OAG 92-71

April 24, 1992

Sarah Hernandez

Assistant General Counsel

Tourism Cabinet

Capital Plaza Tower, 24th Floor

500 Mero Street

Frankfort, Kentucky 40601

Dear Ms. Hernandez:

You have submitted the following questions to the Attorney General:

[T]his writing requests an opinion as to whether the occasional, transient motorcoach, charter, or tour bus operation is exempted from the scope of this statute [KRS 136.1873].

In addition, some questions have been raised as to the constitutionality of this statute. Apparently, other states have determined that a similar statute to this may be unconstitutional. This writing is to further request an opinion as to the constitutionality of the statute.

The statute to which you refer is one of three related statutes enacted in Acts 1990 c. 437. Those statutes provide:

136.1873. Taxation of vehicles of system whose route or operation is partly within this state.—(1) Notwithstanding the provisions of KRS 132.487 [which sets out the general property tax collection procedure for motor vehicles], trucks, tractors, semitrailers and buses of any person, corporation, partnership, or any other business association whose route or system is partly within this state and partly within another state or states, shall be assessed by the Revenue Cabinet for purposes of taxation as of January 1 each year. Notwithstanding the provisions of KRS 132.200, the trucks, tractors, semitrailers, and buses described in this subsection shall be subject to taxation for state purposes only.

(2) The proportion of miles operated in this state compared to the total miles operated everywhere shall be considered in fixing the value of the property for taxation. Other reasonable evidence shall be considered in fixing the value.

136.1875. Information to be furnished by fleet owner.—On or before April 15, 1991, and each year thereafter, each person, corporation, partnership, or other business association owning or operating trucks, tractors, semitrailers, and buses whose route or system is partly within this state and partly within another state or states, shall on forms provided by the Revenue Cabinet provide the cabinet with a detailed description of all the property as well as an estimate of the proportionate use of business situs property on a fleet basis and an estimate of the use of major interstate routes on a fleet basis.

KRS 136.1877. Appeal from notice of tentative assessment—Collection of state taxes.—(1) The Revenue Cabinet shall immediately, after fixing the assessed value of the trucks, tractors, semitrailers, and buses, notify the taxpayer of the valuation determined. Any taxpayer who has been assessed by the cabinet in the manner outlined in KRS 136.1873 shall have thirty (30) days from the date of the cabinet's notice of the tentative assessment in which to protest in the manner provided by KRS 131.110.

(2) The state taxes on the property shall become due thirty (30) days from the date of notice and shall be collected directly by the Revenue Cabinet.

These statutes, like all statutes relating to state property taxation, merely implement the directive of sections 3 and 174 of the state constitution that all property be taxed unless specifically exempted in the constitution. Section 3 says that “no property shall be exempt from taxation except as provided in this Constitution”; and section 174 says, “All property, whether owned by natural persons or corporations, shall be taxed in proportion to its value, unless exempted by this Constitution . . . .” The statutes do not subject any property to taxation because the constitution has already subjected all property in the state to taxation with a few limited exceptions not relevant here.

KRS 136.1873 does nothing more than establish the procedure for assessment of taxable trucks, tractors, semitrailers, and buses. It states that this property is to be assessed by the Revenue Cabinet as of January 1 of each year. Without such a statute, the property would be subject to assessment by the local property valuation administrators in each county along the vehicles' routes in this state. The statute also establishes mileage traveled within Kentucky as the primary basis of apportionment of value between states within which the vehicles travel. Without this provision, other methods of apportionment, such as elapsed time within the state, could be used.

Turning to the specific questions you have asked, we find nothing in the statutes that would exempt “the occasional, transient motorcoach, charter, or tour bus operation” from the assessment procedure set out in KRS 136.1873. Nor do we find anything unconstitutional in this procedure. We view the statute simply as an attempt by the state to insure compliance with the constitutional directive that all property be taxed.

Although your questions are directed specifically at the procedural statute KRS 136.1873, we suspect that your inquiry is in a more general sense whether tour buses that enter Kentucky infrequently are taxable here. Although there is no question that Kentucky may tax property that is within the state only part of the year (see for example Reeves v. Island Creek Fuel and Transportation Company, 313 Ky. 400, 230 S.W.2d 924 (1950); Union Barge Line Corporation v. Marcum, Ky., 360 S.W.2d 130 (1962)), we cannot offer a general opinion on this question because each case must be evaluated on its own facts. A conclusion that one tour bus is subject to tax does not imply that another bus, even one owned and operated by the same company, is also taxable. Issues of taxability can be determined only by the assessment and appeal procedures set out in the statutes.


Chris Gorman

Attorney General

Ross T. Carter

Assistant Attorney General