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96.820 Payment of sums equivalent to taxes based on book value.
(1)
For the purposes of this section, unless the context requires otherwise:
(a) "Taxing jurisdiction" shall mean each county, each school district, each
municipality, and each other special taxing district located within the state.
(b) "State" shall mean the Commonwealth of Kentucky.
(c) "Tax equivalent" shall mean the amount in lieu of taxes computed
according to this section which is required to be paid by each board to the
state and to each taxing jurisdiction in which the board operates and
required by subsection (11) of KRS 96.570 to be included in resale rates.
(d) "Tax year" shall mean the twelve (12) calendar-month period ending with
December 31.
(e) "Current tax rate" shall mean the actual levied ad valorem property tax
rate of the state and of each taxing jurisdiction which is applicable to all
property of the same class as a board's property subject to taxation for
the tax year involved.
(f) "Book value of property" or "book value of property owned by the board"
shall mean the sum of:
1.
The original cost (less reasonable depreciation or retirement
reserve) of a board's electric plant in service on December 31 of the
immediately preceding calendar year located within the state, used
and held for use in the transmission, distribution, and generation of
electric energy, and
2.
The cost of the material and supplies owned by a board on
December 31 of the immediately preceding calendar year. For the
purpose of this definition, "electric plant in service" shall mean those
items included in the "electric plant in service" account prescribed by
the Federal Energy Regulatory Commission uniform system of
accounts for electric utilities, and "material and supplies" shall mean
those items included in the accounts grouped under the heading
"material and supplies" in the said system of accounts.
(g) "Adjusted book value of property" or "adjusted book value of property
owned by the board" shall mean the book value of property owned by the
board excluding manufacturing machinery as interpreted by the
Department of Revenue for franchise tax determination purposes.
(h) The "adjustment factor" shall be one hundred twenty-five percent (125%)
for the tax year 1970. For each tax year thereafter, it shall be the duty of
the Department of Revenue to compute the adjustment factor for that tax
year as follows: For each five (5) percentage points or major fraction
thereof by which the adjustment ratio for electric utility property for the
immediately preceding tax year exceeded or was less than one hundred
sixteen percent (116%), five (5) percentage points shall be added to or
subtracted from one hundred twenty-five percent (125%). For the
purposes of this computation, "adjustment ratio for electric utility property"
shall mean the ratio of total assessed value to total property value for all
public service corporations distributing electric energy to more than fifty
thousand (50,000) retail electric customers within the state. "Total
(2)
(3)
assessed value" shall mean the total actual cash value assigned by the
Department of Revenue for ad valorem property tax purposes to the
property of such corporations located within the state (properly adjusted
for property under construction). "Total property value" shall mean the
sum of:
1.
The depreciated original cost of the total utility plant in service of
such corporations within the state, and
2.
The book value of material and supplies of such corporations
located within the state, both as derived from published reports of
the Federal Energy Regulatory Commission, or in the absence
thereof, from information provided to the Department of Revenue by
such corporations.
(i) "Electric operations" shall mean all activities associated with the
establishment, development, administration, and operation of any electric
system and the supplying of electric energy and associated services to
the public, including without limitation the generation, purchase, sale, and
resale of electric energy and the purchase, use, and consumption thereof
by ultimate consumers.
It shall be the duty of each board, on or before April 30, to certify to the
Department of Revenue the book value of property owned by the board and
the adjusted book value of property owned by the board and located within the
state and within each taxing jurisdiction in which the board operates. A copy of
the certification shall also be sent by the board to each such taxing jurisdiction.
