Sales Tax On Utilities Going Into Effect in January '23: Some Action For Exemption Required

Some Exemptions Already In Place With No Action

Darren Doyle, story:
We've received multiple emails, calls, and messages regarding a new sales tax that will placed on some utilities, going into effect in January of 2023. Several rumors and discussions have been shared; however, there are exemptions for home owners and some of them are already in place without any further action.

Many who are first hearing about the tax believe certain forms must be filled out by everyone or the tax will automatically be charged come January, but that is not exactly the case.

The sales tax is part of a tax reform bill passed by the Kentucky legislature earlier this year (House Bill 8) that is designed to eventually eliminate the state income tax for good, according to Representative Michael Meredith, who sponsored the bill. We spoke with Meredith this week regarding the changes.

"State income tax will drop by a half percent on January 1, of 2023 and another half percent January 1, 2024, going from 5% to 4%," Meredith told the Edmonson Voice. "There are also annual reviews of the states revenues, expenses, and budget reserves.  If we continue hitting targets with growth, income tax keeps going down a half percent each year until it’s eliminated altogether.  The tradeoff to the income tax reduction was extending the sales tax to a list of non-essentials (listed in various places in the bill). One of those extensions of sales tax was to utilities that are not your primary residence.  So landlords who put utilities for rental properties in the landlords names, commercial properties, and second homes are taxable."

Here's what that means for WRECC, Edmonson Water, and Leitchfield Utilities customers:

Edmonson Water: According to Erica Wolfe, Edmonson Water Office Manager, customers who currently have only one water account with the district will not be affected.

"They will not need to do anything; they will be grandfathered in, so to speak," she said. "If they have any type of change to their account after the first of the year, they will then have to complete the form or pay the tax. This is the part that has not be emphasized, current customers who only have one account in their name do not need to take any action."

Wolfe said that customers who currently have more than one account are being sent letters and the domicile form to complete, via mail, which can also be completed in-person or printed from the water district website.

"They will only receive the exemption on one account, the domicile account," she said. "After the new year, they will have the new tax applied to the additional accounts. The declaration of domicile form can be found on our website under the forms tab. We are also asking any customers that are farm exempt to send in the new farm exemption certificate. A pdf of the farm exemption form has been put on our website as well."

All applicable exemptions and forms need to be emailed, faxed, dropped off, or mailed in by January 1st, 2023. Forms received after January 1st may be billed the new tax until the necessary forms are received.

WRECC: We spoke with a customer service rep this morning who instructed us that all customers would have to contact WRECC and declare your primary residence to remain exempt. While you can fill out a form, it was much easier to simply call 270-842-6541 and do it quickly over the phone.

Other ways to declare include downloading the KY Department of Revenue Form 51A380 (Declaration of Domicile for Purchase of Residential Utilities) here.  Completed and signed forms may be submitted by mail to PO Box 1118, Bowling Green KY 42102, email to [email protected], or in person at any WRECC office. You may also make a declaration through SmartHub at Contact us/Report an issue/Other issues/Declaration: Residential Tax Exemption.

Leitchfield Utilities: We spoke with a customer representative that informed us that no action needed to be taken and that the exemption for homeowners with one meter would automatically take place in January.

The bill was sponsored by 15 republicans. It was vetoed by the Governor on April 8th. The veto was overridden by the Senate on April 13 with a 72-25 majority and by the House with a 28-8-1 majority on the same day.