{"data":{"id":"us-ky/krs-141.389","jurisdiction":"us-ky","citation":"KRS 141.389","heading":"Nonrefundable and nontransferable distilled spirits ad valorem tax credit -","body":"- Election to waive credits -- Credit to be used only for capital improvement at\nlicensed distiller's premises -- Refundable credit for taxpayer investing and\ncreating jobs in area of low and moderate income -- Administrative regulations\n-- Annual report.\n(1) (a) There shall be allowed a nonrefundable and nontransferable credit to each\ntaxpayer paying the distilled spirits ad valorem tax as follows:\n1. For taxable years beg inning on or after January 1, 2015, and before\nDecember 31, 2015, the credit shall be equal to twenty percent (20%) of\nthe tax assessed under KRS 132.160 and paid under KRS 132.180 on a\ntimely basis;\n2. For taxable years beginning on or after January 1, 20 16, and before\nDecember 31, 2016, the credit shall be equal to forty percent (40%) of\nthe tax assessed under KRS 132.160 and paid under KRS 132.180 on a\ntimely basis;\n3. For taxable years beginning on or after January 1, 2017, and before\nDecember 31, 2017,  the credit shall be equal to sixty percent (60%) of\nthe tax assessed under KRS 132.160 and paid under KRS 132.180 on a\ntimely basis;\n4. For taxable years beginning on or after January 1, 2018, and before\nDecember 31, 2018, the credit shall be equal to eig hty percent (80%) of\nthe tax assessed under KRS 132.160 and paid under KRS 132.180 on a\ntimely basis; and\n5. For taxable years beginning on or after January 1, 2019, but prior to\nJanuary 1, 2024, the credit shall be equal to one hundred percent (100%)\nof the tax assessed under KRS 132.160 and paid under KRS 132.180 on\na timely basis.\n(b) The credit shall be applied both to the income tax imposed under KRS\n141.020 or 141.040 and to the limited liability entity tax imposed under KRS\n141.0401, with the ordering of the credits as provided in KRS 141.0205.\n(2) (a) For purposes of this section:\n1. \"Accumulated amount\" means the tax credits that have been\naccumulated by a taxpayer under subsection (4)(a) of this section;\n2. \"Base reduction percentage\" means the percentage by which the\ntaxpayer's total number of barrels of distilled spirits stored or aging in\nthis state as of January 1 of a taxable year does not equal or exceed the\ntaxpayer's total number of barrels of distilled spirits stored or aging in\nthis state as of January 1, 2025;\n3. \"Business-wide reduction\" has the same meaning as in KRS 138.208;\n4. \"Extraordinary event\" has the same meaning as in KRS 138.208; and\n5. \"LMI\" means a low and moderate income population where the county\nmedian family income or county median household income is less than\neighty percent (80%) of the state median fami ly income or state median\nhousehold income, respectively, as determined by using the most recent\nfive (5) year American Community Survey published by the United\nStates Census Bureau. For purposes of this section, once a county has\nbeen identified as an LMI  population, the county shall remain an LMI\npopulation without regard to future determinations using the United\nStates Census Bureau data.\n(b) A taxpayer may make an election regarding the distilled spirits tax credit\nrelated to taxable years beginning on or after January 1, 2024, but prior to\nJanuary 1, 2040. The election shall be to:\n1. a. Waive any accumulated amount of tax credits; and\nb. Be allowed a nonrefundable and nontransferable tax credit up to\ntwenty-five thousand (25,000) barrels of distilled s pirits in a\nbonded warehouse or premises for each taxable year. The tax\ncredit shall be equal to one hundred percent (100%) of the tax\nassessed under KRS 132.160 and paid by the taxpayer under KRS\n132.180 on a timely basis on those barrels; or\n2. a. Waive all future tax credits allowed under this section; and\nb. Be allowed a refundable tax credit on multiple taxes as described\nin subsection (7) of this section.\n(c) Any election made under this subsection shall be made on a form prescribed\nby the department and shall be submitted to the department on or before the\ndue date of the tax return, including an extension of time to file a return under\nKRS 141.170, for the taxpayer's first taxable year beginning on or after\nJanuary 1, 2024.\n(d) Any election made unde r this subsection shall be binding on both the\ndepartment and the taxpayer and shall be irrevocable.\n(3) The amount of distilled spirits credit allowed under subsection (1) of this section\nshall be used only for capital improvements at the premises of the distiller licensed\npursuant to KRS Chapter 243. As used in this subsection, \"capital improvement\"\nmeans any costs associated with:\n(a) Construction, replacement, or remodeling of warehouses or facilities;\n(b) Purchases of barrels and pallets used for the s torage and aging of distilled\nspirits in maturing warehouses;\n(c) Acquisition, construction, or installation of equipment for the use in the\nmanufacture, bottling, or shipment of distilled spirits;\n(d) Addition or replacement of access roads or parking facilities; and\n(e) Construction, replacement, or remodeling of facilities to market or promote\ntourism, including but not limited to a visitor's center.\n(4) The distilled spirits credit allowed under subsection (1) of this section:\n(a) May be accumulated for multiple taxable years;\n(b) Shall be claimed on the return of the taxpayer filed for the taxable year during\nwhich the credits were used pursuant to subsection (3) of this section; and\n(c) Shall not include:\n1. Any delinquent tax paid to the Commonwealth; or\n2. Any interest, fees, or penalty paid to the Commonwealth.