139.010 Definitions for chapter. - Kentucky Statutes

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139.010 Definitions for chapter. As used in this chapter, unless the context otherwise provides:
(1) "Business" includes any activity engaged in by any person or caused to be engaged in by that person with the object of gain, benefit, or advantage, either direct or
indirect; (2) "Commonwealth" means the Commonwealth of Kentucky;
(3) "Department" means the Department of Revenue;
(4) (a) "Digital audio-visual works" means a series of related images which, when shown in succession, impart an impression of motion, with accompanying
sounds, if any. (b) "Digital audio-visual works" includes movies, motion pictures, musical videos, news and entertainment programs, and live events. (c) "Digital audio-visual works" shall not include video greeting cards, video games, and electronic games; (5) (a) "Digital audio works" means works that result from the fixation of a series of musical, spoken, or other sounds. (b) "Digital audio works" includes ringtones, recorded or live songs, music, readings of books or other written materials, speeches, or other sound
recordings. (c) "Digital audio works" shall not include audio greeting cards sent by electronic mail; (6) (a) "Digital books" means works that are generally recognized in the ordinary and usual sense as books, including any literary work expressed in words,
numbers, or other verbal or numerical symbols or indicia if the literary work is
generally recognized in the ordinary or usual sense as a book. (b) "Digital books" shall not include digital audio-visual works, digital audio works, periodicals, magazines, newspapers, or other news or information
products, chat rooms, or Web logs; (7) (a) "Digital code" means a code which provides a purchaser with a right to obtain one (1) or more types of digital property. A "digital code" may be obtained by
any means, including electronic mail messaging or by tangible means,
regardless of the code's designation as a song code, video code, or book code. (b) "Digital code" shall not include a code that represents: 1. A stored monetary value that is deducted from a total as it is used by the
purchaser; or 2. A redeemable card, gift card, or gift certificate that entitles the holder to
select specific types of digital property; (8) (a) "Digital property" means any of the following which is transferred electronically:
1. Digital audio works; 2. Digital books; 3. Finished artwork; 4. Digital photographs; 5. Periodicals; 6. Newspapers; 7. Magazines; 8. Video greeting cards; 9. Audio greeting cards; 10. Video games;
11. Electronic games; or
12. Any digital code related to this property. (b) "Digital property" shall not include digital audio-visual works or satellite radio programming; (9) (a) "Finished artwork" means final art that is used for actual reproduction by photomechanical or other processes or for display purposes. (b) "Finished artwork" includes: 1. Assemblies; 2. Charts; 3. Designs; 4. Drawings; 5. Graphs; 6. Illustrative materials; 7. Lettering; 8. Mechanicals; 9. Paintings; and 10. Paste-ups; (10) (a) "Gross receipts" and "sales price" mean the total amount or consideration, including cash, credit, property, and services, for which tangible personal
property, digital property, or services are sold, leased, or rented, valued in
money, whether received in money or otherwise, without any deduction for
any of the following:
1. The retailer's cost of the tangible personal property or digital property
sold; 2. The cost of the materials used, labor or service cost, interest, losses, all
costs of transportation to the retailer, all taxes imposed on the retailer, or
any other expense of the retailer; 3. Charges by the retailer for any services necessary to complete the sale; 4. Delivery charges, which are defined as charges by the retailer for the
preparation and delivery to a location designated by the purchaser
including transportation, shipping, postage, handling, crating, and
packing; and 5. Any amount for which credit is given to the purchaser by the retailer,
other than credit for tangible personal property or digital property traded
when the tangible personal property or digital property traded is of like
kind and character to the property purchased and the property traded is
held by the retailer for resale. (b) "Gross receipts" and "sales price" shall include consideration received by the retailer from a third party if:
1. The retailer actually receives consideration from a third party and the
consideration is directly related to a price reduction or discount on the
sale to the purchaser; 2. The retailer has an obligation to pass the price reduction or discount
through to the purchaser; 3. The amount of consideration attributable to the sale is fixed and
determinable by the retailer at the time of the sale of the item to the
purchaser; and 4. One (1) of the following criteria is met:
a. The purchaser presents a coupon, certificate, or other
documentation to the retailer to claim a price reduction or discount
where the coupon, certificate, or documentation is authorized,
distributed, or granted by a third party with the understanding that
the third party will reimburse any seller to whom the coupon,
certificate, or documentation is presented; b. The price reduction or discount is identified as a third-party price
reduction or discount on the invoice received by the purchaser or
on a coupon, certificate, or other documentation presented by the
purchaser; or c. The purchaser identifies himself or herself to the retailer as a
