Request By:
Mr. John P. Reisz
Reisz, Blackburn & Manly
Attorneys at Law
2650 First National Tower
Louisville, Kentucky 40202
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 Norman Wooten, Inc. is a Kentucky corporation organized in 1972. It conducts the business of mid-stream refueling of barges. The corporation also supplies barges and towboats with incidental supplies such as groceries, reading materials, spare parts and so forth.
Until April, 1977 the corporation's physical location was on the Ohio River tied to the Kentucky bank. In that month the corporation moved its physical location to the north side of the river. The company owns four barges and two boats. Its mode of operation is to receive the oil products it sells from a terminal on the Kentucky shore, store it on barges and deliver the oil mid-stream to the towboats it supplies.
The company receives water, electricity and other such utilities from the Indiana shore. Most of the boats are anchored 50 feet from the bank. The barges storing petroleum products are normally 100 feet from the bank.
The company has heretofore paid Kentucky income tax and Kentucky ad valorem property taxes. After moving the company's physical location from the south bank to the north bank of the Ohio River, the Indiana Department of Revenue has forwarded several personal property tax returns to the corporation with a note attached that they be completed and filed with Indiana officials.
The company normally operates solely within Jefferson County, Kentucky. It re-fuels in Jefferson County and does not leave the immediate area of the Port of Louisville.
The question is whether the company is within the Commonwealth of Kentucky for the purpose of paying ad valorem personal property taxes. Any authority found to support the answer is also requested.
The boundary of the state of Kentucky is the northwestern bank of the Ohio River from the north of Big Sandy to the north of the Ohio. See McFarland v. McKnight (1846), 45 Ky. (6 B. Mon.) 500. Also see KRS Title 1 Chapter 1. Kentucky has jurisdiction to the low water mark on the north or northwestern shore.
In 1896 the United States Supreme Court in the case of Indiana v. Kentucky, 163 41 Law Ed., 250 fixed the boundary line between the state of Indiana and the Commonwealth of Kentucky between certain points. They neglected, however, to fix points where such terminal points reach the low water mark on the right side of the river forming the remainder of the boundary line between the states.
In 1942, as a result of negotiations between Indiana and Kentucky, see Acts 1942, Chapter 116, House Bill 375, there is set out in detail the terminal points to delineate the boundary line between the two states. Indiana passed a similar statute, see Indiana Acts, 1943, Chapter 2, 57 Statute 248 (1943). Generally speaking, moving from the south bank to the north bank of the Ohio River would not change the barge company's status with respect to its liability for ad valorem property taxes to the Commonwealth of Kentucky. If the move was made in April of 1977, since the assessment date is January 1, the barges would be liable for tax to the state, county and school districts in Kentucky. So long as the barges are tied in the Ohio River 50 to 100 feet from the Indiana shore, it would appear that they are well within the jurisdiction of the Commonwealth of Kentucky.