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Kentucky Department of Revenue Files Illinois Tool Works Status Report

01.08.2007

On December 12, 2006, the Kentucky Department of Revenue (“Revenue”) filed with the Franklin Circuit Court (“Court”) a report concerning the status of refund claims and protests of assessments resulting from the Court’s holding in Illinois Tool Works v. Revenue Cabinet, 00-CI-00623 (Ky. Cir. Ct., Dec. 5, 2002). Illinois Tool Works held that Kentucky’s corporate license scheme was unconstitutional on Commerce Clause grounds, because it granted a tax benefit to corporations domiciled in Kentucky, but denied the benefit to corporations domiciled in other states. In the Illinois Tool Worksdecision, the Court directed Revenue to file quarterly status reports concerning refunds and assessments related to the Illinois Tool Works case.

Revenue’s quarterly status report indicated that as of December 12, 2006 it had received a total of 377 corporation license tax refund claims totaling $23,524,436. Of that amount, Revenue had approved $11,556,342 in refunds. Revenue indicated in its report that it is currently reviewing refund claims in the amount of $1,463,385, and that it had denied all other pending refund claims because the claims.

Further, Revenue’s report indicated that taxpayers have protested 84 corporation license tax assessments based on the unconstitutionality of KRS 136.071. Of those assessments, Revenue indicated that it has abated 71 assessments totaling $4,472,898 because the taxpayers qualified for the corporation license tax benefit set forth in KRS 136.071, although they were not domiciled in Kentucky, but were domiciled in other states. Revenue further indicated that it is currently reviewing the remainder of the pending assessments in order to determine whether those assessments should be abated because they satisfy the requirements of KRS 136.071 (other than being domiciled outside Kentucky).

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