Kentucky’s legislature overrode Gov. Andy Beshear’s veto to enact several tax changes. The most significant change is the expansion of sales and use tax to many more services. The state legislature also created a tax amnesty program commencing in the Fall 2022.
The broadening of the state’s sales and use tax base to services, not previously subject to tax, is noteworthy as it will impact many taxpayers operating in Kentucky. The state has gradually increased the number of services it taxes since 2018 when only a handful of services were subject to tax. The state added several services in 2018 to its list of taxable services, but this current round of additions is the most substantial yet. A partial list of the newly taxable services in Kentucky includes photography, marketing, executive recruitment, web site hosting and design, security system monitoring, rental of space for meetings, entertainment, weddings, etc., household moving, and prewritten computer software access (SaaS). The complete listing of services subject to sales tax in Kentucky may be viewed here.
Kentucky will offer a tax amnesty program this year from October 1st through November 29th. The tax amnesty program applies to qualified tax liabilities established between October 1, 2011, and before December 1, 2021. The program applies to taxes, fees, interest, and penalties. Participating taxpayers will have penalty waived and will be responsible for one-half the interest normally due. The tax amnesty program applies to all taxes administered by the Department but does not include ad valorem taxes on real or personal property. The Kentucky Department of Revenue will be releasing more information on its tax amnesty program in the future. Please check the Department’s website or the HBK SALT page for updates.
If you have questions on Kentucky’s tax changes or other SALT matters, please contact HBK’s SALT Advisory Group at hbksalt@hbkcpa.com.
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