a. The occupational license fees imposed in this Subchapter shall not apply to the following persons, business entities or specified income:
1. Any bank, trust company, combined bank and trust company, or trust, banking and title insurance company organized and doing business in Kentucky, any savings and loan association whether state or federally chartered;
2. Any compensation received by members of the Kentucky National Guard for active duty training, unit training assemblies and annual field training;
3. Any compensation received by precinct workers for election training or work at election booths in state, county, and local primary, regular or special elections;
4. Public Service Corporations that pay an ad valorem tax on property valued and assessed by the Kentucky Department of Revenue pursuant to the provisions of KRS 136.120. However, licensees whose businesses are predominantly non-public service who are also engaged in public service activity are required to pay a net profit license fee on their net profit derived from the non-public service activities apportioned to the City;
5. Persons or business entities that have been issued a license under KRS Chapter 243 to engage in manufacturing or trafficking in alcoholic beverages. Persons engaged in the business of manufacturing or trafficking in alcoholic beverages are required to file a return, but may exclude the allocated portion of their net profits derived from the manufacturing or trafficking in alcoholic beverages;
6. Life insurance companies incorporated under the laws of and doing business in the Commonwealth of Kentucky;
7. Any profits, earnings, distributions of an investment fund which would qualify under KRS 154.20-250 to 154.20-284 to the extent any profits, earnings or distributions would not be taxable to an individual investor;
8. Where persons pay a 2.0% withholdings license fee on gross salaries or withdrawals paid to them by their business or partnership, such amounts paid by such business or partnership shall be deducted from such business or partnership’s gross earnings before arriving at the net profit of such business or partnership;
9. Where persons are required to pay a 2.0% withholdings license fee on gross salaries or wages paid to them by a corporation, such amounts paid by such corporation as wages or salaries shall be deducted from such corporation’s gross earnings before arriving at the net profits for such corporation;
10. Income from pensions, non-business interest and dividends not specifically defined as includable;
11. Trust estates are not subject to the net profit license fee imposed by this Chapter upon the income of such trust estate, except where such trust operates a business which is subject to a net profit license fee for doing business within the City. The remainder of such trust estate is hereby exempt from any payment of net profit license fees;
12. Entities, such as Self-Directed Roth IRA or other similar retirement programs, filing a Federal Exempt Organization Business Income Tax Return as a tax exempt organization shall be required to file with the City a net profit license fee return, but the City’s occupational license fees shall be waived only where no part of the unrelated trade or business income inures to the benefit of any private person. However, if the net income on the Federal return exceeds an amount whereby the net profit license fee would be greater than the net profit minimum fee, the net profit return shall be required with the full amount of fees due.
13. A fiduciary who holds in trust property, monies or properties to which another has a beneficial interest or who receives or controls income for another person is not subject to the net profit license fee imposed by this Chapter, except where such fiduciary operates a business which is subject to net profit license fee for doing business within the City. The remainder of such trust is hereby exempt from any payment of net profit license fees;
14. Income of a household worker that resides or works exclusively in a private residence. However, net profit and withholdings license fees shall be required for business entities and their employees conducting such type of household services;
15. Income of self-employed dancers, musicians and entertainers working in an establishment that is subject to the provisions hereinbelow related to establishments where live entertainers are contracted or providing service for a nonprofit corporation. This Section does not alleviate the requirements set out in Chapter 24 (Sexually Explicit Business License Regulations) of the City’s Code of Ordinances or any other applicable City code;
16. Rental income of any person or sole proprietorship renting or leasing real estate consisting of two (2) or less residential units;
17. Pension payments made to persons retired from service after reaching a specified age or a stated period of employment;
18. Payments by an employer to employees under disability, sickness and accident benefit plans that are paid for by the employee;
19. Unemployment compensation payments by the Commonwealth of Kentucky or any other agent;
20. Payments received for personal injuries and property losses;
21. Death benefits payable to the beneficiary of an employee or to his estate, whether payable in single sum or otherwise. This shall not include wages as defined in this Chapter earned prior to death;
22. Benefits arising under the Workers’ Compensation Act as compensation for disabilities sustained during the course of employment, together with any amount of damages received by suit or agreement on account of such disability; or,
23. Income from the sale of real and personal property classified as capital gains by the Internal Revenue Service.
(Ord. BG2020-23, 9/1/2020; Ord. BG2022-49, 11/15/2022; Ord. BG2023-6, 5/2/2023)
Editor's Note: Any business subject to Subchapter 18-2 shall pay a net profit license fee of 1.85% until the end of its current fiscal year, and thereafter the 2.0% net profit license fee shall be in effect for all fiscal years beginning on or after January 1, 2024. All Employee Wage Withholding fees shall be 2% effective January 1, 2024.