KRS § 139.270 — KY Code / Title XI / Chapter 139 / Section 139.270
139.270 Resale certificate and certificates of exemption
Status: in_force

139.270 Resale certificate and certificates of exemption.

(1) The resale certificate, certificate of exemption, agriculture exemption license

number, or Streamlined Sales and Use Tax Agreement Certificate of

Exemption relieves the retailer or seller from the burden of proof if the retailer

or seller:

(a) Within ninety (90) days after the date of sale:

1. Obtains a fully completed resale certificate, certificate of exemption,

or Streamlined Sales and Use Tax Agreement Certificate of

Exemption;

2. Obtains an agriculture exemption license number from the

purchaser or a fully completed Streamlined Sales and Use Tax

Agreement Certificate of Exemption that contains an agriculture

exemption license number; or

3. Captures the relevant data elements that correspond to the

information that the purchaser would otherwise provide to the

retailer or seller on the Streamlined Sales and Use Tax Agreement

Certificate of Exemption; and

(b) Maintains a file of the certificate, agriculture exemption license number, or

Streamlined Sales and Use Tax Agreement Certificate of Exemption

obtained or relevant data elements captured in accordance with KRS

139.720.

(2) The relief from liability provided to the retailer or the seller in this section does

not apply to a retailer or seller who:

(a) Fraudulently fails to collect the tax;

(b) Solicits purchasers to participate in the unlawful claiming of an

exemption; or

(c) Accepts an exemption certificate when the purchaser claims an

entity-based exemption when:

1. The product sought to be covered by the exemption certificate is

actually received by the purchaser at a location operated by the

retailer or seller; and

2. The state in which that location resides provides an exemption

certificate that clearly and affirmatively indicates that the claimed

exemption is not available in that state.

For purposes of this paragraph, "entity-based exemption" means an

exemption based on who purchases the product or who sells the product.

An exemption available to all individuals shall not be considered an

entity-based exemption.

(3) (a) If the department requests that the seller or retailer substantiate that the

sale was a sale for resale or an exempt sale and the retailer or seller has

not complied with subsection (1) of this section, the seller or retailer shall

be relieved of any liability for the tax on the transaction if the seller or

retailer, within one hundred twenty (120) days of the department's

request:

1. Obtains a fully completed resale certificate, exemption certificate,

agriculture exemption license number, or Streamlined Sales and

Use Tax Agreement Certificate of Exemption from the purchaser for

an exemption that:

a. Was available under this chapter on the date the transaction

occurred;

b. Could be applicable to the item being purchased; and

c. Is reasonable for the purchaser's type of business; or

2. Obtains other information establishing that the transaction was not

subject to the tax.

(b) Notwithstanding paragraph (a) of this subsection, if the department

discovers through the audit process that the seller or retailer had

knowledge or had reason to know at the time the information was

provided that the information relating to the exemption claimed was

materially false, or the seller or retailer otherwise knowingly participated in

activity intended to purposefully evade the tax that is properly due on the

transaction, the seller or retailer shall not be relieved of the tax on the

transaction. The department shall bear the burden of proof that the seller

or retailer had knowledge or had reason to know at the time the

information was provided that the information was materially false.

(4) Notwithstanding subsections (1) and (3) of this section, the seller or retailer

may still offer additional documentation that is acceptable by the department

that the transaction is not subject to tax and to relieve the seller or retailer from

the tax liability.

(5) If the department later finds that the retailer or seller complied with subsections

(1), (3), and (4) of this section, but that the purchaser used the property or

service in a manner that would not have qualified for resale status or the

purchaser issued a certificate of exemption, an agriculture exemption license

number, or a Streamlined Sales and Use Tax Agreement Certificate of

Exemption and used the property or service in some other manner or for some

other purpose, the department shall hold the purchaser liable for the remittance

of the tax originally due and may apply penalties provided in KRS 139.990.