Kentucky Statutes 139.270 – Resale certificate and certificates of exemption
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(1) The resale certificate, certificate of exemption, agriculture exemption license number, or Streamlined Sales and Use Tax Agreement Certificate of Exemption relieves the retailer or seller from the burden of proof if the retailer or seller:
(a) Within ninety (90) days after the date of sale:
1. Obtains a fully completed resale certificate, certificate of exemption, or Streamlined Sales and Use Tax Agreement Certificate of Exemption;
2. Obtains an agriculture exemption license number from the purchaser or a fully completed Streamlined Sales and Use Tax Agreement Certificate of Exemption that contains an agriculture exemption license number; or
3. Captures the relevant data elements that correspond to the information that the purchaser would otherwise provide to the retailer or seller on the Streamlined Sales and Use Tax Agreement Certificate of Exemption; and
(b) Maintains a file of the certificate, agriculture exemption license number, or Streamlined Sales and Use Tax Agreement Certificate of Exemption obtained or relevant data elements captured in accordance with KRS
139.720.
(2) The relief from liability provided to the retailer or the seller in this section does not apply to a retailer or seller who:
(a) Fraudulently fails to collect the tax;
(b) Solicits purchasers to participate in the unlawful claiming of an exemption; or
(c) Accepts an exemption certificate when the purchaser claims an entity-based exemption when:
1. The product sought to be covered by the exemption certificate is actually received by the purchaser at a location operated by the retailer or seller; and
2. The state in which that location resides provides an exemption certificate that clearly and affirmatively indicates that the claimed exemption is not available in that state.
For purposes of this paragraph, “entity-based exemption” means an exemption based on who purchases the product or who sells the product. An exemption available to all individuals shall not be considered an entity-based exemption.
(3) (a) If the department requests that the seller or retailer substantiate that the sale was a sale for resale or an exempt sale and the retailer or seller has not complied with subsection (1) of this section, the seller or retailer shall be relieved of any liability for the tax on the transaction if the seller or retailer, within one hundred twenty (120) days of the department’s request:
1. Obtains a fully completed resale certificate, exemption certificate,
agriculture exemption license number, or Streamlined Sales and Use Tax Agreement Certificate of Exemption from the purchaser for an exemption that:
a. Was available under this chapter on the date the transaction occurred;
b. Could be applicable to the item being purchased; and c. Is reasonable for the purchaser’s type of business; or
2. Obtains other information establishing that the transaction was not subject to the tax.
(b) Notwithstanding paragraph (a) of this subsection, if the department discovers through the audit process that the seller or retailer had knowledge or had reason to know at the time the information was provided that the information relating to the exemption claimed was materially false, or the seller or retailer otherwise knowingly participated in activity intended to purposefully evade the tax that is properly due on the transaction, the seller or retailer shall not be relieved of the tax on the transaction. The department shall bear the burden of proof that the seller or retailer had knowledge or had reason to know at the time the information was provided that the information was materially false.
(4) Notwithstanding subsections (1) and (3) of this section, the seller or retailer may still offer additional documentation that is acceptable by the department that the transaction is not subject to tax and to relieve the seller or retailer from the tax liability.
(5) If the department later finds that the retailer or seller complied with subsections (1), (3), and (4) of this section, but that the purchaser used the property or service in a manner that would not have qualified for resale status or the purchaser issued a certificate of exemption, an agriculture exemption license number, or a Streamlined Sales and Use Tax Agreement Certificate of Exemption and used the property or service in some other manner or for some other purpose, the department shall hold the purchaser liable for the remittance of the tax originally due and may apply penalties provided in KRS § 139.990.
Effective:March 30, 2022
History: Amended 2022 Ky. Acts ch. 58, sec. 3, effective March 30, 2022. — Amended 2019 Ky. Acts ch. 151, sec. 22, effective June 27, 2019. — Amended
2011 Ky. Acts ch. 33, sec. 4, effective July 1, 2011. — Amended 2009 Ky. Acts ch. 73, sec. 8, effective July 1, 2009. — Amended 2007 Ky. Acts ch. 141, sec. 7, effective July 01, 2007. — Amended 2005 Ky. Acts ch. 85, sec. 414, effective June 20, 2005. — Amended 2003 Ky. Acts ch. 124, sec. 14, effective July 1,
2004. — Amended 1988 Ky. Acts ch. 135, sec. 2, effective July 15, 1988. — Amended 1982 Ky. Acts ch. 208, sec. 1, effective July 15, 1982. — Created 1960
Ky. Acts ch. 5, Art. I, sec. 27, effective February 5, 1960.
Legislative Research Commission Note (6/27/2019). Section 82 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 22 of that Act apply to transactions occurring on or after July 1, 2019.
