ASSESSMENT ADMINISTRATION MANUAL

OFFICE OF THE

PROPERTY VALUATION ADMINISTRATOR

COMMONWEALTH OF KENTUCKY

DEPARTMENT OF REVENUE

OFFICE OF PROPERTY VALUATION

2023

PREFACE

An assessment administration manual has been part of Kentucky property tax professionals’ libraries for

nearly seventy years. In January 1950, following the historic 1949 Special Session of the General

Assembly, the “Kentucky Property Assessment Administration Manual” was printed and distributed to all

120 Tax Commissioners (since renamed Property Valuation Administrators, or PVAs). This manual has

taken various forms throughout the years, and became a mandate when the 1988 General Assembly directed

the Department of Revenue to develop up-to-date manuals outlining uniform procedures for assessing all

categories of real and personal property (KRS 131.140).

This manual is to be used by all PVAs and staff to ensure a standardized approach to property tax assessment

administration across the Commonwealth. It is updated periodically to reflect changes in the law or

revisions of policy that may affect administration and valuation processes. Kentucky Revised Statute

(KRS) citations have been included in the body of the text for additional reference, emphasis, or clarity.

Full versions of statutes are available at https://legislature.ky.gov. Deviations from the standardized

methods or procedures due to unique or exceptional circumstances may be permitted upon specific

authorization from the Office of Property Valuation. Detailed information on virtually any aspect of

assessment administration is available under the numerous offerings of the Office of Property Valuation

Education Program, as well as other instructional functions such as the annual Conference on Assessment

Administration. Any PVA with a question regarding technical or administrative procedures is encouraged

to contact the Office of Property Valuation.

This version of the Assessment Administration Manual supersedes all previous versions.

December, 2022

T A B L E O F C O N T E N T S

Page

Chapter 1 General Duties and Professional Development of the

Property Valuation Administrator

A. Introduction to the Market Value Standard .................................................. 1-1

B. General Duties .............................................................................................. 1-2

C. Continuing Education Requirements ............................................................ 1-3

D. Professional Designation Program ................................................................ 1-5

Chapter 2 Property Tax Duties of the Department of Revenue

A. Introduction ................................................................................................... 2-1

B. Annual Conference on Assessment Administration ..................................... 2-1

C. Monitoring Responsibilities of the Department of Revenue ........................ 2-2

Chapter 3 Property Subject to Taxation

A. Introduction ................................................................................................... 3-1

B. Real Property Classification ......................................................................... 3-1

C. Personal Property Classification ................................................................... 3-3

D. Property Subject to Preferential Tax Rates ................................................... 3-4

Chapter 4 Property Exempt from Taxation

A. Introduction ................................................................................................... 4-1

B. Procedures for Listing Exempt Property ....................................................... 4-1

C. Public Property Used for Public Purposes .................................................... 4-2

D. Property Owned by a Non-Profit Institution of Education ........................... 4-3

E. Property Owned and Real Property Owned and Occupied by an Institution

of Religion ................................................................................................... 4-3

F. Homestead/Disability Exemption ................................................................. 4-5

G. Other Constitutionally Exempt Property ...................................................... 4-6

H. Leased Property ............................................................................................ 4-7

I. Application for Exemption ........................................................................... 4-8

J. Personal Property Exempt by Statute ............................................................ 4-9

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Chapter 5 Property Tax Relief Programs

A. Introduction ................................................................................................... 5-1

B. Agricultural Value ........................................................................................ 5-1

C. Assessment Moratorium Program................................................................. 5-3

D. Foreign Trade Zones ...................................................................................... 5-4

E. Tax Increment Financing ............................................................................... 5-4

F. Brownfields .................................................................................................... 5-5

Chapter 6 The Kentucky Property Tax Calendar

A. Introduction ................................................................................................... 6-1

B. Assessment Date ........................................................................................... 6-3

C. Listing Period ................................................................................................ 6-3

D. Estimate Submitted to the County Judge-Executive ..................................... 6-5

E. Notification of Taxpayers ............................................................................. 6-5

F. Preparation of Tax Roll and PVA Recapitulation .......................................... 6-6

G. The Inspection Period .................................................................................... 6-7

H. Notice of the Inspection Period...................................................................... 6-7

I. Board of Assessment Appeals ....................................................................... 6-8

J. Board of Tax Appeals .................................................................................... 6-9

K. Final Recap to the Department of Revenue ................................................. 6-10

L. Department of Revenue Certification .......................................................... 6-10

M. Tax Bill Preparation ..................................................................................... 6-11

N. Tax Bills Delivered to Sheriff ...................................................................... 6-11

O. Payment of Tax Bills ................................................................................... 6-11

Chapter 7 Property Tax Rate Structure

A. Introduction ................................................................................................... 7-1

B. Real Property Tax Rates ............................................................................... 7-1

C. Tangible Property Tax Rates ........................................................................ 7-2

D. Intangible Property Tax Rates ...................................................................... 7-2

E. Setting Local Property Tax Rates ................................................................. 7-2

F. Rates by Property Class ................................................................................. 7-3

Chapter 8 Assessment/Sales Ratio Study Program

A. Introduction ................................................................................................... 8-1

B. Data Collection and Verification .................................................................. 8-2

C. Statistical Analysis ........................................................................................ 8-6

D. Median Ratios ............................................................................................... 8-6

E. Coefficient of Dispersion .............................................................................. 8-7

F. Interpretation of the Median Ratio and Coefficient of Dispersion ................ 8-7

G. Significance of the Assessment/Sales Ratio .................................................. 8-8

H. Release of Information ................................................................................. 8-13

Chapter 9 Assessment Quality and Equalization

A. Introduction ................................................................................................... 9-1

B. Biennial Performance Audit and Record and Mapping Review .................... 9-1

C. Equalization Methods ................................................................................... 9-2

Chapter 10 Physical Examination of Real Property

A. Introduction .................................................................................................. 10-1

B. Assessment Planning ................................................................................... 10-1

C. Submission of Review Schedule .................................................................. 10-2

D. Guidelines for Quadrennial Physical Examination ...................................... 10-2

E. Periodic Revaluations .................................................................................. 10-3

Chapter 11 Maintenance of Property Identification Mapping Systems

A. Introduction .................................................................................................. 11-1

B. Maintenance of Maps and Records .............................................................. 11-2

C. The Future of Mapping ................................................................................ 11-6

D. Upgrading Obsolete Mapping Systems ....................................................... 11-6

E. Map Sales and Data ..................................................................................... 11-7

F. Aerial Photography ...................................................................................... 11-8

Chapter 12 Assessment of Real Property

A. Introduction .................................................................................................. 12-1

B. The Sales Comparison Approach to Value .................................................. 12-1

C. The Cost Approach to Value........................................................................ 12-4

D. The Income Approach to Value ................................................................... 12-9

E. The Concept of Mass Appraisal ................................................................. 12-12

Chapter 13 Assessment of Personal Property

A. Introduction .................................................................................................. 13-1

B. Listing of Personal Property ........................................................................ 13-2

C. Return Processing and Entry ........................................................................ 13-2

D. Valuation of Personal Property .................................................................... 13-3

Chapter 14 Special or Unique Valuation Procedures

A. Introduction .................................................................................................. 14-1

B. Telecommunications Property ..................................................................... 14-1

Chapter 15 Motor Vehicle Assessment (MOTAX) System

A. Introduction .................................................................................................. 15-1

B. Vehicle Valuation ........................................................................................ 15-1

C. Valuation Guides ......................................................................................... 15-2

D. The Collection of Motor Vehicle Taxes ...................................................... 15-3

E. Reports from the Department....................................................................... 15-3

F. Delinquent Motor Vehicle Taxes ................................................................. 15-6

G. Assessment Appeals..................................................................................... 15-7

Chapter 16 Assessment of Unmined Coal and Mineral Property

A. Introduction .................................................................................................. 16-1

B. Reporting of Mineral Resource Property ..................................................... 16-1

C. Billing and Appeals Procedures ................................................................... 16-2

D. Responsibility of the PVA ........................................................................... 16-2

Chapter 17 State Assessed Property

A. Introduction .................................................................................................. 17-1

B. Domestic Life Insurance Companies ........................................................... 17-1

C. Bank Deposits .............................................................................................. 17-1

D. Public Service Companies ........................................................................... 17-2

E. Commercial Watercraft ................................................................................ 17-3

F. Distilled Spirits ............................................................................................ 17-3

G. Trucks, Tractors, Semi-trailers and Buses ................................................... 17-3

Chapter 18 Property Tax Collection

A. Introduction .................................................................................................. 18-1

B. Property Tax Collection Cycle..................................................................... 18-2

Chapter 19 Omitted Property

A. Introduction .................................................................................................. 19-1

B. Omitted Real Property ................................................................................. 19-1

C. Omitted Personal Property ........................................................................... 19-2

Chapter 20 Exonerations and Property Tax Refunds

A. Introduction .................................................................................................. 20-1

B. Exonerations ................................................................................................ 20-1

C. Property Tax Refunds .................................................................................. 20-2

D. Clerical Errors .............................................................................................. 20-2

Chapter 21 Assessment Appeals

A. Introduction .................................................................................................. 21-1

B. Conference with Taxpayer ........................................................................... 21-1

C. Local Board of Assessment Appeals ........................................................... 21-2

D. Personal Property and State Assessed Property Appeals ............................. 21-3

E. Board of Tax Appeals .................................................................................. 21-4

F. Appeals to the Courts ................................................................................... 21-5

Chapter 22 Delinquent Property

A. Introduction .................................................................................................. 22-1

B. The PVA’s Role Regarding Delinquent Property ........................................ 22-1

Chapter 23 Open Records

A. Introduction .................................................................................................. 23-1

B. Definitions.................................................................................................... 23-2

C. General Requirements .................................................................................. 23-3

D. Public Records Open for Inspection ............................................................ 23-4

E. Public Records NOT Open for Inspection ................................................... 23-5

F. Fee Schedule for Open Records Requests ................................................... 23-5

Chapter 24 Records Retention

A. Introduction .................................................................................................. 24-1

B. Public Records ............................................................................................. 24-1

C. Local Disposal of Records ........................................................................... 24-2

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CHAPTER ONE

GENERAL DUTIES AND PROFESSIONAL DEVELOPMENT

OF THE PROPERTY VALUATION ADMINISTRATOR

A. Introduction to the Market Value Standard

The primary duty of the Property Valuation Administrator (PVA) is to equitably assess the

value of real and personal property listed by taxpayers in his or her county. The Constitution of

Kentucky requires that “All property, not exempted from taxation by this Constitution, shall be

assessed for taxation at its fair cash value, estimated at the price it would bring at a fair voluntary

sale.” This language has not been amended since the current (fourth) Kentucky Constitution was

adopted in 1891. KRS 160.460 states unequivocally that “…all real property located in the state

and subject to local taxation shall be assessed at one hundred percent (100%) of fair cash value.”

These mandates, backed up by the historic (1965) Russman v. Luckett decision, establish the

market value standard as law in Kentucky.

For the purposes of assessment administration, “market value” and “fair cash value” should be

considered synonymous. Market value is defined by the International Association of Assessing

Officers (IAAO) in Property Assessment Valuation, Third Edition (2010) as follows:

Market value is the most probable price which a property should

bring in a competitive and open market under all conditions

requisite to a fair sale, the buyer and seller each acting prudently

and knowledgeably, and assuming the price is not affected by undue

stimulus.

