Kentucky enacts numerous income, sales tax changes

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April 2019

Overview

On March 26, Kentucky enacted H.B. 354, making changes to its mandatory unitary combined reporting regime enacted in 2018 and requiring “marketplace providers” to collect sales tax, among other significant provisions. On April 9, Kentucky enacted H.B. 458, containing additional combined reporting changes such as providing financial accounting impact relief and allowing NOL sharing among combined group members.

The takeaway

After concerted efforts by the business community to repeal mandatory unitary combined reporting or make it elective, the enactment of two bills modifying the 2018 combined reporting mandate likely signal that combined reporting is here to stay in Kentucky. Taxpayers should take special notice of the new NOL sharing provisions, as the Department of Revenue will need to revise a proposed regulation it released in December seeking to implement the now repealed 2018 provisions barring loss sharing. The Department also will need to provide additional guidance in short order, especially considering the required ASC 740 deduction statement is due July 1 (and computation of a taxpayer’s deferred tax deduction is contingent on application of the other combined reporting provisions).

While this Insight covers some of the major tax provisions contained in H.B. 354 and H.B. 458, numerous additional tax changes are made, including other changes to sales and use taxes, individual income taxes, LLE tax administrative provisions, and property taxes.

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Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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