Kentucky Senate’s version of tax cleanup bill changes how gambling winnings are taxed
The Republican-led Kentucky Senate unveiled its own plan Friday to address “unintended consequences” from last year’s tax overhaul bill.
The Senate version of House Bill 354, approved at a special meeting of the Senate Appropriations and Revenue Committee, would allow gambling losses to be deducted from gambling winnings reported as taxable income.
that included changing a tax on gambling.
The 2018 tax bill allowed taxing gross gambling winnings.
Prior to last year’s tax bill, said committee chairman Chris McDaniel R-Latonia, “We had taxed gambling earnings on the net. Then last year we taxed on the gross. This change would take it back to the net. The way it was before.”
The gambling change was among the major provisions in the Senate version of this year’s tax bill. The House version passed last month before lawmakers became aware of the gambling issue.
McDaniel said it became more well-known this year as Kentuckians prepared their income tax returns. He said the tax change the Senate is recommending will not apply to 2018 tax returns.
He said the tax gambling change would cost the state about $3.2 million.
Like the House version, the Senate’s taxation plan exempts taxation on sales of admissions by all non-profit organizations. The exemption would not apply to sales generated by a tourism development project or a public facility that qualifies for a sales tax rebate.
Also, all fund-raising event sales by all non-profits would be exempt from the sales tax.
McDaniel noted that the sales tax would not be applied to tickets to university sporting events unless they are purchased from a for-profit company like TicketMaster or StubHub.
The senator said the total financial impact of the bill was indeterminable. House budget chairman Steven Rudy, R-Paducah, said the House taxation bill would cost $7.75 million in its first year.
The Senate plan also would:
▪ Not require persons to collect and remit to the state sales tax on certain services if their gross receipts are less than $12,000 a year and they do not sell tangible personal or digital property.
McDaniel said this would include “the neighborhood kid who mows your yard.”
▪ Generate some revenue by requiring online companies such as Amazon Marketplace or Etsy to collect and remit sales taxes when a seller using their platform has more than 200 transactions or $100,000 in gross receipts in Kentucky.
▪ Clarify that there be no tax on veterinary services for poultry.
McDaniel said the tax bill will now go to the full Senate for its consideration. He said he does not expect the House will agree with the Senate and the two chambers, both controlled by Republicans, will have to form a conference committee to try to iron out their differences in the final days of this year’s legislature. Friday marked the 22nd day of the 30-day session.
McDaniel added that he expects most lawmakers will be concerned about what’s not in the tax bill than what is in it. Several members of the Senate budget committee said they would like to see more be done about easing the tax burden on state retirees’ pension income.
The Senate budget committee probably will take up HB 268, the House bill making changes in the state budget, at its regularly scheduled meeting on Tuesday, McDaniel said.
That bill contains a request by Republican Gov. Matt Bevin’s administration to borrow about $75 million and spend another $25 million in the current two-year state budget to pay for improvements to parks, university projects and economic development projects.
