{"data":{"id":"us-ky/krs-96.820","jurisdiction":"us-ky","citation":"KRS 96.820","heading":"Payment of sums equivalent to taxes based on book value.","body":"(1) For the purposes of this section, unless the context requires otherwise:\n(a) \"Taxing jurisdiction\" shall mean each county, each school district, each\nmunicipality, and each other special taxing district located within the state.\n(b) \"State\" shall mean the Commonwealth of Kentucky.\n(c) \"Tax equivalent\" shall mean the amount in lieu of taxes computed according\nto this section which is required to be paid by each board to the state and to\neach taxing jurisdiction in which the board operates and required by\nsubsection (11) of KRS 96.570 to be included in resale rates.\n(d) \"Tax year\" shall mean the twelve (12) calendar -month period ending with\nDecember 31.\n(e) \"Current tax rate\" shall mean the actual levied ad valorem property tax rate of\nthe state and of each ta xing jurisdiction which is applicable to all property of\nthe same class as a board's property subject to taxation for the tax year\ninvolved.\n(f) \"Book value of property\" or \"book value of property owned by the board\"\nshall mean the sum of:\n1. The original cost (less reasonable depreciation or retirement reserve) of\na board's electric plant in service on December 31 of the immediately\npreceding calendar year located within the state, used and held for use in\nthe transmission, distribution, and generation of electric energy, and\n2. The cost of the material and supplies owned by a board on December 31\nof the immediately preceding calendar year. For the purpose of this\ndefinition, \"electric plant in service\" shall mean those items included in\nthe \"electric plant  in service\" account prescribed by the Federal Energy\nRegulatory Commission uniform system of accounts for electric utilities,\nand \"material and supplies\" shall mean those items included in the\naccounts grouped under the heading \"material and supplies\" in the said\nsystem of accounts.\n(g) \"Adjusted book value of property\" or \"adjusted book value of property owned\nby the board\" shall mean the book value of property owned by the board\nexcluding manufacturing machinery as interpreted by the Department of\nRevenue for franchise tax determination purposes.\n(h) The \"adjustment factor\" shall be one hundred twenty -five percent (125%) for\nthe tax year 1970. For each tax year thereafter, it shall be the duty of the\nDepartment of Revenue to compute the adjustment factor for that tax year as\nfollows: For each five (5) percentage points or major fraction thereof by which\nthe adjustment ratio for electric utility property for the immediately preceding\ntax year exceeded or was less than one hundred sixteen percent (116%), fiv e\n(5) percentage points shall be added to or subtracted from one hundred\ntwenty-five percent (125%). For the purposes of this computation,\n\"adjustment ratio for electric utility property\" shall mean the ratio of total\nassessed value to total property value  for all public service corporations\ndistributing electric energy to more than fifty thousand (50,000) retail electric\ncustomers within the state. \"Total assessed value\" shall mean the total actual\ncash value assigned by the Department of Revenue for ad va lorem property\ntax purposes to the property of such corporations located within the state\n(properly adjusted for property under construction). \"Total property value\"\nshall mean the sum of:\n1. The depreciated original cost of the total utility plant in serv ice of such\ncorporations within the state, and\n2. The book value of material and supplies of such corporations located\nwithin the state, both as derived from published reports of the Federal\nEnergy Regulatory Commission, or in the absence thereof, from\ninformation provided to the Department of Revenue by such\ncorporations.\n(i) \"Electric operations\" shall mean all activities associated with the\nestablishment, development, administration, and operation of any electric\nsystem and the supplying of electric energy and associated services to the\npublic, including without limitation the generation, purchase, sale, and resale\nof electric energy and the purchase, use, and consumption thereof by ultimate\nconsumers.