Request By:
Hon. Robert J. Jackson, Circuit Judge
Thirteenth Judicial Circuit
212 Farmers Square
Nicholasville, Kentucky 40356
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Ross T. Carter, Assistant Attorney General
In your letter to the Attorney General you stated that your judicial office extends into three counties, two of which (Jessamine and Garrard) have levied an occupational tax. These circumstances prompt you to ask the following questions:
1. Is a circuit judge engaged in an occupation that would be subject to tax?
2. Must a circuit judge pay the tax in each county in which he holds court?
3. Can the tax be prorated according to the number of days the judge is present in each county?
4. If a city also levies an occupational tax, must the judge pay tax to both the county and the city?
The answer to your first question appears in
Commissioners of Sinking Fund v. Hopson, Ky.App., 613 S.W.2d 621 (1980), in which the court held that judges must pay a city occupational tax. (This case has a peculiar history. The Supreme Court granted discretionary review and heard oral arguments, but then vacated the order granting review. That order, reproduced at 613 S.W.2d 619, includes a dissenting opinion by Justice Lukowsky and a concurring opinion by Chief Justice Palmore. Those opinions, predictably, discuss the merits of the case rather than the purely procedural action taken by the Supreme Court.) In a concurring opinion, Judge Wilhoit wrote, "Undoubtedly, constitutional officers such as judges are not engaged in either a 'trade' or 'profession' in the performance of their official functions. They are, however, engaged in an 'occupation. '" Id. at 625. Obviously if judges are subject to a city tax on occupations they are equally subject to a county tax on occupations.
Your second question raises the issue of when activity within a taxing jurisdiction may be deemed to be the carrying on of an occupation within the jurisdiction. In
H. H. Leet Furniture Company, Inc., v. City of Richmond, Ky., 357 S.W.2d 329 (1962), the court discussed the question in general terms with such observations as "an isolated transaction under specific employment was not carrying on or conducting business." Id. at 332. Conversely, business conducted "as a regular matter" was taxable. We conclude that a judge would not be subject to a county's occupational tax solely because he appeared as a special judge in that county or attended continuing education seminars in the county. The tax would apply if the judge appeared regularly in the county in fulfillment of the duties of his assigned jurisdiction.
Your third question, regarding proration among counties, is addressed in the ordinances that you supplied with your request. Both ordinances provide in section VIII that "the license fee required under this order shall be computed and paid upon the basis of the proportion of compensation earned for services performed within the county." Neither the ordinances nor the law in general requires the application of any specific method of apportionment. When an employee receives a salary, the most logical basis of apportionment would be based on the number of days that the employee is present within the county. Other methods might be better suited to other occupations. A salesman, for example, might apportion his compensation on the basis of commissions earned, or miles driven, or customers contacted, etc. Since neither ordinance specifies how the apportionment of salaries is to be accomplished, we cannot determine whether the methods chosen by Jessamine and Garrard Counties are reasonable.
Your fourth question, regarding the payment of a city tax and a county tax, calls attention to an odd situation regarding the authority of counties to levy occupational taxes. In KRS 68.197, the legislature has granted specific authority to levy occupational taxes to counties having a population exceeding 30,000. Subsection four of this statute states that "persons who pay a county license fee to a city contained in the county shall be allowed to credit their city license fee against their county license fee. " Thus there is no concurrent taxation in counties with a population exceeding 30,000.
The legislature has not granted such specific taxing authority to smaller counties; however in
Casey County Fiscal Court v. Burke, Ky., 743 S.W.2d 26 (1988), the court held that smaller counties may levy occupational taxes under the general authority of KRS 67.083. This general grant of power does not include the limitation of KRS 68.197(4) regarding concurrent taxation by counties and cities. Thus the statutes and cases lead to the conclusion that when a county of over 30,000 population levies an occupational tax, the county must credit tax payments made to a city; but a county of under 30,000 population levying an identical tax need not extend such a credit.
We offer no opinion on the possible constitutional implications arising from this situation.
This distinction based on population carries significance in your situation, for the Legislative Research Commission informs us that Garrard County has a population under 30,000 and Jessamine County has a population over 30,000. Thus any city occupational tax would be credited against the tax in Jessamine County but not in Garrard County.
We note in passing that the law does not prohibit concurrent taxation by the county and a city.