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139.270 Resale certificate and certificates of exemption.
(1)
(2)
(3)
The resale certificate, certificate of exemption, or Streamlined Sales and Use Tax
Agreement Certificate of Exemption relieves the retailer or seller from the burden
of proof if the retailer or seller:
(a) Within ninety (90) days after the date of sale:
1.
Obtains a fully completed resale certificate, certificate of exemption, or
Streamlined Sales and Use Tax Agreement Certificate of Exemption; or
2.
Captures the relevant data elements that correspond to the information
that the purchaser would otherwise provide to the retailer or seller on the
Streamlined Sales and Use Tax Agreement Certificate of Exemption;
and
(b) Maintains a file of the certificate obtained or relevant data elements captured
in accordance with KRS 139.720.
The relief from liability provided to the retailer or the seller in this section does not
apply to a retailer or seller who:
(a) Fraudulently fails to collect the tax;
(b) Solicits purchasers to participate in the unlawful claiming of an exemption; or
(c) Accepts an exemption certificate when the purchaser claims an entity-based
exemption when:
1.
The product sought to be covered by the exemption certificate is actually
received by the purchaser at a location operated by the retailer or seller;
and
2.
The state in which that location resides provides an exemption
certificate that clearly and affirmatively indicates that the claimed
exemption is not available in that state.
For purposes of this paragraph, "entity-based exemption" means an exemption
based on who purchases the product or who sells the product. An exemption
available to all individuals shall not be considered an entity-based exemption.
(a) If the department requests that the seller or retailer substantiate that the sale
was a sale for resale or an exempt sale and the retailer or seller has not
complied with subsection (1) of this section, the seller or retailer shall be
relieved of any liability for the tax on the transaction if the seller or retailer,
within one hundred twenty (120) days of the department's request:
1.
Obtains a fully completed resale certificate, exemption certificate, or
Streamlined Sales and Use Tax Agreement Certificate of Exemption
from the purchaser for an exemption that:
a.
Was available under this chapter on the date the transaction
occurred;
b.
Could be applicable to the item being purchased; and
c.
Is reasonable for the purchaser's type of business; or
2.
Obtains other information establishing that the transaction was not
(4)
(5)
subject to the tax.
(b) Notwithstanding paragraph (a) of this subsection, if the department discovers
through the audit process that the seller or retailer had knowledge or had
reason to know at the time the information was provided that the information
relating to the exemption claimed was materially false, or the seller or retailer
otherwise knowingly participated in activity intended to purposefully evade
the tax that is properly due on the transaction, the seller or retailer shall not be
relieved of the tax on the transaction. The department shall bear the burden of
proof that the seller or retailer had knowledge or had reason to know at the
time the information was provided that the information was materially false.
Notwithstanding subsections (1) and (3) of this section, the seller or retailer may
still offer additional documentation that is acceptable by the department that the
transaction is not subject to tax and to relieve the seller or retailer from the tax
liability.
If the department later finds that the retailer or seller complied with subsections (1),
(3), and (4) of this section, but that the purchaser used the property in a manner that
would not have qualified for resale status or the purchaser issued a certificate of
exemption or a Streamlined Sales and Use Tax Agreement Certificate of Exemption
and used the property in some other manner or for some other purpose, the
department shall hold the purchaser liable for the remittance of the tax and may
apply penalties provided in KRS 139.990.
Effective: July 1, 2011
History: Amended 2011 Ky. Acts ch. 33, sec. 4, effective July 1, 2011. -- Amended
2009 Ky. Acts ch. 73, sec. 8, effective July 1, 2009. -- Amended 2007 Ky. Acts ch.
141, sec. 7, effective July 01, 2007. -- Amended 2005 Ky. Acts ch. 85, sec. 414,
effective June 20, 2005. -- Amended 2003 Ky. Acts ch. 124, sec. 14, effective July 1,
2004. -- Amended 1988 Ky. Acts ch. 135, sec. 2, effective July 15, 1988. -- Amended
1982 Ky. Acts ch. 208, sec. 1, effective July 15, 1982. -- Created 1960 Ky. Acts ch.
5, Art. I, sec. 27, effective February 5, 1960.
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