KRS 138.208 — Replacement tax -- Total tax for school districts, fire districts, and emergency service boards -- Annual assessment -- Reduction -- Distribution -- Administrative regulations

(1) As used in this section:
(a) "Bonded warehouse or premises" d oes not include a revenue bond -financed
warehouse as defined in KRS 132.140 for periods prior to the 2043 calendar
year;
(b) "Local jurisdiction" means:
1. A school district;
2. A fire protection district or subdistrict authorized to levy the ad valorem
tax permitted by KRS 75.015 and 75.040 and that provides fire or other
emergency services; and
3. An area served by an emergency services board that levies the ad
valorem tax permitted by KRS 75A.050 and provides fire or other
emergency services; and
(c) "Taxpayer" means the owner, proprietor, or custodian of one (1) or more
bonded warehouses or premises.
(2) Beginning with the 2026 calendar year and for each subsequent calendar year
thereafter, in addition to any ad valorem taxes collected under KRS 132.150, there
is imposed a replacement tax on every taxpayer with a bonded warehouse or
premises located in a local jurisdiction that collected ad valorem tax during calendar
year 2025.
(3) The total replacement tax for each school district shall be:
(a) An amount that is not less than zero; and
(b) The result from the following calculation:
1. The ad valorem tax under KRS 132.150 on distilled spirits stored or
aging in a bonded warehouse or premises collected by or on behalf of
the school district during calendar year 2023;
2. Minus the amount of the ad valorem tax under KRS 132.150 on distilled
spirits stored or aging in a bonded warehouse or premises collected by
or on behalf of the school district for the applicable calendar year; and
3. Minus the amount by which the Support Education Excellence in
Kentucky program under KRS 157.310 to 157.440 final calculation for
the school year ending during the applicable calendar year exceeds the
Support Education Excellence in Kentucky program final calculation for
the 2022 -2023 school year, as determined by the Department of
Education under KRS 157.410(3). For purposes of the Support
Education Excellence in Kentucky final calculation under this
subparagraph, the average daily attendance and equalization ratio for the
school year ending during the applicable calendar year shall not be less
than those for the 2022-2023 school year final calculation.
(4) The total replacement tax for each fire district or emergency services board shall be:
(a) An amount that is not less than zero; and
(b) The result from the following calculation:
1. The ad valorem tax under KRS 132.150 on distilled spirits stored or
aging in a bonded warehouse or premises collected by or on behalf of
the fire district or emergency services board during calendar year 2025;
2. Minus the amount of the ad valorem tax under KRS 132.150 on distilled
spirits stored or aging in a bonded warehouse or premises collected by
or on behalf of the district or board for the applicable calendar year.
(5) (a) Each year the department shall assess taxpayers the replacement tax for the
preceding calendar year in proportion to the number of barrels of distilled
spirits stored and aging at their bonded warehouse or premises in the local
jurisdiction on January 1 of that preceding calendar year.
(b) If a business-wide reduction or extraordinary event occurs, any taxpayer may
apply to the secretary of the Finance and Administration Cabinet for a
reduction in the taxpayer's replacement tax assessment.
(c) For purposes of this subsection:
1. "Business-wide reduction" means that the volume of distilled spirits
distilled and barreled by all taxpayers at all business locations in this
state during the applicable calendar year is less than the volume of
distilled spirits distilled and barreled at all business locations in this state
in calendar year 2025; and
2. "Extraordinary event" means a pandemic, epidemic, restrictive
governmental laws or regulations enacted after Mar ch 31, 2023, riots,
insurrection, war, acts of a government authority imposed after March
31, 2023, court orders issued after March 31, 2023, a natural disaster, a
decrease in sales in excess of ten percent (10%), or other reason of a like
nature determined by the secretary not to be the fault of the taxpayer and
any other items determined by the secretary to be beyond the taxpayer's
reasonable control, which prevents the taxpayer from distilling or
barreling distilled spirits.
(6) All revenues received by the department from the tax imposed by this section shall
be distributed to the local jurisdiction for which the tax was levied within sixty (60)
days from the date received.
(7) The department shall administer the replacement tax levied by this section an d, in
conjunction or consultation with any agency representing a local jurisdiction, may
promulgate administrative regulations to implement this section.