KRS 138.4605: Taxes on loaner or rental motor vehicles.

(1) A motor vehicle dealer who operates a service or repair component in his dealership

may register a motor vehicle to be used exclusively as a loaner or rental motor

vehicle to the customers of this service or repair department. The dealer may pay

usage tax on the loaner or rental motor vehicle as provided in KRS 138.460, or,

subject to the provisions of this section, may pay a usage tax of twenty -five dollars

($25) per month on the loaner or rental motor vehicle.

(2) A dealer shall pay the usage tax on a loa ner or rental motor vehicle in the manner

provided by KRS 138.460 unless the dealer shows to the satisfaction of the

Department of Revenue that he is regularly engaged in the servicing or repair of

motor vehicles and loans or rents the loaner or rental mot or vehicle to a retail

customer while the customer's motor vehicle is at the dealership for repair or

service.

(3) For a dealer to be eligible to pay the usage tax on a loaner or rental motor vehicle

under this section, the dealer shall identify the motor vehicle as a loaner or rental

motor vehicle to the Department of Revenue and shall maintain records, as required

by the Department of Revenue, which show all uses of the loaner or rental motor

vehicle.

(4) The tax due under subsection (1) of this section s hall be remitted to the Department

of Revenue monthly on forms prescribed by and in accordance with administrative

regulations promulgated by the department.

(5) Failure of a motor vehicle dealer to remit the taxes applicable to a loaner or rental

motor ve hicle under this section shall be sufficient cause for the Department of

Revenue to revoke the authority to use that motor vehicle as a loaner or rental motor

vehicle and cause the usage tax on that motor vehicle to be due and payable in

accordance with KRS 138.460 on the retail price of that motor vehicle when it was

first registered as a loaner or rental motor vehicle.

(6) A motor vehicle no longer covered under the loaner permit program shall be taxed

in the same manner as motor vehicles under KRS 138.450(12) or (16).