Request By:
Mr. George S. Schuhmann
Special Counsel for City
of Shively
P.O. Box 16007
Shively, Kentucky 40216
Opinion
Opinion By: Robert F. Stephens, Attorney General; By William S. Riley, Assistant Attorney General
In your recent letter to the Attorney General it is stated that the operation of the sewer system in the City of Shively is conducted by the Louisville and Jefferson County Metropolitan Sewer District. Shively residents pay the regular sewer service charges. In addition, as a separate item on the bill to Shively residents, there is a charge which has been calculated to be sufficient to meet the principal and interest requirements of the bonded indebtedness which finances the original construction of the Shively Sewer Plant and System. The plant is no longer in operation.
The question is since part of the charge to the Shively customers consists of debt requirement on the part of the system not used in furnishing sewer services, is that portion of the charges included in the scope of KRS 139.100(2)(b).
KRS 139.100(2)(b) states that a "retail sale" or a "sale at retail" includes, among other things, the furnishing of sewer services and intrastate telephonic and telegraphic communications and services. The Kentucky Sales Tax is imposed on the retailer by KRS 139.200 on gross receipts for retail sales.
KRS 139.130(1)(b) states that "sales price" means and includes the cost of materials used, labor or service cost, interest charged, losses or any other expenses. A debt incurred by the utility company which the customer must help retire would be included on the bill as a surcharge. This surcharge should be included in the gross receipts of the utility company. It is within the measure of the sales tax and under KRS 139.210 can be passed on to the customer in accordance with the collection bracket system.
It is, therefore, our opinion that the debt requirements of that part of the system not used in the furnishing of sewer service but which is a part of the charge to meet the principal and interest requirements out of bonded indebtedness to finance the original construction of the Shively Sewer Plant and System is properly included as a part of the sewer services subject to the sales tax.