member of a group or organization entitled to a price reduction or
discount. A "preferred customer" card that is available to any
patron does not constitute membership in such a group. (c) "Gross receipts" and "sales price" shall not include: 1. Discounts, including cash, term, or coupons that are not reimbursed by a
third party and that are allowed by a retailer and taken by a purchaser on
a sale; 2. Interest, financing, and carrying charges from credit extended on the sale
of tangible personal property, digital property, or services, if the amount
is separately stated on the invoice, bill of sale, or similar document given
to the purchaser; 3. Any taxes legally imposed directly on the purchaser that are separately
stated on the invoice, bill of sale, or similar document given to the
purchaser; or 4. The amount charged for labor or services rendered in installing or
applying the tangible personal property, digital property, or service sold, provided the amount charged is separately stated on the invoice, bill of
sale, or similar document given to the purchaser. (d) As used in this subsection, "third party" means a person other than the purchaser; (11) "In this state" or "in the state" means within the exterior limits of the Commonwealth and includes all territory within these limits owned by or ceded to
the United States of America; (12) (a) "Lease or rental" means any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration. A lease
or rental shall include future options to:
1. Purchase the property; or 2. Extend the terms of the agreement and agreements covering trailers
where the amount of consideration may be increased or decreased by
reference to the amount realized upon sale or disposition of the property
as defined in 26 U.S.C. sec. 7701(h)(1). (b) "Lease or rental" shall not include: 1. A transfer of possession or control of property under a security
agreement or deferred payment plan that requires the transfer of title
upon completion of the required payments; 2. A transfer of possession or control of property under an agreement that
requires the transfer of title upon completion of the required payments
and payment of an option price that does not exceed the greater of one
hundred dollars ($100) or one percent (1%) of the total required
payments; or 3. Providing tangible personal property and an operator for the tangible
personal property for a fixed or indeterminate period of time. To qualify
for this exclusion, the operator must be necessary for the equipment to
perform as designed, and the operator must do more than maintain,
inspect, or setup the tangible personal property. (c) This definition shall apply regardless of the classification of a transaction under generally accepted accounting principles, the Internal Revenue Code, or
other provisions of federal, state, or local law; (13) (a) "Machinery for new and expanded industry" means machinery: 1. Used directly in a manufacturing or processing production process; 2. Which is incorporated for the first time into a plant facility established
in this state; and 3. Which does not replace machinery in the plant facility unless that
machinery purchased to replace existing machinery:
a. Increases the consumption of recycled materials at the plant
facility by not less than ten percent (10%); b. Performs different functions; c. Is used to manufacture a different product; or d. Has a greater productive capacity, as measured in units of
production, than the machinery being replaced. (b) The term "machinery for new and expanded industry" does not include repair, replacement, or spare parts of any kind regardless of whether the purchase of
repair, replacement, or spare parts is required by the manufacturer or vendor
as a condition of sale or as a condition of warranty. (c) The term "processing production" shall include the processing and packaging of raw materials, in-process materials, and finished products; the processing
and packaging of farm and dairy products for sale; and the extraction of
minerals, ores, coal, clay, stone, and natural gas; (14) "Manufacturing" means any process through which material having little or no commercial value for its intended use before processing has appreciable commercial
value for its intended use after processing by the machinery. The manufacturing or
processing production process commences with the movement of raw materials
from storage into a continuous, unbroken, integrated process and ends when the
product being manufactured is packaged and ready for sale; (15) (a) "Occasional sale" includes: 1. A sale of tangible personal property or digital property not held or used
by a seller in the course of an activity for which he or she is required to
hold a seller's permit, provided such sale is not one (1) of a series of
sales sufficient in number, scope, and character to constitute an activity
requiring the holding of a seller's permit. In the case of the sale of the
entire, or a substantial portion of the nonretail assets of the seller, the
number of previous sales of similar assets shall be disregarded in
determining whether or not the current sale or sales shall qualify as an
occasional sale; or 2. Any transfer of all or substantially all the tangible personal property or
digital property held or used by a person in the course of such an activity
when after such transfer the real or ultimate ownership of such property
is substantially similar to that which existed before such transfer. (b) For the purposes of this subsection, stockholders, bondholders, partners, or other persons holding an interest in a corporation or other entity are regarded