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Obviously, the most reliable indicator of market value for a particular parcel of property is a

recent sale price that meets the criteria established above. If a recent market price is not available,

the PVA must estimate the fair cash value based on the most probable price a willing buyer would

pay a willing seller, provided both parties are fully informed and act voluntarily. This hypothetical

“sale price”, or value, must be derived by using standard appraisal practices. Every effort should

be made to arrive at a fair assessment, as "any grossly discriminatory valuation shall be construed

as an intentional discrimination." (KRS 132.450) The information needed for an appraisal can be

gathered through visits with the taxpayer, property tax returns, physical or virtual inspection of the

property, deeds and records, and from any other source the PVA may be able to obtain, including

from the PVA's personal knowledge.

B. General Duties

In the process of accomplishing the primary function of the PVA office, to assess all property

at market value, many supporting functions must be performed. Tax rolls, maps, photographs, and

computer data must be constantly maintained and updated. Personal property tax returns must be

entered into the centralized statewide computer system. Property owners must be informed of

pertinent filing dates and of changes affecting property tax liabilities, and PVAs must use various

means and methods to locate and assess omitted property. PVAs also provide a variety of

information management services as custodians of the parcel ownership database, most of which

is public information subject to disclosure pursuant to the Kentucky Open Records Act.

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In order to effectively carry out the many duties required of the PVA office, an office staff

must be hired, trained, and directed by the PVA. A bank account must be maintained for the

management of local funds and a budget must be set to purchase needed supplies and equipment.

The PVA is a statutory state official and the deputies and assistants in the PVA office are

unclassified state employees (KRS 132.370). As part of the executive branch of state government,

the PVA office, although responsible for assessments in only one county, is a state office and

subject to state office statutory provisions. The PVA is required to keep scheduled office hours

and be engaged in official duties at least five days a week (KRS 132.410).

PVAs are elected in the same year as other local officials and take office the first Monday in

December. They are sworn in by the county judge-executive with the following oath of office:

I do solemnly swear (or affirm, as the case may be) that I will support the

Constitution of the United States and the Constitution of this Commonwealth, and

be faithful and true to the Commonwealth of Kentucky so long as I continue a citizen

thereof, and that I will faithfully execute, to the best of my ability, the office of

Property Valuation Administrator according to law; and I do further solemnly

swear (or affirm) that since the adoption of the present Constitution, I, being a

citizen of this State, have not fought a duel with deadly weapons within this State

nor out of it, nor have I sent or accepted a challenge to fight a duel with deadly

weapons, nor have I acted as a second in carrying a challenge, nor aided or

assisted any person thus offending, so help me God.

C. Continuing Education Requirements

Due to the extensive and ever-changing body of knowledge needed to successfully run the

PVA office, PVAs participate in two separate statutory continuing education programs, both based

upon completion of annual requirements for hours of education. Since 1986, qualifying PVAs

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have received a monthly expense allowance which is tied to classroom attendance at educational

functions; and since 2000, qualifying PVAs have been awarded an annual training incentive, based

on continuing participation in the Education Program and adjusted by the consumer price index.

Each of these programs have separate rules, but PVAs are allowed to earn hours of education

toward both concurrently.

The specific requirements that PVAs must meet to qualify for the annual expense allowance

are identified in KRS 132.597. Each PVA must participate in a minimum of 30 classroom hours

of “professional instruction conducted or approved by the Department of Revenue” within each

calendar year in order to qualify for the expense allowance for the subsequent calendar year. Hours

of education in excess of the 30 hour requirement lapse at the end of the year in which they have

been earned, and cannot be carried forward into subsequent years. PVAs who have earned the

Senior Kentucky Assessor (SKA) designation must meet a reduced requirement of just 15

classroom hours per calendar year in order to qualify for the annual expense allowance for the

subsequent year. The requirements for the professional designations are described in the following

section. Should a PVA fail to meet the educational requirement in any year, the annual expense

allowance will be withheld for the subsequent year.

Under KRS 132.590, in addition to the monthly expense allowance described above, PVAs

also receive a lump sum training incentive for each training unit completed.

Under the training incentive program set forth in the statute, PVAs must earn a training unit of

forty hours of education per calendar year in order to qualify for the training incentive payment.

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Unlike the expense allowance program, up to forty hours of approved education in excess of the

training unit are allowed to be carried over into the next calendar year, to qualify for that year’s

training unit. Payment is in a lump sum at the end of the month following the attainment of the

training unit of forty hours. Therefore, a PVA carrying over the maximum of forty hours can

qualify in January of the succeeding calendar year and be approved for payment during February.

PVAs may earn only one training incentive per year but can receive up to four per year depending

on tenure and accumulated training units. The statutory amount of the incentive ($1,169.77 in year

2022 dollars) is adjusted annually with the consumer price index, so the actual payment varies

from year to year.

More specific rules and procedures governing the training incentive program for PVAs are

included in the Education and Professional Designation Program Student Manual, published by

the Office of Property Valuation, Local Officials Compliance Branch.

D. Professional Designation Program

The Department of Revenue, in cooperation with the Kentucky PVA’s Association, has

developed an education and professional designation program, with two professional designations

available to PVAs, their staffs, and Department of Revenue employees. To obtain the first level

designation, Certified Kentucky Assessor (CKA), a candidate must complete a structured program

of 120 hours of classroom instruction, pass comprehensive examinations over the subject matter,

and have three years of experience in Kentucky property tax administration. An advanced

designation, Senior Kentucky Assessor (SKA), can be earned by successfully completing an

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additional 90 hours of classroom instruction, passing comprehensive examinations over the

material, and acquiring an additional two years of experience in property tax administration (KRS

132.385).

A standard curriculum has been designed to meet the education requirements. A variety of

Kentucky property tax courses have been developed in-house and more are being designed. The

curriculum also includes courses offered by the International Association of Assessing Officers

(IAAO), which is the leading professional organization in the field of property tax assessment

administration. For a more detailed analysis of these courses as well as professional designation

requirements, please refer to the Education and Professional Designation Program Student Manual

published by the Office of Property Valuation, Local Officials Compliance Branch.

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CHAPTER TWO

PROPERTY TAX DUTIES OF THE DEPARTMENT OF REVENUE

A. Introduction

The Department of Revenue is an agency of the executive branch of state government. Within

the Department, the Office of Property Valuation has three divisions charged with various

responsibilities regarding property tax assessment administration: the Local Support Division, the

State Valuation Division, and the Minerals Taxation and GIS Services Division. The statutory

authority of the Department of Revenue requires it to "exercise all administrative functions of the

state in relation to the state revenue and tax laws." (KRS 131.030). The Office of Property

Valuation is charged with administering the property tax assessment administration process

throughout the state, which includes monitoring and providing assistance to the state's 120

Property Valuation Administrators.

B. The Annual Conference on Assessment Administration

In order to provide a flexible program of continuing education and updates in the

administrative and appraisal process, the Department of Revenue is required by law to conduct an

annual conference on assessment administration (KRS 131.140). This conference, a tradition in

Kentucky property tax administration since 1918, is normally held in the fall for no more than five

days. All PVAs are required to attend the conference "unless prevented by illness or other reason

satisfactory to the commissioner" of the Department of Revenue. If the PVA takes part in all

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sessions of the conference and submits itemized receipts for actual and necessary expenses related

to attending, the PVA will be reimbursed, with fifty percent (50%) of the expenses paid by the

respective county and fifty percent (50%) by the Department.

C. Monitoring Responsibilities of the Department of Revenue

The 1988 General Assembly enacted legislation which significantly increased the

responsibility and authority of the Department of Revenue in monitoring assessment quality and

equity throughout the state. In addition, the 1990 General Assembly amended KRS 132.370 to

grant the Commissioner of the Department of Revenue the authority to remove a PVA from office

for the following reasons:

1. Willful disobedience of any just or legal order of the department;

2. Misfeasance or malfeasance in office;

3. Willful neglect in the discharge of official duties, including intentional

underassessment or overassessment of properties and chronic underassessment of

properties.

"Chronic underassessment" is defined as a widespread pattern and practice of assessing

properties at levels substantially below fair market value and persisting for a period of two or more

years. Assessment/sales ratio studies, random sample appraisals, special audits, or other means

reasonably calculated to present an accurate determination of assessment practices in a county are

used to determine the presence or absence of chronically underassessed property. An

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assessment/sales ratio level of below eighty percent for two consecutive calendar years indicates

the presence of chronic underassessment in a county, and automatically triggers a special audit by

the department (KRS 133.250).

If the commissioner determines that a PVA should be removed from office, the PVA must be

notified in writing. The notice shall state the specific reasons for removal and the PVA has the

right to a preremoval conference and an administrative hearing. The PVA has six (6) working

days from the date on which the notice is received to request a preremoval conference. The

conference shall be scheduled within seven (7) working days of the date on which the request is

received and the commissioner has five (5) working days after the conference in which to render

a decision. A PVA removed from office by the Commissioner of the Department of Revenue has

the right to appeal the action within 30 days after the entry of the final order from the

Commissioner. The appeal proceedings shall be held in a Circuit Court of a judicial circuit

adjacent to the county in which the PVA serves. PVAs who are unsuccessful in the appeal process

shall be ineligible to serve in the office at any future date and shall forfeit all certifications from

the Department of Revenue pertaining to the office of Property Valuation Administrator (KRS

132.370).

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CHAPTER THREE

PROPERTY SUBJECT TO TAXATION

A. Introduction

The foundation for property taxation in Kentucky is the Constitution of Kentucky (Sections 3,

170, 171, and 172), which requires that all property be assessed for taxation at fair cash value.

Property assessed by the PVA is broken down into two basic types: real property and personal

property. Real property consists of the three general classes of farm, residential and

commercial/industrial property. Personal property is comprised of the categories of tangible and

intangible personal property. The legislature is authorized by the Constitution to divide property

into classes and to determine which classes of personal property are exempt from local taxes. All

real property is taxable for state purposes unless specifically exempted by the Constitution. All

assessments shall be equitable and the tax rates uniform within the same class of property.

B. Real Property Classification

For the purposes of assessment administration real property is divided into three primary sub-

classes: residential, farm, and commercial/industrial. Interests in real estate such as unmined

minerals (oil, gas, limestone and coal) and timber are also assessed as real property.

Residential property is comprised of small parcels (generally less than ten acres), usually

measured in square footage, linear front footage, or acreage. This property typically contains

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residential improvements. However, vacant land intended or zoned for residential purposes is also

classified as residential property. Duplexes and single-family dwellings converted to multiple

family use are generally classified as residential. However, apartment buildings and complexes

(which are intended solely for income producing purposes) must be classified as commercial

property. Condominiums are considered to be residential property, since they are individually

owned and conveyed.

Commercial property is land with buildings constructed for business purposes, such as retail,

wholesale, or manufacturing. Vacant land intended for business purposes is also classified as

commercial. Commercial parcels may be relatively small, such as in the central business districts

of urban areas and measured by the square foot or linear front footage. However, large shopping

centers or industrial parks may cover many acres.

Industrial property is included with other commercial property for assessment administration

purposes. In general, industrial property can be described as land and/or buildings intended for

the use of manufacturing. Typically, fairly large tracts of land are needed for industrial purposes.

Most manufacturing improvements are designed and constructed specifically for a particular

manufacturing process.

