Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
KRS
138.462(2), (3),
138.463,
138.4631,
281.615-281.670
NECESSITY, FUNCTION, and CONFORMITY:
KRS
138.463(9) requires the fair
market rental or lease value of a motor vehicle to be based on standards
established by an administrative regulation promulgated by the Transportation
Cabinet. This administrative regulation establishes the standards for use in
determining the minimum amount of usage tax to be reported and paid on a rental
or lease vehicle.
Section 1.
Definitions.
(1) "Lease" is defined by
KRS
138.462(3).
(2) "Rental" is defined by
KRS
138.462(2).
(3) "Renting" or "leasing" means a U-drive-it
permit holder who:
(a) Rents or leases a
vehicle as part of an established business to a retail customer wishing to rent
or lease a vehicle; and
(b)
Maintains the records required by
601 KAR
1:147, Section 2.
(4) "Vehicle classification" means the motor
vehicle classification system established by the National Automobile Dealers
Association in its monthly NADA Official Used Car Guide.
Section 2. Fair Market Value Rental Amount of
a Permit Holder.
(1) If a U-drive-it permit
holder is regularly engaged in the business of renting motor vehicles to retail
customers, the Transportation Cabinet Division of Road Fund Audits shall audit
the records of the permit holder to determine an average rental amount that
establishes the fair market value rental amount for the permit
holder.
(2) The fair market value
rental amount shall be used to assess the usage tax assessed pursuant to
KRS
138.463 on an individual transaction of a
U-drive-it permit holder regularly engaged in the business of renting vehicles
to retail customers if:
(a) The transaction
is for less than the fair market value of the rental of the motor vehicle;
or
(b) The records required by
601 KAR
1:147, Section 2, for the transaction are missing or
incomplete.
Section
3. Fair Market Value Established by Cabinet as Rental Amount.
(1)
(a) The
Transportation Cabinet Division of Road Fund Audits shall randomly select
U-Drive-It permit holders regularly engaged in the business of renting vehicles
to retail customers to determine the industry average fair market value rental
amount for a specific vehicle classification.
(b) The value for a specific vehicle
classification shall be the fair market value established by the cabinet as the
rental amount for a specific vehicle classification.
(2) The industry average fair market value
established by the cabinet as the rental amount for a specific vehicle
classification shall be used to assess the tax assessed by
KRS
138.463 for the following:
(a) A transaction by a permit holder who is
not regularly engaged in the business of renting vehicles to retail customers;
or
(b) A vehicle used by a permit
holder regularly engaged in the business of renting vehicles to retail
customers who are not correctly reporting the U-drive-it usage tax on a monthly
tax return.
(3) The
current industry average fair market value established by the cabinet is listed
in Fair Market Value Transportation Cabinet Established Rental and Lease
Amounts.
Section 4. Fair
Market Value Lease Amount.
(1) If a U-drive-it
permit holder is regularly engaged in the business of leasing vehicles to
retail customers, the Transportation Cabinet Division of Road Fund Audits shall
audit the records of the permit holder to determine an average lease amount per
$1,000 value of the manufacturer's suggested retail price of the permit
holder's lease vehicles.
(2) The
fair market value lease amount shall be used to assess the U-drive-it usage tax
required by
KRS
138.463 on an individual transaction of a
U-drive-it permit holder regularly engaged in the business of leasing vehicles
to retail customers if:
(a) The transaction is
for less than the fair market value of the lease of the motor vehicle;
or
(b) The records required to be
maintained by
601 KAR
1:147, Section 2(2), are missing or
incomplete.
Section
5. Fair Market Value Transportation Cabinet Established Lease
Amount.
(1)
(a) The Transportation Cabinet Division of
Road Fund Audits shall survey the executed lease agreements of randomly
selected U-drive-it permit holders regularly engaged in the business of leasing
vehicles to retail customers to determine the industry average dollar lease
amount per $1,000 value of the manufacturer's suggested retail price of a
vehicle.
(b) The value established
as the industry average dollar lease amount per $1,000 of the manufacturer's
suggested retail price shall be the fair market value Transportation Cabinet
established lease amount per $1,000 of the manufacturer's suggested retail
price.
(2) The usage tax
assessed pursuant to
KRS
138.463 for a lease vehicle of a permit
holder not regularly engaged in the business of leasing vehicles to retail
customers shall be the greater of the following:
(a) The established fair market value lease
amount per $1,000 value of the manufacturer's suggested retail price of the
vehicle; or
(b) The monthly lease
amount assessed by the permit holder.
(3) The established lease amount per $1,000
value of the manufacturer's suggested retail price shall be listed in Fair
Market Value Transportation Cabinet Established Rental And Lease
Amounts.
Section 6.
Incorporation by Reference.
(1) "Fair Market
Value Transportation Cabinet Established Rental And Lease Amounts", August
2012, is incorporated by reference.
(2) This material may be inspected, copied,
or obtained, subject to applicable copyright law, at the Transportation
Cabinet, Division of Road Fund Audits, 200 Mero Street, Frankfort, Kentucky
40622, phone (502) 564-7650, fax (502) 564-5238, office hours are Monday
through Friday, 8 a.m. to 4:30 p.m.
STATUTORY AUTHORITY:
KRS
138.463(9)