By Mark A. Loyd, JD, CPA Kentucky’s manufacturing supplies sales tax exemption was recently addressed by the Kentucky Court of Appeals in Century Aluminum of Kentucky, GP v. Department of Revenue, 2020-CA-0301-MR (Ky. App. July 9, 2021), which held in favor of the Department of Revenue in an opinion designated not to be published. The taxpayer has filed a motion for discretionary review with the Kentucky Supreme Court. Should Kentucky’s highest court review Century Aluminum?
Because of the pandemic, the 2020-21 school year was very difficult for thousands of Kentucky elementary and high school students, but the heaviest burden fell on low-income students and families of color; those who have limited resources for educational choices. In future years, Kentucky’s K-12 students will have choices for educational services thanks to the Education Opportunity Account (“EOA”) Act passed by the Kentucky 2021 General Assembly.
Property taxes, especially real property taxes, matter to businesses or non-profits with locations in Kentucky, because such taxes often present a material cost that may be either managed so that only the appropriate amount of tax is levied or avoided when an exemption applies.
As Abraham Lincoln once said, “It is . . . the duty of Government to render prompt justice against itself in favor of citizens. . . .” Calvert Invs., Inc. v. Louisville & Jefferson County Metro. Sewer Dist., 805 S.W.2d 133, 138 (Ky. 1991) (quoting Abraham Lincoln). Equally, in a tax audit, the tax auditor’s job is to determine the right amount of tax, regardless of whether the audit determines that the taxpayer paid that amount, too little or too much.
Nexus is a term used for “connection” or “presence” in a state. For a state to impose its income or sales tax on an out-of-state business, there must be a requisite level of connection between the state and the business. The U.S. Supreme Court requires substantial nexus under the Commerce Clause and sufficient contacts under the Due Process Clause. Over time, states have developed and applied differing nexus standards subjecting companies to tax based on physical presence or certain economic connections to the state.
CPA Mark Loyd walks us through state revenues from businesses.
