KRS 139.495: Application of taxes to certain resident nonprofit institutions and limited

liability companies -- Definitions for section -- Exemptions -- Refund.

(1) As used in this section:

(a) "Educational or charitable institution" means:

1. A res ident, nonprofit educational or charitable institution that has

qualified for exemption from income taxation under Section 501(c)(3)

of the Internal Revenue Code; or

2. Any resident, single member limited liability company that is:

a. Wholly owned and cont rolled by a resident or nonresident,

nonprofit educational or charitable institution that has qualified for

exemption from income taxation under Section 501(c)(3) of the

Internal Revenue Code; and

b. Disregarded as an entity separate from the resident or n onresident,

nonprofit educational or charitable institution for federal income

tax purposes pursuant to 26 C.F.R. sec. 301.7701-2; and

(b) "Religious institution" means:

1. A resident nonprofit religious institution that has qualified for

exemption from income taxation under Section 501(c)(3) of the Internal

Revenue Code;

2. Any resident, single member limited liability company that is:

a. Wholly owned and controlled by a resident or nonresident,

nonprofit religious institution that has qualified for exemption

from income taxation under Section 501(c)(3) of the Internal

Revenue Code; and

b. Disregarded as an entity separate from the resident or nonresident,

nonprofit religious institution for federal income tax purposes

pursuant to 26 C.F.R. sec. 301.7701-2; or

3. A resident nonprofit religious institution that has chosen not to apply to

the Internal Revenue Service for a Section 501(c)(3) de signation but

would otherwise qualify for that designation by demonstrating that the

institution has:

a. A recognized creed and form of worship;

b. A distinct religious history;

c. Ordained minister that ministers to the congregation of believers;

d. An es tablished place of worship where worship services are held

in the same location on a regular basis;

e. A congregation of who regularly attend worship services; and

f. Regularly scheduled and promoted religious services for the public

to attend.

(2) (a) For educational or charitable institutions, except as provided in paragraph (b)

of this subsection, the taxes imposed by this chapter do not apply to any of the

following:

1. Purchases of tangible personal property, digital property, or services

made by these institutions, provided the tangible personal property,

digital property, or service is to be used solely in this state within the

educational or charitable function;

2. Sales of food to students in school cafeterias or lunchrooms;

3. Sales by school books tores of textbooks, workbooks, and other course

materials;

4. Sales by nonprofit, school sponsored clubs and organizations, provided

the sales do not include tickets for athletic events;

5. Sales of admissions, including the sales of admissions to a golf c ourse

when the admission is the result of a fundraising event, by educational

or charitable institutions. All other sales of admissions to a golf course

by these institutions are not exempt from tax under this section; or

6. a. Fundraising event sales made by educational or charitable

institutions.

b. As used in this subparagraph, "fundraising event sales" does not

include sales related to the operation of a retail business, including

but not limited to thrift stores, bookstores, surplus property

auctions, recycle and reuse stores, or any ongoing operations in

competition with for-profit retailers.

(b) The exemptions provided in paragraph (a)5. and 6. of this subsection shall not

apply to sales generated by or arising at a tourism development project

approved under KRS 148.851 to 148.860.

(3) (a) An educational or charitable institution shall be entitled to a refund equal to

twenty-five percent (25%) of the tax collected on its sale of donated goods if

the refund is used exclusively as reimbursement for capit al construction costs

of additional retail locations in this state, provided the institution:

1. Routinely sells donated items;

2. Provides job training and employment to individuals with workplace

disadvantages and disabilities;

3. Spends at least seventy -five percent (75%) of its annual revenue on job

training, job placement, or other related community services;

4. Submits a refund application to the department within sixty (60) days

after the new retail location opens for business; and

5. Provides records of capital construction costs for the new retail location

and any other information the department deems necessary to process

the refund.

The maximum refund allowed for any location shall not exceed one million

dollars ($1,000,000).

(b) As used in this subsection, "capital construction cost":

1. Means the cost of construction of any new facilities or the purchase and

renovation of any existing facilities; and

2. Does not include the cost of real property other than real property

designated as a brownfield site as defined in KRS 65.680(4).

(4) Notwithstanding any other provision of law to the contrary, refunds under

subsection (3) of this section shall be made directly to the institution. Interest shall

not be allowed or paid on the refund. The department may examine any refund

within four (4) years from the date the refund application is received. Any

overpayment shall be subject to the interest provisions of KRS 131.183 and the

penalty provisions of KRS 131.180.

(5) All other sales made by educational or charitable institutions are taxable and the tax

may be passed on to the purchaser as provided in KRS 139.210.

(6) For religious institutions, the taxes imposed by this chapter do not apply to any of

the following:

(a) Sales of tangible perso nal property, digital property, or services made by a

religious institution, provided the tangible personal property, digital property,

or service is sold in this state within the religious function; or

(b) Purchases of tangible personal property, digital property, or services made by

a religious institution, provided the tangible personal property, digital

property, or service is to be used solely in this state within the religious

function.