Melissa Juried Kriebel
As Kentuckians ring in the new year, they can also expect to pay new sales taxes on some items and services.
During the 2022 legislative session, the Kentucky General Assembly passed House Bill 8, which lowers the state income tax to 4% but applies the state’s 6% sales tax to a variety of services that had been exempt. Gov. Andy Beshear vetoed the Republican sponsored bill, but lawmakers overrode the veto. The bill passed in April and takes effect on Jan. 1.
Here’s a look at five of the more than 30 services that will be impacted by House Bill 8.
Non-primary residential electric utility bills
Residents across Kentucky who own more than one residential property can expect to see a sales tax applied to the electric utility bill of their non-primary residences.
“The majority of our residential customers have one property, and this law does not apply … This law does apply to customers who have service at multiple residential properties,” said Liz Pratt, media relations manager at LG&E and KU. “They will have to pay sales tax on their properties that are not their primary residence.”
For residents with multiple residential properties, they will need to fill out a Declaration of Domicile. Jill Midkiff, a spokesperson for the Finance and Administration Cabinet’s Department of Revenue, said utility providers will alert customers if they need to declare a domicile location, otherwise residents do not need to do anything.
“No utility should be automatically defaulting all customer accounts to taxable on Jan. 1, 2023, absent a declaration,” Midkiff said. “Only those with more than one account should be asked to complete the form to identify which service address is their primary domicile.”
Renters will need to check with their landlord to see if the metered utility service is in the landlord’s name or the renter’s name to best determine if they need to complete a declaration of domicile.
“In many cases when you rent, your utility services are in your name and the property you rent is considered your primary residence. In this case, there’s no additional action needed,” Pratt said. “In some instances, a landlord has service to multiple residential properties in their name – instead of being in their tenants’ name – and their tenants would need to complete our online tax exemption form to let us know the property is their primary residence. Landlords cannot submit the form on their tenants’ behalf.”
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Getting a background check will be more costly in the coming year. The commonwealth uses personal background check services for a variety of things. All childcare staff working in the state must have a background check completed. Many counties across the state require teachers and education professionals to complete a background check, and even college students enrolled in education majors at schools like Eastern Kentucky University are expected to complete a background check.
According to Senate Bill 7, any employer may require a background check as a condition of employment.
The Kentucky State Police offers background checks for $20 and up to an additional $10 for a background check with fingerprints. In 2023 a complete KSP background check will cost 6% more due to the addition of a sales tax, making it $31.80.
Health and fitness activities
The Kentucky legislature has added a sales tax to a slew of health and fitness activities. For example, sales taxes will now be applied to leisure, recreational and athletic instruction, recreational camp tuition and fees and personal fitness training services.
That means young athletes and their families can expect to pay a sales tax on recreational athletic instruction.
Locally, places like Edge Sports Performance, a sports sand personal training business will no longer be able to offer flat rates for training but will be required to collect sales taxes. Even nonprofits such as the YMCA will be required to collect sales taxes on programs and services, but memberships will remain tax free.
“The new sales tax was neither initiated nor supported by the Y, but we will abide by the new laws,” said Steve Tarver, president and CEO of the YMCA of Greater Louisville. “This (sales tax) will be collected and remitted to the state directly by the YMCA.”
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Ride sharing services
Next time you order a ride share from companies like Uber or Lyft, expect to see it cost a bit more.
The Kentucky Department of Revenue will begin collecting a sales tax from ride share services, taxicab services, limousine services, car rental companies like Enterprise and peer-to-peer car sharing companies like Getaround.
While many of these companies operate from apps downloaded on a phone and are not locally based, it will be up to the company to collect and pay the 6% sales tax to the state.
“It is the responsibility of the service provider to collect sales tax from the consumer at the time of service and remit sales tax to the Department of Revenue by the 20th day (of each month),” Midkiff said. “This is the same process that exists for other businesses currently collecting sales tax at the point of sale.”
Next year, that tattoo you want will come with a sales tax. So will the body piercing, the scarification, the branding, the transdermal and subdermal implants, the ear pointing, the teeth pointing, the tongue splitting, and any other body modifications that are for cosmetic purposes and not deemed medically necessary.
The Kentucky legislature has also deemed all cosmetic surgeries such as a nose job, a tummy tuck, breast reduction and more as a taxable services. Cosmetic surgeries will only remain sales tax free if they are medically necessary as determined by a medical professional.
Contact reporter Olivia Evans at firstname.lastname@example.org or on Twitter at @oliviamevans_