{"data":{"id":"us-ky/krs-139.534","jurisdiction":"us-ky","citation":"KRS 139.534","heading":"Tax refund for purchases and operation of certain communications and","body":"computer systems costing $100 million or more.\n(1) As used in this section:\n(a) \"Approved company\" means an eligible company that has received\npreliminary approval from the department for a sales and use tax refund under\nthis section;\n(b) \"Communications system\" means a system composed of equipment used to\nprovide communications services as defined in KRS 139.195.\n\"Communications system\" does not include repair, replacement, or spare parts\nas defined in KRS 139.010, installation materials, operating supplies, office\nsupplies, or supplies to maintain the system;\n(c) \"Computer software\" means a set of coded instructions designed to cause a\ncomputer or automatic processing equipment to perform a task;\n(d) \"Computer system\" means a system composed of personal computers, laptops,\ncomputer software, computer servers, processors, coprocessors, memory\ndevices, storage devices, input and output devices, and other similar devices\ndeployed as part  of the system configuration. \"Computer system\" does not\ninclude repair, replacement, or spare parts as defined in KRS 139.010,\ninstallation materials, operating supplies, office supplies, or supplies to\nmaintain the system;\n(e) \"Eligible company\" means a corporation, limited liability company,\npartnership, registered limited liability partnership, sole proprietorship,\nbusiness trust, or any other entity that is classified under the following 2007\nNorth American Industry Classification System (NAICS) indust ry codes,\nincluding any subsequent updates or revisions thereto:\n1. NAICS 511210, Software publishers;\n2. NAICS 518210, Data processing, hosting, and related services;\n3. NAICS 519130, Internet publishing, broadcasting, and web search portal\nbusiness; or\n4. NAICS 541511, Custom computer programming services; and\n(f) \"Qualifying system\" means:\n1. A communications system;\n2. A computer system; or\n3. A combination thereof;\nthat is subject to depreciation under Section 167 or 168 of the In ternal\nRevenue Code, including assets expensed under Section 179 of the Internal\nRevenue Code.\n(2) Notwithstanding KRS 134.580(3) and 139.770, an approved company may qualify\nfor a refund of up to one hundred percent (100%) of the Kentucky sales and use ta x\npaid, reduced by the amount of vendor compensation allowed under KRS 139.570,\non the purchase of a qualifying system.\n(3) To qualify for the refund provided in subsection (2) of this section, all of the\nfollowing requirements shall be met:\n(a) The eligible company shall file an application for preliminary approval with\nthe department prior to making the purchase;\n(b) Upon receiving preliminary approval, the approved company shall purchase\nthe qualifying system on or after July 1, 2010, and shall spend one  hundred\nmillion dollars ($100,000,000) or more on the purchase or purchases,\nexcluding tax;\n(c) The qualifying system shall be installed at a single location in the\nCommonwealth within eighteen (18) months from the date the department\npreliminarily approves the eligible company for a sales and use tax refund as\nprovided in subsection (5) of this section; and\n(d) The approved company shall use the qualifying system:\n1. At the specified location until the property is fully depreciated or, if the\napproved company elects to expense the property under Section 179 of\nthe Internal Revenue Code, the property shall be operated at the\nKentucky location for the same time as if the property were depreciated\nunder Section 167 or 168 of the Internal Revenue Code; and\n2. In the business activities that are included within the NAICS industry\ncodes listed in subsection (1)(e) of this section.\n(4) The eligible company shall file an application for preliminary approval with the\ndepartment prior to purchasing the qualifying system. The application shall be in the\nform prescribed by the department and shall include:\n(a) The name and address of the eligible company;\n(b) A description of the eligible company's business activities and applicable\nNAICS code;\n(c) A description of the qualifying system and an explanation of how the\ncomponents thereof will be used by the eligible company in its business\nactivities;\n(d) The estimated cost of the system;\n(e) The business location where the system will be located;\n(f) The date of anticipated purchase;\n(g) The anticipated installation completion date; and\n(h) Any other information the department may require.\n(5) The department shall notify the eligible company that the application for\npreliminary approval has been approved or denied.\n(6) (a) To be eligible to receive a full refund, the approved company shall file a\nrequest for a sales and use tax refund within sixty (60) days following the\ncompleted installation of qualifying system.\n(b) Failure to file a refund request within sixty (60) days shall result in an\nadjustment to the refund amount paid as follows:\n1. For late refund requests filed on or after the sixty -first day and prior to\nthe one hundred eighty-first day after the completed installation, for each\nthirty (30) days, or portion ther eof, that the refund request is late, the\nrefund amount shall be reduced by one -twelfth (1/12) of the total\namount determined by the department; and\n2. Any refund request filed more than one hundred eighty (180) days after\nthe completed installation shall be rejected, and no refunds shall be paid\nfor the time period covered by the request.\n(7) Interest shall not be allowed or paid on any sales and use tax refund made under this\nsection.\n(8) (a) If the approved company does not operate the qualifying system at the\nbusiness location where the system was initially installed for the time period\nrequired under subsection (3)(d)1. of this section, or in the manner required\nunder subsection (3)(d)2. of this section, the approved company shall notify\nthe department that the requirements of subsection (3) of this section have not\nbeen met. The approved company shall repay the previously received sales\nand use tax refunds plus interest at the rate establish ed in KRS 131.183\ncomputed from the date the refund was issued.\n(b) If the approved company fails to pay the tax and interest within thirty (30)\ndays of the notification, the department shall apply all applicable penalties\nprovided in KRS 131.180.","path":["KRS Chapter 139"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=28918","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:32Z","sha256":"b62b9dfff5e3fbd2e9aa41a88fb5ddf1da2a648231ec5699324c1b75b546f8ea","source_id":"us-ky","stale":false,"prev":"us-ky/krs-139.533","next":"us-ky/krs-139.535"},"notice":"GroundRules: Original legal text. Not legal advice."}