GOVERNMENT UPDATE: MARKETING SERVICE TAX
Sep 7, 2023
With the help of numerous agency supporters and a vigorous lobbying effort, Kentucky Revised Statutes (KRS) 139.200 and 139.310 were amended to remove marketing services as subject to the new tax. Therefore, marketing services are no longer subject to tax, retroactive to 1/1/2023.
This is a tremendous achievement by the sponsors, leadership, and contributing members of AAF-Louisville! We are very appreciative to the firms that sponsored this cause:
- RedTag (Paramount Defender)
- Blue Meta (Guiding Defender)
- Doe-Anderson (Supporting Defender)
- PriceWeber (Supporting Defender)
- Fieldtrip (Defender)
- PaperBoy PR (Defender)
Background
In a significant new tax law, in 2022 the Commonwealth of Kentucky executed pivotal revisions to its tax code, including a provision that targeted marketing services. The new law took effect in January 2023.
The Louisville ad community saw this 6% tax as a threat to competitiveness. By increasing the cost of doing business with marketing firms in Kentucky, the tax would have put Louisville agencies at a financial disadvantage when competing with out-of-state firms.
At the beginning of 2023, many marketing companies received letters from the Kentucky Department of Revenue advising them of the requirement to begin collecting tax dollars for the new taxes.
Thankfully, because of efforts by the AAF, the law was amended, and these tax items were removed, retroactive to 1/1/2023. Therefore, marketing services are no longer subject to tax!
Details on the revised tax law:
For more details on the tax legislation changes, The Kentucky Government website provides these answers to frequently asked questions, summarized below (with links to KY.gov):
This legislation repealed the application of sales and use tax to the sale of marketing services retroactively to 1/1/2023. Therefore, account holders reporting receipts and paying the sales and use tax on the sales of marketing services should request a cancellation of their account numbers if their businesses do not engage in any other activities that require continued tax reporting. To cancel an account, the business may complete and submit an Update or Cancellation of Kentucky Tax Account(s), Form 10A104. The form may be downloaded from the Revenue website at 10A104 (ky.gov). Follow the instructions on the form to submit the cancellation request or send the completed form to the Sales and Use Tax Division at KRC.WebResponseSalesTax@Ky.gov.
Before the seller is eligible for a sales and use tax refund, the seller must refund the taxes collected back to the customer. See KRS 139.770. Then, sellers must file a Sales and Use Tax Refund Application, Form 51A209, with the Sales and Use Tax Division to document and submit the request for repayment of the tax remitted with previously filed returns. Instructions on how to submit the refund request are provided on the form as follows: 51A209 (ky.gov)
Success of our advocacy:
The elimination of marketing services from the tax law is a noteworthy accomplishment and stands as a testament to the dedication of sponsors, leaders, and contributors within AAF-Louisville. Their unwavering commitment has ushered in a positive change that not only benefits the marketing industry, but also underscores the power and influence of collective action.
For more information or for more ways to support our legislative efforts, contact either Scott Adkins at advocacy@aaflouisville.org or Allison Deely at allison@aaflouisville.org.