(A) Except as provided in divisions (B) and (E) of this section, every person or business entity engaged in any business for profit and any person or business entity that is required to make a filing with the Internal Revenue Service or the Kentucky Revenue Cabinet shall be required to file and pay to the city an occupational license tax for the privilege of engaging in such activities within the city. The occupational license tax shall be measured by two percent (2%) of :
(1) All wages and compensation paid or payable in the city for work done or services performed or rendered in the city by every resident and nonresident who is an employee; and
(2) The net profit from business conducted in the city by a resident or nonresident business entity.
(B) All partnerships, S corporations, and all other entities where income is “passed through” to the owners are subject to this chapter. The occupational license tax imposed in this chapter is assessed against income before it is “passed through” these entities to the owners.
(C) If any business entity dissolves, ceases to operate, or withdraws, from the city during any taxable year, or if any business entity in any manner surrenders or loses its charter during any taxable year, the dissolution, cessation of business, withdrawal, or loss or surrender of charter shall not defeat the filing of returns and the assessment and collection of any occupational license tax for the period of that taxable year during which the business entity had business activity in the city.
(D) If a business entity makes, or is required to make, a federal income tax return, the occupational license tax shall be computed for the purposes of this chapter on the basis of the same calendar or fiscal year required by the federal government, and shall employ the same methods of accounting required for federal income tax purposes.
(E) The occupational license tax imposed in this section shall not apply to the following persons or business entities:
(1) Any bank, trust company, combined bank and trust company, or trust, banking and title insurance company organized and doing business in this state, 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. Licensees whose businesses are predominantly non-public service who are also engaged in public service activity are required to pay a license tax 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 portion of their net profits derived from the manufacturing or trafficking in alcoholic beverages;
(6) Insurance companies incorporated under the laws of and doing business in the Commonwealth of Kentucky, except as provided in KRS 91A.080;
(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) Entities exempt pursuant to federal law or the laws of the Commonwealth of Kentucky;
(9) Coal mine employees who enter a mine portal or mine entrance that is located within the corporate city boundaries but whose workplace within the mine is outside of the corporate boundaries shall not be subject to the license fee although some incidental part of their work may occur within the city such as travel through a portion of the mine located within the city; performing routine maintenance or repairs to a portion of the mine within the city; loading, unloading or the staging of supplies or equipment at the mine portal within the city where the coal mining occurs outside the city.
(F) The occupational license tax imposed in this section shall not apply to the following;
(1) Periodic payments, commonly recognized as “old age” or “retirement pensions,” made to persons retired from service after reaching a specified age or after a stated period of employment.
(2) Unemployment compensation payments by the Commonwealth of Kentucky, or any other agency.
(3) Death benefits payable by an employer to the beneficiary of an employee or to his or her estate, whether payable in a single sum or otherwise.
(4) Amounts received by employees under the Worker’s Compensation Act as compensation for a disability sustained during the course of employment, together with any amount of damages received by suit or agreement on account of such disability.
(5) Disability payments. Payments made to an employee under a disability insurance plan which meet one or more of the following criteria:
(a) The payments are made by a third-party payer, which bears an insurance risk as determined by Treas. Reg. § 31.3401(a)-1(b).
(b) The payments are for “permanent and total disability” as defined by IRC § 22(e)(3).
(c) The payments are for the loss of limb or disfigurement of an employee as set forth in IRC § 105(c)(1) and the payments are made without regard to the amount of time an employee is absent from work.
(6) Allowances and reimbursements for expenses. Sums allowed and paid by an employer to an employee for expenses necessarily and actually incurred by the employee in the direct performance of his or her services, including meal and lodging allowances, if the employee is not required to include such receipts as income on his or her federal income tax return.
(7) Fringe benefits not taxable for federal income tax purposes. Non-cash fringe benefits which pursuant to IRC § 132 qualify as (a) no additional cost services, (b) qualified employee discounts, (c) working condition fringes, and (d) de minimus fringes and are therefore not taxable for federal income tax purposes.
(8) Employer contributions to qualified retirement, profit sharing and deferred compensation plans except as expressly provided in another section of this chapter.
(9) Amounts paid from qualified and non-qualified retirement, profit sharing and deferred compensation plans. Amounts paid from retirement plans, profit sharing plans and deferred compensation plans, whether or not such plans are “qualified” plans pursuant to the Internal Revenue Code.
(10) Students. Payments received by students as described in § 115.01 in the form of stipends, honorariums, grants and other payments made to students to the extent that such payments are conditioned upon the recipient’s pursuit of studies and/or participation in athletic or other intercollegiate competition, and scholarships and other non-cash fringe benefits received by duly registered students from the post secondary school, college or university in which they are enrolled.
(11) Compensation received for domestic services rendered by those persons classified as domestic servants by § 115.01.
(12) Gratuities. Compensation received by employees described under § 115.01.
(13) Federal Donor Leave Program. Leave time is donated by fellow employees to persons who are on leave (medical/disability). The recipients must have used all leave they had personally available. The amount paid under this program is exempt.
