Unofficial Copy As of 09/12/1803 Reg. Sess. 03 Rs Br 838

UNOFFICIAL COPY AS OF 09/12/1803 REG. SESS.03 RS BR 838

AN ACT relating to taxation, making an appropriation therefor, and declaring an emergency.

Be it enacted by the General Assembly of the Commonwealth of Kentucky:

Page 1 of 24

BR083800.100-838

UNOFFICIAL COPY AS OF 09/12/1803 REG. SESS.03 RS BR 838

SECTION 1. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

As used in Sections 1 to 13 of this Act:

(1)"Cabinet" means the Revenue Cabinet.

(2)"Electric generating unit" means any person, except a city, that owns, controls, operates, or manages facilities in the Commonwealth that have a nameplate capacity of twenty-five megawatts (25MW) or more and that generate electricity for sale at retail or at wholesale.

(3)"Kilowatt" means one thousand (1,000) watts of electricity.

(4)""Kilowatt hour" means a measure of electricity defined as a unit of work of energy, measured as one (1) kilowatt of power expended for one (1) hour.

SECTION 2. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

Effective June 1, 2003, a tax is hereby imposed on the production of electricity by electric generating units located in the Commonwealth. The tax rate shall be eight hundredths of a cent ($0.0008) per kilowatt hour of electricity generated.

SECTION 3. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

(1)Every electric generating unit subject to the tax imposed in Section 2 of this Act shall register with the cabinet by submitting a registration application in the form prescribed by the cabinet.

(2)The registration application shall be signed by the owner if a natural person; in the case of an association, limited liability company or partnership, by a member or partner; in the case of a corporation, by an executive officer or a person specifically authorized by the corporation to sign the application.

SECTION 4. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

(1)The tax imposed in Section 2 of this Act shall be due and payable to the cabinet monthly and shall be remitted on or before the twentieth calendar day following the close of the preceding month.

(2)On or before the twentieth day following the close of the preceding month, a return for the preceding month shall be filed with the cabinet on the form prescribed by the cabinet, together with payment of any tax due.

SECTION 5. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

(1)As soon as practicable after each return filed under Section 4 of this Act is received, the cabinet shall examine the return. If the amount of tax computed by the cabinet is greater than the amount returned by the taxpayer, the excess shall be assessed by the cabinet within four (4) years from the later of the date the return was filed or due. Except in the case of a failure to file a return or a fraudulent return, the excess may be assessed at any time.

(2)Any electric generating unit aggrieved by any action of the cabinet may request a review and shall have the rights of appeal as set forth in KRS Chapter 131.

SECTION 6. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

In making a determination of tax liability, the cabinet may offset overpayment for a period or periods, together with interest on the overpayments, against any underpayments for another period or periods, against penalties, and against the interest on the underpayments.

SECTION 7. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

(1)Every electric generating unit subject to the tax imposed in Section 2 of this Act shall keep records, receipts, invoices and other pertinent papers in such form as the cabinet may require.

(2)Every electric generating unit who files the returns required under Section 4 of this Act shall keep records for not less than five (5) years from the making of the records unless the cabinet, in writing, authorizes their destruction at an earlier date.

SECTION 8. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

In every case, any tax due under Section 2 of this Act that is not paid on or before the due date shall bear interest at the tax interest rate provided by KRS 131.183 from the date due until the date of payment.

SECTION 9. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

(1)The tax paid in accordance with Section 4 of this Act shall be refunded or credited in the manner provided in KRS 134.580.

(2)A claim for refund or credit shall be made on a form prescribed by the cabinet and shall contain information that the cabinet requires.

SECTION 10. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

The cabinet shall administer the provisions of Sections 1 to 13 of this Act and shall have all the powers, rights, duties, and authority with respect to the assessment, collection, refunding, and administration of taxes conferred generally upon the cabinet by the Kentucky Revised Statutes, including KRS Chapters 131, 134, and 135.

SECTION 11. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

(1)Whenever it is deemed necessary to insure compliance with the provisions of Sections 1 to 13 of this Act, the cabinet may require any person subject to the tax imposed under Section 2 of this Act to place security with it. The amount of security shall be fixed by the cabinet but shall not be greater than three (3) times the estimated average quarterly liability of the electric generating unit. This limitation shall apply regardless of the type of security placed with the cabinet.

(2)The amount of the security may be increased or decreased by the cabinet, subject to the limitations provided in subsection (1) of this section.

(3)(a)If necessary, the cabinet may sell the security at public auction in order to recover any tax, penalty, or interest due. However, security in the form of a bearer bond issued by the United States or any state or local governmental unit which has a prevailing market price may be sold by the cabinet at a private sale at a price not lower than the prevailing market price.

(b)The cabinet shall provide notice by certified mail, sent to the last known address as reflected in the records of the cabinet, or by delivery, to the person who placed the security with the cabinet of the date, time, and place of sale.

(c)Any amount in excess of the amount due the cabinet after the sale shall be returned to the person placing the security.

