601 KAR 1:146. Fair market rental or
lease value of vehicles operated pursuant to a U-drive-it permit.
RELATES
TO: KRS 138.462(2), (3), 138.463, 138.4631, 281.615-281.670
STATUTORY
AUTHORITY: KRS 138.463(9)
NECESSITY,
FUNCTION, and CONFORMITY: KRS 138.463(9) requires the fair market rental or
lease value of a motor vehicle to be based on standards established by an
administrative regulation promulgated by the Transportation Cabinet. This
administrative regulation establishes the standards for use in determining the
minimum amount of usage tax to be reported and paid on a rental or lease
vehicle.
Section
1. Definitions. (1) "Lease" is defined by KRS 138.462(3).
(2)
"Rental" is defined by KRS 138.462(2).
(3)
"Renting" or "leasing" means a U-drive-it permit holder
who:
(a)
Rents or leases a vehicle as part of an established business to a retail
customer wishing to rent or lease a vehicle; and
(b)
Maintains the records required by 601 KAR 1:147, Section 2.
(4)
"Vehicle classification" means the motor vehicle classification
system established by the National Automobile Dealers Association in its
monthly NADA Official Used Car Guide.
Section
2. Fair Market Value Rental Amount of a Permit Holder. (1) If a U-drive-it
permit holder is regularly engaged in the business of renting motor vehicles to
retail customers, the Transportation Cabinet Division of Road Fund Audits shall
audit the records of the permit holder to determine an average rental amount
that establishes the fair market value rental amount for the permit holder.
(2)
The fair market value rental amount shall be used to assess the usage tax
assessed pursuant to KRS 138.463 on an individual transaction of a U-drive-it
permit holder regularly engaged in the business of renting vehicles to retail customers
if:
(a)
The transaction is for less than the fair market value of the rental of the
motor vehicle; or
(b)
The records required by 601 KAR 1:147, Section 2, for the transaction are
missing or incomplete.
Section
3. Fair Market Value Established by Cabinet as Rental Amount.
(1)(a)
The Transportation Cabinet Division of Road Fund Audits shall randomly select
U-Drive-It permit holders regularly engaged in the business of renting vehicles
to retail customers to determine the industry average fair market value rental
amount for a specific vehicle classification.
(b)
The value for a specific vehicle classification shall be the fair market value established
by the cabinet as the rental amount for a specific vehicle classification.
(2)
The industry average fair market value established by the cabinet as the rental
amount for a specific vehicle classification shall be used to assess the tax
assessed by KRS 138.463 for the following:
(a)
A transaction by a permit holder who is not regularly engaged in the business
of renting vehicles to retail customers; or
(b)
A vehicle used by a permit holder regularly engaged in the business of renting
vehicles to retail customers who are not correctly reporting the U-drive-it usage
tax on a monthly tax return.
(3) The current industry average fair market value established
by the cabinet is listed in Fair Market Value Transportation Cabinet
Established Rental and Lease Amounts.
Section
4. Fair Market Value Lease Amount. (1) If a
U-drive-it permit holder is regularly engaged in the business of leasing vehicles
to retail customers, the Transportation Cabinet Division of Road Fund Audits
shall audit the records of the permit holder to determine an average lease
amount per $1,000 value of the manufacturer's suggested retail price of the
permit holder's lease vehicles.
(2)
The fair market value lease amount shall be used to assess the U-drive-it usage
tax required by KRS 138.463 on an individual transaction of a U-drive-it permit
holder regularly engaged in the business of leasing vehicles to retail
customers if:
(a)
The transaction is for less than the fair market value of the lease of the
motor vehicle; or
(b)
The records required to be maintained by 601 KAR 1:147, Section 2(2), are
missing or incomplete.
Section
5. Fair Market Value Transportation Cabinet Established Lease Amount. (1)(a)
The Transportation Cabinet Division of Road Fund Audits shall survey the
executed lease agreements of randomly selected U-drive-it permit holders regularly
engaged in the business of leasing vehicles to retail customers to determine
the industry average dollar lease amount per $1,000 value of the manufacturer's
suggested retail price of a vehicle.
(b)
The value established as the industry average dollar lease amount per $1,000 of
the manufacturer's suggested retail price shall be the fair market value
Transportation Cabinet established lease amount per $1,000 of the
manufacturer's suggested retail price.
(2)
The usage tax assessed pursuant to KRS 138.463 for a lease vehicle of a permit
holder not regularly engaged in the business of leasing vehicles to retail
customers shall be the greater of the following:
(a)
The established fair market value lease amount per $1,000 value of the manufacturer's
suggested retail price of the vehicle; or
(b)
The monthly lease amount assessed by the permit holder.
(3)
The established lease amount per $1,000 value of the manufacturer's suggested
retail price shall be listed in Fair Market Value Transportation Cabinet
Established Rental And Lease Amounts.
Section
6. Incorporation by Reference. (1) "Fair Market Value Transportation
Cabinet Established Rental And Lease Amounts", August 2012, is
incorporated by reference.
(2)
This material may be inspected, copied, or obtained, subject to applicable copyright
law, at the Transportation Cabinet, Division of Road Fund Audits, 200 Mero
Street, Frankfort, Kentucky 40622, phone (502) 564-7650, fax (502) 564-5238,
office hours are Monday through Friday, 8 a.m. to 4:30 p.m. (24
Ky.R. 1183; Am. 1524; 2365; eff. 5-18-98; 39 Ky.R. 1497; 1880; eff. 4-5-2013.)