as having the "real or ultimate ownership" of the tangible personal property or
digital property of such corporation or other entity; (16) "Person" includes any individual, firm, copartnership, joint venture, association, social club, fraternal organization, corporation, estate, trust, business trust, receiver,
trustee, syndicate, cooperative, assignee, governmental unit or agency, or any other
group or combination acting as a unit; (17) "Permanent," as the term applies to digital property, means perpetual or for an indefinite or unspecified length of time; (18) "Plant facility" means a single location that is exclusively dedicated to manufacturing or processing production activities. For purposes of this section, a
location shall be deemed to be exclusively dedicated to manufacturing activities even if retail sales are made there, provided that the retail sales are incidental to the
manufacturing activities occurring at the location. The term "plant facility" shall not
include any restaurant, grocery store, shopping center, or other retail establishment; (19) "Prewritten computer software" means: (a) Computer software, including prewritten upgrades, that are not designed and developed by the author or other creator to the specifications of a specific
purchaser. The combining of two (2) or more prewritten computer software
programs or portions thereof does not cause the combination to be other than
prewritten computer software; (b) Software designed and developed by the author or other creator to the specifications of a specific purchaser when it is sold to a person other than the
original purchaser; or (c) Any portion of prewritten computer software that is modified or enhanced in any manner, where the modification or enhancement is designed and
developed to the specifications of a specific purchaser. When a person
modifies or enhances computer software of which the person is not the author
or creator, the person shall be deemed to be the author or creator only of the
modifications or enhancements the person actually made. In the case of
modified or enhanced prewritten software, if there is a reasonable, separately
stated charge on an invoice or other statement of the price to the purchaser for
the modification or enhancement, then the modification or enhancement shall
not constitute prewritten computer software; (20) "Purchase" means any transfer of title or possession, exchange, barter, lease, or rental, conditional or otherwise, in any manner or by any means whatsoever, of
tangible personal property or digital property transferred electronically for a
consideration and includes:
(a) When performed outside this state or when the customer gives a resale certificate, the producing, fabricating, processing, printing, or imprinting of
tangible personal property for a consideration for consumers who furnish
either directly or indirectly the materials used in the producing, fabricating,
processing, printing, or imprinting; (b) A transaction whereby the possession of tangible personal property or digital property is transferred but the seller retains the title as security for the payment
of the price; and (c) A transfer for a consideration of the title or possession of tangible personal property or digital property which has been produced, fabricated, or printed to
the special order of the customer, or of any publication; (21) "Recycled materials" means materials which have been recovered or diverted from the solid waste stream and reused or returned to use in the form of raw materials or
products; (22) "Recycling purposes" means those activities undertaken in which materials that would otherwise become solid waste are collected, separated, or processed in order
to be reused or returned to use in the form of raw materials or products; (23) (a) "Repair, replacement, or spare parts" means any tangible personal property used to maintain, restore, mend, or repair machinery or equipment. (b) "Repair, replacement, or spare parts" does not include machine oils, grease, or industrial tools; (24) (a) "Retailer" means: 1. Every person engaged in the business of making retail sales of tangible
personal property, digital property, or furnishing any services included in
KRS 139.200; 2. Every person engaged in the business of making sales at auction of
tangible personal property or digital property owned by the person or
others for storage, use or other consumption, except as provided in
paragraph (c) of this subsection; 3. Every person making more than two (2) retail sales of tangible personal
property or digital property during any twelve (12) month period,
including sales made in the capacity of assignee for the benefit of
creditors, or receiver or trustee in bankruptcy; 4. Any person conducting a race meeting under the provision of KRS
Chapter 230, with respect to horses which are claimed during the
meeting. (b) When the department determines that it is necessary for the efficient administration of this chapter to regard any salesmen, representatives,
peddlers, or canvassers as the agents of the dealers, distributors, supervisors or
employers under whom they operate or from whom they obtain the tangible
personal property or digital property sold by them, irrespective of whether
they are making sales on their own behalf or on behalf of the dealers,
distributors, supervisors or employers, the department may so regard them and
may regard the dealers, distributors, supervisors or employers as retailers for
purposes of this chapter. (c) 1. Any person making sales at a charitable auction for a qualifying entity