Farm property is land used for the purpose of producing agricultural products such as corn,

tobacco, wheat, soybeans, fruit, vegetables, pork, beef, poultry, and livestock such as cattle or

horses. Timberland is also classified as farm property. In practice, any large (generally over 10

acres) parcel of land that is not specifically used for commercial or residential purposes is classified

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as farm property. This does not mean, however, that all property classified as farm is eligible for

the agricultural deferment program (please refer to Chapter 5).

The real estate owner may sever and/or transfer the ownership of timber rights or subsurface

rights such as coal, oil, and gas to another person or corporation. These rights are assessed as real

property against the person or corporation to whom the rights are transferred. A lessee may be

liable for property tax on a leasehold interest if it has value. The separation of the ownership of

improvements from land is also recognized. Thus, the building owner and the owner of the land

may be assessed separately.

C. Personal Property Classification

Personal property is broken down into two sub-classes for appraisal purposes: tangible

personal property and intangible personal property.

In general, tangible personal property is physical property which is not real property, usually

movable, that has intrinsic value and utility. “Real property” is defined as all lands within this

state and improvements thereon (KRS 132.010 and KRS 136.010). In determining whether an

item is real property or tangible personal property, the following aspects must be considered: (1)

annexation - the manner in which the item is fixed or attached to the real estate, (2) adaptation -

whether the item adapted or applied to the use or purpose of the part of the realty to which it is

connected or annexed has been devoted, (3) intention of the party who attached the item (to leave

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it permanently or to remove it at some future time, based on objective evidence observable by a

disinterested third party).

Generally items remain tangible personal property if they can be removed without serious

damage to the real estate or to the item itself. Machinery bolted to the floor to prevent movement

while in operation would remain personal property. However, if the machinery were built into the

building in such a manner that its removal would produce considerable damage to the building, it

would be part of the real estate.

Intangible personal property is property which represents evidence of value or the right to

value. Examples of intangible personal property include bonds, notes, mortgages, receivables,

copyrights and patents. Other than domestic life insurance capital, no intangible personal property

is subject to local property tax rates. KRS 132.208 exempts most intangible personal property with

the exception of property assessed under KRS 132.030 or KRS Chapter 136.

D. Property Subject to Preferential Rates

Kentucky utilizes the classified rate structure to distribute the property tax burden among

various types of property, and therefore taxpayers. While other states use mill rates, dollars per

thousand or a combination of rate schemes, property tax rates in this state are expressed in dollars

and cents per $100 of assessed property value. Most property tax rates are established locally and

vary from year to year. These rates are discussed further in Chapter 7.

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While the Constitution stresses that all property must be assessed for taxation unless

specifically exempted, some classes of property require further explanation, having been virtually

exempted by statute through low tax rates. The General Assembly, for reasons related to economic

development, has reduced rates on some types of property to the level where it is not economically

feasible to collect the tax. Section 171 of the Constitution of Kentucky states in part, “The General

Assembly shall provide by law an annual tax, which, with other resources, shall be sufficient to

defray the estimated expenses of the Commonwealth for each fiscal year.” A tax rate of 1/10¢ per

$100, or an effective tax rate of .001 percent, will yield only one dollar in tax revenue per one

hundred thousand dollars of assessed value. Considering the cost of discovery, listing, valuation,

billing and collection, it is not feasible for the PVA office to initiate the assessment process for

any property where the final bill would be less than $5.00, which in the 1/10 ¢ per $100 rate class

would have an assessed value of under $500,000.

Farm machinery and livestock are taxed at the state rate of 1/10¢ per $100 of valuation and are

exempt from local property taxes (KRS 132.020). Fluidized bed energy facilities have also earned

the 1/10¢ per $100 rate in recognition of their environmental benefits (KRS 132.020). No special

effort should be made by the PVA to secure listings of any of these types of property. If a taxpayer

does file a return with only these items listed, the PVA should file or scan the return for reference,

but no tax bill should be generated unless the amount to be collected obviously exceeds the cost

of assessing the tax for this property.

An amendment to the Constitution passed by the voters in 1998 gave the General Assembly

the authority to exempt any class of personal property. This allowed the 2000 General Assembly

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to pass legislation (HB 749) exempting personal property placed in a warehouse or distribution

center for subsequent shipment to an out of state location from state tax (KRS 132.097). This bill

also phased out local property tax rates (other than for special taxing districts) for this type of

property (KRS 132.099).

In 2005, the General Assembly exempted most intangible personal property with the passage

of HB 272, the tax modernization bill. (See Chapter 4).

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CHAPTER FOUR

PROPERTY EXEMPT FROM TAXATION

A. Introduction

Sections 170 and 171 of the Kentucky Constitution identify several types of property that are

exempt from property taxation in Kentucky. These exemptions are administratively categorized

into the following classifications:

1. Federally owned property;

2. State owned property;

3. County owned property;

4. City owned property;

5. Property owned by a non-profit institution of education;

6. Personal property owned and real property owned and occupied by an

institution of religion;

7. Homestead and disability exemptions;

8. Cemeteries and property owned by purely public charities.

B. Procedures for Listing Exempt Property

Even though the above classes of property are exempt, the PVA must review and assess all

exempt real property every year in the same manner that taxable property is valued (KRS 132.220).

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The exempt property is not added to the tax roll. However, the PVA shall maintain a listing of all

exempt property. Each property should be described completely, the location of the parcel should

be given, and a breakdown of value between land and improvements should be included. A copy

of this listing is then submitted to the Department by March 31, thirty days after the close of the

listing period. The Department submits each county's exempt list to the Governor's office and the

Legislative Research Commission by April 30 of each year for review.

C. Public Property Used for Public Purposes

The first four classes of exempt property listed in Subsection A are fairly easy to identify, and

include such property as courthouses, municipal buildings, and municipal water treatment plants.

If the property is publicly owned and used for public purposes, it is usually tax exempt. Some

projects that are financed through bond issues, such as airports, roads and industrial parks, are also

exempt. However, they can become taxable when the bond is retired and the property reverts to

private ownership. Furthermore, it is possible for a manufacturing facility to be partially taxable if

only a portion of it has been financed through an Industrial Revenue Bond. PVAs should check

with the Economic Development Cabinet regarding the status of Industrial Revenue Bonds (refer

to Subsection H for further information regarding leased publicly financed property).

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D. Property Owned by a Non-Profit Institution of Education

Educational property includes the property of any non-profit institution located in Kentucky

where a systematic method of learning is taught. It does not include schools that teach dancing,

horse-back riding, gymnastics or other areas of special accomplishment. Income-producing

property of an educational institution is also exempt when the income is used solely for educational

purposes. For example, if an institution operates income-producing properties such as a laundry,

a printing department, or a craft shop, and the profit from these endeavors supports its education

programs, the properties are exempt.

E. Property Owned and Real Property Owned and Occupied by an Institution of Religion

Section 170 of the Constitution states that: ". . . real property owned and occupied by, and

personal property both tangible and intangible owned by, institutions of religion" are exempt from

property taxation. Clearly, the property tax exemption applies to all personal property owned by

a church, synagogue, mosque, or other organized religious institution. As such, all motor vehicles,

office equipment, furniture, and any other personal property held in the institution’s name are

exempt from taxation.

Tax exemptions granted to real property owned by an institution of religion are not as

straightforward. Real property must not only be owned but also be occupied by the institution in

order to qualify for the tax exemption.

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The test for determining taxability of real estate owned by an institution of religion relies on

the actual use of the property. Is it being regularly used in a religious capacity? The following

properties would be considered both owned and occupied by a religious institution, and therefore

tax exempt:

1. Places of religious worship;

2. A minister-occupied parsonage, co-located on the same parcel as a place

of religious worship or a directly adjacent parcel;

3. Land and improvements used for summer camps attended by members;

4. Meeting halls and social centers used by its members;

5. Outdoor recreation areas held for use by its members;

A common example of property that needs to be on the tax roll is vacant land held for future

expansion on which no religious activities occur. This type of property cannot be considered to

be occupied by the institution of religion and must be taxed. Other examples of taxable church-

owned property include property that is leased to or used by another individual or business for a

non-religious purpose, residential housing held by a church but not used as a parsonage, and

acreage utilized as farmland.

It is inevitable that many situations will be encountered that will require an examination of all

the facts and circumstances involved. PVAs with questions should supply the Department with as

many details as possible surrounding the issue and the Department will issue a recommendation

regarding whether a property should be exempt.

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F. Homestead/Disability Exemption

The Homestead exemption applies to any real property owned and maintained as the permanent

residence of a taxpayer who is sixty-five years of age or older. For property owned by a married

couple, the property may qualify for the exemption as long as either spouse is at least sixty-five

years old. Only one exemption is allowed per household, however, even if both spouses meet the

age requirement. Once an application has been filed and accepted, the application is good for

subsequent years as long as the original applicant owns and lives on the property. If the property

is sold, the new owner must apply for the exemption if eligible. In other words, the exemption is

tied to the owner, not to the property.

The Homestead exemption is also extended to anyone who is totally disabled under a program

authorized or administered by an agency of the United States Government or any retirement system

either within or without the Commonwealth of Kentucky. To qualify, the applicant must have

maintained the disability classification for the entirety of the particular taxation period, must have

received disability payments under this classification, and must submit verification documentation

before December 31. Most applicants qualifying for a homestead exemption due to their total

disability will only need to file an initial application. KRS 132.810 exempts “service-connected

totally disabled veterans of the United States Armed Forces” and individuals found disabled under

the applicable rules of the social security administration, the applicable rules of the Kentucky

Retirement System, or any other provision of the Kentucky Revised Statutes from the yearly filing

requirement. Therefore, after the initial application process has been completed for a totally

disabled person described above, it will not be necessary for that property owner to reapply for the

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exemption in subsequent years. Only applicants who are classified as totally disabled by a state or

local agency outside of Kentucky must continue to apply annually with the PVA office to receive

the disability exemption.

Form 62A350 is used for both the age exemption and the disability exemption. These forms

must be kept on file in the PVA office. Approval does not exempt the entire value of the property

from taxation; only the amount approved by the Department of Revenue may be deducted from

the assessed value of the property. This amount is adjusted every two years, as required by law,

to account for changes in the purchasing power of the dollar. The exemption has increased from

$6,500 in 1972 to $46,350 for the 2023 and 2024 property tax assessment periods (KRS 132.810).

G. Other Constitutionally Exempt Property

The last classification of constitutionally exempt property includes such items as cemeteries

and all property owned by purely public charities. Cemeteries are exempt if they are not held for

private or corporate gain. However, it needs to be noted that this exemption applies only to the

real property. Any tangible property owned by a cemetery remains taxable.

Institutions that perform charitable work in Kentucky must be nonprofit in order to qualify for

the exemption. The work performed can be providing food and shelter to the needy poor; character

building, such as in Boy Scout and Girl Scout organizations; care giving as by nonprofit hospitals;

or even improving the natural environment. Some very worthwhile nonprofit organizations are

not tax exempt because, although they may undertake a few charitable activities throughout each

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year, their principal activities are centered around promoting the interests and gratifying the wishes

of their own members. Determinations of eligibility for the purely public charity exemption are

often on a case-by-case basis, examining all of the pertinent facts and financial information made

available for review by the applicant to the PVA and/or the Department. In 2021, the General

Assembly passed House Bill 249, which defined a “veteran service organization” (KRS 132.310)

and allows them to qualify as an institution of purely public charity if over fifty (50) percent of

their income is spent on veterans and charitable causes (KRS 132.212). A PVA should seek

guidance from the Department when an application is received from a veteran service organization.

