The Kentucky Department of Revenue is seeking to toss cold water on a move to centralize the collection of state and local transient room taxes.
Speaking to the Interim Joint Committee on Appropriations and Revenue, Richard Dobson, the Executive Director Office of Sales and Excise Taxes, told lawmakers centralizing the collection of the local taxes is not feasible now or “in the foreseeable future.”
“In view of our study and comparison to other states and what they have done and their experiences, the department does not recommend adding a local transient room tax to our administration duties, centralization at the present time or in the foreseeable future,” Dobson told the committee. “What we respectfully suggest is to allow the provisions of House Bill 8 that was enacted by the General Assembly, be allowed to take effect.”
Dobson said short-term vacation rental platforms should be forced to comply with the law and to report and pay to local jurisdictions in the state.
Even if the Department of Revenue thought differently or were forced to centralize the collection of local taxes, Dobson said ongoing multi-year phased projects would not allow the department to program or staff up for at least 12 months, if not more, assuming they could find a window in their current programming needs.
“It’s not something we could do on a moment’s notice,” he said.
The Kentucky League of Cities and the Louisville Metro Revenue Commission (LMRC) are both opposed to the centralized collection of the transient tax.
“KLC remains steadfastly opposed to the state collection of local revenue. It has been the long-standing position of city governments and KLC to oppose any attempted breach of local autonomy in the administration of local taxes,” KLC said in a statement read at the committee hearing.
Louisville Metro Revenue Commission agreed with the position, saying not only was it not necessary, but it could cause harm.
“It is the position of LMRC that conversion to a centralized system is unnecessary for Louisville Metro and could actually impede the collection and distribution of these revenues in a timely, accurate manner,” a statement from LMRC said.
Sen. Gary Boswell, R-Owensboro, added a comment on the matter, saying the centralization of local taxes is a “solution in search of a problem.”
Others in the legislature seemed to disagree with the “objection to streamline,” as Rep. Patrick Flannery, R-Olive Hill, said.
The Department of Revenue again asserted to Flannery that it was not feasible at this time.
“The companies that are providing these services, they already have the technological capacity to do it,” Dobson said. “They’re complying in jurisdictions in other parts of the country; why shouldn’t they be compliant here?”