Kentucky: Tax Relief Will Help Communities Rebuild after Storms
- Aug 24, 2015 | Gail Cole
Tornadoes and storms devastated parts of Kentucky in mid-July, destroying buildings, washing out roads, and claiming lives. In response, Governor Steve Beshear declared the whole state to be in a state of emergency and asked President Obama to issue a major disaster declaration and provide emergency assistance to affected communities: Carter, Johnson, Rowan and Trimble counties. The president did so.
Recovery will take time. To help ease the cost of rebuilding, Kentucky law provides a sales and use tax refund on building materials used for disaster recovery.
The law provides the following definitions:
- Building materials: “all tangible personal property which enters into and becomes a permanent part of a building.”
- Disaster: “damage resulting from a flood, rain storm, ice storm, wind storm, tornado, hurricane, earthquake, or terrorist attack.”
- Disaster area: “a county that has been declared a disaster by the President of the United States pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. secs 5121 to 5206.”
Only the legal owner of an affected building may qualify for the sales and use tax refund, although materials may be purchased by a contractor “under contract with the legal owner to incorporate the building materials into the building.” Eligible purchases include supplies necessary to repair the affected building or build “a new building in a disaster area to replace the building damaged or destroyed by the disaster.”
The refund is “limited to the lessor of:
- 100% of the Kentucky sales and use tax actually paid, reduced by the amount of vendor compensation allowed under KRS 139.570; or
- $6,000 for each building in the disaster area which is damaged or destroyed by the disaster regardless of the number of legal owners.”
How to request a refund
Refund requests must be filed with the Department of Revenue "after completion of the qualifying construction and within three (3) years from the date the disaster area is declared." The following documents must be submitted with a refund request:
- “Application for Kentucky Disaster Relief Sales and Use Tax Refund, Form 51A600;
- Information Sharing and Assignment Agreement for Disaster Relief Refund Claims, Form 51A601;
- Expenditure Report for Building Materials Disaster Relief Refunds, Form 51A602;
- Copies of contractor invoices to the legal building owner, if applicable;
- Related sample sales receipts of building materials purchased from each vendor;
- Photographs of disaster damage and related construction;
- Other applicable documents that the applicant believes will support the refund claim; and
- One of the following types of documentation:
- Confirmation letter that the legal building owner is eligible for assistance from the Federal Emergency Management Agency (FEMA), United States Department of Homeland Security because of property damage from the disaster; or
- A copy of the insurance claim filed for the building damage sustained in the disaster.”
Records supporting the refund request must be retained for at least four years.
Additional information is available in KRS 139.519, 103 KAR 31:170 and through the Kentucky Department of Revenue.