The book value of property and adjusted book value of property shall be
determined, and the books and records of the board shall be kept in
accordance with standard accounting practices, and the books and records of
each board shall be subject to inspection by the Department of Revenue and
by representatives of the affected taxing jurisdictions and to adjustment by the
Department of Revenue if found not to comply with the provisions of this
section. Upon the receipt of the required certification from a board, the
Department of Revenue shall make any inspection and adjustment,
hereinabove authorized, as it deems necessary, and no earlier than September
1 of each year the Department of Revenue shall certify to the board and to the
county clerk of each county in which the board operates the book value of
property owned by the board and the adjusted book value of property owned
by the board, located within each taxing jurisdiction in which the board
operates and within the state. At the same time, the Department of Revenue
shall certify to the board and to the county clerk the adjustment factor for the
tax year. The county clerk shall promptly certify the book value of property, the
adjusted book value of property, and the adjustment factor certified by the
Department of Revenue, to the respective taxing jurisdiction in which the board
operates.
(a) Each board shall pay for each tax year, beginning with the tax year 1970,
to the state and to each taxing jurisdiction in which the board operates, a
tax equivalent from the revenues derived from the board's electric
operations for that tax year, computed according to this subsection.
(b) The tax equivalent for each tax year payable to the state shall be the total
of:
1.
(4)
The book value of the property owned by the board within the state,
multiplied by the adjustment factor, multiplied by the current tax rate
of the state, less thirty cents ($0.30), plus
2.
The state's portion of the amount payable under paragraph (d) of
this subsection.
(c) The tax equivalent for each tax year payable to each taxing jurisdiction in
which the board operates shall be the total of:
1.
The adjusted book value of property owned by the board within the
taxing jurisdiction, multiplied by the adjustment factor, multiplied by
the current tax rate of the taxing jurisdiction; provided, however, for
the purpose of this calculation the tax rate for school districts shall
be increased by thirty cents ($0.30), plus
2.
The taxing jurisdiction's portion of the amount payable under
paragraph (d) of this subsection.
(d) For purposes of this subsection, "amount payable" shall mean four-tenths
of one percent (0.4%) of the book value of property owned by the board
located within the state. The state shall be paid the same proportion of the
amount payable as the payment to the state under subparagraph 1. of
paragraph (b) of this subsection represents of the total payments to the
state and all taxing jurisdictions in which the board operates required by
subparagraph 1. of paragraph (b) and subparagraph 1. of paragraph (c) of
this subsection. Each taxing jurisdiction in which the board operates shall
be paid the same proportion of the amount payable as the payment to the
taxing jurisdiction under subparagraph 1. of paragraph (c) of this
subsection represents of the total payments to the state and all taxing
jurisdictions in which the board operates required by subparagraph 1. of
paragraph (b) and subparagraph 1. of paragraph (c) of this subsection.
Under the regulations the Department of Revenue may prescribe, upon
the board's receipt from the state and taxing jurisdictions of notice of the
amount due under subparagraph 1. of paragraph (b) and subparagraph 1.
of paragraph (c) of this subsection, the board shall compute the portion of
the amount payable which is due the state and each taxing jurisdiction in
which the board operates.
(e) Payment of the tax equivalent under this section for each tax year shall
be made by each board to the state within thirty (30) days after receipt by
the board of the certification from the Department of Revenue required by
subsection (2) of this section and shall be made directly to each taxing
jurisdiction in which the board operates within thirty (30) days from the
date of the certifications by the county clerk required by subsection (2) of
this section. The state and each taxing jurisdiction in which a board
operates shall have a superior lien upon the proceeds of the sale of
electric energy by that board for the amounts required by this section to
be paid to it.