\n(2) It shall be the duty of each board, on or before April 30, to certify to the Department\nof Revenue the book value of property owned by the board and the adjusted book\nvalue of property owned by the board and located within the state and within each\ntaxing jurisdiction in which the board operates. A copy of the certification shall also\nbe sent by the boa rd to each such taxing jurisdiction. The book value of property\nand adjusted book value of property shall be determined, and the books and records\nof the board shall be kept in accordance with standard accounting practices, and the\nbooks and records of each board shall be subject to inspection by the Department of\nRevenue and by representatives of the affected taxing jurisdictions and to\nadjustment by the Department of Revenue if found not to comply with the\nprovisions of this section. Upon the receipt of t he required certification from a\nboard, the Department of Revenue shall make any inspection and adjustment,\nhereinabove authorized, as it deems necessary, and no earlier than September 1 of\neach year the Department of Revenue shall certify to the board and  to the county\nclerk of each county in which the board operates the book value of property owned\nby the board and the adjusted book value of property owned by the board, located\nwithin each taxing jurisdiction in which the board operates and within the sta te. At\nthe same time, the Department of Revenue shall certify to the board and to the\ncounty clerk the adjustment factor for the tax year. The county clerk shall promptly\ncertify the book value of property, the adjusted book value of property, and the\nadjustment factor certified by the Department of Revenue, to the respective taxing\njurisdiction in which the board operates.\n(3) (a) Each board shall pay for each tax year, beginning with the tax year 1970, to\nthe state and to each taxing jurisdiction in which  the board operates, a tax\nequivalent from the revenues derived from the board's electric operations for\nthat tax year, computed according to this subsection.\n(b) The tax equivalent for each tax year payable to the state shall be the total of:\n1. The book value of the property owned by the board within the state,\nmultiplied by the adjustment factor, multiplied by the current tax rate of\nthe state, less thirty cents ($0.30), plus\n2. The state's portion of the amount payable under paragraph (d) of this\nsubsection.\n(c) The tax equivalent for each tax year payable to each taxing jurisdiction in\nwhich the board operates shall be the total of:\n1. The adjusted book value of property owned by the board within the\ntaxing jurisdiction, multiplied by the adjustment factor, multiplied by the\ncurrent tax rate of the taxing jurisdiction; provided, however, for the\npurpose of this calculation the tax rate for school districts shall be\nincreased by thirty cents ($0.30), plus\n2. The taxing jurisdiction's portion of the amount  payable under paragraph\n(d) of this subsection.\n(d) For purposes of this subsection, \"amount payable\" shall mean four -tenths of\none percent (0.4%) of the book value of property owned by the board located\nwithin the state. The state shall be paid the same proportion of the amount\npayable as the payment to the state under subparagraph 1. of paragraph (b) of\nthis subsection represents of the total payments to the state and all taxing\njurisdictions in which the board operates required by subparagraph 1. of\nparagraph (b) and subparagraph 1. of paragraph (c) of this subsection. Each\ntaxing jurisdiction in which the board operates shall be paid the same\nproportion of the amount payable as the payment to the taxing jurisdiction\nunder subparagraph 1. of paragraph (c ) of this subsection represents of the\ntotal payments to the state and all taxing jurisdictions in which the board\noperates required by subparagraph 1. of paragraph (b) and subparagraph 1. of\nparagraph (c) of this subsection. Under the regulations the Depa rtment of\nRevenue may prescribe, upon the board's receipt from the state and taxing\njurisdictions of notice of the amount due under subparagraph 1. of paragraph\n(b) and subparagraph 1. of paragraph (c) of this subsection, the board shall\ncompute the portio n of the amount payable which is due the state and each\ntaxing jurisdiction in which the board operates.\n(e) Payment of the tax equivalent under this section for each tax year shall be\nmade by each board to the state within thirty (30) days after receipt b y the\nboard of the certification from the Department of Revenue required by\nsubsection (2) of this section and shall be made directly to each taxing\njurisdiction in which the board operates within thirty (30) days from the date\nof the certifications by the  county clerk required by subsection (2) of this\nsection. The state and each taxing jurisdiction in which a board operates shall\nhave a superior lien upon the proceeds of the sale of electric energy by that\nboard for the amounts required by this section to be paid to it.