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Kentucky Sales Tax on Services

Kentucky Sales Tax on Services

The Kentucky Department of Revenue (DOR) has issued a new Sales Tax Facts summarizing recent legislation impacting the sales and use tax including taxation of services; changes to taxation of extended warranty services; applications for the film refund credit; and farmer exemption numbers among other changes.

The sales and use tax base has been expanded to include a number of new services effective January 1, 2023. The newly taxable services may be purchased for resale. “Limousine services” have been removed as a service subject to sales tax. Effective January 1, 2023, limousine service providers are subject to a 6% excise tax on the gross receipts of vehicle rentals, peer-to-peer car sharing rentals, ride share services, taxicab services, and limousine services. The 6% excise tax applies to any vehicle rental or service listed that originates in Kentucky.

Effective January 1, 2023, “extended warranty services” is amended to mean “services provided through a service contract agreement between the contract provider and the purchaser where the purchaser agrees to pay compensation for the contract and the provider agrees to repair, replace, support, or maintain tangible personal property, digital property, or real property according to the terms of the contract.” The intent is to also include all contracts for tangible personal property and digital property regardless of whether the property itself is taxable or exempt. For example, separately charged extended warranties purchased on exempt property such as farm equipment, machinery for new expanded industry and motor vehicles sold to certain out-of-state residents will no longer be exempt from sales and use tax.

DOR will also begin receiving new registration applications (Form 51A241) for the film refund credit, which was temporarily suspended, on or after July 1, 2022, for film productions that begin after that date. The deadline for farmers to obtain their agriculture exemption license number has been extended until January 1, 2023. All agriculture exemption license numbers will expire on December 31, 2026, and every four years thereafter. (Kentucky Sales Tax Facts No. 06/01/2022, 06/01/2022.)

Kentucky Sales Tax on Services

Ansari Law Firm

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