KRS 138.463: Collection of U-Drive-It tax. (Effective July 1, 2021)

(1) A holder of a certificate as required under KRS 281.630 to operate as a

U-Drive-It as defined in KRS 281.010:

(a) May pay the motor vehicle usage tax imposed under KRS 138.460 upon

the retail price of the motor vehicle; or

(b) May pay the motor vehicle usage tax of six percent (6%) upon the

amount of the gross rental or lease charges paid by a customer or lessee

renting or leasing a motor vehicle from such holder of the certificate,

subject to the provisions of this section and KRS 138.470.

(2) The provisions of KRS 138.462 and this section shall apply to all rental and

leasehold contracts entered into after March 9, 1990.

(3) A holder of a certificate shall pay the usage tax as provided in KRS 138.460

unless he shows to the satisfaction of the cabinet that he is regularly engaged

in the renting or leasing of motor vehicles to retail customers as a part of an

established business. The issuance of a U-Drive-It certificate under the

provisions of KRS Chapter 281 shall create a rebuttable presumption that the

holder of a certificate is regularly engaged in renting or leasing. Persons first

engaging in the renting or leasing of motor vehicles to retail customers shall, in

addition to obtaining a certificate required under KRS 281.630, demonstrate to

the satisfaction of the cabinet that they are prepared to qualify under the

standards set forth in this subsection.

(4) In the event the holder of such certificate qualifies under subsection (3) of this

section and elects to pay the motor vehicle usage tax by the alternate method

as provided in subsection (1)(b) of this section, or is required by subsection (8)

of this section to pay by the alternate method, he shall pay the fee imposed by

KRS 281.631(3) and in addition shall pay the monthly tax authorized by

subsection (1) of this section.

(5) The tax authorized by subsection (1) of this section shall be the direct

obligation of the holder of the certificate but it may be charged to and collected

from the customer in addition to the rental or lease charges. The tax due shall

be remitted to the cabinet each month on forms and pursuant to regulations

promulgated by the cabinet.

(6) (a) As soon as practicable after each return is received, the cabinet shall

examine and audit it. If the amount of tax computed by the cabinet is

greater than the amount returned by the taxpayer, the excess shall be

assessed by the cabinet within four (4) years from the date the return was

filed, except as provided in paragraph (c) of this subsection, and except

that in the case of a failure to file a return or of a fraudulent return the

excess may be assessed at any time. A notice of such assessment shall

be mailed to the taxpayer. The time herein provided may be extended by

agreement between the taxpayer and the cabinet.

(b) For the purpose of paragraphs (a) and (c) of this subsection, a return filed

before the last day prescribed by law for the filing thereof shall be

considered as filed on such last day.

(c) Notwithstanding the four (4) year time limitation of paragraph (a) of this

subsection, in the case of a return where the tax computed by the cabinet

is greater by twenty-five percent (25%) or more than the amount returned

by the taxpayer, the excess shall be assessed by the cabinet within six (6)

years from the date the return was filed.

(7) Failure of the holder of the certificate to remit the taxes applicable to the rental

charges as provided herein shall be sufficient cause for the Department of

Vehicle Regulation to void the certificate issued to such holder and the usage

tax on each of the motor vehicles which had been registered by the holder

under the certificate shall be due and payable on the retail price of each such

motor vehicle when it was first purchased by the holder.

(8) Notwithstanding the provisions of KRS 138.460 and subsection (1) of this

section, a holder of a certificate operating a fleet of rental passenger cars

which has been registered pursuant to an allocation formula approved by the

cabinet shall pay the tax by the method provided in this section. The provisions

of this section shall apply to all vehicles rented by the holder in this state.

(9) The usage tax reported and paid on every rental or lease of a vehicle

registered pursuant to this section shall be based on the fair market rental or

lease value of the vehicle. Fair market rental or lease value shall be based on

standards established by administrative regulation promulgated by the cabinet.

The cabinet may remove a vehicle from the U-Drive-It program without a

hearing if it is determined by the cabinet that no taxes have been remitted on

that vehicle during the registration period. However, the tax reported and paid

to the Transportation Cabinet shall not be less than the amount due based on

the actual terms of a rental or lease agreement. The burden of proving that the

consideration charged by the holder satisfies this subsection is on the holder.