Tax Reform Measures and Their Impact on ManufacturersKAM
Some tax reform measures were considered and adopted in the recently completed legislative session. We think most legislators and the Bevin administration consider the provisions adopted as being a first step in moving from an income based system to a consumption based system. It is likely that legislators will discuss further revisions and reforms during the Interim session and possibly have a more comprehensive bill for the 2019 session.
Key tax changes that could impact manufacturers include providing for a reduction in the individual and corporate rate, adoption of the federal changes adopted last year, single sales factor filing, partial repeal of the inventory tax, applying the sales tax to labor for some services and combined reporting. These provisions will be addressed during the Interim session as the Revenue Cabinet develops administrative regulations to implement the changes into the tax code. Administrative regulations are rules developed by the Executive Branch that clarify the intent and process by which the new changes will be interpreted.
Interested parties like KAM have the ability to comment and add input to administrative regulations as they are developed and considered. We will be monitoring the process very closely and keep you advised as it moves forward this summer and fall. We have included two links to aide you in reviewing the impact to your company, the Revenue Cabinet webpage https://taxanswers.ky.gov, and a document we have prepared on provisions related to manufacturing here. The latter also includes page numbers in the bill for each provision as well as a link to the bill http://www.lrc.ky.gov/record/18RS/HB487.htm.
As you review the impact to your company and you have any questions feel free to contact us.