KRS § 139.499 — KY Code / Title XI / Chapter 139 / Section 139.499
139.499 Exemption for certain data center equipment
Status: in_force

139.499 Exemption for certain data center equipment.

(1) As used in this section:

(a) 1. "Approved company";

2. "Authority";

3. "Data center equipment";

4. "Eligible costs";

5. "Memorandum of agreement";

6. "Preliminarily approved company";

7. "Qualified data center project"; and

8. "Term";

have the same meaning as in KRS 154.20-220;

(b) "Certificate of exemption" means a completed form provided by the

department stating at least:

1. The name, address, and federal employer identification number of the

approved company or preliminarily approved company;

2. That the approved company or preliminarily approved company is

exempt from sales and use tax on data center equipment purchased for

use in a qualified data center project in the Commonwealth; and

3. The date of expiration based on the term of the memorandum of

agreement; and

(c) "Fiscal year" means a period beginning on July 1 and continuing until the

following June 30.

(2) The taxes imposed by this chapter shall not apply to the sale, purchase, use, storage,

consumption, installation, repair, and replacement of data center equipment to or by

a preliminarily approved company or an approved company in accordance with the

memorandum of agreement with the preliminarily approved company or the

approved company as provided in subsection (4) of this section.

(3) (a) The exemption provided in subsection (2) of this section shall apply whether

or not the seller is under contract to deliver, assemble, and incorporate the

data center equipment into real estate for the qualified data center project.

(b) An approved company or preliminarily approved company may provide the

seller the certificate of exemption issued by the department to claim the

exemption. The certificate may be executed by either:

1. An approved company or preliminarily approved company; or

2. Jointly by a contractor and an approved company or preliminarily

approved company in any case in which a contractor under contract with

the approved company or preliminarily approved company purchases

the data center equipment.

(4) Upon notification that the authority has executed a memorandum of agreement with

a preliminarily approved company, the department shall issue a certificate of

exemption to the preliminarily approved company or the approved company.

(5) (a) Upon notification that the authority has terminated the sales and use tax

exemptions available to the preliminarily approved company or the approved

company as provided in KRS 154.20-229, the department shall issue a notice

of assessment to the approved company or preliminarily approved company.

(b) The aggregate amount of sales and use tax recovered shall not exceed the sum

of the aggregate value of tax not paid as a result of the tax exemption under

this section together with interest required under KRS Chapter 131.

(c) If the notice of assessment is issued to:

1. A preliminarily approved company, notwithstanding KRS 139.620, the

notice of assessment under paragraph (b) of this subsection shall be

considered timely if the department issues the notice of assessment the

later of:

a. One hundred eighty (180) days from the date the department is

notified by the authority related to termination of the

memorandum of agreement; or

b. The date on which a notice of assessment could otherwise be

issued in a timely manner under KRS 139.620;

2. An approved company, the notice of assessment shall be assessed on the

open periods and subject to KRS 139.620; and

3. A subsequent owner under KRS 154.20-229(8)(b)1., the notice of

assessment shall include the tax assumed by the subsequent owner and

the open periods for assessment shall be determined under

subparagraphs 1. and 2. of this paragraph and depend solely on whether

the subsequent owner is a preliminarily approved company or an

approved company.

(6) Beginning September 1, 2025, and on or before September 1 for each year

thereafter, a preliminarily approved company shall report to the department

annually:

(a) The name, address, and any other identifying information the department may

require for the qualified data center project;

(b) The county in which the qualified data center project is located; and

(c) An itemized schedule of qualified data center equipment purchased during the

fiscal year and the applicable sales and use tax that was not paid as a result of

the sales and use tax exemption, including verification and certification by an

independent third party unrelated to the preliminarily approved company.

(7) Beginning November 1, 2025, and on or before November 1 of each year thereafter,

the department shall report to the authority and the Interim Joint Committee on

Appropriations and Revenue the data reported for data center project under

subsection (6) of this section.

(8) All information required to be reported under this section shall not be considered

confidential taxpayer information and shall not be subject to KRS Chapter 131 or

any other provisions of the Kentucky Revised Statutes prohibiting disclosure or

reporting of information.