\n(4) Except as hereinafter provided, the tax equivalents computed under this section\nshall be in lieu of all state, municipal, county, school district, special taxing district,\nother taxing district, and other state and local taxes or charge s on the tangible and\nintangible property, the income, franchises, rights, and resources of every kind and\ndescription of any municipal electric system operating under KRS 96.550 to 96.900\nand on the electric operations of any board established pursuant th ereto, and the tax\nequivalent for any tax year computed and payable under this section to the state or\nto any taxing jurisdiction in which any board operates shall be reduced by the\naggregate amount of any tax or charge within the meaning of this sentence which is\nimposed by the state, or by any taxing jurisdiction in which a board operates, on the\nboard, the electric system, or the board's electric operations. Provided, however, that\nif any school district in which property of a board is located has electe d, or does\nhereafter elect, to apply the utility gross receipts license tax for schools to all utility\nservices as provided by KRS 160.613 through KRS 160.617, or as may hereafter be\nprovided by other statutes, the amount of such utility gross receipts lic ense tax shall\nnot reduce, or in any manner affect, the amount payable to any such board or boards\nunder the provisions of this section. It is the intent and purpose of this provision to\neliminate all sums received by any such board or boards by reason of the utility\ngross receipts license tax from any computation of the amount payable under this\nsection to any such board or boards, irrespective of the manner in which that\npayment is computed, so that, in no event, shall any sum received by any school\ndistrict by reason of the utility gross receipts license tax reduce, directly or\nindirectly, the amount payable to such district under this chapter. Provided, further,\nthat if the state shall levy a statewide retail sales or use tax on electric power or\nenergy, collected by retailers of the energy from the vendees or users thereof, and\nimposed at the same rate or rates as are generally applicable to the sale or use of\npersonal property or services, including natural or artificial gas, fuel oil, and coal as\nwell as electric power or energy, the retail sales or use tax shall not be deemed to be\na tax or charge within the meaning of the first sentence of this subsection, and the\ntax equivalent payable for the tax year to the state under this section shall not be\nreduced on account of such retail sales or use tax.\n(5) (a) Notwithstanding subsection (3) of this section, until the first tax year in which\nthe total of:\n1. The tax equivalent payable to the state, or to any taxing jurisdiction in\nwhich the board operates, computed under subsection (3) of this section,\nplus\n2. The additional amounts permitted to be paid to the state or taxing\njurisdiction without deduction under the second and third sentences of\nsubsection (4) of this section, exceeds the minimum payment to the state\nor taxing jurisdiction specified in paragraph (b) of this subsection, the\ntax equivalent for each tax year payable to the state or taxing jurisdiction\nshall be an amount equal to the minimum payment computed under\nparagraph (b) of this subsection.\n(b) For purposes of this subsection, the minimum payment to the state or to any\ntaxing jurisdiction in which the board operates shall mean an amount equal to\nthe total of:\n1. The largest actual payment made by the board pursuant to this section to\nthe state or to the taxing jurisdiction for any of the tax years 1964, 1965,\nor 1966, plus\n2. The state's or taxing jurisdiction's pro rata share of an amount equal to\nfour-tenths of one percent (0.4%) of the increase since July 1, 1964, in\nthe book value of pro perty owned by the board within the state. For the\npurposes of this paragraph \"pro rata share\" shall mean the same\nproportion of the amount computed under this subparagraph as the\nlargest actual payment in lieu of taxes made by the board to the state or\ntaxing jurisdiction for the applicable tax year under subparagraph 1. of\nthis paragraph represents of the total amount of the largest actual\npayments in lieu of taxes made by the board to the state and to all taxing\njurisdictions in which it operated for any of the applicable tax years.\n(c) The provisions of paragraph (e) of subsection (3) of this section shall apply to\nall payments required under this subsection.\n(d) This subsection shall not be applicable for the first tax year specified in\nparagraph (a) of this subsection or for any tax year thereafter, except however,\nthat tax year 1977 shall not be deemed as the \"first tax year\" as specified in\nparagraph (a) and this subsection shall continue to apply in such cases.","path":["KRS Chapter 96"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=26288","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:58Z","sha256":"ba99ef38aed2fc6bc38168dc1c394bf19ef7e217db9351fc31292a36420f7726","source_id":"us-ky","stale":false,"prev":"us-ky/krs-96.810","next":"us-ky/krs-96.830"},"notice":"GroundRules: Original legal text. Not legal advice."}