Except as hereinafter provided, the tax equivalents computed under this
section shall be in lieu of all state, municipal, county, school district, special
taxing district, other taxing district, and other state and local taxes or charges
(5)
on the tangible and intangible property, the income, franchises, rights, and
resources of every kind and description of any municipal electric system
operating under KRS 96.550 to 96.900 and on the electric operations of any
board established pursuant thereto, and the tax equivalent for any tax year
computed and payable under this section to the state or to any taxing
jurisdiction in which any board operates shall be reduced by the aggregate
amount of any tax or charge within the meaning of this sentence which is
imposed by the state, or by any taxing jurisdiction in which a board operates,
on the board, the electric system, or the board's electric operations. Provided,
however, that if any school district in which property of a board is located has
elected, or does hereafter elect, to apply the utility gross receipts license tax for
schools to all utility services as provided by KRS 160.613 through KRS
160.617, or as may hereafter be provided by other statutes, the amount of such
utility gross receipts license tax shall not reduce, or in any manner affect, the
amount payable to any such board or boards under the provisions of this
section. It is the intent and purpose of this provision to eliminate all sums
received by any such board or boards by reason of the utility gross receipts
license tax from any computation of the amount payable under this section to
any such board or boards, irrespective of the manner in which that payment is
computed, so that, in no event, shall any sum received by any school district by
reason of the utility gross receipts license tax reduce, directly or indirectly, the
amount payable to such district under this chapter. Provided, further, that if the
state shall levy a statewide retail sales or use tax on electric power or energy,
collected by retailers of the energy from the vendees or users thereof, and
imposed at the same rate or rates as are generally applicable to the sale or use
of personal property or services, including natural or artificial gas, fuel oil, and
coal as well as electric power or energy, the retail sales or use tax shall not be
deemed to be a tax or charge within the meaning of the first sentence of this
subsection, and the tax equivalent payable for the tax year to the state under
this section shall not be reduced on account of such retail sales or use tax.
(a) Notwithstanding subsection (3) of this section, until the first tax year in
which the total of:
1.
The tax equivalent payable to the state, or to any taxing jurisdiction
in which the board operates, computed under subsection (3) of this
section, plus
2.
The additional amounts permitted to be paid to the state or taxing
jurisdiction without deduction under the second and third sentences
of subsection (4) of this section, exceeds the minimum payment to
the state or taxing jurisdiction specified in paragraph (b) of this
subsection, the tax equivalent for each tax year payable to the state
or taxing jurisdiction shall be an amount equal to the minimum
payment computed under paragraph (b) of this subsection.
(b) For purposes of this subsection, the minimum payment to the state or to
any taxing jurisdiction in which the board operates shall mean an amount
equal to the total of:
1.
The largest actual payment made by the board pursuant to this
section to the state or to the taxing jurisdiction for any of the tax
(c)
(d)
years 1964, 1965, or 1966, plus
2.
The state's or taxing jurisdiction's pro rata share of an amount equal
to four-tenths of one percent (0.4%) of the increase since July 1,
1964, in the book value of property owned by the board within the
state. For the purposes of this paragraph "pro rata share" shall
mean the same proportion of the amount computed under this
subparagraph as the largest actual payment in lieu of taxes made by
the board to the state or taxing jurisdiction for the applicable tax year
under subparagraph 1. of this paragraph represents of the total
amount of the largest actual payments in lieu of taxes made by the
board to the state and to all taxing jurisdictions in which it operated
for any of the applicable tax years.
The provisions of paragraph (e) of subsection (3) of this section shall
apply to all payments required under this subsection.
This subsection shall not be applicable for the first tax year specified in
paragraph (a) of this subsection or for any tax year thereafter, except
however, that tax year 1977 shall not be deemed as the "first tax year" as
specified in paragraph (a) and this subsection shall continue to apply in
such cases.
Effective:June 20, 2005
History: Amended 2005 Ky. Acts ch. 85, sec. 103, effective June 20, 2005. -Amended 2002 Ky. Acts ch. 89, sec. 2, effective July 15, 2002. -- Amended
1990 Ky. Acts ch. 476, Pt. IV, sec. 124, effective July 13, 1990. -- Amended
1978 Ky. Acts ch. 163, sec. 1, effective June 17, 1978; and ch. 384, sec. 223,
effective June 17, 1978. -- Amended 1972 Ky. Acts ch. 219, sec. 1. -- Amended
1970 Ky. Acts ch. 286, sec. 2. -- Amended 1968 Ky. Acts ch. 170, sec. 1. -Amended 1966 Ky. Acts ch. 165, sec. 2. -- Created 1942 Ky. Acts ch. 18,
sec. 25.
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