Current through Register Vol. 50, No. 9, March 1, 2024
NECESSITY, FUNCTION AND CONFORMITY:
KRS
131.130(1) authorizes the
Department of Revenue to promulgate administrative regulations necessary for
the administration and enforcement of all tax laws in Kentucky. This
administrative regulation explains the property tax classification found in
KRS
132.020(1) and
132.200(4)
for "machinery actually engaged in manufacturing" as it pertains to coal,
crushed stone, sand, gravel and hot mix asphalt.
Section 1. Definitions.
(1) "Manufacturing machinery" means machinery
actually engaged in manufacturing that is subject to the state ad valorem tax
of fifteen (15) cents upon each $100 of value provided in
KRS
132.020(1) and exempt under
KRS
132.200(4) from ad valorem
taxation by any county, city, school or other taxing district in which it has a
taxable situs.
(2) "Processing
area" means the area of a coal preparation plant or coal load out facility
where operational steps and methods are used to wash, size, blend, crush, load,
or chemically treat coal to get a final marketable product.
Section 2. Machinery Actually Engaged in
Manufacturing as it Pertains to Coal.
(1)
Machinery actually used in mining or a similar operation that is engaged in
manufacturing.
(a) Machinery actually used in
the crushing, sizing, blending, chemical treating, and washing of coal shall be
classified as manufacturing machinery.
(b) Coal manufacturing shall begin when
machinery and equipment is used to convey the raw coal into the crushing,
sizing, blending and washing facilities and shall include machinery and
equipment moving the coal between the manufacturing processes within the
processing area including in-process staging.
(c) Machinery and equipment used to blend
different product grades, prior to the point of the coal being loaded on
transport for removal from the processing area, shall be classified as
manufacturing machinery.
(d)
Manufacturing shall end with the loading of coal for final transport to the end
user. The loading of coal for final transport to the end user shall only be
classified as manufacturing if blending or chemical treatment occurs during the
loading process.
(e) Machinery
actually used in crushing, sizing, blending and washing shall include
structures housing the crushing, sizing, blending or washing
machinery.
(f) Machinery whose
purpose shall be classified as to move, stage or load the coal when it is
utilized subsequent to receiving or dumping of the coal into one (1) of these
processes and prior to completion of the sizing, crushing, blending or washing
process is manufacturing machinery.
(2) Equipment used in mining or a similar
operation that is not engaged in manufacturing.
(a) The manufacturing process shall exclude
coal hauled via a licensed truck outside the processing area.
(b) Other machinery actually used in
extraction, severance, dredging, or mining operations shall not be classified
as manufacturing machinery regardless of where in the operation it is
located.
Section
3. Machinery Actually Engaged in Manufacturing of Crushed Stone,
Sand, and Gravel.
(1) "Machinery actually
engaged in manufacturing" includes the following:
(a) Machinery actually used in the conveying,
crushing, screening, washing, drying, blending, and stockpiling of stone, sand,
or gravel to a product of the appropriate gradation and specification required
for sale or final use;
(b)
Machinery and equipment actually used to size, crush, screen, blend, de-dust or
wash the stone, sand, or gravel, including all necessary housing, electrical,
and support systems;
(c) Machinery
and equipment actually used to convey or maintain proper material flow of the
stone, sand, or gravel to and between the crushing, sizing, screening,
blending, dedusting, and washing facilities; or
(d) Machinery and equipment actually used to
reassemble, remix, and blend the crushed stone, sand, or gravel into different
product grades.
(2)
Manufacturing of crushed stone, sand, or gravel.
(a) Manufacturing of crushed stone, sand, and
gravel shall commence with the initial sizing of the stone (shot rock), sand,
or gravel after it has been removed from its natural deposit, and shall
continue with the loading, hauling, pumping, or conveying to the primary
crusher or screen.
(b)
Manufacturing shall continue with the further sizing, classifying, crushing,
screening, blending, dedusting, and washing of the stone, sand, or
gravel.
(c) Manufacturing of stone,
sand, or gravel shall end when the product meets and maintains the appropriate
gradation, specifications, or blends.
(d) The loading of stone, sand, or gravel for
final transport to the end user shall only be classified as manufacturing if
blending occurs during the loading process.
Section 4. Machinery Actually Engaged in
Manufacturing of Hot Mix Asphalt.
(1)
"Machinery actually engaged in manufacturing" shall include the following:
(a) Machinery and equipment actually used to
load raw materials into an asphalt plant's cold feed bins, including the cold
feed bins; the blending of aggregates; the movement of material across screen
decks into dryers or drums, including the dryer and drums; and surge
facilities, silos, and load control systems;
(b) Machinery and equipment actually used to
transport or convey the material through or between the cold feed bins, the
screen decks, the dryer or drum, the surge facilities, silos, and load control
systems;
(c) Machinery and
equipment actually used to heat, dry, mix, and blend the aggregates with the
liquid asphalt, including all necessary housing, electrical, controls, liquid
asphalt tanks, and energy supply systems; or
(d) Machinery and equipment actually used to
load, adhere, remix, place, and compact the hot mix asphalt.
(2) Manufacturing of Hot Mix
Asphalt.
(a) Manufacturing of hot mix asphalt
shall commence with the loading of raw materials to the cold feed
bins.
(b) Manufacturing shall
continue with the blending of aggregates on the conveyor belts, through the
flow of material across the screen decks, and into the dryer or drum for
further blending or mixing.
(c)
Manufacturing shall continue through the surge facilities, silos, and load
control systems.
(d) Manufacturing
of hot mix asphalt shall end when:
1. Either:
a. The hot mix asphalt is loaded for delivery
to a retail customer; or
b. When
the hot mix asphalt is placed and compacted as directed by the customer;
and
2. It meets the
requirements set forth by the applicable customer or regulatory
specifications.
(e) The
loading of hot asphalt for final transport to the end user shall only be
classified as manufacturing if blending occurs during the loading
process.