KRS 139.499 — Exemption for certain data center equipment

(1) As used in this section:
(a) 1. "Approved company";
2. "Authority";
3. "Data center equipment";
4. "Eligible costs";
5. "Memorandum of agreement";
6. "Preliminarily approved company";
7. "Qualified data center project"; and
8. "Term";
have the same meaning as in KRS 154.20-220;
(b) "Certificate of exemption" means a completed form provided by the
department stating at least:
1. The name, address, and federal employer identification number of the
approved company or preliminarily approved company;
2. That the approved company or preliminarily approved company is
exempt from sales and use tax on data center equipment purchased for
use in a qualified data center project in the Commonwealth; and
3. The date of expiration based on the term of the memorandum of
agreement; and
(c) "Fiscal year" means a period beginning on July 1 and continuing until the
following June 30.
(2) The taxes imposed by this chapter shall not apply to the sale, purchase, use, storage,
consumption, installation, repair, and replacement of data center equipment to or by
a preliminarily approved company or an approved company in accordance with the
memorandum of agreement with the preliminarily approved company or the
approved company as provided in subsection (4) of this section.
(3) (a) The exemption provided in subsection (2) of this section shall apply whether
or not the seller is under contract to deliver, assemble, and incorporate the
data center equipment into real estate for the qualified data center project.
(b) An approved company or preliminarily approved company may provide the
seller the certificate of exemption issued by the department to claim the
exemption. The certificate may be executed by either:
1. An approved company or preliminarily approved company; or
2. Jointly by a contractor and an approved company or preliminarily
approved company in any case in which a contractor under contract with
the approved company or preliminarily approved company purchases
the data center equipment.
(4) Upon notification that the authority has executed a memorandum of agreement with
a preliminarily approved company, the department shall issue a certificate of
exemption to the preliminarily approved company or the approved company.
(5) (a) Upon notification that the authority has terminated the sales and use tax
exemptions available to the preliminarily approved company or the approved
company as provided in KRS 154.20 -229, the department shall issue a notice
of assessment to the approved company or preliminarily approved company.
(b) The aggregate amount of sales and use tax recovered shall not exceed the sum
of the aggregate value of tax not paid as a result of the tax exemption under
this section together with interest required under KRS Chapter 131.
(c) If the notice of assessment is issued to:
1. A preliminarily approved company, notwithstanding KRS 139.620, the
notice of assessment under paragraph (b) of this subsection shall be
considered timely if the department issues the notice of assessment the
later of:
a. One hundre d eighty (180) days from the date the department is
notified by the authority related to termination of the
memorandum of agreement; or
b. The date on which a notice of assessment could otherwise be
issued in a timely manner under KRS 139.620;
2. An approved company, the notice of assessment shall be assessed on the
open periods and subject to KRS 139.620; and
3. A subsequent owner under KRS 154.20 -229(8)(b)1., the notice of
assessment shall include the tax assumed by the subsequent owner and
the open perio ds for assessment shall be determined under
subparagraphs 1. and 2. of this paragraph and depend solely on whether
the subsequent owner is a preliminarily approved company or an
approved company.
(6) Beginning September 1, 2025, and on or before September 1 for each year
thereafter, a preliminarily approved company shall report to the department
annually:
(a) The name, address, and any other identifying information the department may
require for the qualified data center project;
(b) The county in which the qualified data center project is located; and
(c) An itemized schedule of qualified data center equipment purchased during the
fiscal year and the applicable sales and use tax that was not paid as a result of
the sales and use tax exemption, including ver ification and certification by an
independent third party unrelated to the preliminarily approved company.
(7) Beginning November 1, 2025, and on or before November 1 of each year thereafter,
the department shall report to the authority and the Interim Joint Committee on
Appropriations and Revenue the data reported for data center project under
subsection (6) of this section.
(8) All information required to be reported under this section shall not be considered
confidential taxpayer information and shall not be subject to KRS Chapter 131 or
any other provisions of the Kentucky Revised Statutes prohibiting disclosure or
reporting of information.