{"data":{"id":"us-ky/krs-139.495","jurisdiction":"us-ky","citation":"KRS 139.495","heading":"Application of taxes to certain resident nonprofit institutions and limited","body":"liability companies -- Definitions for section -- Exemptions -- Refund.\n(1) As used in this section:\n(a) \"Educational or charitable institution\" means:\n1. A res ident, nonprofit educational or charitable institution that has\nqualified for exemption from income taxation under Section 501(c)(3)\nof the Internal Revenue Code; or\n2. Any resident, single member limited liability company that is:\na. Wholly owned and cont rolled by a resident or nonresident,\nnonprofit educational or charitable institution that has qualified for\nexemption from income taxation under Section 501(c)(3) of the\nInternal Revenue Code; and\nb. Disregarded as an entity separate from the resident or n onresident,\nnonprofit educational or charitable institution for federal income\ntax purposes pursuant to 26 C.F.R. sec. 301.7701-2; and\n(b) \"Religious institution\" means:\n1. A resident nonprofit religious institution that has qualified for\nexemption from income taxation under Section 501(c)(3) of the Internal\nRevenue Code;\n2. Any resident, single member limited liability company that is:\na. Wholly owned and controlled by a resident or nonresident,\nnonprofit religious institution that has qualified for exemption\nfrom income taxation under Section 501(c)(3) of the Internal\nRevenue Code; and\nb. Disregarded as an entity separate from the resident  or nonresident,\nnonprofit religious institution for federal income tax purposes\npursuant to 26 C.F.R. sec. 301.7701-2; or\n3. A resident nonprofit religious institution that has chosen not to apply to\nthe Internal Revenue Service for a Section 501(c)(3) de signation but\nwould otherwise qualify for that designation by demonstrating that the\ninstitution has:\na. A recognized creed and form of worship;\nb. A distinct religious history;\nc. Ordained minister that ministers to the congregation of believers;\nd. An es tablished place of worship where worship services are held\nin the same location on a regular basis;\ne. A congregation of who regularly attend worship services; and\nf. Regularly scheduled and promoted religious services for the public\nto attend.\n(2) (a) For educational or charitable institutions, except as provided in paragraph (b)\nof this subsection, the taxes imposed by this chapter do not apply to any of the\nfollowing:\n1. Purchases of tangible personal property, digital property, or services\nmade by these  institutions, provided the tangible personal property,\ndigital property, or service is to be used solely in this state within the\neducational or charitable function;\n2. Sales of food to students in school cafeterias or lunchrooms;\n3. Sales by school books tores of textbooks, workbooks, and other course\nmaterials;\n4. Sales by nonprofit, school sponsored clubs and organizations, provided\nthe sales do not include tickets for athletic events;\n5. Sales of admissions, including the sales of admissions to a golf c ourse\nwhen the admission is the result of a fundraising event, by educational\nor charitable institutions. All other sales of admissions to a golf course\nby these institutions are not exempt from tax under this section; or\n6. a. Fundraising event sales made  by educational or charitable\ninstitutions.\nb. As used in this subparagraph, \"fundraising event sales\" does not\ninclude sales related to the operation of a retail business, including\nbut not limited to thrift stores, bookstores, surplus property\nauctions, recycle and reuse stores, or any ongoing operations in\ncompetition with for-profit retailers.\n(b) The exemptions provided in paragraph (a)5. and 6. of this subsection shall not\napply to sales generated by or arising at a tourism development project\napproved under KRS 148.851 to 148.860.\n(3) (a) An educational or charitable institution shall be entitled to a refund equal to\ntwenty-five percent (25%) of the tax collected on its sale of donated goods if\nthe refund is used exclusively as reimbursement for capit al construction costs\nof additional retail locations in this state, provided the institution:\n1. Routinely sells donated items;\n2. Provides job training and employment to individuals with workplace\ndisadvantages and disabilities;\n3. Spends at least seventy -five percent (75%) of its annual revenue on job\ntraining, job placement, or other related community services;\n4. Submits a refund application to the department within sixty (60) days\nafter the new retail location opens for business; and\n5. Provides records of capital construction costs for the new retail location\nand any other information the department deems necessary to process\nthe refund.\nThe maximum refund allowed for any location shall not exceed one million\ndollars ($1,000,000).\n(b) As used in this subsection, \"capital construction cost\":\n1. Means the cost of construction of any new facilities or the purchase and\nrenovation of any existing facilities; and\n2. Does not include the cost of real property other than real property\ndesignated as a brownfield site as defined in KRS 65.680(4).\n(4) Notwithstanding any other provision of law to the contrary, refunds under\nsubsection (3) of this section shall be made directly to the institution. Interest shall\nnot be allowed or paid on the refund. The department may examine any refund\nwithin four (4) years from the date the refund application is received. Any\noverpayment shall be subject to the interest provisions of KRS 131.183 and the\npenalty provisions of KRS 131.180.\n(5) All other sales made by educational or charitable institutions are taxable and the tax\nmay be passed on to the purchaser as provided in KRS 139.210.\n(6) For religious institutions, the taxes imposed by this chapter do not apply to any of\nthe following:\n(a) Sales of tangible perso nal property, digital property, or services made by a\nreligious institution, provided the tangible personal property, digital property,\nor service is sold in this state within the religious function; or\n(b) Purchases of tangible personal property, digital property, or services made by\na religious institution, provided the tangible personal property, digital\nproperty, or service is to be used solely in this state within the religious\nfunction.","path":["KRS Chapter 139"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=58196","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:32Z","sha256":"47cfeed2f482dcef9e1df59df2d368ce9163ff2b625ecad980a2cb625f310ab7","source_id":"us-ky","stale":false,"prev":"us-ky/krs-139.490","next":"us-ky/krs-139.496"},"notice":"GroundRules: Original legal text. Not legal advice."}