and as used in this chapter shall include only those special purpose governmental entities with the authority to levy ad valorem taxes, and that are not specifically exempt from the provisions of this chapter by another provision of the Kentucky Revised Statutes;

CHAPTER 92 77 (30) "Livestock" means cattle, sheep, swine, goats, horses, alpacas, llamas, buffaloes, and any other animals of the bovine, ovine, porcine, caprine, equine, or camelid species;

(a) Primarily used and designed for construction, mining, forestry, or industrial purposes, including but not limited to cranes, earthmoving equipment, well-well-drilling Page 167 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN drilling machinery and equipment, lifts, material handling equipment, pumps, generators, and pollution-reducing equipment;

(b) Financing derived from exempt facility bonds for qualified residential rental projects under Section 142 of the Internal Revenue Code;

or Page 168 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN (b) Duplexes or single-family units unless they are included as part of a larger property that is subject to government restriction on use.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (2) The General Assembly further recognizes that property valuation may be determined using a variety of valid valuation methods, including but not limited to:

When all direct and indirect costs and entrepreneurial incentives are deducted from the estimated anticipated gross sales price of the finished lots, and the resultant net sales proceeds are then discounted to present value at a market-derived rate over the development and absorption Page 169 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN period;

income generating Page 170 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN potential;

or CHAPTER 92 79 2.

Page 171 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN ii.

Page 172 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN 132.760 Exemption from ad valorem taxes for trucks, tractors, buses, and trailers used both in and outside Kentucky and subject to KRS 136.188 fee.

and Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (6) Experiences, both good and bad, from other states that have developed or implemented a centralized system.

Section 4 of this Act applies retroactively to January 1, 2023, except that any penalty imposed under subsection (11) of Section 4 of this Act and any interest Page 173 of 174 HB036020.100 - 1414 - XXXX 3/16/2023 11:06 PM Engrossed UNOFFICIAL COPY 23 RS HB 360/EN imposed under KRS 131.183 shall not apply to a return required to be filed under subsection (3)(b) of Section 4 of this Act before the effective date of this Act if the return is filed and the tax is paid by the twentieth day of the month following the effective date of this Act.

PageSigned 174by ofGovernor 174March HB036020.10024, -2023. 1414 - XXXX 3/16/2023 11:06 PM Engrossed