(14) Wages, salaries or other compensation received while:
(a) Performing live entertainment, acts, shows, concerts or performances performed before a live audience or the employees of that act, show or concert or performer while setting up or assisting in the performance. Concession vendors, maintenance or service contractors are not subject to this exemption.
(b) Filing, acting, directing or producing a statewide or nationally distributed:
1. Film or motion picture produced for distribution in theaters or via digital format, including but not limited to DVD, internet, or mobile electronic device program (but excluding the filming or production of obscene materials as defined by KRS 531.010);
2. Television program (but excluding the filming or production of obscene materials as defined by KRS 531.010 or television coverage of news, local events or athletic events primarily distributed regionally); or
3. Documentary of the history, heritage, event or tourism of Pikeville or Pike County (but excluding television coverage of news, local events or athletic events primarily distributed regionally.)
(15) Wages, salaries, income or other compensation:
(a) Received by an artist, as defined in § 115.01
, who works out of a non-profit community artisan center.
(b) Art gallery dedicated to developing artistic talent, enriching lives and educating future artisans by turning peoples’ passion for art into an entrepreneurial opportunity or displays or sells art out of such an artisan center.
(c) Artist as defined in § 115.01
, participating in a festival sponsored by the City of Pikeville or its agencies or approved by the City Manager.
(16) Wages, salaries, income or other compensation received by membership farmers, value-added vendors (canned goods or baked goods), and artists/crafters (producers of soap, wooden items, jewelry, stained glass, and the like) of an established, Kentucky Department of Agriculture registered farmers’ market or employees of the same while working at a farmers’ market or producing qualified exempted goods sold at a farmers’ market. To qualify for this exemption, farmers’ market member farmers must:
(a) Be good agricultural practices (GAP) certified;
(b) Accept SNAP benefits;
(c) All value-added vendors must have home processing and/or micro-processing certifications;
(d) All artists/crafters must be approved by the farmers’ market membership by a majority vote;
(e) At all times comply with the rules and regulations contained in the “Kentucky Farmers’ Market Manual and Resources Guide” published by the Kentucky Department of Agriculture, which are adopted herein by reference, as the same may change from time to time.
(17) Wages, salaries, income or other compensation of a minor (under 18 years of age) while operating a small business solely owned and operated by the minor on an occasional basis without any employees. It is the minor's responsibility to establish by clear and convincing proof that the minor meets the qualification for this exemption. This exemption shall not apply to minors working for another business regardless of whether the minor is classified as an independent contractor, contract labor or employee or working under the direction and control of another business operation.
(18) (a) Any person, firm, business entity, nonprofit organization or corporation engaging in the business of promoting, operating, or otherwise conducting a temporary event such as a flea market, trade show, expo, consumer show, or sporting activity which primarily engages in leasing, renting, or providing the use of temporary booths, tent space or other like spaces to two (2) or more individuals, persons, firms, business entities, nonprofit organizations, corporations or combination thereof on a day-to-day basis shall be required to obtain a permit for the temporary event and pay a minimum license fee of five dollars ($5.00) per booth leased, rented or otherwise provided in lieu of the merchant, participant or booth space renter/leasee paying a separate minimum license fee under § 115.13
, and such temporary permit shall be valid for a period not to exceed seven (7) days and shall be valid only for operations at the permitted location.
(b) Any person, firm, business entity, nonprofit organization or corporation required under subsection (18)(a) to pay the required temporary event permit fee to the city shall, prior to engaging in such activity, be required to place a deposit with the city in an amount equal to the number of booths or spaces available to be rented, leased or otherwise provided, multiplied by the temporary event minimum license fee of five dollars ($5.00) per booth or space. The temporary event minimum license fee deposit shall be forfeited in full, unless within twenty (20) days following the scheduled date of the event, the permittee requests and applies for a reconciliation of the actual permit fee due the city, in which case the amount of additional fees or the amount of refund due shall be determined and paid.
(c) This required minimum license fee is in addition to any other occupational license or minimum occupational license fee that any person, firm, business entity, nonprofit organization, corporation, or participant leasing, renting, or being provided the use of temporary booths, tent space or other like spaces at the temporary event may already possess or otherwise be required to possess due to its operation outside of the permitted period and temporary event location.
(d) Any person, firm, business entity, nonprofit organization, corporation, or participant leasing, renting, or being provided the use of temporary booths, tent spaces or other like spaces under subsection (18)(a) and their employees shall be exempt from the requirement of this chapter but only to the extent of operation or employment for the permitted event. This provision is not intended to exempt any person, firm, business entity, nonprofit organization, corporation, or participant leasing, renting, or being provided the use of temporary booths, tent space or other like spaces under subsection (18)(a) or their employees from any other requirement under this chapter due to its/their operation(s) outside of the permitted period and location.
(Ord. 0-2008-002, passed 1-14-08; Am. Ord. 0-2015-008, passed 6-22-15; Am. Ord. 0-2016-007, passed 5-20-16; Am. Ord. 0-2018-01, passed 1-22-18; Am. Ord. O-2021-11, passed 4-26-21; Am. Ord. O-2021-12, passed 5-10-21; Am. Ord. O-2021-22, passed 10-11-21)
Penalty, see § 115.99