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UNOFFICIAL COPY 23 RS HB 5/EN AN ACT relating to fiscal matters and declaring an emergency.
CHAPTER 148 1 CHAPTER 148 ( HB 5 ) AN ACT relating to fiscal matters and declaring an emergency.
(3) The maximum state and local tax rate that may be levied on distilled spirits stored or aging in barrels located in a bonded warehouse or premises shall be as Page 1 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN follows:
(3) The maximum state and local tax rate that may be levied on distilled spirits stored or aging in barrels located in a bonded warehouse or premises shall be as follows:
(k) Forty-four percent (44%) of the otherwise applicable tax rate for tax assessments made on January 1, 2036;
Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (k) Forty-four percent (44%) of the otherwise applicable tax rate for tax assessments made on January 1, 2036;
Page 2 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN (n) Twenty-four percent (24%) of the otherwise applicable tax rate for tax assessments made on January 1, 2039;
(n) Twenty-four percent (24%) of the otherwise applicable tax rate for tax assessments made on January 1, 2039;
and Page 3 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN 3.
and 3.
For purposes of the Support Education Excellence in Kentucky final calculation under this subparagraph, the average daily attendance and equalization ratio Page 4 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN for the school year ending during the applicable calendar year shall not be less than those for the 2022-2023 school year final calculation.
For purposes of the Support Education Excellence in Kentucky final calculation under this subparagraph, the average daily attendance and equalization ratio for CHAPTER 148 3 the school year ending during the applicable calendar year shall not be less than those for the 2022-2023 school year final calculation.
"Extraordinary event" means a pandemic, epidemic, restrictive governmental laws or regulations enacted after the effective date of this Act, riots, insurrection, war, acts of a government authority Page 5 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN imposed after the effective date of this Act, court orders issued after the effective date of this Act, a natural disaster, a decrease in sales in excess of ten percent (10%), or other reason of a like nature determined by the secretary not to be the fault of the taxpayer and any other items determined by the secretary to be beyond the taxpayer's reasonable control, which prevents the taxpayer from producing distilled spirits.
"Extraordinary event" means a pandemic, epidemic, restrictive governmental laws or regulations enacted after the effective date of this Act, riots, insurrection, war, acts of a government authority imposed after the effective date of this Act, court orders issued after the effective date of this Act, a natural disaster, a decrease in sales in excess of ten percent (10%), or other reason of a like nature determined by the secretary not to be the fault of the taxpayer and any other items determined by the secretary to be beyond the taxpayer's reasonable control, which prevents the taxpayer from producing distilled spirits.
For taxable years beginning on or after January 1, 2017, and before December 31, 2017, the credit shall be equal to sixty percent (60%) of the tax assessed under KRS 132.160 and paid under KRS 132.180 on a Page 6 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN timely basis;
For taxable years beginning on or after January 1, 2017, and before December 31, 2017, the credit shall be equal to sixty percent (60%) of the tax assessed under KRS 132.160 and paid under KRS 132.180 on a timely basis;
and 5.
and Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 5.
"LMI" means a low and moderate income population where the county median family income or county median household income is less than eighty percent (80%) of the state median family income or Page 7 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN state median household income, respectively, as determined by using the most recent five (5) year American Community Survey published by the United States Census Bureau.
"LMI" means a low and moderate income population where the county median family income or county median household income is less than eighty percent (80%) of the state median family income or state median household income, respectively, as determined by using the most recent five (5) year American Community Survey published by the United States Census Bureau.
(3)[(2)] The amount of distilled spirits credit allowed under subsection (1) of this Page 8 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN section shall be used only for capital improvements at the premises of the distiller licensed pursuant to KRS Chapter 243.
(3)[(2)] The amount of distilled spirits credit allowed under subsection (1) of this section shall be used only for capital improvements at the premises of the distiller licensed pursuant to KRS Chapter 243.
and (e) Construction, replacement, or remodeling of facilities to market or promote tourism, including but not limited to a visitor's center.
and CHAPTER 148 5 (e) Construction, replacement, or remodeling of facilities to market or promote tourism, including but not limited to a visitor's center.
