​Implementation of Changes to the Sales & Use Tax Residential Utility Exemption-KRS 139.470(7), effective 01/01/2023​

The basis of the residential exemption for utilities shifts from reliance on tariff language filed with the Public Service Commission (PSC) to a customer declaration that the services are used at the location as the place of domicile.

No. DOR will administer the new language as enacted. In most cases, customers treated as exempt under the previous language in KRS 139.470(7) are expected to continue to receive the residential exemption. One exception to this general expectation is applicable to customers who are currently receiving a residential exemption for two or more locations. Beginning 01/01/2023, a utility customer is only eligible for the residential exemption for services used at his or her place of domicile, which is defined under KRS 139.470(7)(b)(1) as “where an individual has his or her legal, true, fixed, and permanent home and principal establishment, and to which, whenever the individual is absent, the individual has the intention of returning.”

Yes, the new form for use by residents to declare their eligibility for the residential exemption is the Declaration of Domicile for Purchase of Residential Utilities, Form 51A380. Submit the completed form or provide the required information from the form in the format requested by each applicable utility provider. The form is available at 51A380 (1-23)​.​​

​No. Since most accounts currently classified as residential are expected to retain residential treatment going forward, accounts should not default to non-residential status on 01/01/2023. However, utility companies should examine their databases to determine if they have customers with a residential coding for more than one address. In such cases, utility companies must document the single address that the customer declares as his or her place of domicile.

In addition, utilities must obtain the declaration of domicile information for any accounts they currently designate as residential when there is a change in account holders or if a new account is established. If there is uncertainty regarding the exempt status of a particular account, it will be the responsibility of the utility company to justify the residential treatment by obtaining a completed certificate of domicile from the customer.​​

Since the residential exemption effective 01/01/2023 is based upon utilities purchased for, and declared by, the resident as used in his or her place of domicile, residents must declare their place of domicile to establish eligibility for the exemption. According to provisions in HB 360 enacted in 2023, a property owner may submit one Declaration of Domicile, Form 51A382 on behalf of the residential renters to the applicable utility companies providing services to the multi-unit residential rental facility for reclassification as a residential account. This new exemption form is now available on the department website at  51A382 (4-23).

The Multi-Unit Declaration must specify how many dwelling units are served by the master meter, and the owner or operator must affirm the Multi-Unit Declaration of Domicile is for all the dwelling units at the facility or park. Multi-Unit Declarations that do not include the owner's or operator's affirmation for all the dwelling units served by the master meter are not eligible for residential tax treatment. In addition, customer accounts with a master meter that serves only common areas are also not eligible for residential treatment.

Accounts for master meters that serve both common areas and residential areas where the common area usage is greater than a de minimis amount (greater than 10% of the total metered usage) are not eligible for the residential sales tax exemption.  If the utility meter does not measure common area usage separately from residential usage, the owner or operator may estimate common area usage based on the hourly common area usage compared to hourly residential usage over a 7-day period. Calculations with a new estimation of common usage for each calendar year must be maintained for verification by the Department of Revenue upon request. Do not send common area usage calculations to your utility provider or rural electric cooperative.​

Yes, multiple properties owned by the same party may qualify for a residential exemption if each property is the place of domicile for different Kentucky residents and the utility service provider receives a certificate of domicile for each separately metered account.​

​Yes, the same general format should be used by each utility. Each retailer (utility service provider) must maintain its own records to document accounts that are classified as residential.

Effective 01/01/2023, customer accounts classified as non-residential may qualify for residential treatment if the utility service provider receives a new exemption certificate of domicile that the utility services relating to an account are purchased for and used in the place of domicile of the Kentucky resident. This exemption will apply for periods of service after the date the utility service provider receives the completed declaration for the customer account. Therefore, there should be no refund requests for periods beginning 01/01/2023 but before the utility receives a completed request for a residential exemption.​

​There is no expiration date for the certificate of domicile. It will remain effective as long as the facts stated on the form remain accurate. For example, if the account location changes ownership or if the renter at the location changes, then the certificate should be updated to reflect the new Kentucky resident using the location as his or her place of domicile.​​

​Yes, the residential utility exemption may apply under the following circumstances: a) the utility meters must serve a single location that is the declared place of domicile, b) the utility services through both meters must be exclusively for residential usage, and c) the resident must submit a fully completed Declaration of Domicile, Form 51A380, for each metered account. ​

However, if there is only one meter at the location servicing both the residential home and an outbuilding, which is used for a business purpose such as farming or otherwise, then the mixed use of the utility services in this situation does not qualify for the residential utility exemption.

​No, there are no sales and use tax exemptions available for electricity used in farming operations. There were no changes made to the application of sales and use tax to utility services for farm usage in HB 8. The current applicable farming exemptions are for gasoline, special fuels, liquified petroleum gas, and natural gas used exclusively and directly in certain farming operations as provided under KRS 139.480(15). For example, fuel used in a farm tractor or natural gas used in an on-farm dairy facility are eligible for an exemption from sales and use tax, but there are no agricultural exemptions provided for electricity.

An additional utility exemption available for farming operations is the purchase of water. Under KRS 139.480(27), water used in farming operations for the production of crops, the production of milk for sale, and the raising and feeding of livestock and poultry may be exempted. Water purchased for raising and feeding ratites, llamas, alpacas, buffalo, cervids or aquatic organisms may also be eligible for the sales and use tax exemption.

Finally, there is an entirely separate water exemption in KRS 139.470(12) for the sale of water used in the raising of equine as a business. The certificate for claiming this exemption is Form 51A157.

​This question presumes that the other locations are used by resident farm employees. These accounts may qualify if the farmer has the employee complete the declaration of domicile. This treatment assumes that each location in question is the domicile of a farm employee. Also, if the circumstance is a multi-unit dwelling with a master meter, then the farmer should complete the landlord declaration (Form 51A381) and then have each unit resident complete a declaration of domicile (Form 51A380). The residential exemption does not require the employee to pay directly for the utility services.​

​Provisions in HB 360 allow owners and operators of multi-unit residential rental facilities and mobile home parks to complete a single Declaration of Domicile (Form 51A382) per facility on behalf of resident renters. However, HB 360 did not make similar changes for owners and operators of condominium associations and other residential property memberships. Therefore, owners and operators of these other residential property groups must continue to obtain separate Declarations of Domicile, Form 51A380, completed by each resident of the community. Then the owner or operator must also complete a Multi-Unit Declaration of Domicile, Form 51A381 (4-23) and submit all the individual Declarations of Domicile together to the applicable utility service providers. The Multi-Unit Declaration specifies how many dwelling units are served by the master meter, and Multi-Unit Declarations that do not include individual Declarations of Domicile from all dwelling units served by the master meter are not eligible for residential tax treatment.

In addition, the same de minimis measure (greater than 10% of the total metered usage) is the threshold where a master meter that serves both common areas and residential areas does not qualify for the residential sales and use tax exemption. See previous question and answer for further detail on calculation and documentation requirements.