{"data":{"id":"us-ky/krs-139.215","jurisdiction":"us-ky","citation":"KRS 139.215","heading":"Taxation of bundled transactions.","body":"(1) Unless otherwise provided by federal law, the following rules shall apply to a\nbundled transaction, as defined in subsection (3) of this section, that includes any or\nall of a telecommunications service, ancillary service, Internet access, audio\nprogramming, or video programming:\n(a) If the price is attributable to products that are taxable and products that are\nnontaxable, the portion of the price attributable to the nontaxable product is\nsubject to tax unless the provider can identify, by reasonable and v erifiable\nstandards, the portion of the products that are nontaxable from its books and\nrecords that are kept in the regular course of business for other purposes,\nincluding nontax purposes; or\n(b) If the price is attributable to products that are subject to tax at different rates,\nthe total price shall be treated as attributable to the products subject to tax at\nthe highest rate unless the provider can identify, by reasonable and verifiable\nstandards, the portion of the price attributable to the products s ubject to tax at\nthe lower rate from its books and records that are kept in the regular course of\nbusiness for other purposes, including nontax purposes.\n(2) The following rules shall apply to all bundled transactions, except as provided in\nsubsection (1) of this section:\n(a) If the price is attributable to products where taxable and exempt tangible\npersonal property have been bundled together and sold by the retailer as a\nbundled transaction, the entire charge is subject to tax;\n(b) If the price is attribu table to products where taxable products and exempt\nservices have been bundled together and sold by the retailer as a bundled\ntransaction, the entire charge is subject to tax.\n(3) For purposes of this section:\n(a) \"Bundled transaction\" means the retail sal e of two (2) or more products,\nexcept real property and services to real property, where:\n1. The products are otherwise distinct and identifiable; and\n2. The products are sold for one (1) nonitemized price;\n(b) \"Distinct and identifiable products\" do not include:\n1. Packaging such as containers, boxes, sacks, bags, bottles, wrapping\nmaterials, labels, tags, or instruction guides that accompany the retail\nsale of the products and are incidental or immaterial to the retail sale\nthereof. Examples include groce ry sacks, shoe boxes, dry cleaning\ngarment bags, and express delivery envelopes and boxes.\n2. A product provided free of charge with the required purchase of another\nproduct. A product is provided free of charge if the sales price of the\nproduct purchased does not vary depending on the inclusion of the\nproduct provided free of charge; or\n3. Items included in the definition of sales price: and\n(c) \"One (1) nonitemized price\" does not include a price that is separately\nidentified by product on binding sales or other supporting sales -related\ndocumentation made available to the customer in paper or elec tronic form,\nincluding but not limited to an invoice, bill of sale, receipt, contract, service\nagreement, lease agreement, periodic notice of rates and services, rate card, or\nprice list.\n(4) A \"bundled transaction\" does not include:\n(a) The retail sale of any products in which the sales price varies or is negotiable,\nbased on the selection by the purchaser of the products included in the\ntransaction;\n(b) The retail sale of tangible personal property and a service where the tangible\npersonal property is ess ential to the use of the service, and is provided\nexclusively in connection with the service, and the true object of the\ntransaction is the service;\n(c) The retail sale of digital property and a service where the digital property is\nessential to the use of  the service, and is provided exclusively in connection\nwith the service, and if the true object of the transaction is the service;\n(d) The retail sale of services where one (1) service is provided that is essential to\nthe use or receipt of a second servic e and the first service is provided\nexclusively in connection with the second service and the true object of the\ntransaction is the second service;\n(e) A transaction that includes taxable products and nontaxable products if the\npurchase price or sales pric e of the taxable products is de minimis. For\npurposes of this section, \"de minimis\" means the seller's purchase price or the\nsales price of the taxable products is ten percent (10%) or less of the total\npurchase price or sales price of the bundled products . Sellers shall use either\nthe purchase price or the sales price of the products to determine if the taxable\nproducts are de minimis. Sellers shall not use a combination of the purchase\nprice and the sales price of the products to determine if the taxable products\nare de minimis. Sellers shall use the full term of a service contract to\ndetermine if the taxable products are de minimis; or\n(f) The retail sale of exempt tangible personal property and taxable tangible\npersonal property where:\n1. The transaction includes:\na. Food and food ingredients as defined in KRS 139.485;\nb. Drugs as defined in KRS 139.472;\nc. Durable medical equipment as defined in KRS 139.472;\nd. Mobility enhancing equipment as defined in KRS 139.472;\ne. Medical supplies; or\nf. Over-the-counter drugs as defined in KRS 139.472; and\n2. The seller's purchase price or sales price of the taxable tangible personal\nproperty is fifty percent (50%) or less of the total purchase price or sales\nprice of the bundled tangible personal property. Sellers shall not use a\ncombination of the purchase price and the sales price of the tangible\npersonal property when making the fifty percent (50%) determination\nfor a transaction.","path":["KRS Chapter 139"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=28863","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:31Z","sha256":"a1848fc650a294e7271b1fed3d387761bc8fe687df4516403535b199c003acae","source_id":"us-ky","stale":false,"prev":"us-ky/krs-139.210","next":"us-ky/krs-139.220"},"notice":"GroundRules: Original legal text. Not legal advice."}