(c) If the allowed credit is associated with multiple capital improvements, and not Page 9 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN all capital improvements are sold or otherwise disposed of, the distilled spirits credit shall be prorated based on the cost of the capital improvement sold over the total cost of all improvements associated with the credit.
(c) If the allowed credit is associated with multiple capital improvements, and not all capital improvements are sold or otherwise disposed of, the distilled spirits credit shall be prorated based on the cost of the capital improvement sold over the total cost of all improvements associated with the credit.
of this Page 10 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN subparagraph has been utilized through the sales and use tax and withholding tax remitted;
of this subparagraph has been utilized through the sales and use tax and withholding tax remitted;
a.
Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY a.
(g) To fulfill the requirements for a sales and use tax refund, the taxpayer shall Page 11 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN execute information-sharing agreements prescribed by the department with contractors, vendors, and other related parties to verify construction material costs.
(g) To fulfill the requirements for a sales and use tax refund, the taxpayer shall execute information- sharing agreements prescribed by the department with contractors, vendors, and other related parties to verify construction material costs.
The portion of the assessed value of distilled spirits which equates to the percentage of Page 12 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN the otherwise applicable tax rate that does not apply under subsection (3) of Section 1 of this Act shall not be included in the calculation of the local effort required for Support Education Excellence in Kentucky or the tax rate-setting process in KRS Chapter 160.
The portion of the assessed value of distilled spirits which equates to the percentage of the otherwise applicable tax rate that does not apply under subsection (3) of Section 1 of this Act shall not be included in the calculation of the local effort required for Support Education Excellence in Kentucky or the tax rate-setting process in KRS Chapter 160.
b.
CHAPTER 148 7 b.
Any fee paid for the use of a boat ramp for the purpose of allowing Page 13 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN boats to be launched into or hauled out from the water;
Any fee paid for the use of a boat ramp for the purpose of allowing boats to be launched into or hauled out from the water;
(b) "Digital audio works" includes ringtones, recorded or live songs, music, Page 14 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN readings of books or other written materials, speeches, or other sound recordings.
(b) "Digital audio works" includes ringtones, recorded or live songs, music, readings of books or other written materials, speeches, or other sound recordings.
(b) "Digital code" shall not include a code that represents:
Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (b) "Digital code" shall not include a code that represents:
Page 15 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN 6.
6.
(b) "Executive employee recruitment services" includes but is not limited to making a detailed list of client requirements, researching and identifying Page 16 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN potential candidates, preforming pre-screening interviews, and providing contract and salary negotiations;
(b) "Executive employee recruitment services" includes but is not limited to making a detailed list of client requirements, researching and identifying potential candidates, preforming pre-screening interviews, and providing contract and salary negotiations;
2.
CHAPTER 148 9 2.
(17) (a) "Gross receipts" and "sales price" mean the total amount or consideration, Page 17 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN including cash, credit, property, and services, for which tangible personal property, digital property, or services are sold, leased, or rented, valued in money, whether received in money or otherwise, without any deduction for any of the following:
(17) (a) "Gross receipts" and "sales price" mean the total amount or consideration, including cash, credit, property, and services, for which tangible personal property, digital property, or services are sold, leased, or rented, valued in money, whether received in money or otherwise, without any deduction for any of the following:
The retailer has an obligation to pass the price reduction or discount Page 18 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN through to the purchaser;
The retailer has an obligation to pass the price reduction or discount through to the purchaser;
1.
Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 1.
Page 19 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN 3.
3.
Page 20 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN 1.
1.
Page 21 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN a.
a.
b.
CHAPTER 148 11 b.