H. Leased Property

Any real or personal property owned by a tax-exempt entity, but leased to an individual or a

profit making business, is subject to the same tax rates on the leasehold interest in the property as

nonexempt property owners (KRS 132.193, 132.195). The taxes are to be assessed to the lessee

and collected in the same manner as regular tax bills except that past due taxes shall not become a

lien against the property.

An example of this situation occurs when a nonprofit hospital leases office space, medical

equipment, and parking facilities at less than market rent to a physician engaged in a profit-making

practice. The difference between the market rent and the actual rent is capitalized into an assessed

value which is taxable to the physician at the applicable tax rates on both the tangible and real

property.

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All privately-owned leasehold interests in industrial buildings which are owned and financed

by a tax-exempt governmental unit qualify for the 1½¢ per $100 of value state rate (KRS 132.020)

and are exempt from local ad valorem taxes (KRS 132.200). However, if the tenant provides

private financing for the project, that portion of the total value of the leasehold interest represented

by private financing is not eligible for the 1½¢ state rate only. Instead, it would be taxed at full

state and local rates. If the debt on the structure has been retired, and the occupant is paying less

than market rent to the governmental unit, the leasehold interest created is fully taxable to the

lessee.

I. Application for Exemption

Revenue Form 62A023, Application for Exemption from Property Taxation, should be filled

out by any organization applying for the first time for exempt status. The application should be

returned to the PVA's office for approval. If the PVA is unsure if the organization qualifies, then

all the information submitted should be forwarded to the Department for review. The Department

will issue a written recommendation to the PVA addressing whether or not the organization

qualifies for an exemption. The PVA then sends an official ruling letter to the entity. Exempt

status has been established for a number of organizations. However, if an organization indicates

that it has been previously approved for an exemption, the PVA should verify that information

with the Department.

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J. Personal Property Exempt by Statute

As was mentioned in the previous chapter, the legislature now has the authority to exempt any

type of personal property. House Bill 229, of the 1998 General Assembly, put the question to a

referendum (Amendment 2), which passed by more than a three to one majority on November 3,

1998. This Amendment, which also expanded the eligibility requirements for the disability

exemption, added the following sentence to Section 170 of the Constitution:

Notwithstanding the provisions of Sections 3, 172, and 174 of this Constitution to

the contrary, the General Assembly may provide by law an exemption for all or

any portion of the property tax for any class of personal property.

The General Assembly has been cautious in exercising this authority, primarily due to budget

concerns. Only two types of personal property have been exempted since 1998:

• KRS 132.097 exempts from state taxation personal property placed in a warehouse or

distribution center for the purpose of subsequent shipment to an out-of-state destination within

six months of its being placed. KRS 132.099 exempts the same personal property from county,

city, and school taxes, and taxation is optional for special taxing districts.

• KRS 132.208 exempts certain types of intangible personal property, primarily stocks and

mutual funds, in response to the St. Ledger v. Revenue Cabinet decision; In 2005, the General

Assembly amended KRS 132.208 to include “All intangible personal property except that

which is assessed under KRS 132.030 or KRS Chapter 136…”

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Two other statutes which had been considered by many to be unconstitutional exemptions of

personal property are now clearly constitutional since the passage of Amendment 2 in 1998:

• KRS 132.190 (1) (a) exempts twenty-five domestic fowl to each family;

• KRS 290.635 exempts deposits in Kentucky credit unions.

No application process is necessary for personal property exempt by statute. It is not required

to be listed on a property tax return, since the listing statutes refer to “any tangible personal

property taxable in this state” (KRS 132.220).

For more detailed information about property tax exemptions, a “Property Exemption

Guidelines” manual and a “Guidelines for Administering the Homestead Exemption” manual have

been developed to assist PVAs in this area of property tax assessment administration. The manuals

are on the PVA network: https://revenue.ky.gov/pvanetwork/pages/default.aspx

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CHAPTER FIVE

PROPERTY TAX RELIEF PROGRAMS

A. Introduction

Several property tax relief programs have been approved in Kentucky and require special

consideration for appraisal and taxing purposes. Included in this area are agricultural value,

assessment moratoriums, foreign trade zones, tax increment financing, and brownfields.

B. Agricultural Value

The purpose of the agricultural value program is to stimulate the continuation of farming

operations and encourage the preservation of farmland in Kentucky by providing property tax

relief. The value of land used for farm production is assessed at a “use” value, which results in a

lower taxable dollar value per acre than the fair cash value for the same land. This program was

enacted through a constitutional referendum in 1969 to keep rising property assessments,

particularly in developing areas, from forcing farmers out of business and accelerating the land

conversion process.

The statutory definition of “agricultural land” stipulates that any tract of land, ten acres or

more, used for the production of agricultural products, including timber, qualifies for this

preferential treatment. Any tract of land five acres or more used for aquaculture is also defined as

agricultural. “Horticultural land” is defined as a tract of at least five acres commercially used for

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the cultivation of orchard or the raising of fruits or nuts, vegetables, flowers, or ornamental plants.

(KRS 132.010).

Land occupied by improvements related to the income-producing nature of the farm, including

barns, silos, sheds, tenant houses, ponds, etc., is included under this acreage requirement.

However, land used for residential purposes, including the primary residence of the property

owner, lawns, drives, pools, etc., must be excluded from the calculation of qualifying agricultural

land. (KRS 132.450). A farm residence occupied by the farm owner must be assessed at its fair

cash value and is not eligible for an agricultural value. However, houses used by farm managers

or tenants actually working on the farm can be valued according to the contribution they make to

the agriculturally related income production.

In some cases, where a farm has little developmental potential, it may be found that the fair

cash value and the agricultural value of land are nearly the same. The difference is most

pronounced for farms located at the urban fringe. Each year both the fair cash value and the

agricultural value must be determined by the PVA for all property which qualifies for the

agricultural value program (KRS 132.450). These values are calculated based on standard

appraisal techniques, using the methodology established by the Office of Property Valuation,

which is the subject of Kentucky Property Tax Course Ninety, “Farm Real Property Appraisal”.

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C. Assessment Moratorium Program

The assessment moratorium program was established in 1982 in order to provide incentives

for repairing, rehabilitating, restoring or stabilizing qualifying residential or commercial buildings

in Kentucky. Approval for the moratorium must come from the local governing bodies of a county

or city. Certain guidelines and standards must be met before approval is granted (Ky. Const., Sec.

172, KRS 99.595-600, 132.010, 132.190, 132.452).

The PVA should maintain two values on property that has been approved for an assessment

moratorium: a “frozen” value and a “current” value. The value of the property as of January 1 of

the year in which the moratorium is granted as well as the value of the property on January 1 of

each year of the moratorium period must be assessed. The logic behind this dual assessment lies

in the fact that the property tax break applies only to those counties and cities that have adopted

the program.

Local tax rates for participating governments are applied to the original value under

moratorium, and the state rate, school rate, and non-participating local rates are applied to the

market value of the property as the improvements are made. A home may be on the tax roll at

$25,000 one year (value before any improvements); at $50,000 the next year (improvements made

in that year); and at $100,000 the following year (value after the restoration project is completed).

The state rate and local rates for non-participating governments are applied to the increasing values

and the local rates for participating governments continue to be applied to the original value of

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$25,000. The assessment moratorium is limited to a five-year period for individual properties,

with the possibility of a subsequent reapplication within three years of the original moratorium.

D. Foreign Trade Zones

Foreign trade zones are established for the purpose of stimulating economic activity under the

federal Foreign Trade Zones Act (see 19 C.F.R. §18). Within a foreign trade zone, tangible

personal property is nearly exempt, being subject to the 1/10¢ per $100 state rate and no local

rates. However, the foreign trade zone must be activated (19 C.F.R. §146.6 (e)). Until it is

activated in accordance with the governing federal regulations, the property does not qualify for

the preferential rate. Currently foreign trade zones are located in Jefferson County and Northern

Kentucky, however each of these zones have subzones which are located throughout the state.

E. Tax Increment Financing

The 2000 and 2001 General Assemblies passed several bills for the purpose of enabling an

economic development incentive known as tax increment financing (TIF). This concept is based

on the use of “tax increments”, or the difference between current revenues and future revenues to

be derived from revitalized areas. Under TIF, an urban renewal/community development agency

enters into a contract with the state and/or local taxing districts (the current TIF structure

specifically excludes school districts) to release to the agency the tax increments, which must be

used solely within the development area.

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TIF, being based on revenues, does not enter into the assessment process except as the basis

for an increase in the increment, particularly in a situation where property tax rates are declining

under the House Bill 44 process. Therefore, property located within the boundaries of a TIF zone

must be assessed at the current year market value.

F. Brownfields

KRS 132.020(1)(f)2 provides that the ad valorem tax rate for real property where the owner

has corrected the effect of all known releases of hazardous substances, pollutants, contaminants,

petroleum, or petroleum products located on the property consistent with a corrective action plan

approved by the Energy and Environment Cabinet shall be 1.5¢ per $100 of value (state rate only)

for a period of three years following the Energy and Environment Cabinet's issuance of a No

Further Action Letter or its equivalent. After the third tax year the regular state tax rate for real

property applies to the property.

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CHAPTER SIX

THE KENTUCKY PROPERTY TAX CALENDAR

A. Introduction

The framework of the Kentucky Property Tax Calendar is established by the major statutory

deadlines of various components of the assessment cycle. These dates have been mandated by the

legislature in an attempt to establish uniformity of the cycle across the state, and ensure continuity

of services provided by taxing jurisdictions, as well as to promote the equitable and timely

assessment and collection of property taxes. All activities of the PVA are arranged to follow this

schedule.

The Property Tax Calendar is split along the lines of duties associated with real and personal

property assessment. After the common assessment date of January 1, real property duties follow

a schedule which allows maximum individual and public input into the assessment process.

Personal property duties, administered through a centralized computer system, follow a schedule

which is more closely related to data management and income tax return preparation. The Property

Tax Calendar is reunified at the point of tax roll certification, from which the rate setting, billing

and collection processes commence for all classes of property.

A diagram of the property tax calendar is presented on the following page.

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KENTUCKY PROPERTY TAX CALENDAR

REAL PROPERTY PERSONAL

PROPERTY

Assessment Date

January 1

Listing Period

January 1 - March 1

January 1 - May 15

First Recap to Department of

Revenue

First Monday in April

Public Inspection of Tax

Roll/PVA Conferences

13 Days Beginning First

Monday in May (6 days per

week, including Saturday)

Final Recap to Department of

Revenue

No Later Than 6 Work Days

After the Close of Inspection

Department of Revenue

Certification

Upon Completion of Action

by Department

Upon Completion of Action

by Department

Board of Assessment

Appeals

5 Days Beginning 25 to 35

Days After Inspection

Delivery of Assessment/Sales

Ratio Study to PVA

Sept. 1 or Within 30 Days

After Final Recap

Tax Bills Delivered to Sheriff

By September 15

Pay With Discount

By November 1

Pay Without Discount

November 2 - December 31

Tax Bills Delinquent

January 1

Pay With 5 Percent Penalty

January 1 - January 31

Pay With 10 Percent Penalty

and 10 Percent Sheriff’s Add-

on Fee

After January 31

Tax Bills Transferred to

County Clerks

April 15 - Sheriff collects tax

through close of business

April 15 - Sheriff collects tax

through close of business

County Clerk’s Sale of

Certificates of Delinquency

July 14 through August 28*

Sheriff’s Settlement

September 1

*Counties with delinquent unmined mineral or oil and gas tax bills have an additional 60-day time period to schedule their tax sale

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B. Assessment Date

The assessment date for most property, both real and personal, is January 1 (KRS 132.220).

