Residential Utility Exemption Changes
Implementation of Changes to the Sales & Use Tax Residential Utility Exemption-KRS 139.470(7), effective 01/01/2023
The basis of the residential exemption for utilities shifts from reliance on tariff language filed with the Public Service Commission (PSC) to a customer declaration that the services are used at the location as the place of domicile.
The new form for use by residents to declare their eligibility for the residential exemption is the Declaration of Domicile for Purchase of Residential Utilities, Form 51A380. Submit the completed form or provide the required information from the form in the format requested by each applicable utility provider. The form is available at 51A380 (1-23).
Since most accounts currently classified as residential are expected to retain residential treatment going forward, accounts should not default to non-residential status on 01/01/2023. However, utility companies should examine their databases to determine if they have customers with a residential coding for more than one address. In such cases, utility companies must document the single address that the customer declares as his or her place of domicile.
In addition, utilities must obtain the declaration of domicile information for any accounts they currently designate as residential when there is a change in account holders or if a new account is established. If there is uncertainty regarding the exempt status of a particular account, it will be the responsibility of the utility company to justify the residential treatment by obtaining a completed certificate of domicile from the customer.
How will the declaration of domicile work for a multi-unit residential rental facility or mobile home park that is billed to an owner or operator of the facility rather than the resident?
Since the residential exemption effective 01/01/2023 is based upon utilities purchased for, and declared by, the resident as used in his or her place of domicile, residents must declare their place of domicile to establish eligibility for the exemption. A property owner may collect and submit the Declaration of Domicile, Form 51A380 on behalf of the residential renters to the applicable utility companies providing services to the multi-unit residential rental facility for reclassification as a residential account.
The property owner or landlord must also complete a Multi-Unit Declaration of Domicile for Landlords, Form 51A381. The form is available at 51A381 (1-23). The Multi-Unit declaration must specify how many dwelling units are served by the master meter, and a separate and complete Declaration of Domicile must be included for each of the dwelling units. Multi-Unit declarations that do not include Declarations of Domicile from all dwelling units served by the master meter are not eligible for residential tax treatment. In addition, customer accounts with a master meter that serves only common areas or that serves common areas and multiple dwelling units are also not eligible for residential treatment.
If an individual owns two or more homes, lives in one and rents the others, could the others qualify for exemption? Would the lessee(s) be required to submit a declaration of domicile?
Yes, multiple properties owned by the same party may qualify for a residential exemption if each property is the place of domicile for different Kentucky residents and the utility service provider receives a certificate of domicile for each separately metered account.
How long will the declaration of domicile be effective?
There is no expiration date for the certificate of domicile. It will remain effective as long as the facts stated on the form remain accurate. For example, if the account location changes ownership or if the renter at the location changes, then the certificate should be updated to reflect the new Kentucky resident using the location as his or her place of domicile.
May a person claim the residential utility exemption on all utilities supplied to a primary residence with one meter servicing the home and another meter servicing an outbuilding?
Yes, the residential utility exemption may apply under the following circumstances: a) the utility meters must serve a single location that is the declared place of domicile, b) the utility services through both meters must be exclusively for residential usage, and c) the resident must submit a fully completed Declaration of Domicile, Form 51A380, for each metered account.