103 KAR 8:140. Ad valorem taxation of
machinery actually used in the manufacturing of crushed stone, sand, and gravel.
RELATES TO: KRS 132.020, 132.200
STATUTORY AUTHORITY: KRS 131.130(1)
NECESSITY, FUNCTION AND
CONFORMITY: KRS 131.130(1) authorizes the Department of Revenue to promulgate
administrative regulations necessary for the administration and enforcement of
all tax laws in Kentucky KRS 132.020(1)(i) establishes the ad valorem tax rate
based on the value of all machinery actually engaged in manufacturing. KRS
132.200(4) provides that machinery actually engaged in manufacturing shall be
subject to taxation for state purposes only. This administrative regulation
explains the property tax classification found in KRS 132.020(1) and 132.200(4)
for "machinery actually engaged in manufacturing" as it pertains to
the crushed stone, sand, and gravel industries.
Section 1. Machinery Actually Engaged In
Manufacturing. For purposes of this administrative regulation, KRS 132.020(1)
and 132.200(4), "machinery actually engaged in manufacturing"
includes the following:
(1) Machinery actually used in the
conveying, crushing, screening, washing, drying, blending, and stockpiling of
stone, sand, or gravel to a product of the appropriate gradation and specification
required for sale or final use;
(2) Machinery and equipment actually used
to size, crush, screen, blend, de-dust or wash the stone, sand, or gravel,
including all necessary housing, electrical, and support systems;
(3) Machinery and equipment actually used
to convey or maintain proper material flow of the stone, sand, or gravel to and
between the crushing, sizing, screening, blending, dedusting, and washing
(4) Machinery and equipment actually used
to reassemble, remix, and blend the crushed stone, sand, or gravel into
different product grades.
Section 2. Manufacturing of Crushed Stone,
Sand, or Gravel. (1) Manufacturing of crushed stone, sand, and gravel shall
commence with the initial sizing of the stone (shot rock), sand, or gravel after
it has been removed from its natural deposit, and shall continue with the
loading, hauling, pumping, or conveying to the primary crusher or screen.
(2) Manufacturing shall continue with the
further sizing, classifying, crushing, screening, blending, dedusting, and washing
of the stone, sand, or gravel.
(3) Manufacturing of stone, sand, or
gravel shall end when the product meets and maintains the appropriate
gradation, specifications, or blends.
(4) The loading of stone, sand, or gravel
for final transport to the end user shall only be classified as manufacturing
if blending occurs during the loading process. (34 Ky.R. 374; Am. 967; eff.