Some centrally assessed properties have an assessment date one day earlier (December 31 of the

year prior to the tax year) in order to coordinate information with the income tax filing process.

(KRS 136.120). The value of the property is established as of the assessment date for the entire

assessment and collection cycle, and the owner of record as of January 1 is liable for the taxes

regardless of whether the property has been sold, transferred, destroyed or otherwise disposed of.

C. Listing Period

The listing period for real property is from January 1 through March 1 (KRS 132.220), other

than minerals (KRS 132.820) and centrally assessed properties (KRS 136.130). During this period,

taxpayers may declare the value of all land and improvements in person or by mail, with the PVA.

A property which was purchased in the preceding year and for which a value was stated in the

deed according to the provisions of KRS 382.135 may be considered by the owner to be listed for

the current year if no changes that could potentially affect the assessed value have been made to

the property. KRS 132.220(2). Any deed value that is used must be based on an arm’s length

transaction.

Once real property is on the tax roll, the owner is not required to list it again in the following

years, unless changes have occurred which could potentially affect the assessed value of the

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property. However, it is the responsibility of the PVA to adjust the value of the property when

necessary due to changes in the market.

Tangible personal property (exclusive of motor vehicles) and property of public service

companies listed under KRS 136.120 is listed from January 1 through May 15. This deadline

recognizes the need to integrate personal property assessment with the income tax schedule, since

most tax preparers are handling the same documents related to both taxes. The tangible property

tax form (62A500) is available on the Department of Revenue website: https://revenue.ky.gov/Get-

Help/Pages/Forms.aspx

It is the responsibility of the owner to annually list all personal property for assessment

purposes. No data regarding personal property may be entered into the centralized assessment

system without a corresponding return filed by the taxpayer.

Construction in progress (“CIP”) should be reported as a partial assessment based on the cost

of construction completed as of January 1. The PVA must be aware of ongoing construction in

the county because property owners may unknowingly fail to report incomplete improvements for

taxation. This may be accomplished through a review of building permits or a field review.

Every person renting space to mobile homes is required to annually report the names and

residences of mobile home owners to the PVA, as well as a description of the property on forms

prescribed by the Department of Revenue. (KRS 132.260.)

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For counties containing a city of the first class or consolidated local government, utility

providers are required to report new customers to the PVA on a weekly basis (KRS 132.275). If

real property which is not on the tax roll is discovered through any means by the PVA, the PVA

must list such property, assess it, initiate the current year billing cycle and pass the information on

to the County Clerk for billing as omitted property for up to five prior years. (KRS 132.290, KRS

132.310, and KRS 132.230). Omitted personal property is located and assessed by the State

Valuation Division of the Office of Property Valuation. (KRS 132.320 and KRS 132.360).

D. Estimate Submitted to the County Judge/Executive

An estimate of net assessment growth must be submitted by the PVA to the County

Judge/Executive by April 1 (KRS 133.040). This estimate enables the County Judge/Executive to

tentatively figure the tax base for the purpose of projecting property tax revenue. Once this is

done, the County Judge/Executive can begin planning the budget for the upcoming year.

E. Notification of Taxpayers

The PVA is continuously in the process of updating property values. If any property is assessed

at a higher value than the previous year or at a higher value than that listed by the taxpayer, or if

previously unlisted property is assessed, the PVA must give a notice of assessment increase to the

taxpayer (KRS 132.450).

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It is appropriate, if the PVA so chooses, to annually inform real property owners of the assessed

value of their property. The most efficient procedure is to notify every property owner by mail.

A simple postcard, preferably computer-generated, is all that is necessary. If a mailing is used, the

information should be given even if the assessment has not changed from the previous year.

Notification by mail is more economical than using the office staff to assist the public in the

inspection of the assessment roll, and it can be a good opportunity to verify or collect current or

updated property characteristic information.

F. Preparation of the Tax Roll and PVA Recapitulation

March 1 is the closing date for the listing and assessing period for real property. Under KRS

133.040, the PVA is required to complete the tax roll for all real property in the county before the

first Monday in April.

The PVA's recap (Revenue Form 62A304) is used to report the grand total assessments for

residential, farm and commercial properties. Unmined mineral property is assessed by the

Minerals Taxation and GIS Services Division (KRS 132.820), and the totals are submitted to the

Local Support Division during the certification process.

The Department then computes the preliminary levels of assessment in each category of real

property to determine if the assessed values appear to meet the established fair cash value

standards. The coefficient of dispersion (COD), a measure of assessment equity discussed later in

this manual, will also be reviewed to ensure that it is in compliance with the Department’s

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guidelines. If the level of assessment and the COD are acceptable, the Department issues an

approval letter, after which the PVA may begin preparing for the final recap. If they are not

acceptable, the Department directs the PVA to reexamine the assessments and take corrective

action. Various options are available should the assessment quality fail to meet the Department’s

standards (KRS 133.040, KRS 133.150, and KRS 132.660).

G. The Inspection Period

Beginning on the first Monday in May and for thirteen days following, the law requires the tax

roll be open to public inspection so that property owners may review the current assessment placed

on their property (KRS 133.045). However, a reasonable extension of time or a time other than

that provided by the statutes may be granted by the Department of Revenue if the PVA submits a

written request for the change and the change is determined to be necessary. The inspection period

cannot be held before the first Monday in May. If the PVA is advised by the Department that the

assessment level does not meet the legal requirement of fair cash value, the inspection period will

be scheduled for a later date.

H. Notice of the Inspection Period

The PVA is required to give notice of the inspection period in the newspaper with the largest

circulation in the county. This notice must state that the real property tax roll is open for public

inspection, give the dates and time the public can review the tax roll, state that a taxpayer desiring

to appeal an assessment must first request a conference to be held with the PVA prior to or during

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the inspection period, and include information on how to file an appeal if a taxpayer who has had

a conference with the PVA disagrees with the assessment made by the PVA. The Fiscal Court is

required to supply the funds to cover the cost of this advertisement. A notice of the inspection

period should also be posted at the courthouse door at least seven days before the inspection period

is to begin. If the Department authorizes a change in dates, the same requirements apply for

notifying the public of the revised inspection period (KRS 133.045).

I. Board of Assessment Appeals

Once the inspection period has drawn to a close, the Board of Assessment Appeals, a locally

appointed three member tribunal, convenes in each county to hear any appeals taxpayers may bring

against the assessments placed on their property (KRS 133.020). The board also has the

responsibility to review the assessments of the PVA's own property, as well as that of the deputy

PVAs (KRS 132.470). Members of the board must take an oath administered by the County

Judge/Executive to “fix at fair cash value all property assessments” under appeal (KRS 133.020).

On matters involving exempt property issues, the board must “obtain and follow the advice from

the Department of Revenue relative to the taxability of such property” (KRS 133.123). The

Department of Revenue is responsible for preparing and furnishing to each PVA guidelines and

materials for an orientation and training program to be conducted for the board by the PVA on the

first day that the board convenes (KRS 133.020, KRS 133.030).

The property tax calendar states that the local Board of Assessment Appeals shall convene no

earlier than twenty-five (25) nor later than thirty-five (35) days after the end of the tax roll

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inspection period (KRS 132.460, 133.030). The board will continue to meet for no more than five

(5) days unless an extension has been granted by the Department of Revenue. If more than 100

appeals have been filed, additional panels of the local board may be appointed, with the approval

of the Department of Revenue. The PVA or an authorized deputy must be present at all hearings

held before the Board (KRS 133.020).

J. Board of Tax Appeals

Once the local board has heard the appeal, the taxpayer is notified of the decision through the

mailing of the "Notice to Property Owner of Final Ruling of Board of Assessment Appeals",

Revenue Form 62A354. The County Clerk is responsible for mailing this notice to the taxpayer.

The notice should be mailed within three days of the decision and should be sent by certified mail

(KRS 131.340(2)). Should a taxpayer or the PVA remain dissatisfied with an assessment after the

Local Board of Assessment Appeals has issued its ruling, an appeal may be made to the Kentucky

Board of Tax Appeals (KBTA). An individual property owner may represent himself or herself

before the KBTA, but a corporation, trust, estate, partnership, joint venture, limited liability

corporation (LLC), or any other artificial legal entity, must be represented by an attorney. In the

event an appeal is made to the KBTA, it is the duty of the PVA to attend the hearing (KRS

132.460). In addition, the county attorney is required to represent the PVA in a hearing before the

KBTA. The Office of Property Valuation is available upon request to assist the PVA in preparing

for the hearing before the KBTA.

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K. Final Recap to the Department of Revenue

The final recap of the property tax roll is due in Frankfort six working days after the end of the

tax roll inspection period. Upon completion of the tax roll inspection period, the county clerk has

three working days to provide the PVA with a copy of each appeal petition and summary of all

appeals filed. The PVA then has three working days from the receipt of the appeals summary to

submit a final recapitulation of the property tax roll to the Department (KRS 133.125).

The assessments of all properties under appeal must be listed for recapitulation and

certification purposes at the value claimed by the taxpayer. Any other assessment changes that

have been made since the first recap was submitted must also be reflected in the final

recapitulation. After submission of the final recapitulation to the Department of Revenue, the tax

roll is complete except for the correction of certain clerical, mathematical or procedural errors

(KRS 133.110), or if property has been assessed to the wrong owner (KRS 133.130). Assessed

values may not be changed based on appraisal methodology or opinion of value, other than those

adjustments ordered by the board (KRS 133.125(1).

L. Department of Revenue Certification

When the final recap and all other related forms have been submitted to Frankfort, the Office

of Property Valuation is required to certify to the County Clerk the assessment and the amount of

state taxes due. KRS 133.180. The certification is issued after completing action on the

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assessment. When a county has been certified, it is then permissible to begin setting local tax rates

and preparing the tax bills for the current year (KRS 133.185).

M. Tax Bill Preparation

When the tax rates for the various taxing jurisdictions have been established, the County Clerk

is responsible for calculating the taxes due and preparing a tax bill for each individual taxpayer.

For this effort, the County Clerk is reimbursed thirty cents (30¢) per account, half of which is paid

by the state and half is paid by the county. KRS 132.550. In most counties, the printing is

performed under contract by the County Clerk to another party, such as the PVA or a private

contractor. The tax bills are then delivered to the Sheriff for mailing (KRS 133.220).

N. Tax Bills Delivered to Sheriff

The tax bills must be delivered to the Sheriff by the County Clerk on or before September 15.

The Sheriff is responsible for the actual mailing of the tax bill to each taxpayer and for collecting

the receipts from the tax bills (KRS 133.220).

O. Payment of Tax Bills

Most property taxes are due and payable beginning September 15 of each year. Any tax

bill paid by November 1 is discounted two percent. Bills paid between November 2 and December

31 are due at face value, and on January 1, any unpaid bill becomes delinquent. A five percent

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penalty is added to delinquent tax bills if paid by January 31. Bills still outstanding after January

31 receive a ten percent penalty (KRS 134.015). In addition, a ten percent fee is applied to the

total due to compensate the sheriff for all delinquent taxes collected from the time the ten percent

penalty becomes applicable (KRS 134.119). The sheriff’s ten percent add-on fee is calculated on

the total of the tax and ten percent penalty, effectively increasing the amount due by 21 percent.