(4)The Commonwealth may bring an action for a restraining order or a temporary or permanent injunction to restrain or enjoin the operation of an electric generating unit until the security is obtained. The action may be brought in the Franklin Circuit Court or in the Circuit Court having jurisdiction over the electric generating unit.

SECTION 12. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

(1)Notwithstanding any other provisions to the contrary, the president, vice president, secretary, treasurer, or any other person holding any equivalent corporate office or any corporation subject to the provisions of Section 2 of this Act shall be personally and individually liable, both jointly and severally, for the tax imposed under Section 2 of this Act. Corporate dissolution, withdrawal of the corporation from the state, or the cessation of holding any corporate office shall not discharge the liability imposed upon any person. The personal and individual liability shall apply to each and every person holding a corporate office at the time the tax becomes or became due. No person shall be personally and individually liable under this section who had no authority to collect, truthfully account for, or pay over any tax imposed by Section 2 of this Act at the time the tax imposed becomes or became due. "Tax" as used in this subsection shall include interest accrued at the rate provided by KRS 131.183, all applicable penalties imposed under the provisions of this chapter, and all applicable penalties imposed under the provisions of Section 13 of this Act and KRS 131.990.

(2)Notwithstanding any other provision of this chapter, KRS 275.150, or KRS 362.220(2) to the contrary, the managers of a limited liability company and the partners of a registered limited liability partnership or any other person holding any equivalent office of a limited liability company or a registered limited liability partnership subject to the provisions of Section 2 of this Act shall be personally and individually liable, both jointly and severally, for the tax imposed under Section 2 of this Act. Dissolution, withdrawal of the limited liability company or registered limited liability partnership from the state, or the cessation of holding any office shall not discharge the liability of any person. The personal and individual liability shall apply to each and every manager of a limited liability company and partner of a registered limited liability partnership at the time the tax becomes or became due. No person shall be personally and individually liable under this subsection who had no authority to collect, truthfully account for, or pay over any tax imposed by Section 2 of this Act at the time the tax becomes or became due. "Tax" as used in this subsection shall include interest accrued at the rate provided under KRS 131.183, all applicable penalties imposed under the provisions of this chapter, and all applicable penalties imposed under the provisions of Section 13 of this Act and KRS 131.990.

SECTION 13. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO READ AS FOLLOWS:

Penalties for violating Sections 1 to 13 of this Act shall be imposed and assessed in accordance with the provisions of KRS 131.180.

Section 14. KRS 42.450 is amended to read as follows:

(1)There is hereby established in the State Treasury a fund entitled "Local Government Economic Assistance Fund." The fund may receive state appropriations, gifts, grants, and federal funds and shall be disbursed by the State Treasurer upon the warrant of the secretary of the Finance and Administration Cabinet. Any unallotted or unencumbered balances in the fund shall be invested in United States Government Securities maturing not later than one (1) year from the date of investment and the income earned from the investment shall be prorated for expenditure in coal producing and coal impact counties according to each county's allocable part in the fund.

(2)Effective July 1, 1981, an amount equal to one-half (1/2) of the tax collected annually on the sale of minerals, exclusive of coal, shall be transferred from the general fund into this fund. The transfers shall be made quarterly, based upon the revenue estimates prevailing at the time each quarterly transfer is due, except that the last quarterly transfer shall be made after the close of the fiscal year accounting records, and shall be adjusted to provide the balance of the annual transfer required by this subsection.

(3)Effective July 1, 2003, an amount equal to fifteen percent (15%) of the energy production tax collected annually pursuant to Section 2 of this Act shall be transferred from the general fund into this fund. The transfers shall be made quarterly, based upon the revenue estimates prevailing at the time each quarterly transfer is due, except that the last quarterly transfer shall be made after the close of the fiscal year accounting records, and shall be adjusted to provide the balance of the annual transfer required by this subsection.

(4)The quarterly calculation and transfer of funds pursuant to subsection (3) of this section shall be made only after the quarterly installment of the annual nineteen million dollars ($19,000,000) allocation of energy production tax revenues has been credited to the benefit reserve fund within the Kentucky Workers' Compensation Funding Commission as required by KRS 342.122.

Section 15. KRS 42.4582 is amended to read as follows:

(1)There is hereby established in the State Treasury a fund entitled "Local Government Economic Development Fund." The fund may receive state appropriations, gifts, grants, and federal funds and shall be disbursed by the State Treasurer upon the warrant of the secretary of the Finance and Administration Cabinet. Any unallotted or unencumbered balances in the fund shall be invested as provided for in KRS 42.500(9). Income earned from the investments shall be prorated for grants to counties according to the allotment schedule set out in KRS 42.4592.

(2)Moneys shall be transferred from the general fund into this fund according to the following schedule:

(a)Effective July 1, 1992, an amount equal to fifteen percent (15%) of the severance and processing taxes on coal collected annually;

(b)Effective July 1, 1993, an amount equal to eighteen percent (18%) of the severance and processing taxes on coal collected annually;

(c)Effective July 1, 1994, an amount equal to twenty-five percent (25%) of the severance and processing taxes on coal collected annually; and

(d)Effective July 1, 1995, and ending June 30, 2003[thereafter], an amount equal to fifty percent (50%) of the severance and processing taxes on coal collected annually, unless otherwise amended by the budget bill.

