601 KAR 1:146. Fair market rental or lease value of vehicles operated pursuant to a U-drive-it permit

Link to law: http://www.lrc.ky.gov/kar/601/001/146.htm
Published: 2015

      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.)
Read Entire Law on www.lrc.ky.gov