When the collection schedule is delayed through no fault of the taxpayers, a revised schedule

must be implemented. The two percent discount applies for bills paid within 30 days from the date

the bills were actually mailed. The face amount is due for the next 30 days with the five percent

penalty effective for the following 30 days. As with the original schedule, all bills outstanding

after this period receive a ten percent penalty (KRS 134.015) and are subject to the sheriff’s ten

percent add-on fee.

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CHAPTER SEVEN

PROPERTY TAX RATE STRUCTURE

A. Introduction

The property tax rate structure in Kentucky is first divided between real and tangible personal

property. Each class is further divided into property taxed at both the state and local level or

property taxed at the state level only. These rates vary even within the same classes and the state

rate on real property is recalculated annually. In order to compile an accurate tax roll, the PVA

must have a good working knowledge of the appropriate tax rates applicable to the various property

classes. A summary of the property tax classified rate structure as of January 1, 2022 is shown at

the end of this chapter. (See Ky. Const. Sec. 171, KRS 132.200, and KRS 132.020.)

B. Real Estate Rates

All real estate is subject to full state and local rates except leasehold interest in real estate

owned and financed by tax exempt organizations, which is subject to a 1.5¢ per $100 state rate

only and intrastate railroad real property, which is subject to 10¢ per $100 state rate and local

taxation. Coal and other unmined “minerals” such as oil and gas, clay, and limestone are taxed in

the same manner as other real estate, with full state and local rates in effect. The state real property

tax rate varies from year to year and is computed by the Office of Property Valuation by July 1, or

when at least 75 percent of the counties or 75 percent of the total real property assessment has been

determined by the Office of Property Valuation to be acceptable, in accordance with KRS 132.020.

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New property is excluded from the state rate calculation. This is similar to the method used to

calculate local real property tax rates.

The current state rate on real property is 11.5¢ per $100 of assessed valuation.

C. Tangible Property Tax Rates

The tangible property tax rate structure contains a variety of rate categories. Unlike the state

tax rate for real property, which is subject to change from year to year, state tax rates for personal

property remain constant. However, local rates on tangible personal property are set every year.

D. Intangible Property Tax Rates

KRS 132.208 exempts most intangible property. However, the following is still taxable:

intangible property owned by public service companies and taxed under KRS Chapter 136, bank

deposits (KRS 132.030), and domestic life insurance capital and reserves (KRS. 136.320), which

are taxed at 1/10¢ per $100.

E. Setting Local Tax Rates

After the Office of Property Valuation has certified a county's tax roll, the assessment

information is furnished to the Department for Local Government (DLG) and the Kentucky

Department of Education (KDE). DLG and KDE use this information to compute the

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compensating tax rate (KRS 132.010), and the four percent increase tax rate to recommend to each

county and school district. These rates represent the range of options available without triggering

a recall petition pursuant to KRS 132.017. Recall petitions were first authorized in 1979 under

House Bill 44, the tax reform legislation that limits property tax revenue growth. The County-

Judge Executive, the Fiscal Court, school boards and the individual taxing jurisdictions in a county

must then choose the rates they wish to implement for the current year.

F. Tax Rates by Property Class

The classified property tax rate structure, including state and local rates, is presented on the

following pages. For a listing of all property tax rates, including those for the over 1,400 local

taxing districts, please refer to the publication, Kentucky Property Tax Rates. This publication can

be found on the Department of Revenue website, at:

https://revenue.ky.gov/news/publications/pages/property-tax-rate-books.aspx

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Classified Property Tax Rate Structure

REAL PROPERTY

_______________________________________________________________________

Property Statute *State County School City

Type Rate Rate Rate Rate

RESIDENTIAL 132.020(1)(a) Full Full Full Full

(Land & Improvements)

FARM 132.020(1)(a) Full Full Full Full

(Land & Improvements)

COMMERCIAL 132.020(1)(a) Full Full Full Full

(Land & Improvements)

LEASEHOLD INTERESTS 132.020(1)(f)7 .015 Full Full Full

LEASEHOLD INTERESTS 132.020(1)(f)1 .015 None None None

(Owned & Financed by tax exempt organization)

MOBILE HOMES 132.751 Full Full Full Full

OIL AND NATURAL

GAS PROPERTY 132.820 Full Full Full Full

(Producing & Undeveloped)

TIMBER PROPERTY 132.020 Full Full Full Full

UNMINED COAL 132.820 Full Full Full Full

OTHER UNMINED MINERALS 132.820 Full Full Full Full

(Limestone, Clay and Fluorspar)

INTRASTATE RAILROAD 132.020(1)(d) .10 * * *

BROWNFIELDS 132.020(1)(f)2 .015 None None None

(3 year limit to qualifying properties)

* Computed Annually

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INTANGIBLE PERSONAL PROPERTY

__________________________________________________________________________

Property Statute State County School City

Type Rate Rate Rate Rate

BANK DEPOSITS 132.030(1) .001 None None None

DOMESTIC LIFE INSURANCE:

Capital 136.320 .001 .15 None .15

Reserves .001 None None None

TANGIBLE PERSONAL PROPERTY

___________________________________________________________________________

Property Statute State County School City

Type Rate Rate Rate Rate

AGRICULTURAL PRODUCTS

In Hands of Producer or Agent 132.020(1)(f) .015 None None None

In Storage - Not at Mfg. 132.200(6) .015 .045 None .045

Tobacco In Storage 132.020(1)(e) .015 .015 None .015

AIRCRAFT

Commercial 132.020 .45 Full Full Full

Non - Commercial 132.020(1)(f) .015 *** *** ***

CERTIFIED ALCOHOL PRODUCTION

FACILITIES 132.020(1)(g) .001 None None None

BOATS AND MARINE EQUIPMENT 123.020(1)(e) .05 None None None

(under floor plan financing)

BUSINESS FURNITURE & FIXTURES 132.020(1)(h) .45 Full Full Full

CAR LINES 136.120(4) * ** ** **

COLLECTIBLES (Stamp, Coin, Art) 132.020(1)(h) .45 Full Full Full

COMPUTER EQUIPMENT 132.020(1)(h) .45 Full Full Full

CONSTRUCTION EQUIPMENT 132.020(1)(h) .45 Full Full Full

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TANGIBLE PERSONAL PROPERTY

(Continued)

_________________________________________________________________________

Property Statute State County School City

Type Rate Rate Rate Rate

DISTILLED SPIRITS 132.020(1)(e) .05 Full Full Full

DISTRIBUTION CENTER GOODS

(property in storage, not in transit) 132.020(e) .05 Full Full Full

DRILLING & MINING EQUIPMENT 132.020(1)(h) .45 Full Full Full

FARM MACHINERY(used in farming) 132.020(1)(g) .001 None None None

Dealer’s Inventory 132.020(1)(e) .05 None None None

FLUIDIZED BED ENERGY FACILITIES 132.020(1)(g) .001 None None None

INVENTORIES IN TRANSIT 132.097 Exempt Exempt Exempt Exempt

Exempt for all except special taxing districts 132.099

LIVESTOCK & POULTRY 132.020(1)(g) .001 None None None

MANUFACTURER'S MACHINERY 132.020(1)(c) .15 None None None

(owned or leased)

MANUFACTURER'S RAW MATERIALS 132.020(1)(e) .05 None None None

MANUFACTURER'S FINISHED GOODS 132.020(1)(e) .05 *** Full ***

MERCHANTS INVENTORY 132.020(1)(e) .05 **** Full ****

MOTOR VEHICLES

Regular 132.487 .45 Full Full Full

Recreational 132.487 .45 Full Full Full

Apportioned 132.220(1) * ** ** **

Historic 132.020(1)(b) .25 None None None

Motor Vehicles Held for Sale 132.020(1)(e) .05 None None None

POLLUTION CONTROL FACILITIES 132.020(1)(c) .15 None None None

PRECIOUS METALS (Bullion) 132.020(1)(h) .45 Full Full Full

RADIO-TELEVISION-TELEPHONIC 132.020(1)(c) .15 None None None

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TANGIBLE PERSONAL PROPERTY

(Continued)

__________________________________________________________________________

Property Statute State County School City

Type Rate Rate Rate Rate

RECYCLING EQUIPMENT 132.200(15) .45 None None None

WATERCRAFT

(Commercial) 136.1802 .45 Full Full Full

(Recreational) 132.020(h) .45 Full Full Full

Documented Boats 132.020(1)(f) .015 *** *** ***

TANGIBLE PERSONAL PROPERTY 132.020(h) .45 Full Full Full

Not Elsewhere Specified

The tax rates are expressed in dollars per $100 dollars of assessed value.

* Computed annually

** Included in the state rate

*** Local exemption optional

**** Pursuant to KRS 132.028 and KRS 68.246, a City, County or Urban Government may levy

a rate on Merchant’s Inventory that is less than the prevailing rate of taxation on other tangible

personal property.

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CHAPTER EIGHT

ASSESSMENT/SALES RATIO STUDY PROGRAM

A. Introduction

For over eighty years, the assessment/sales ratio study has been the primary means of

evaluating assessment quality from the state level. While the statistical techniques employed in

the study may seem rather involved to persons unfamiliar with this field, the mechanics are simple:

the ratios of assessed values divided by their corresponding sale prices indicate the percentage of

fair cash value attained within a study sample. For practical purposes, a study sample consists of

data from sales of a class of property (residential, commercial or farm) within a particular county.

Further statistical analyses may be conducted from the same data to provide a measure of the

uniformity of assessments.

Kentucky's first systematic ratio study was performed in 1937, encompassing 31 of the state's

largest counties. The statewide mean ratio was calculated at approximately 60 percent. The

modern standard for assessment performance as indicated by the ratio study is 100 percent, with

an allowable range of plus or minus ten percent. This standard is based on the "fair cash value"

mandate of the Constitution of Kentucky, upheld by such landmark court decisions as Russman v.

Luckett (1965), Department of Revenue v. Oldham County (1967), and Butler v. Allphin (1981).

KRS 160.460, enacted as part of the Kentucky Education Reform Act of 1990 (KERA) states

unequivocally that “…all real property located in the state and subject to local taxation shall be

assessed at one hundred percent (100%) of fair cash value.”

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The allowable range is based upon the International Association of Assessing Officers (IAAO)

Standard on Assessment-Ratio Studies, which states: "The overall assessment level of a

jurisdiction or stratum should be within ten percent of the legal level of assessment." Since

property in Kentucky is assessed at 100 percent of its fair cash value, the allowable range for

assessment/sales ratio studies is 90 to 110 percent. The fair cash value standard comes into play

during the assessment certification process. PVAs of counties which fail to make 90 percent or

exceed 110 percent in a particular class of real property should make a corresponding adjustment

in assessed values.

The assessment/sales ratio study is conducted in three major phases: (1) data collection and

verification; (2) statistical analysis; (3) release of information.

B. Data Collection and Verification

From the standpoint of the validity and accuracy of the final ratio figures, data collection and

verification are key components of the study. They are also the most time-consuming. These

figures are the result of how deeds are interpreted and documented by the PVA and PVA deputies.

This data is submitted from the PVA offices to the Department. The data collection period is six

months, beginning on July 1 and ending on December 31. For the 2023 assessment year, sales

from July 1 through December 31, 2021 will initially be used. However, a PVA may also choose

to use a ratio based upon sales that occurred from July 1 through December 31, 2022.

