Kentucky – Taxability of Labor Charges for Fabricating Property

SALT Report 1600 – The latest issue of the Kentucky Sales Tax Facts newsletter discusses the taxability of labor charges for fabricating tangible personal property. Under 103 KAR 28:030, sales tax applies to the price of tangible personal property that is cut, threaded, shaped, bent, polished, welded, sheared, engraved, punched, drilled, machined, monogrammed, decoratively stitched, or has work performed on it that changes it from its original state into something with different characteristics.
Kentucky state sales tax applies to the total selling price of the fabricated property regardless of whether the seller or buyer provides it for fabrication.  Additionally, all labor and service costs are considered part of the charge for the production of the item and should be included in the gross receipts from the sale.
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