KRS 139.495 — Application of taxes to resident nonprofit institutions and to certain limited liability companies -- Exemptions -- Refund

(1) The taxes imposed by this chapter shall apply to:
(a) Resident, nonprofit educational, charitable, or religious institutions which
have qualified for exemption from income taxation under Section 501(c)(3) of
the Internal Revenue Code; and
(b) Any resident, single member limited liability company that is:
1. Wholly owned and controlled by a resident or nonresident, n onprofit
educational, charitable, or religious institution which has qualified for
exemption from income taxation under Section 501(c)(3) of the Internal
Revenue Code; and
2. Disregarded as an entity separate from the resident or nonresident,
nonprofit edu cational, charitable, or religious institution for federal
income tax purposes pursuant to 26 C.F.R. sec. 301.7701-2;
as provided in this section.
(2) (a) Tax does not apply to:
1. Sales of tangible personal property, digital property, or services to these
institutions or limited liability companies described in subsection (1) of
this section, provided the tangible personal property, digital property, or
service is to be used solely in this state within the educational,
charitable, or religious function;
2. Sales of food to students in school cafeterias or lunchrooms;
3. Sales by school bookstores of textbooks, workbooks, and other course
materials;
4. Sales by nonprofit, school sponsored clubs and organizations, provided
such sales do not include tickets for athletic events;
5. Sales of admissions, including the sales of admissions to a golf course
when the admission is the result of a fundraising event, by nonprofit
educational, charitable, or religious institutions described in subsection
(1) of this section. All other sales of admissions to a golf course by these
institutions are not exempt from tax under this section; or
6. a. Fundraising event sales made by nonprofit educational, charitable,
or religious institutions and limited liability companies described
in subsection (1) of this section.
b. For the purposes of this subparagraph, "fundraising event sales"
does not include sales related to the operation of a retail business,
including but not limited to thrift stores, bookstores, surplus
property auctions, recycle and reuse stores, or any ongoing
operations in competition with for-profit retailers.
(b) The exemptions provided in subparagraphs 5. and 6. of paragraph (a) of this
subsection shall not apply to sales generated by or arising at a tourism
development project approved under KRS 148.851 to 148.860.
(3) An institution shall be entitled to a refund equal to twenty -five percent (25%) of the
tax collected on its sale of donated goods if the refund is used exclusively as
reimbursement for capital construction costs of addi tional retail locations in this
state, provided the institution:
(a) Routinely sells donated items;
(b) Provides job training and employment to individuals with workplace
disadvantages and disabilities;
(c) Spends at least seventy -five percent (75%) of its annual revenue on job
training, job placement, or other related community services;
(d) Submits a refund application to the department within sixty (60) days after the
new retail location opens for business; and
(e) Provides records of capital constructio n costs for the new retail location and
any other information the department deems necessary to process the refund.
The maximum refund allowed for any location shall not exceed one million dollars
($1,000,000). As used in this subsection, "capital constru ction cost" means the cost
of construction of any new facilities or the purchase and renovation of any existing
facilities, but does not include the cost of real property other than real property
designated as a brownfield site as defined in KRS 65.680(4).
(4) Notwithstanding any other provision of law to the contrary, refunds under
subsection (3) of this section shall be made directly to the institution. Interest shall
not be allowed or paid on the refund. The department may examine any refund
within four (4) years from the date the refund application is received. Any
overpayment shall be subject to the interest provisions of KRS 131.183 and the
penalty provisions of KRS 131.180.
(5) All other sales made by nonprofit educational, charitable, or religious in stitutions or
limited liability companies described in subsection (1) of this section are taxable
and the tax may be passed on to the purchaser as provided in KRS 139.210.