shall not be a retailer for purposes of the sales made at the charitable
auction if:
a. The qualifying entity, not the person making sales at the auction, is
sponsoring the auction; b. The purchaser of tangible personal property at the auction directly
pays the qualifying entity sponsoring the auction for the property
and not the person making the sales at the auction; and c. The qualifying entity, not the person making sales at the auction, is
responsible for the collection, control, and disbursement of the
auction proceeds. 2. If the conditions set forth in subparagraph 1. of this paragraph are met,
the qualifying entity sponsoring the auction shall be the retailer for
purposes of the sales made at the charitable auction. 3. For purposes of this paragraph, "qualifying entity" means a resident: a. Church; b. School; c. Civic club; or d. Any other nonprofit charitable, religious, or educational
organization; (25) "Retail sale" means any sale, lease, or rental for any purpose other than resale, sublease, or subrent; (26) (a) "Ringtones" means digitized sound files that are downloaded onto a device and that may be used to alert the customer with respect to a communication. (b) "Ringtones" shall not include ringback tones or other digital files that are not stored on the purchaser's communications device; (27) (a) "Sale" means the furnishing of any services included in KRS 139.200; any transfer of title or possession, exchange, barter, lease, or rental, conditional or
otherwise, in any manner or by any means whatsoever, of tangible personal
property; or digital property transferred electronically for a consideration, and
includes:
1. The producing, fabricating, processing, printing, or imprinting of
tangible personal property or digital property for a consideration for
purchasers who furnish, either directly or indirectly, the materials used
in the producing, fabricating, processing, printing, or imprinting; 2. A transaction whereby the possession of tangible personal property or
digital property is transferred, but the seller retains the title as security
for the payment of the price; and 3. A transfer for a consideration of the title or possession of tangible
personal property or digital property which has been produced,
fabricated, or printed to the special order of the purchaser. (b) This definition shall apply regardless of the classification of a transaction under generally accepted accounting principles, the Internal Revenue Code, or
other provisions of federal, state, or local law; (28) "Seller" includes every person engaged in the business of selling tangible personal property, digital property, or services of a kind, the gross receipts from the retail
sale of which are required to be included in the measure of the sales tax, and every
person engaged in making sales for resale; (29) (a) "Storage" includes any keeping or retention in this state for any purpose except sale in the regular course of business or subsequent use solely outside
this state of tangible personal property or digital property purchased from a
retailer. (b) "Storage" does not include the keeping, retaining, or exercising any right or power over tangible personal property for the purpose of subsequently
transporting it outside the state for use thereafter solely outside the state, or for
the purpose of being processed, fabricated, or manufactured into, attached to, or incorporated into, other tangible personal property to be transported outside
the state and thereafter used solely outside the state; (30) "Tangible personal property" means personal property which may be seen, weighed, measured, felt, or touched, or which is in any other manner perceptible to the senses
and includes natural, artificial, and mixed gas, electricity, water, steam, and
prewritten computer software; (31) "Taxpayer" means any person liable for tax under this chapter;
(32) "Transferred electronically" means accessed or obtained by the purchaser by means other than tangible storage media; and (33) (a) "Use" includes the exercise of any right or power over tangible personal property or digital property incident to the ownership of that property, or by
any transaction in which possession is given, or by any transaction involving
digital property where the right of access is granted. (b) "Use" does not include the keeping, retaining, or exercising any right or power over tangible personal property or digital property for the purpose of:
1. Selling tangible personal property or digital property in the regular
course of business; or 2. Subsequently transporting tangible personal property outside the state
for use thereafter solely outside the state, or for the purpose of being
processed, fabricated, or manufactured into, attached to, or incorporated
into, other tangible personal property to be transported outside the state
and thereafter used solely outside the state. Effective: August 1, 2009
History: Amended 2009 Ky. Acts ch. 73, sec. 1, effective July 1, 2009; and ch. 86, sec. 13, effective August 1, 2009. -- Amended 2008 Ky. Acts ch. 95, sec. 4, effective
August 1, 2008. -- Created 1960 Ky. Acts ch. 5, Art. I, sec. 1, effective February 5,
1960. Legislative Research Commission Note (8/1/2009). This section was amended by 2009 Ky. Acts chs. 73 and 86, which do not appear to be in conflict and have been codified
together. Legislative Research Commission Note (8/1/2009). The Reviser of Statutes has altered the numbering of subsection (26) of this statute from the way it appeared in 2009 Ky.
Acts ch. 73, sec. 1 under the authority of KRS 7.136(1)(c).