(24) "Marketplace" means any physical or electronic means through which one (1) or Page 22 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN more retailers may advertise and sell tangible personal property, digital property, or services, or lease tangible personal property or digital property, such as a catalog, Internet Web site, or television or radio broadcast, regardless of whether the tangible personal property, digital property, or retailer is physically present in this state;
(24) "Marketplace" means any physical or electronic means through which one (1) or more retailers may advertise and sell tangible personal property, digital property, or services, or lease tangible personal property or digital property, such as a catalog, Internet Web site, or television or radio broadcast, regardless of whether the tangible personal property, digital property, or retailer is physically present in this state;
Provides a marketplace for making retail sales of tangible personal property, digital property, or services, or otherwise facilitates retail sales of tangible personal property, digital property, or services, regardless of ownership or control of the tangible personal Page 23 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN property, digital property, or services, that are the subject of the retail sale;
Provides a marketplace for making retail sales of tangible personal property, digital property, or services, or otherwise facilitates retail sales of tangible personal property, digital property, or services, regardless of ownership or control of the tangible personal property, digital property, or services, that are the subject of the retail sale;
Provides software development or research and development activities related to any activity described in this subparagraph, if the software development or research and development activities are directly related to the physical or electronic marketplace provided by a marketplace provider;
Provides software development or research and development activities related to any activity described in this subparagraph, if the software development or research and Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY development activities are directly related to the physical or electronic marketplace provided by a marketplace provider;
Through terms and conditions, agreements, or arrangements with a third party, collects payment in connection with a retail sale of tangible personal property, digital property, or services from a purchaser and transmits that payment to the marketplace retailer, regardless of whether the person collecting and transmitting the Page 24 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN payment receives compensation or other consideration in exchange for the service;
Through terms and conditions, agreements, or arrangements with a third party, collects payment in connection with a retail sale of tangible personal property, digital property, or services from a purchaser and transmits that payment to the marketplace retailer, regardless of whether the person collecting and transmitting the payment receives compensation or other consideration in exchange for the service;
(b) For the purposes of this subsection, stockholders, bondholders, partners, or other persons holding an interest in a corporation or other entity are regarded Page 25 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN as having the "real or ultimate ownership" of the tangible personal property or digital property of such corporation or other entity;
(b) For the purposes of this subsection, stockholders, bondholders, partners, or other persons holding an interest in a corporation or other entity are regarded as having the "real or ultimate ownership" of the tangible personal property or digital property of such corporation or other entity;
(c) "Other direct mail" does not include the development of billing information or the provision of any data processing service that is more than incidental to the production of printed material;
CHAPTER 148 13 (c) "Other direct mail" does not include the development of billing information or the provision of any data processing service that is more than incidental to the production of printed material;
Image editing, including shadow removal, tone adjustments, vertical and horizontal alignment and cropping, composite image creation, Page 26 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN formatting, watermarking printing, and delivery of an original photograph in the form of tangible personal property, digital property, or other media.
Image editing, including shadow removal, tone adjustments, vertical and horizontal alignment and cropping, composite image creation, formatting, watermarking printing, and delivery of an original photograph in the form of tangible personal property, digital property, or other media.
(b) When a person modifies or enhances computer software of which the person is not the author or creator, the person shall be deemed to be the author or Page 27 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN creator only of the modifications or enhancements the person actually made.
(b) When a person modifies or enhances computer software of which the person is not the author or creator, the person shall be deemed to be the author or creator only of the modifications or enhancements the person actually made.
When performed outside this state or when the customer gives a resale 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;
When performed outside this state or when the customer gives a resale certificate, the producing, fabricating, processing, printing, or imprinting of tangible personal property for a consideration Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY for consumers who furnish either directly or indirectly the materials used in the producing, fabricating, processing, printing, or imprinting;
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and Page 28 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN 3.
and 3.
Page 29 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN 4.
4.
Page 30 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN a.
a.
b.
CHAPTER 148 15 b.
and Page 31 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN 3.
and 3.
