KRS § 160.613 — KY Code / Title XIII / Chapter 160 / Section 160.613
160.613 Utility gross receipts license tax -- Exemptions -- User liable if supplier is exempt -- Direct pay authorization -- Tollers
Status: in_force

160.613 Utility gross receipts license tax -- Exemptions -- User liable if

supplier is exempt -- Direct pay authorization -- Tollers. (Effective July

1, 2021)

(1) There is hereby authorized a utility gross receipts license tax for schools not to

exceed three percent (3) of the gross receipts derived from the furnishing,

within the district, of utility services, except that "gross receipts" shall not

include amounts received for furnishing:

(a) Energy or energy-producing fuels to a person engaged in manufacturing

or industrial processing as provided in subsection (3) or (4) of this section,

if that person provides the utility services provider with a copy of its utility

gross receipts license tax energy direct pay authorization, as provided in

subsection (3) of this section, and the utility service provider retains a

copy of the authorization in its records;

(b) Utility services which are to be resold; or

(c) Notwithstanding subsection (2) of this section, electricity used or

consumed at a colocation facility in commercial mining of cryptocurrency:

1. If the facility operator provides the utility services provider with a

copy of its utility gross receipts license tax exemption certificate, as

authorized by subsection (6) of this section, and the utility service

provider retains a copy of the exemption certificate in its records; or

2. If the utility service provider is a governmental agency, the facility

operator shall retain the exemption certificate in its records.

(2) If any user of utility services purchases the utility services directly from any

supplier who is exempt either by state or federal law from the utility gross

receipts license tax, then the user of the utility services, if the tax has been

levied in the user's school district, shall be liable for the tax and shall register

with and pay directly to the department, in accordance with the provisions of

KRS 160.615, a utility gross receipts license tax for schools computed by

multiplying the gross cost of all utility services received by the tax rate levied

under the provisions of this section.

(3) A person engaged in manufacturing or industrial processing whose cost of

energy or energy-producing fuels used in the course of manufacturing or

industrial processing exceeds an amount equal to three percent (3) of the

cost of production may apply to the department for a utility gross receipts

license tax energy direct pay authorization. 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 processing

production process that ends with a product packaged and ready for sale. If the

person receives confirmation of eligibility from the department, the person shall:

(a) Provide the utility services provider with a copy of the utility gross receipts

license tax energy direct pay authorization issued by the department for

all purchases of energy and energy-producing fuels; and

(b) Report and pay directly to the department, in accordance with the

provisions of KRS 160.615, the utility gross receipts license tax due.

(4) A person who performs a manufacturing or industrial processing activity for a

fee and does not take ownership of the tangible personal property that is

incorporated into, or becomes the product of, the manufacturing or industrial

processing activity is a toller. For periods on or after July 1, 2018, the costs of

the tangible personal property shall be excluded from the toller's cost of

production at a plant facility with tolling operations in place as of July 1, 2018.

(5) 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:

(a) Maintains a binding contract for periods after July 1, 2018, that governs

the terms, conditions, and responsibilities with a separate legal entity,

which holds title to the tangible personal property that is incorporated into,

or becomes the product of, the manufacturing or industrial processing

activity;

(b) Maintains accounting records that show the expenses it incurs to fulfill the

binding contract that include but are not limited to energy or

energy-producing fuels, materials, labor, procurement, depreciation,

maintenance, taxes, administration, and office expenses;

(c) Maintains separate payroll, bank accounts, tax returns, and other records

that demonstrate its independent operations in the performance of its

tolling responsibilities;

(d) Demonstrates one (1) or more substantial business purposes for the

tolling operations germane to the overall manufacturing, industrial

processing activities, or corporate structure at the plant facility. A

business purpose is a purpose other than the reduction of utility gross

receipts license tax liability for the purchases of energy and

energy-producing fuels; and

(e) Provides information to the department upon request that documents

fulfillment of the requirements in paragraphs (a) to (d) of this subsection

and gives an overview of its tolling operations with an explanation of how

the tolling operations relate and connect with all other manufacturing or

industrial processing activities occurring at the plant facility.

(6) (a) The operator of a colocation facility primarily engaged in the commercial

mining of cryptocurrency may apply to the department for a utility gross

receipts license tax exemption certificate. If the operator receives

confirmation of eligibility from the department, it:

1. Shall provide the utility services provider with a copy of the utility

gross receipts license tax exemption certificate issued by the

department for all purchases of electricity; or

2. Keep the certificate on file if the utility service provider is a

governmental agency.

(b) The utility gross receipts license tax exemption shall be effective from the

date of confirmation of eligibility until June 30, 2030.