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Not all sales are used in an assessment/sales ratio study. In order to be included in the ratio

study, a sale must be an arms-length transaction, between a willing buyer and a willing seller on

the open market, with neither party under any pressure to buy or sell. In a county with less than

twenty valid residential sales, the sales ratio study will be supplemented with data from the

Biennial Performance Audit as part of the certification process.

Although not all sales are usable in the ratio study, all sales should be initially coded and

submitted by the PVA. Table 8-1 provides a list of reasons why a sale may be excluded from the

study by the Department. The letter codes indicate the reason the sale is invalid. Codes A through

V are used for invalid sales. Codes X, Y and Z are valid sales. If a PVA uses a coding system other

than the one below, a list of those codes needs to accompany the sales when they are submitted to

Frankfort.

TABLE 8-1

ASSESSMENT/SALES RATIO STUDIES:

SALES CONDITIONS CODES AND DEFINITIONS

(A) Partial Sales - Sales in which only a part of any assessed parcel is sold.

(B) Close Relative Sales - Sales between close relatives, for example, parents, grandparents,

brothers and sisters, in laws.

residential.

(D) Personal Property Sales - Sales that include a significant amount of personal property.

Documentation that identifies what percentage is personal must be provided.

(E) Exempt sales - Sales of exempt properties and in which a government agency or charitable

group is involved as a party.

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(F) Annual twice-sold property - Property which has sold twice within a one-year period.

The first time a property sold may be a valid sale and included in the ratio study.

(G) Minimal Consideration - A “sliding scale” approach is in place to exclude sales that are

below a certain value. The current threshold values for excluding sales are as follows:

Over 300 sales in the study Sales < $40,000 will be excluded

40 to 299 sales in the study Sales < $20,000 will be excluded

20 to 39 sales in the study Sales < $15,000 will be excluded

Under 20 sales in the study Sales < $10,000 will be excluded

(H) Changed Transfer Sale - Sales in which the transferred property has been changed

through construction or destruction after the assessment date and before the sale date.

Documentation that identifies what was changed must be provided.

(I) New Construction - Sales in which the property was vacant as of the January 1 assessment

date but now has a structure.

(J) Expansion Sale - Sales in which the purchaser owns adjoining (contiguous) property.

(K) Multiple properties - Sales for which a single sale price applies to more than one assessed

property.

(L) Foreclosure proceedings - Transfers under foreclosure proceedings and sales in which a

bank is involved as a party.

(M) Obligation Transfers - Transfers solely to provide or release security from a debt or

obligation, including an auction sale.

(N) Master Commissioner Sales - Master Commissioner Sales.

(O) Delinquent Tax Transfers - Transfers required for delinquent taxes or assessments.

(P) Mobile Homes Only - Sales of mobile homes without land.

(Q) Real Estate Exchanges - Transfers involving exchanges of real estate as all or part of the

consideration.

(R) Affiliated Organizations - Transfers between affiliated organizations. Includes corporate

mergers and property purchased by relocation companies under contract with employer of

the seller

(S) Other - Any other reason that can reasonably be felt to render a transfer not representative

of fair market value provided such reason is fully documented and approved by the Office

of Property Valuation.

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(T) Vacant Lots/Builders - Sales of vacant lots by builders and developers.

(U) Transfer Tax Not Paid - Deeds of correction, quitclaim deed, straw deeds, and any other

deed in which the transfer tax was paid.

(V) Environmental/Drug Property - Environmental and drug contaminated property.

Documentation that identifies the contamination must be provided.

(X) Mobile Home Sales with lots - Are included as a valid sale. They will be used in the ratio

study. This code will be used to help in the stratification of sales.

(Y) Lake Properties/Riverfront - Are included as a valid sale. They will be used in the ratio

study. This code will be used to help in the stratification of sales.

(Z) Arms Length Transaction - Arm’s length transaction; a valid sale.

At this point, the PVA or an authorized deputy may assist in the screening process, adding

whatever local insight may be available regarding conditions of the sale which are not apparent

upon scrutiny of the deed alone. For example, the PVA or deputy might recognize family

transactions between relatives of different surnames.

Any of the conditions coded A through V in Table 8-1 could result in the exclusion of a transfer

from the assessment/sales ratio study. Any other influence on the conditions of a sale which affect

its validity as an objective transaction in the open market may also result in the exclusion of the

sale, provided that such influences are identified and fully documented to the satisfaction of the

Department of Revenue.

At the end of the initial screening, the data is submitted to the Department. All counties are

required to submit ratio data electronically in a file format specified by the Department of Revenue.

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C. Statistical Analysis

Processing this data involves editing, data manipulation and applied mathematics. The

deadline for completion of ratio calculations and submission of ratio figures to the respective PVAs

is September 1, or within 30 days of the receipt of the final recapitulation by the Department,

whichever date is later. KRS 133.250.

D. Median Ratios

It is helpful at this juncture to have an understanding of several basic terms which come into

play during the ratio program's statistical analysis. The measure of central tendency utilized in the

calculations is the median. A median is simply the middle value in an array of figures, which

separates the array into two sets with an equal number of figures. For example, in the array of

ratios (88, 90, 95, 98, 105) the median ratio is 95. If an array has an even number of figures, the

two middle values are averaged in order to produce the median. The median is expressed as a

percentage or decimal. The ratio program performs this exercise for all three classes of property

within a county and produces a median ratio figure. While there are other measures of central

tendency, use of the median is preferred in assessment quality evaluation because of its

straightforward nature and ease of interpretation, as well as the fact that it is less vulnerable to

influence by extremely high or low ratios, also known as "outliers".

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E. Coefficient of Dispersion

The two primary measures of assessment quality are level and uniformity. Measures of central

tendency, such as the median, provide an indication of assessment level. Measures of dispersion

provide an indication of assessment uniformity. In addition to producing the median ratio, the

ratio study program also calculates a measure of dispersion known as the coefficient of dispersion,

or COD. The COD, like the median, is expressed as a percentage or decimal. It represents the

average percentage of deviation among all assessment/sales ratios from the median ratio. A small

COD means that most properties are assessed at about the same percentage of market value. A

high COD indicates substantial inequity in assessment level.

F. Interpretation of the Median Ratio and COD

Coefficients of dispersion may vary from zero to any positive number. A COD of zero

indicates perfect assessment equity and a coefficient of dispersion greater than 20% generally

indicates problems with assessment equity. According to the International Association of

Assessing Officers Standards on Assessment Ratio Studies, the following standards are

recommended:

Coefficients of dispersion for single-family residences generally should be less than 15%, and less

than 10% for areas of new single-family residences.

Coefficients of dispersion for income producing properties should be less than 15%.

Coefficients of dispersion for all other properties should be less than 20%.

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The median ratio and the COD therefore complement each other by providing an indication of

assessment health from two different perspectives, level and uniformity. Both are extremely

important considerations in the assessment certification process. A county whose median ratio for

residential property assessments is 90 percent with a COD of 15 percent is far more equalized than

a county with a median residential ratio of 95 percent and a COD of 45 percent. The median

assessment/sales ratio relates to the duty of the PVA to maintain assessments at market value, thus

ensuring that education and government are adequately funded within the county, while the COD

relates to the responsibility of equalizing the property tax burden among taxpayers.

G. The Significance of the Assessment/Sales Ratio

After the results of the assessment/sales ratio study have been released, the ratio continues to

play a significant role in assessment certification and school district funding. The ratio is used in

the calculation of the level of assessment figures that are used in the assessment certification

process.

The level of assessment is the extent to which the property valuation administrator has

achieved the statutory requirement of 100% fair cash value for all classes of property during a

particular tax year. The median ratio, which was calculated through an assessment/sales ratio

study for each class of property, is used to set a level of assessment requirement for each property

class. Therefore, a level of assessment is established for residential property, a second level

requirement for farm property, and a third level requirement for commercial property.

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The assessment level for each class of property is calculated as follows:

1. Divide the net assessment of the previous year by the current ratio. The result of this

calculation represents the full value (target) figure for the current year.

2. Determine the current year’s net assessment.

3. Divide the current year’s net assessment by the full value figure obtained in step 1.

It is important to note that the level of assessment calculations involve the net assessment

values for both current and prior years. For residential and commercial property, the net

assessment value for the prior year is arrived at by first adding the prior year’s taxable assessments

and homestead exemption values together. This total is then reduced by the current year’s

deletions from that class of property. The deletions are detailed on the Record of Additions and

Deletions form (62A323). The result after subtracting the deletions is the prior year’s net

assessment value.

The computations for farm property are the same with the exception that the prior year’s

taxable and homestead exemption amounts for farm must also be combined with the previous

year’s assessment amount deferred under the Agricultural Land Use Act. The current year’s

deletions are then subtracted from this total to arrive at the prior year’s net assessment for farm.

After the prior year’s net assessment value for each class of property has been calculated, this

number is then divided by the appropriate ratio to arrive at a projected full value target for the

current year’s assessment. The ratio used is the result of the Department’s annual assessment/sales

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ratio study. The full value target represents the assessment total necessary to achieve 100% fair

cash value for that class of property.

To compute the current year’s net assessment value, the current year’s taxable amounts for

each property class must be added with the current homestead exemption amounts. For farm

property, the current year’s agricultural deferred amounts must also be included. This amount is

then reduced by the current year’s additions to arrive at the current year’s net assessment. The

level of assessment in each class of property is then computed by dividing the current year’s net

assessment value by the projected full value target for each category of property.

A detailed illustration of the level of assessment calculations is on the next page.

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OFFICE OF PROPERTY VALUATION

ASSESSMENT MEASUREMENT

FINAL COUNTY: BLUEGRASS

RECAPTIULATION

CLASS OF 2021 2022 FULL VALUE CLASS OF 2022

PROPERTY ASSESSMENT RATIO PROPERTY ASSESSMENT

Residential Residential

Taxable 17,030,185 Taxable 18,056,306

Plus Hex 2,892,916 Plus Hex 3,109,566

Total FCV 19,923,101 Total FCV 21,165,872

Less Deletions 441,538 Less Additions 575,300

Net 2021 19,481,563 92.5% 21,061,149 Net 2022 20,590,572

Farm Farm

Taxable 26,265,590 Taxable 27,651,395

Plus Hex 2,532,892 Plus Hex 2,546,636

Plus Deferment 40,358,826 Plus Deferment 41,293,327

Total FCV 69,157,308 Total FCV 71,491,358

Less Deletions 267,000 Less Additions 1,015,360

Net 2021 68,890,308 94.5% 72,899,797 Net 2022 70,475,998

Commercial Commercial

Taxable 2,739,497 Taxable 2,785,097

Plus Hex Plus Hex 29,400

Total FCV 2,739,497 Total FCV 2,814,497

Less Deletions 5,500 Less Additions 1,200

Net 2021 2,733,997 95.3% 2,868,832 Net 2022 2,813,297

Class of Net 2022 Full Value Measure

Property

Residential 20,590,572 21,061,149 98%

Farm 70,475,998 72,899,797 97%

Commercial 2,813,297 2,868,832 98%

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The level of assessment is used to gauge the effectiveness of the PVA in achieving fair cash

value assessments for the year and is applied during the assessment certification process. After

the first Recapitulation of the Property Tax Roll has been submitted, the level of assessment is

calculated. For the 2023 assessment year, if the ratio utilized in the level of assessment

computation is based upon sales that occurred during the last six months of 2021, the acceptable

range for the level of assessment calculation will be 95%-105%. However, if the ratio used in the

level of assessment computation is based upon sales that occurred during the last six months of

2022, the acceptable range for the level of assessment can be expanded to 90%-110%. Whenever

a PVA’s level of assessment fails to meet either of these standards, the PVA will be contacted to

discuss the appropriate actions that need to be taken.

