Tax AdministrationProtest Time Period Changes
The time to file a protest increases from 45 to 60 days, applicable to notices of tax due and refund denials issued on or after July 1, 2018. This change does not apply to protests of real property tax assessments.
Federal Audit Final Determinations
The due date for submission to Kentucky increases from 30 to 180 days. Taxpayers now have 180 days to submit an amended income tax return to Kentucky from the date the federal audit final determination is issued by the IRS.
Tax Assessment Appeals
The law was repealed that required the tax due be paid or a bond be posted to appeal an order sustaining a tax assessment. This change became effective April 27, 2018.
DOR Contingent Fee Contracts
The Kentucky Taxpayer Bill of Rights was amended to prohibit DOR from entering into a contingent fee contract for audits, collections or legal services if the service performed is contingent upon the amount of tax, interest, fee, or penalty assessed against or collected from the taxpayer. This change became effective April 27, 2018.
Prewritten Computer Software
Property tax law was amended to clarify that prewritten computer software is subject to state and local property tax. "Prewritten computer software" is defined to have the same meaning as the sales tax definition.
A change was enacted on how the receipts are allocated for the Tennessee Valley Authority (TVA)-in-lieu-of-tax. Effective for fiscal years beginning on or after July 1, 2018, more money will be sent to the counties with TVA power plants to improve economic development in those areas. The term "Tennessee Valley Authority (TVA)-in- lieu-of- tax" refers to the Department of Revenue's annual responsibility to administer and distribute the centrally collected TVA tax equivalency payments for local taxing jurisdictions.
Additional Tax Changes
CASA Income Tax Refund Designation
An income tax refund designation was enacted for the Kentucky Court Appointed Special Advocates (CASA) network fund. This change will be effective on or after January 1, 2019.
Alcoholic Beverage Statutes
An amendment to the alcoholic beverage statutes requires microbrewers to report and pay state excise taxes directly to the Department of Revenue.
Pari-mutuel Tax Statutes
Effective July 14, 2018, an amendment to the pari-mutuel tax statutes was enacted to provide a permanent exemption from the tax for the times an international two-day horse racing event is hosted at a racetrack in the Commonwealth.
Economic Development Tax Incentive Programs
Several changes were enacted to the economic development tax incentive programs. Little used programs were repealed, including the Kentucky Environmental Stewardship Act. Other tax incentive programs were sunset, including the Incentives for Energy Independence Act (IEIA), effective August 1, 2018.