KRS 160.613: Utility gross receipts license tax for schools -- Exemptions -- User liable if

supplier is exempt -- Direct pay authorization -- Tollers.

(1) There is hereby authorized a utility gross receipts license tax for schools not to

exceed three percent (3%) of the gross receipts derived from the furnishing, within

the district, of utility services, except that "gross receipts" shall not include amounts

received for furnishing:

(a) Energy or energy -producing fuels to a person engaged in manufacturin g or

industrial processing as provided in subsection (3) or (4) of this section, if that

person provides the utility services provider with a copy of its utility gross

receipts license tax energy direct pay authorization, as provided in subsection

(3) of t his section, and the utility service provider retains a copy of the

authorization in its records;

(b) Utility services which are to be resold; or

(c) Notwithstanding subsection (2) of this section, electricity used or consumed at

a colocation facility in commercial mining of cryptocurrency:

1. If the facility operator provides the utility services provider with a copy

of its utility gross receipts license tax exemption certificate, as

authorized by subsection (6) of this section, and the utility service

provider retains a copy of the exemption certificate in its records; or

2. If the utility service provider is a governmental agency, the facility

operator shall retain the exemption certificate in its records.

(2) If any user of utility services purchases th e utility services directly from any

supplier who is exempt either by state or federal law from the utility gross receipts

license tax, then the user of the utility services, if the tax has been levied in the

user's school district, shall be liable for the tax and shall register with and pay

directly to the department, in accordance with the provisions of KRS 160.615, a

utility gross receipts license tax for schools computed by multiplying the gross cost

of all utility services received by the tax rate levi ed under the provisions of this

section.

(3) A person engaged in manufacturing or industrial processing whose cost of energy

or energy -producing fuels used in the course of manufacturing or industrial

processing exceeds an amount equal to three percent (3% ) of the cost of production

may apply to the department for a utility gross receipts license tax energy direct pay

authorization. Cost of production shall be computed on the basis of a plant facility,

which shall include all operations within the continuou s, unbroken, integrated

manufacturing or processing production process that ends with a product packaged

and ready for sale. If the person receives confirmation of eligibility from the

department, the person shall:

(a) Provide the utility services provider with a copy of the utility gross receipts

license tax energy direct pay authorization issued by the department for all

purchases of energy and energy-producing fuels; and

(b) Report and pay directly to the department, in accordance with the provisions

of KRS 160.615, the utility gross receipts license tax due.

(4) A person who performs a manufacturing or industrial processing activity for a fee

and does not take ownership of the tangible personal property that is incorp orated

into, or becomes the product of, the manufacturing or industrial processing activity

is a toller. For periods on or after July 1, 2018, the costs of the tangible personal

property shall be excluded from the toller's cost of production at a plant fac ility

with tolling operations in place as of July 1, 2018.

(5) For plant facilities that begin tolling operations after July 1, 2018, the costs of

tangible personal property shall be excluded from the toller's cost of production if

the toller:

(a) Maintains a binding contract for periods after July 1, 2018, that governs the

terms, conditions, and responsibilities with a separate legal entity, which

holds title to the tangible personal property that is incorporated into, or

becomes the product of, the manufacturing or industrial processing activity;

(b) Maintains accounting records that show the expenses it incurs to fulfill the

binding contract that include but are not limited to energy or energy -

producing fuels, materials, labor, procurement, depreciation, maintenance,

taxes, administration, and office expenses;

(c) Maintains separate payroll, bank accounts, tax returns, and other records that

demonstrate its independent operations in the performance of its tolling

responsibilities;

(d) Demonstrates one (1) or more substantial business purposes for the tolling

operations germane to the overall manufacturing, industrial processing

activities, or corporate structure at the plant facility. A business purpose is a

purpose other than the reduction of utility gross receipts license tax liability

for the purchases of energy and energy-producing fuels; and

(e) Provides information to the department upon request that documents

fulfillment of the requirements in paragraphs (a) to (d) of this subsection and

gives an over view of its tolling operations with an explanation of how the

tolling operations relate and connect with all other manufacturing or industrial

processing activities occurring at the plant facility.

(6) (a) The operator of a colocation facility primarily en gaged in the commercial

mining of cryptocurrency may apply to the department for a utility gross

receipts license tax exemption certificate. If the operator receives

confirmation of eligibility from the department, it:

1. Shall provide the utility services provider with a copy of the utility gross

receipts license tax exemption certificate issued by the department for

all purchases of electricity; or

2. Keep the certificate on file if the utility service provider is a

governmental agency.

(b) The utility gr oss receipts license tax exemption shall be effective from the

date of confirmation of eligibility until June 30, 2030.