Kentucky Enacts Disaster Relief Sales Tax Refund

Friday, April 20th, 2012


Governor Steve Beshear signed legislation that provides for sales tax relief for owners of buildings that were damaged or destroyed by the severe storms and tornadoes that ripped through Kentucky earlier this year. See Ky. Dept. of Revenue Important Info.: Disaster Relief Sales and Use Tax Legislation (Dept. of Revenue Apr. 17, 2012); Tax Relief for Victims of Severe Storms, Tornadoes, Straight-line Winds and Flooding in Kentucky (Ky. Dept. of Revenue Apr. 2012)

Building owners located in designated counties may receive a sales and use tax refund on purchases of building materials used to repair or replace these buildings. "Building materials" are articles of tangible personal property that becomes a permanent part of the building. To qualify for the refund, either the building owner or the contractor (under contract with the legal owner) must purchase the building materials. Furthermore, the buildings must be located in counties declared federal disaster areas due to the storms that occurred between February 29, 2012 through March 3, 2012, and the damage to the buildings must have been the result of those storms.

The tax refund is limited to the lesser of either (1) $6,000 for each building without regard to the number of legal owners or (2) 100% of the Kentucky sales and use tax actually paid reduced by the vendor compensation permitted to sellers under the law. The seller is permitted to deduct 1.75% of the first $1,000 of taxes due and 1% of the taxes due in excess of $1,000, with an overall cap of $1,500 for any reporting period of vendor compensation on each return.

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