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143.010 Definitions for chapter.
As used in this chapter:
(1) "Department" means the Department of Revenue;
(2) "Coal" means and includes any material composed predominantly of
hydrocarbons in a solid state;
(3) "Severed," "severing," or "severance" means the physical removal of coal from
the earth;
(4) "Ton" means a short ton of 2,000 pounds. The number of tons shall be
determined at the first point at which the coal is weighed;
(5) (a) "Taxpayer" means and includes any individual, partnership, joint venture,
association, or corporation engaged in severing and/or processing coal in
this state. In instances where contracts, either oral or written, are entered
into by which persons, organizations, or businesses are engaged to mine
or process the coal but do not obtain title to or do not have an economic
interest therein, the party who owns the coal or has an economic interest
shall be the taxpayer.
(b) For purposes of this chapter, a taxpayer possesses an economic interest
in coal where the taxpayer has acquired by investment any interest in coal
and secures, by any form of legal relationship, income derived from the
severance or processing of coal, to which he must look for a return of his
capital. A party who has no capital investment in the coal or who only
receives an arm's length royalty shall not be considered as having an
economic interest;
(6) "Gross value" is defined as follows:
(a) For coal severed and/or processed and sold during a reporting period,
gross value shall be the amount received or receivable by the taxpayer;
(b) For coal severed and/or processed, but not sold during a reporting period,
gross value shall be determined as follows:
1.
If the coal is to be sold under the terms of an existing contract, the
contract price shall be used in computing gross value; and
2.
If there is no existing contract, the fair market value for that grade
and quality of coal shall be used in computing gross value;
(c) In a transaction involving related parties, gross value shall be the amount
received or receivable from the first noncontrolled sale by the related
parties. If coal is sold to a related party for consumption, gross value shall
not be less than the fair market value for coal of similar grade and quality;
(d) In the absence of a sale, gross value shall be the fair market value for
coal of similar grade and quality;
(e) If severed coal is purchased for the purpose of processing and resale, the
gross value shall be the amount received or receivable during the
reporting period reduced by the amount paid or payable to the registered
taxpayer actually severing the coal;
(f) If severed coal is purchased for the purpose of processing and
consumption, the gross value shall be the fair market value of processed
coal of similar grade and quality reduced by the amount paid or payable
to the registered taxpayer actually severing the coal;
(g) In all instances, the gross value shall not be reduced by any taxes,
including the tax levied by KRS 143.020, royalties, sales commissions, or
any other expense; and
(h) In all instances, transportation expense incurred in transporting coal shall
not be considered as gross income from the property;
(7) "Reporting period" means the period for which each taxpayer shall compute his
tax liability and remit the tax due to the department. The reporting period shall
be monthly. However, the department may, under certain conditions, authorize
a quarterly reporting period;
(8) "Processing" includes cleaning, breaking, sizing, dust allaying, treating to
prevent freezing, or loading or unloading for any purpose. "Processing" shall
not include:
(a) Acts performed by a final consumer who is not a related party to the
person who severed and/or processed the coal if such acts are performed
only at the site where the coal is consumed for purposes of generating
electricity;
(b) The act of unloading or loading for shipment coal that has not been
severed, cleaned, broken, sized, or otherwise treated in Kentucky; or
(c) The use of electromagnetic energy on coal to reduce moisture, ash,
sulfur, or mercury in the coal;
(9) "Related party" means two (2) or more persons, organizations, or businesses
owned or controlled directly or indirectly by the same interest. Control
shall exist if a contract or lease, either written or oral, is entered into
whereby one (1) party mines or processes coal owned or held by another
party and the owner or lessor participates in the mining, processing, or
marketing of the coal or receives any value other than an arm's length
passive royalty interest. In the case of related parties, the department
may apportion or allocate the receipts between or among the persons,
organizations, or businesses if it determines that the apportionment or
allocation is necessary in order to more clearly reflect gross value;
(10) (a)
"Transportation expense" means:
1.
The amount paid by a taxpayer to a third party for transporting coal
from the mine mouth or pit to a processing plant, tipple, or loading
dock; and
2.
The expense incurred by a taxpayer using his own facilities in
transporting coal from the mine mouth or pit to a processing plant,
tipple, or loading dock.
(b) "Transportation expense" shall not include:
1.
The cost of acquisition, improvements, and maintenance of real
property;
2.
The cost of acquisition and operating expenses of mining and
nonmining loading or unloading facilities; or
3.
The cost of acquisition and operating expenses of equipment used
to load or unload the coal at the mine, processing facility, and mining
(11)
(12)
(13)
(14)
and nonmining loading facility;
"Registered taxpayer" means a taxpayer who holds a valid coal tax certificate
of registration required under KRS 143.030(1) and the certificate of registration
was valid for the period in which his coal was sold;
"Above-drainage" means coal in a coal bed that outcrops at the surface within
a mine permit area and that is accessed at the outcrop location;
"Below-drainage" means coal in a coal bed that does not outcrop at the surface
within a mine permit area and that is accessed by mine slopes or other
openings that penetrate the coal a minimum of thirty (30) feet below the
surface drainage level; and
"Mining ratio" means the amount of bank cubic yards of surface material that
must be removed before a ton of coal can be mined.
Effective:July 1, 2013
History: Amended 2013 Ky. Acts ch. 119, sec. 18, effective July 1, 2013. -Amended 2008 Ky. Acts ch. 182, sec. 1, effective July 15, 2008. -- Amended
2005 Ky. Acts ch. 85, sec. 534, effective June 20, 2005. -- Amended 2000 Ky.
Acts ch. 478, sec. 1, effective July 14, 2000. -- Amended 1994 Ky. Acts ch. 133,
sec. 1, effective July 15, 1994. -- Amended 1990 Ky. Acts ch. 163, sec. 7,
effective July 13, 1990; and ch. 177, sec. 4, effective July 13, 1990. -- Amended
1988 Ky. Acts ch. 331, sec. 2, effective July 15, 1988. -- Amended 1978 Ky.
Acts ch. 189, sec. 1, effective July 1, 1978. -- Created 1972 Ky. Acts ch. 62,
Pt. II, sec. 1.
Legislative Research Commission Note (7/1/2013). Under the authority of KRS
7.136(1), the Reviser of Statutes has modified the internal numbering of
subsection (10) of this statute from the way it appeared in 2013 Ky. Acts ch.
119, sec. 18. The words in the text were not changed.
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