The transfers shall be made quarterly, based upon the revenue estimates prevailing at the time each quarterly transfer is due, except that the last quarterly transfer shall be made after the close of the fiscal year accounting records, and shall be adjusted to provide the balance of the annual transfer required by this subsection.[ The quarterly calculation and transfer of funds pursuant to subsection (2)(d) of this section shall be made only after the quarterly installment of the annual nineteen million dollars ($19,000,000) allocation of coal severance tax revenues has been credited to the benefit reserve fund within the Kentucky Workers' Compensation Funding Commission as required by KRS 342.122.]

(3)Effective July 1, 2003, thirty-three and one-fourth percent (33.25%) of the energy production tax collected annually pursuant to Section 2 of this Act shall be transferred from the general fund into this fund. The transfers shall be made quarterly, based upon the revenue estimates prevailing at the time each quarterly transfer is due, except that the last quarterly transfer shall be made after the close of the fiscal year accounting records, and shall be adjusted to provide the balance of the annual transfer required by this subsection.

(5)After June 30, 2003, moneys in the fund shall be allocated as follows:

(a)Thirty-three and one-third percent (33-1/3%) shall be allocated to each coal producing county on the basis of the ratio of the average coal production in each respective county over the past four (4) years to the average coal production statewide over the past four (4) years.

(b)Thirty-three and one-third percent (33-1/3%) shall be allocated quarterly to each coal producing county on the basis of the following factors, which shall be computed for the current and four (4) preceding years, and which shall be equally weighted:

1.Percentage of employment in mining in relation to total employment in the respective county;

2.Percentage of earnings from mining in relation to total earnings in the respective county; and

3.Surplus labor rate.

(c)Thirty-three and one-third percent (33-1/3%) shall be reserved for expenditure for industrial development projects benefiting two (2) or more coal producing counties. For purposes of this paragraph, "coal producing county" shall mean a county which has produced coal in the current or any one (1) of the four (4) preceding years.

(6)For purposes of paragraph (b) of subsection (5) of this section, "percentage of employment in mining" and "percentage of earnings from mining" shall be the percentages published for the latest available five (5) year period by the Bureau of Economic Analysis in the United States Department of Commerce; "surplus labor rate" shall be the rate published for the latest available five (5) year period by the Department of Employment Services in the Cabinet for Workforce Development, as provided in subsection (2) of Section 19 of this Act.

(7)The funds allocated under the provisions of paragraphs (a) and (b) of subsection (5) of this section shall retain their identity with respect to the county to which they are attributable, and a separate accounting of available moneys within the fund shall be maintained for the respective counties. Accounting for funds allocated under the provisions of this section shall be by the Department for Local Government.

(8)The moneys in the fund are hereby appropriated for the purposes provided in KRS 42.4588.

Section 16. KRS 42.4586 is amended to read as follows:

(1)Prior to July 1, 2003, five percent (5%) of the moneys remaining in the local government economic development fund following the transfer of moneys to the local government economic assistance fund provided for in KRS 42.4585 shall be transferred into the secondary wood products development fund created by KRS 154.47-070 for the purposes of KRS 154.47-015 to 154.47-070.

(2)Moneys transferred into the secondary wood products development fund under subsection (1) of this section shall not be subject to any other provision of KRS 42.450 to 42.495.

Section 17. KRS 42.470 is amended to read as follows:

Moneys in the local government economic assistance fund shall be allocated among the counties as follows:

(1)Funds allocated under KRS 42.4585:

(a)Prior to July 1, 2003, sixty percent (60%) shall be distributed to each coal producing county on the basis of the ratio of tax collected on coal severed in each respective county to the tax collected statewide. After June 30, 2003, sixty percent (60%) shall be distributed to each coal producing county on the basis of the ratio of the average coal production over the preceding four (4) years in each respective county to the average coal production statewide over the preceding four (4) years.

(b)Thirty percent (30%) shall be distributed to each coal producing county on the basis of per capita income (inverse order), ton miles of resource roads and population, equally weighted.

(c)Ten percent (10%) shall be distributed to non-coal producing counties impacted by the transport of coal on the basis of geographic area, ton miles of resource roads, and per capita income (inverse order), weighted on a basis of 30/100, 40/100, and 30/100, respectively. The expenditure of such funds shall be limited to the categories of projects set out in KRS 42.455(2)(c). All counties shall receive an annual payment based on the average of total ton miles within the county during the most recent three (3) year period. To qualify for the funds distributed under the provisions of this paragraph, a county must have within its geographic boundaries in any single year twenty-five hundredths of one percent (0.25%) of the total ton miles within coal impact counties during the most recent three (3) year period.

(2)All funds allocated under KRS 42.450(2) shall be distributed among the mineral producing counties on the basis of the tax collected on minerals severed in each respective county.