LOCAL TAXATION: HARDWICK V. BOYD COUNTY FISCAL COURT (COA 3/16/2007)

HARDWICK V. BOYD COUNTY FISCAL COURT
REVENUE TAXATION:  Local government license fees and disparate treatment in violation of authorizing statute on wage employees outside of county
2006-CA-000660
PUBLISHED: REVESING AND REMANDING; ACREE (SJ KNOPF PARTICIPATING)
DATE RENDERED: 3/16/2007

Section 181 of the Kentucky Constitution authorizes the state legislature to delegate to cities and counties by statute the power to impose and collect license fees on trades, occupations and professions, and KRS 68.197 passed in 1966 authorized certain fiscal courts to adopt ordinances to collect such license fees. In 2005, the Boyd County Fiscal Court adopted and ordinanance with provided disparate treatment of business-licensees, whose license fee would be based on “net profits" vis-à-vis employee-licensees, whose fee would be based on “salaries, wages, commissions and other compensation”.

This disparate treatment under Section 15 of the Ordinance permits any business entity to pay a Fixed Amount License Fee according to a schedule set forth in the ordinance. This option is only available to those sole proprietors and companies that would calculate the tax due and owing under the ordinance based on net profits, but an employee must pay the one (1%) percent tax on his wages.

The narrow question presented by the Appellants is whether the Ordinance is consonant with the authorizing statute and constitutional provision. The Boyd Circuit
Court held it was. bit the COA believed the ordinance conflicts with the plain language of the statute, and reversed the circuit court.

The Boyd Fiscal Court is not permitted to collect the license fee from wages earned for work performed outside Boyd County. KRS 68.197. Some of Appellants’ duties require them to transport prisoners to and from locations outside Boyd County. To the extent Appellants’ work takes them out of the county, they are entitled to claim a refund of the license fee.

The legislature did not intend to authorize a fiscal court to treat those businesses that pay the fee based on net profits differently from employees who pay the fee based on salaries, wages, commissions and other compensation.

Digested by Michael Stevens 

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