\n(5) (a) Before the distilled spirits credit allowed under subsection (1) of this section\nshall be claimed on any return, the capital improvements required by\nsubsection (3) of this section shall be completed and specifically associated\nwith the credit allowed on the return.\n(b) The amount of distilled spirits credit allowed shall be recaptured if the capital\nimprovement associated with the credit is sold or otherwise disposed of prior\nto the exhaustion of the useful life of the asset for Kentucky depreciation\npurposes.\n(c) If the allowed credit is associated with multiple capital improvements, and not\nall capital improvements are sold or otherwise disposed of, the distilled spirits\ncredit shall be prorated based on the cost of the capital improvement sold over\nthe total cost of all improvements associated with the credit.\n(6) If the taxpayer is a pass -through entity, the taxpayer may apply the credits allowed\nin subsection (1) or (2) of this section against the limited liability entity tax imposed\nby KRS 141.0401, an d shall pass the credits through to its members, partners, or\nshareholders in the same proportion as the distributive share of income or loss is\npassed through.\n(7) (a) For taxable years beginning on or after January 1, 2026, a taxpayer making an\nelection under subsection (2)(b)2. of this section is entitled to a refundable tax\ncredit if the taxpayer:\n1. Makes a capital investment of at least twenty million dollars\n($20,000,000) within an LMI; and\n2. Creates ten (10) or more new jobs within an LMI.\n(b) Upon certification to the department that the capital investment has been\nmade and the jobs have been created within an LMI, the department shall:\n1. Award a refundable credit that is:\na. Equal to no more than fifty percent (50%) of the accumulated\namount;\nb. Based on the sales and use tax paid on the purchase of tangible\npersonal property used in the capital investment within the LMI\nand the withholding of tax from wages paid by the taxpayer as an\nemployer under KRS 141.310 from employees hired to fill the jobs\ncreated within the LMI; and\nc. Refunded over a period, the earlier of which is:\na. Fifteen (15) years; or\nb. Until the amount determined in subdivision a. of this\nsubparagraph has been utilized through the sales and use tax\nand withholding tax remitted; and\n2. Reduce the taxpayer's accumulated amount by the amount refunded.\n(c) 1. Any portion of the fifty percent (50%) of the accumulated amount\nremaining on or after March 1, 2039, shall lapse.\n2. No later than June 15, 2039, the department shall report to  the Interim\nJoint Committee on Appropriations and Revenue the total of the lapsing\naccumulated amounts and the number of taxpayers related to the lapsing\naccumulated total.\n(d) 1. To qualify for the portion of the refundable credit for sales and use tax\npaid under paragraph (b) of this subsection, the taxpayer shall:\na. Collect from the purchasers of tangible personal property used in\nthe construction, replacement, or remodeling of warehouses or\nfacilities all documentation relating to the payment of sales  or use\ntax;\nb. Document sales and use tax paid directly by the taxpayer; and\nc. File an application for refund of the sales or use tax paid as\nreflected in the documentation collected.\n2. To qualify for the portion of the refundable credit for tax withhel d from\nemployees, the taxpayer shall document the amount withheld and file an\napplication for a refund as prescribed by the department.\n(e) Requests for a refund shall be filed annually and shall cover purchases made\nor the amount withheld from employees d uring the immediately preceding\nyear. Requests for a refund shall be filed in the manner directed by the\ndepartment.\n(f) Interest shall not be allowed or paid on any refund made under this section.\n(g) To fulfill the requirements for a sales and use tax refund, the taxpayer shall\nexecute information -sharing agreements prescribed by the department with\ncontractors, vendors, a nd other related parties to verify construction material\ncosts.\n(8) (a) Notwithstanding subsection (7) of this section, for taxable years beginning on\nor after January 1, 2026, the taxpayer's accumulated amount shall be reduced\nby the taxpayer's base reduc tion percentage, including a recapture of any\ncredits which have previously been refunded.\n(b) If a business-wide reduction or extraordinary event occurs, any taxpayer may\napply to the secretary of the Finance and Administration Cabinet for a waiver\nof the reduction in the accumulated amount.\n(9) The department may promulgate an administrative regulation pursuant to KRS\nChapter 13A to implement the allowable credits under this section, require the\nfiling of forms designed by the department, and require spec ific information for the\nevaluation of the credits taken by any taxpayer.\n(10) No later than September 1, 2016, and annually thereafter, the department shall\nreport to the Interim Joint Committee on Appropriations and Revenue:\n(a) The name of each taxpayer  taking the credits permitted by subsection (1) or\n(2) of this section;\n(b) The amount of credits taken by that taxpayer;\n(c) The type of capital improvement made for which the credit allowed under\nsubsection (1) of this section is claimed;\n(d) Whether the credits offset tax liability or were refunded to the taxpayer;\n(e) The type of tax that was refunded to the taxpayer; and\n(f) The amount of tax refunded for each type of tax.","path":["KRS Chapter 141"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53595","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:35Z","sha256":"7d99e799a4900518afa3cf0850fa4e23c9637a313e12c3c5b31a2e13a5aea46f","source_id":"us-ky","stale":false,"prev":"us-ky/krs-141.388","next":"us-ky/krs-141.390"},"notice":"GroundRules: Original legal text. Not legal advice."}