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Kentucky’s tax law changes in 2018: New Sales and Use Taxes

By Nathan Vinson, Partner
English, Lucas, Priest and Owsley LLP

Tax law changes in 2018 were huge at both the state and national level. For this blog post, we’re parsing through the changes to the law that require sales tax to be collected on some services and “luxuries,” which was not required in the past.

Nathan Vinson

Nathan Vinson

There are some exemptions as well, and it’s good to know what these are, both from a consumer and service provider perspective.

Who has to pay?

The list of who has to pay is provided in a handy website the Kentucky Department of Revenue set up to answer questions from the public and business owners. There’s even a YouTube video that explains the new taxes, which you can watch here.

The list of businesses that need to collect taxes now, who did not need to do so in the past, is essentially this:

  • Extended warranty service contracts are now taxable.
  • Event or facility admission fees are now taxable. This includes fitness centers (but not for one-on-one instruction), golf courses, health spas, and more.
  • County fairs and historic sites are exempt by statute, and race track admission is already taxable under another Kentucky statute.
  • Tanning services, both booth and spray
  • Janitorial and cleaning services, including such things as window, upholstery and carpet cleaning
  • Labor charges for repairs or maintenance
  • Landscaping services, including winter snow removal
  • Limousine services, if a driver is included
  • Laundry, dry cleaning and linen services, unless it is coin-operated
  • Non-medical weight loss services
  • Pet care and grooming, and also veterinary services, unless it is for an oddly long list of specific animals, including horses (this is Kentucky, after all)
  • Camp site rental, unless the rental is for 30 days or more

However, as explained on Kentucky Department of Revenue’s website, “While the new sales tax requirement applies to many types of services, it does not apply to all types of services. For example, personal care services provided by barbers and hairdressers are not part of the expansion of taxable services.” Further, luckily for homeowners, there are many other specific exemptions (or services to which the sales tax is simply non-applicable) that can be found on Kentucky Department of Revenue’s website.

Let’s look at some specific examples of what is and what is not taxable:

Taxable
1. Sports league fees to participate in games
2. Shelter rentals for picnics
3. Gyms, ballfields, tennis courts, disc golf courses, miniature golf
4. Rental of pool facilities and party rentals
5. Locker rentals at health clubs, gyms, golf courses
6. Slip rental at boat docks
7. Entry fees for fishing tournaments
8. Entry fees for bridge tournaments or other competitive, amusement activities
9. Gun clubs, shooting ranges

10. Bingo

11. Go-karts, batting cages, zip-lines

Non-taxable
1. Team membership fees – payment to join a team is not a taxable admission
2. Professional or fraternal order memberships
3. Instructor–led recreational classes or one on one instruction for swimming, fitness classes, personal trainer exercise instruction, riding lessons, golf lessons, etc.
4. Classes to obtain a professional designation, continuing education credits, or certified training programs such as lifeguard certification classes
5. Day care or child care facilities and fees
6. Summer resident camps and day camps with educational/instructional components
7. Personal training received for music lessons, dance lessons, art classes – painting, pottery, etc.
8. Driver’s license, hunting license, or fishing license fees
9. General facility rentals – conference rooms, ballrooms, temporary storage facilities

calculator-scientific-1-300x200What should a business owner do if they now need to collect sales tax?

If this applies to your business, and you’ve not dealt with this previously, you’ll want to be sure that you understand your duties and how the tax must be collected and paid to the Kentucky Department of Revenue.

You will need to register for a Sales and Use tax account with the Department of Revenue, which you can do here. You’ll need to have your legal business name, address, responsible parties’ names and social security numbers, and business structure type available when you’re registering. You can also save your work and go back if needed.

This blog post is not to be taken as legal advice. Please consult with a qualified tax professional if you need assistance. If you’d like to talk to me, you can reach me, attorney Nathan Vinson, at (270) 781-6500 or nvinson@elpolaw.com.