Kentucky – Disaster Relief Sales and Use Tax Refund

SALT Report 1481 – Kentucky Governor Steve Beshear recently signed legislation that provides a refund of sales and use taxes paid on purchases of building materials that were used on buildings that were damaged or destroyed by the storms that occurred from February 29, 2012 through March 3, 2012.  The refund is available to buildings in the following counties:

  • Adair
  • Ballard
  • Bath
  • Campbell
  • Carroll
  • Grant
  • Grayson
  • Johnson
  • Kenton
  • Larue
  • Laurel
  • Lawrence
  • Magoffin
  • Martin
  • Menifee
  • Montgomery
  • Morgan
  • Ohio
  • Pendleton
  • Rowan
  • Russell
  • Trimble, and
  • Wolfe

The refund is limited to $6,000 for each building, or 100% of the Kentucky sales and use tax paid, minus the vendor compensation permitted to sellers under Kentucky law.

The vendor compensation that a seller is permitted to deduct from each return is 1.75% of the first $1,000 of taxes due and 1% of the taxes due in excess of $1,000, with an overall cap of $1,500 for any reporting period. All purchases of building materials must be made by the building’s legal owner or by a contractor under contract with owner.  Purchases must also include a declaration that the building is located in a county that was designated a federal disaster.

The vendor compensation that a seller is permitted to deduct from each return is 1.75% of the first $1,000 of taxes due and 1% of the taxes due in excess of $1,000, with a maximum deduction of $1,500 for any reporting period. All purchases of building materials must be made by the building’s legal owner or by a contractor under contract with the legal owner.  Purchases must also include a declaration that the building is located in a county that has was designated a federal disaster area.

Applications for a tax refund must be made within three years of the date that the county was declared a disaster area and a separate refund application must be filed for each building. Building owners are not obligated to return any sales and use tax to vendors, contractors, or subcontractors that is refunded by the DOR. To prove a building’s eligibility the legal owner must provide documentation showing that they are eligible for assistance from the Federal Emergency Management Agency or a copy of an insurance claim.

The Kentucky DOR has authorized thirty-day extensions for taxpayers who are having difficulty meeting their sales and use tax filing deadlines.

For Further Information:

Kentucky Department of Revenue – Notice