(a) Within ninety (90) days after the date of sale:
Terms Used In Kentucky Statutes 139.270
- Business: includes any activity engaged in by any person or caused to be engaged in by that person with the object of gain, benefit, or advantage, either direct or indirect. See Kentucky Statutes 139.010
- Department: means the Department of Revenue. See Kentucky Statutes 139.010
- Retailer: means :
1. See Kentucky Statutes 139.010 - Sale: includes but is not limited to:
1. See Kentucky Statutes 139.010 - Seller: includes every person engaged in the business of selling tangible personal property, digital property, or services of a kind, the gross receipts from the retail sale of which are required to be included in the measure of the sales tax, and every person engaged in making sales for resale. See Kentucky Statutes 139.010
- State: when applied to a part of the United States, includes territories, outlying possessions, and the District of Columbia. See Kentucky Statutes 446.010
- Statute: A law passed by a legislature.
- Use: includes the exercise of:
1. See Kentucky Statutes 139.010
1. Obtains a fully completed resale certificate, certificate of exemption, or Streamlined Sales and Use Tax Agreement Certificate of Exemption;
2. Obtains an agriculture exemption license number from the purchaser or a fully completed Streamlined Sales and Use Tax Agreement Certificate of Exemption that contains an agriculture exemption license number; or
3. Captures the relevant data elements that correspond to the information that the purchaser would otherwise provide to the retailer or seller on the Streamlined Sales and Use Tax Agreement Certificate of Exemption; and
(b) Maintains a file of the certificate, agriculture exemption license number, or Streamlined Sales and Use Tax Agreement Certificate of Exemption obtained or relevant data elements captured in accordance with KRS
139.720.
(2) The relief from liability provided to the retailer or the seller in this section does not apply to a retailer or seller who:
(a) Fraudulently fails to collect the tax;
(b) Solicits purchasers to participate in the unlawful claiming of an exemption; or
(c) Accepts an exemption certificate when the purchaser claims an entity-based exemption when:
1. The product sought to be covered by the exemption certificate is actually received by the purchaser at a location operated by the retailer or seller; and
2. The state in which that location resides provides an exemption certificate that clearly and affirmatively indicates that the claimed exemption is not available in that state.
For purposes of this paragraph, “entity-based exemption” means an exemption based on who purchases the product or who sells the product. An exemption available to all individuals shall not be considered an entity-based exemption.
(3) (a) If the department requests that the seller or retailer substantiate that the sale was a sale for resale or an exempt sale and the retailer or seller has not complied with subsection (1) of this section, the seller or retailer shall be relieved of any liability for the tax on the transaction if the seller or retailer, within one hundred twenty (120) days of the department’s request:
1. Obtains a fully completed resale certificate, exemption certificate,
agriculture exemption license number, or Streamlined Sales and Use Tax Agreement Certificate of Exemption from the purchaser for an exemption that:
a. Was available under this chapter on the date the transaction occurred;
b. Could be applicable to the item being purchased; and c. Is reasonable for the purchaser’s type of business; or
2. Obtains other information establishing that the transaction was not subject to the tax.
(b) Notwithstanding paragraph (a) of this subsection, if the department discovers through the audit process that the seller or retailer had knowledge or had reason to know at the time the information was provided that the information relating to the exemption claimed was materially false, or the seller or retailer otherwise knowingly participated in activity intended to purposefully evade the tax that is properly due on the transaction, the seller or retailer shall not be relieved of the tax on the transaction. The department shall bear the burden of proof that the seller or retailer had knowledge or had reason to know at the time the information was provided that the information was materially false.
(4) Notwithstanding subsections (1) and (3) of this section, the seller or retailer may still offer additional documentation that is acceptable by the department that the transaction is not subject to tax and to relieve the seller or retailer from the tax liability.
(5) If the department later finds that the retailer or seller complied with subsections (1), (3), and (4) of this section, but that the purchaser used the property or service in a manner that would not have qualified for resale status or the purchaser issued a certificate of exemption, an agriculture exemption license number, or a Streamlined Sales and Use Tax Agreement Certificate of Exemption and used the property or service in some other manner or for some other purpose, the department shall hold the purchaser liable for the remittance of the tax originally due and may apply penalties provided in KRS § 139.990.
Effective:March 30, 2022
History: Amended 2022 Ky. Acts ch. 58, sec. 3, effective March 30, 2022. — Amended 2019 Ky. Acts ch. 151, sec. 22, effective June 27, 2019. — Amended
2011 Ky. Acts ch. 33, sec. 4, effective July 1, 2011. — Amended 2009 Ky. Acts ch. 73, sec. 8, effective July 1, 2009. — Amended 2007 Ky. Acts ch. 141, sec. 7, effective July 01, 2007. — Amended 2005 Ky. Acts ch. 85, sec. 414, effective June 20, 2005. — Amended 2003 Ky. Acts ch. 124, sec. 14, effective July 1,
2004. — Amended 1988 Ky. Acts ch. 135, sec. 2, effective July 15, 1988. — Amended 1982 Ky. Acts ch. 208, sec. 1, effective July 15, 1982. — Created 1960
Ky. Acts ch. 5, Art. I, sec. 27, effective February 5, 1960.
Legislative Research Commission Note (6/27/2019). Section 82 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 22 of that Act apply to transactions occurring on or after July 1, 2019.