Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
KRS 131.340,
138.462,
138.463,
138.4631,
186.005,
186.281,
281.615-281.670
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
138.463 requires the Transportation Cabinet
to establish standards for fair market rental or lease value and assess,
collect, and audit the monthly U-drive-it usage tax. This administrative
regulation establishes the record-keeping requirements for a permit holder and
the audit procedures of the Transportation Cabinet.
Section 1. Definitions.
(1) "Lease" is defined by
KRS
138.463(3).
(2) "Rental" is defined by
KRS
138.462(2).
Section 2. Recordkeeping.
(1) Rental records.
(a) A holder of a U-drive-it permit who rents
a vehicle shall:
1. Use a consecutive,
preprinted numbering system for a rental agreement;
2. For each motor vehicle included in the
permit holder's rental fleet, retain a copy of the original manufacturer's
invoice or a document that shows the manufacturer's suggested retail price of
the motor vehicle plus the cost of options included on the motor vehicle;
and
3. Retain a copy of the rental
agreement including a void or damaged agreement.
(b) The following information shall be
included on a rental agreement:
1. Rental
agreement number;
2. Beginning date
of the rental;
3. Ending date of
the rental;
4. Identification of
the specific rental vehicle that includes the following:
a. Vehicle identification number;
b. Make;
c. Model; and
d. Year;
5.
Odometer reading of the rental vehicle at the beginning of the rental
agreement;
6. Odometer reading of
the rental vehicle at the end of the rental agreement;
7. Amount charged for the rental
agreement;
8. Method of calculation
of the rental amount charged that includes mileage charges and number of days
used; and
9. Identification of the
person renting the vehicle.
(c) If applicable, the following shall be
attached to an original rental agreement:
1.
Replacement vehicle information; and
2. Information that will alter the original
rental agreement.
(d)
The record of a rental transaction shall be maintained for a period not less
than six (6) years after the due date of the U-drive-it tax return.
(2) Lease records. A holder of a
U-drive-it permit who leases a vehicle shall retain a copy of the leasing
agreement and other information required by this subsection.
(a) A lease agreement shall include the
following information:
1. Complete name and
address of the lessee;
2. Beginning
date of the lease;
3. Ending date
or term of the lease;
4.
Identification of the lease vehicle that includes the following:
a. Vehicle identification number;
b. Make;
c. Model;
d. Year; and
e. Manufacturer's suggested retail price;
5. Final lease termination calculation and
date;
6. Monthly payment amount
subject to the tax imposed by
KRS
138.463;
7. Down payment or trade-in
information;
8. Dated signature of
the lessee and the lessor; and
9.
Date of first lease payment, if different from agreement beginning
date.
(b) The following,
if applicable, shall be attached to the lease agreement:
1. Certificate of title of the leased
vehicle;
2. A lease amount
calculation worksheet;
3. A lease
extension agreement;
4.
Documentation of a lease early termination; and
5. Information that would alter the original
lease agreement.
(c) The
record of a lease transaction shall be maintained for a period not less than
six (6) years after the due date of the U-drive-it tax return.
Section 3. Audits of
Permit Holders.
(1) The Division of Road Fund
Audits shall notify the permit holder of the date, time, and location of the
audit. At least fifteen (15) days' advance notice shall be given to the permit
holder.
(2) The audit period shall
not exceed four (4) or six (6) years as established in
KRS
138.463(6).
(3) A permit holder who fails to make
available the required records, or sufficient alternative records, requested by
the auditor shall receive a tax assessment or have the permit cancelled
pursuant to
KRS
138.463(7).
(4)
(a) A
missing or incomplete record shall result in an assessment based on
KRS
138.460 or
138.463,
whichever is appropriate as determined by the audit.
(b) In computing the assessment for a
specific transaction, a permit holder shall receive credit for a tax previously
remitted to the Transportation Cabinet for that transaction.
(5) If an audit is conducted, the
auditor shall conduct and document a pre-audit telephone conference with the
permit holder outlining:
(a) The
operation;
(b) Audit
procedures;
(c) Records to be
examined;
(d) Sample period;
and
(e) Sampling
procedures.
(6) The
permit holder and auditor shall determine during the pre-audit telephone
conference which parties shall be:
(a)
Responsible for the final acceptance of audit findings; and
(b) Involved in the fieldwork close-out
conference.
(7) If the
audit is conducted, the auditor shall conduct and document a fieldwork
close-out conference with the permit holder outlining preliminary findings to
include:
(a) Recommendations;
(b) Right of appeal; and
(c) To whom the audit report shall be
addressed.
(8) The
Transportation Cabinet shall furnish the permit holder with a letter of audit
findings and recap schedules. If requested, the cabinet shall supply detailed
work papers to the permit holder that serve as backup material to the recap
schedules.
(9) If an audit
indicates that additional tax is owed, the Transportation Cabinet shall issue a
Notice of Tax Due statement.
(10)
Within forty-five (45) days of the notice of tax due statement, a permit holder
shall pay the tax due, or protest in writing pursuant to Section 4 of this
administrative regulation.
Section
4. Protest or Appeal of Audit Results.
(1)
(a) A
written protest may be filed by a taxpayer or a person representing a
taxpayer.
(b) A protest shall
include:
1. A supporting statement that
includes the grounds upon which the protest is made as required by
KRS
131.110(1); and
2. Documents that identify the adjustment
requested, or the portion of the audit protested.
(c) A protest shall be filed with the
cabinet's Division of Road Fund Audits within forty-five (45) days from the
date of the notice of tax due statement.
(2) If the supporting statements and
documents are not sufficient to change the assessment results, the taxpayer may
request an information gathering, or protest conference, with the Division of
Road Fund Audits in writing by regular mail, facsimile, or electronic
mail.
(3) The Division of Road Fund
Audits shall issue a final ruling to the taxpayer within sixty (60) days from
the date the taxpayer submits additional information, or within sixty (60) days
of the protest conference.
STATUTORY AUTHORITY:
KRS
138.463(5),
186.281(2)(c)