(48) "Telemarketing services" means services provided via telephone, facsimile, electronic mail, text messages, or other modes of communications[, including but Page 32 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN not limited to various forms of social media,] to another person, which are unsolicited by that person, for the purposes of:
(48) "Telemarketing services" means services provided via telephone, facsimile, electronic mail, text messages, or other modes of communications[, including but not limited to various forms of social media,] to another person, which are unsolicited by that person, for the purposes of:
or 3.
or Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 3.
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 Page 33 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN state;
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;
(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- 207, and 154.12-2088;
(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, 154.12-207, and 154.12-2088;
Page 34 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN (l) The voluntary environmental remediation credit permitted by KRS 141.418;
(l) The voluntary environmental remediation credit permitted by KRS 141.418;
(r) The railroad maintenance and improvement credit permitted by KRS 141.385;
CHAPTER 148 17 (r) The railroad maintenance and improvement credit permitted by KRS 141.385;
(3) After the application of the nonrefundable credits provided for in subsection (2) of Page 35 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN this section, the refundable credits against the tax imposed by KRS 141.020 shall be taken in the following order:
(3) After the application of the nonrefundable credits provided for in subsection (2) of this section, the refundable credits against the tax imposed by KRS 141.020 shall be taken in the following order:
(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- 207, and 154.12-2088;
(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, 154.12-207, and 154.12-2088;
(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 (h) The enterprise zone credit permitted by KRS 154.45-090, for taxable periods ending prior to January 1, 2008;
Page 36 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN (i) The tax credit for cash contributions to investment funds permitted by KRS 154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 154.20-258;
(i) The tax credit for cash contributions to investment funds permitted by KRS 154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 154.20-258;
(6) After the application of the nonrefundable credits in subsection (5) of this section, Page 37 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN the refundable credits shall be taken in the following order:
(6) After the application of the nonrefundable credits in subsection (5) of this section, the refundable credits shall be taken in the following order:
(2) An individual who is not a resident of this state shall not be liable for any income tax under KRS 141.020(4) if the laws of the state of which the individual was a resident at the time the income was earned in this state contained a reciprocal provision under which nonresidents were exempted from gross or net income taxes to the other state, if the state of residence of the nonresident individual allowed a similar exemption to resident individuals of this state.
(2) An individual who is not a resident of this state shall not be liable for any income tax under KRS 141.020(4) if the laws of the state of which the individual was a resident at the time the income was earned in this state contained a reciprocal provision under which nonresidents were exempted from gross or net income taxes to the other state, if the state of residence of the nonresident individual allowed a similar exemption to resident CHAPTER 148 19 individuals of this state.
Page 38 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN (3) As used in this section, "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.
(3) As used in this section, "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.
(4) Any resident entity owner of an electing entity, as those terms are defined in Section 9 of this Act,[individual that is a partner, member, or shareholder of a pass- 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.
(4) Any resident entity owner of an electing entity, as those terms are defined in Section 9 of this Act,[individual that is a partner, member, or shareholder of a pass-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.
The credit shall be based on the entity owner's[individual's] distributive share of the electing[pass-through] entity's items of income, loss, deduction, and credit.
The credit shall be based on the entity owner's[individual's] distributive share of the electing[pass- through] entity's items of income, loss, deduction, and credit.
(3) Individuals, estates, trusts, or corporations doing business in this state as a partner, member, or shareholder in a pass-through entity shall be liable for income tax only in their individual, fiduciary, or corporate capacities, and no income tax shall be Page 39 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN assessed against the net income of any pass-through entity, except as required:
(3) Individuals, estates, trusts, or corporations doing business in this state as a partner, member, or shareholder in a pass-through entity shall be liable for income tax only in their individual, fiduciary, or corporate capacities, and no income tax shall be assessed against the net income of any pass-through entity, except as required:
Page 40 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN 2.
2.
4.
Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY 4.
