​Receipts from the sales of lobbying services become subject to sales and use tax on 01/01/2023. ​​​​​

​No, the language under KRS 139.200 that lists the new types of services that become taxable on 01/01/2023 includes “lobbying services" with no exclusion or limitation to certain levels of government. Lobbying services performed at the local, state and federal levels are subject to sales and use tax.​

​There is no definition of lobbying services in KRS Chapter 139; therefore, Webster's Dictionary provides helpful guidance. To lobby is to promote or secure passage of legislation or to attempt to influence or sway a public official or other public servant toward a desired action. The desired action could include the support of or opposition to a project or the passage, amendment, defeat, approval, or veto of any legislation, regulation or ordinance.

This guidance applies to activities performed in reference to the federal, state and local levels of government. 

​Sales tax on services is based on where the customer receives the service. For example, a lobbying provider located in Washington, D.C. lobbying on behalf of a Kentucky client would charge the Kentucky sales and use tax because the client is receiving or making first use of the service in Kentucky. See guidance on the sourcing of retail sales in KRS 139.105 and information on receiving services in Kentucky Administrative Regulation 103 KAR 30:190.​

​A lobbying services provider is liable for sales and use tax on its gross receipts derived from the provision of lobbying services. If the provider bills its clients a lump sum amount that includes lobbying services without breaking out the charges from non-lobbying services not subject to the tax, then the entire invoice amount is subject to tax. See KRS 139.215 for guidance on the taxation of bundled transactions where two or more products (one taxable service and one nontaxable service) are sold for one non-itemized price.​

​No, according to the provisions of KRS 139.010(16) “gross receipts" subject to sales and use tax includes the total consideration for services rendered, including any expenses of the service provider or costs of services necessary to complete the sale passed on to the client. The only items excluded from gross receipts subject to tax are the items listed in KRS 139.010(16)(c) that are separately stated on the invoice such as interest, financing and carrying charges. ​

​The Department may consult these filings as a reference point, but these documents will not include receipts derived from lobbying services provided at the local or federal level. In addition, the compensation earned by lobbyists (legislative agents) may be prorated on the statements of expenditures in a different manner than gross receipts for lobbying services are calculated when billing the client for the provision of lobbying services. See question #4. ​

​Yes, lobbying services providers must itemize the tax by displaying the amount of sales tax billed on the invoice. KRS 139.210 requires the retailer to collect the tax from the purchaser and separately display the tax from the sales price, the price advertised in the premises, the marked price, or other price on the sales receipt or other proof of sale.​

​Lobbying services providers must file and pay their taxes due online using the KY OneStop Business Portal. Monthly returns are due on the 20th day of the month following the previous month in which the lobbying services are provided and billed.

Online registration for a sales and use tax account is through the Kentucky OneStop Business Portal. To obtain additional registration information, please refer to the online user guide.

When filing online, lobbying services providers should report their total receipts for all services rendered (taxable and exempt) for the reporting period on the “Total Receipts" line of the return. They should then click on the “Deductions Worksheet" tab of the return and include all receipts from exempt services listed in the “Total Receipts" on the “Other" deduction line.  The system will then calculate the remaining receipts subject to sales tax on the “Total Taxable Amount" line.

​If the lobbying services are performed by employees at the direction of and under supervision of their employers, then there are no retail sales of lobbying services because there is no consideration received for the provision of lobbying services. Consideration subject to sales and use tax does not apply to the salary paid to individual employees for the performance of job duties or membership dues collected by trade groups.​

​No, a lobbying services provider's purchases of equipment or any items consumed or used when providing the taxable services are taxable retail purchase transactions not eligible for exemption as purchases for resale. ​