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- through entity's items of income, loss, and deduction;
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-through entity's items of income, loss, and deduction;
Page 41 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN (9) A corporation that is subject to tax under KRS 141.040 and is a partner or member in a pass-through entity shall take into account the corporation's distributive share of the pass-through entity's items of income, loss, and deduction and:
(9) A corporation that is subject to tax under KRS 141.040 and is a partner or member in a pass-through entity shall take into account the corporation's distributive share of the pass-through entity's items of income, loss, and deduction and:
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-through entity or general partnership in computing its own apportionment factor;
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- through entity or general partnership in computing its own apportionment factor;
Page 42 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN (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-through entity's ultimate apportionment factor for property, payroll and sales as required under subsection (11) of this section.
(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- through entity's ultimate 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- 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).
(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-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).
(b) For taxable years beginning on or after January 1, 2018, a pass-through entity doing business within and without the state shall compute an apportionment fraction as provided in KRS 141.120.
CHAPTER 148 21 (b) For taxable years beginning on or after January 1, 2018, a pass-through entity doing business within and without the state shall compute an apportionment fraction as provided in KRS 141.120.
Page 43 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN (14) (a) Nonresident individuals shall not be taxable on investment income distributed by a qualified investment partnership.
(14) (a) Nonresident individuals shall not be taxable on investment income distributed by a qualified investment partnership.
(b) "Direct owner" means a partner, member, or shareholder that holds an interest directly in a pass-through entity;
(b) "Direct owner" means a partner, member, or shareholder that holds an interest directly in a pass- through entity;
Page 44 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN (d) "Entity owner" means the direct or indirect owners of an electing entity receiving a proportionate share of the entity's income;
(d) "Entity owner" means the direct or indirect owners of an electing entity receiving a proportionate share of the entity's income;
(e) "Indirect owner" means a partner, member, or shareholder in a pass- through entity that holds an interest indirectly, or through another indirect partner, member, or shareholder in a pass-through entity;
(e) "Indirect owner" means a partner, member, or shareholder in a pass-through entity that holds an interest indirectly, or through another indirect partner, member, or shareholder in a pass-through entity;
(d) For taxable years beginning on or after January 1, 2022, but before January 1, 2023:
Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (d) For taxable years beginning on or after January 1, 2022, but before January 1, 2023:
As a result of the electing entity making the election as described in Page 45 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN subparagraph 1.
As a result of the electing entity making the election as described in subparagraph 1.
and (c) Based on the pro rata share of the entity owner's income from the pass- through entity.
and (c) Based on the pro rata share of the entity owner's income from the pass-through entity.
(4) An electing entity shall report to each direct owner of the entity the direct owner's Page 46 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed UNOFFICIAL COPY 23 RS HB 5/EN proportionate share of the tax paid for the taxable year for purposes of the pass- through entity tax credit created in subsection (3) of this section.
(4) An electing entity shall report to each direct owner of the entity the direct owner's proportionate share of the tax paid for the taxable year for purposes of the pass-through entity tax credit created in subsection (3) of this section.
Act ch.
Acts ch.
Any settlement agreement between the Department of Revenue and any taxpayer having distilled spirits in a bonded warehouse, which is related to the ongoing assessment or collection of tax under Section 1 of this Act, shall not be considered null and void based upon the statutory changes in this Act but may be renegotiated by the parties to the settlement agreement and the renegotiated agreement shall be promulgated in an administrative regulation following the renegotiation process.
Any settlement agreement between the Department of Revenue and any taxpayer having distilled spirits in a bonded warehouse, which is related to the ongoing assessment or collection of tax under Section of this Act, shall not be considered null and void based upon the statutory changes in this Act but may be renegotiated by the parties to the settlement agreement and the renegotiated agreement shall be promulgated in an administrative regulation following the renegotiation process.
Page 47 of 47 HB000520.100 - 1754 - XXXX 3/30/2023 9:05 PM Engrossed
Signed by Governor March 31, 2023.
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