The assessment/sales ratio is also used to identify chronic patterns of underassessment. If a

county's ratio falls below eighty percent for two consecutive years, a special audit program is

triggered for that county. Chronic underassessment is grounds for the removal of a PVA under

KRS 132.370.

The assessment/sales ratio study program has an impact on taxpayers across the state, whether

it is used to evaluate assessment quality in 120 counties, or to determine levels of funding among

the state's 178 school districts. Its value as an administrative tool has been proven over the years,

as it is the primary means of evaluating the level and uniformity of assessments statewide.

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PVAs and deputies are encouraged to take Kentucky Property Tax Course 40 and IAAO

Course 400, which are the state and national level assessment administration courses, for a greater

understanding of the assessment/sales ratio study process.

H. Release of Information

The Department is required to provide each PVA with the results of the ratio study within 30

days of the date of the submission of the final recapitulation, or by September 1, whichever is later

(KRS 133.250). The median ratio and COD figures for all three classes of real property are

included, as well as the sales and assessment data utilized in the study and an explanation of the

sampling methodology, if necessary. The PVA should use this information as a guideline in the

subsequent revaluation of the county which is required by KRS 133.250(2) to commence

immediately following the submission of the final recapitulation.

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CHAPTER NINE

ASSESSMENT QUALITY AND EQUALIZATION

A. Introduction

To carry out the monitoring responsibilities delegated to the Department of Revenue by KRS

131.140, the Department conducts performance audits in every PVA office. The purpose of these

audits is to assure assessment quality and equalization across the state. The actual audit process

includes an inspection of maps and records, an appraisal study of real property, and an evaluation

of the overall effectiveness of the Property Valuation Administrator's office. After the audit is

completed, the Department prepares a comprehensive report based on the information gathered

from the audit for submission to the Legislative Research Commission.

B. Biennial Performance Audit and Record and Mapping Review

The biennial performance audits are conducted by staff from the Office of Property Valuation.

To begin this process, a sample of twenty residential parcels, ten commercial parcels and ten farm

parcels are randomly selected from the county tax roll. These selections are randomly made by

the lead field representative of the audit team. The area of the county covered by the most recently

inspected portion of the PVA’s quadrennial plan (KRS 132.690) is examined.

The assessment record cards for the selected parcels are pulled and the data compared to the

information on the tax roll. Any discrepancies are noted on the review sheet by the field

9 - 2

representative. At the same time, the map records are checked for accuracy and the homestead

and agricultural deferment applications are reviewed. Independent appraisals of each selected

parcel are made, and the values are used to arrive at an indication of the assessment quality in the

county. When the audit process is complete, the review sheets are returned to Frankfort. These

appraisals may also be used to supplement the data utilized in the Department's annual

assessment/sales ratio studies (in the case of a county with less than twenty valid sales).

C. Equalization Methods

The Department of Revenue has the statutory authority to intervene in the assessment process

if it determines that action should be taken. The first step usually employed is the rejection of a

PVA's recapitulation. KRS 133.040. Additionally, emergency assessments can be declared by the

Department if no regular assessments have been received from a county, if the county records have

been lost or destroyed, if complaint is made by the owners of not less than ten percent in value of

the taxable property in the taxing district, or if an investigation by the Department reveals that the

assessments are grossly inequitable, and an emergency exists. KRS 132.660. The PVA can avoid

Department intervention by constantly analyzing sales data in the county and making the

appropriate assessment adjustments.

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CHAPTER TEN

PHYSICAL EXAMINATION OF REAL PROPERTY

A. Introduction

The Property Valuation Administrator is required by law to physically examine each parcel of

taxable real property no less than once every four years, and to revalue all real property annually.

KRS 132.690. The PVA is required to submit a schedule to the Department specifying the time in

which the quadrennial inspections are to be accomplished and maintain records of inspections and

revaluations for each parcel of real property. KRS 132.690.

B. Assessment Planning

The Property Valuation Administrator has several options available when planning the

quadrennial examination schedule. The county can be divided geographically into four quadrants

with one quadrant scheduled for review each year (this method was upheld by the Court of Appeals

in Revenue Cabinet v. Leary). Another option would be to divide the county into only three

sections with one section inspected each year until the fourth year, which would be left open for

addressing special needs. Scheduling by class of property or a combination of geographic area

and class would also be an acceptable approach. Regardless of the method used, the workload

should be distributed as evenly as possible over the four-year period and boundaries should be

drawn so that both sides of a street are examined within the same year.

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C. Submission of Review Schedule

Every PVA is required to submit a planned method of complying with the quadrennial physical

examination to the Office of Property Valuation for review and final approval. This plan should

include an estimate of the total number of parcels in the county and the number to be examined

each year, the staff members who will be assigned to the physical examination and the estimated

time required to complete the process each year. Adherence to the plan is checked as part of the

biennial performance audit. Once the plan has been submitted, it cannot be changed without prior

approval of the Department.

D. Guidelines for Quadrennial Physical Examination

When conducting a physical examination of real property, PVAs, deputies, and mapping

technicians have the legal right to measure the exterior dimensions of a structure in the absence of

the property owner. KRS 132.220. Entry onto the property in order to collect data necessary for

an assessment does not constitute trespassing. However, care must be taken to leave the property

undisturbed.

The following guidelines should be used by all PVAs to ensure compliance with the

quadrennial inspection requirement:

1. The field review must include checking, verifying, and correcting property records. All

necessary records such as maps, property record cards, or printouts must be taken to

the field for the actual review process.

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2. The review must pick up new improvements and additions to existing improvements.

New photographs should be taken at every site visit if possible, even if the property has

remained unchanged. Property characteristics such as building sketches, square

footage, and other information about the improvements should also be reviewed and

updated as necessary.

3. Any omitted real property must be added to the tax roll and the omitted billing process

initiated. Land or improvements found to be omitted can be assessed for up to five

preceding omitted years.

4. The assessment on each parcel of property must be reviewed. If the assessment appears

to be appropriate with respect to one or more of the three recognized approaches to

value, it is not necessary to change it. If the assessment is too high, it should be

lowered. If the assessment is too low, it should be raised.

5. Each parcel of property must be assessed separately. If "stacking" (assessing more than

one non-contiguous parcel as a single parcel with one value) is discovered, the parcels

must be separated and assessed individually. Combining property so that only one tax

bill is generated is acceptable as long as they are assessed, valued, and maintained on

the assessment roll as separate parcels. It is recommended, however, that separate tax

bills be prepared unless the taxpayer prefers otherwise.

6. It is recommended that land and improvements be valued separately. If a parcel has

more than one improvement, each improvement should be valued individually.

7. A record must be made of the date of the physical inspection. This may be done on

individual cards or on a folder if folders are kept for each parcel. The ideal record is

an automatic notation, such as is recorded on a digital photograph, for each parcel.

E. Periodic Revaluations

In Nordlinger v. Hahn (the "welcome stranger" ruling) the U.S. Supreme Court declared West

Virginia’s practice of reassessing recently sold property on the basis of sale price without

reassessing similar properties that had not been sold unconstitutional. This decision had little effect

in Kentucky, as the Supreme Court did not find fault with the practice of assessing property on the

basis of the sale price. This is a common practice in Kentucky and is perfectly acceptable, as long

as the Kentucky constitutional mandate of maintaining current values for unsold parcels is upheld.

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The Court endorsed two elements of a modern assessment program: frequent individual

appraisals and supplemental increments based on trends. In Kentucky, the Constitution, statutes,

and court cases support these concepts. By observing the following procedures, a PVA should be

in compliance with both Kentucky constitutional requirements and U.S. constitutional

requirements.

1. The sale price should be considered as a good value indicator, but the PVA should watch for

deeds or affidavits that either understate or overstate sale prices. If an actual

appraisal/reassessment indicates either a higher or lower value than the stated consideration,

the sale price is probably not indicative of market value and should not be used. The property

should be appraised as if no sale occurred, and the field representative gathering information

for the assessment/sales ratio program should be informed of those sales considered invalid by

the PVA.

2. The quadrennial physical examination should be carried out as required by law with the

assessment for each parcel being reviewed during the four-year cycle. By properly following

this procedure, the overall assessment should reflect recent market trends.

3. It is necessary for the PVA to keep sales records, sales maps, and/or sales files. This

information is used to develop market units of comparison and local cost data needed in mass

appraisals.

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CHAPTER ELEVEN

MAINTENANCE OF PROPERTY IDENTIFICATION MAPPING SYSTEMS

A. Introduction

A complete, accurate and up-to-date mapping system is the cornerstone of every efficient and

equitable real property tax assessment effort. Property identification maps, if they are in a

Geographic Information System (GIS), or paper maps - also known as cadastral maps, tax maps,

and a variety of other names - are a graphic representation of the tax roll. Every parcel identified

on the maps must have a corresponding tax roll record, (except Franchise tax) and every real

property account should be represented on the maps.

Property identification maps are the only means of ensuring that all parcels of taxable real

property are assessed, and that no parcel is assessed twice. No tax roll listing should be made

unless the parcel has been mapped correctly. The mapping process includes not just delineating

property boundaries, but also gathering all data which is necessary to make and support real

property appraisals. This information includes property characteristic data pertaining to the land

and all improvements, documented by sketches and photographs. Data may be maintained on

cards or within a computer system, and then referenced to the respective parcel with a unique

identifying number. Thus, the entire assessment data record is tied together by its computerized

or manual mapping system.

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Property identification maps are indispensable to the PVA office for revaluation purposes.

They provide appraisal personnel with a means of routing field inspections and can be used to plot

sales and other data for planning and management applications. If the maps are printed on a recent

aerial photography base, they can also be used for discovery of improvements which may not be

visible from the road or principal dwelling. Maps depict the boundary lines of each property, thus

displaying location, shape and relationship to other parcels, as well as to various physical and

cultural features which may exert an influence on value. These maps and data also represent a

significant resource for public agencies, businesses and individuals other than assessment

personnel. Mapping system maintenance must therefore be an ongoing effort rather than a periodic

one and should remain an integral part of every PVA's assessment methodology.

B. Maintenance of Maps and Records

During the period 1949 - 1995, the task of furnishing every county with a complete set of

property identification maps was legislatively mandated and accomplished. Since 1999, the

Department has been actively involved in converting mapping systems to Geographic Information

Systems (GIS) and this task was completed in 2006. The PVA Geographic Information System

Service Branch continues to provide assistance and support to ensure that PVA offices can upgrade

and maintain their mapping systems by assisting with technical support and GIS software training.

It is important that PVAs in counties which do not currently have GIS technicians but need

working copies of the maps contact Frankfort periodically. PVA map updates can be re-scanned,

geo-referenced, digitized, and a new digital color map printed for office use. This service is

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provided at no cost to the PVAs. PVAs without a GIS technician should make these manual

revisions on the new printed digital maps to help the PVA GIS Services Branch as they update the

digital parcel file and print the new map copies. If an entire county or a significant portion of its

maps thereof is to be updated in such a manner, the PVA should provide notice to the PVA GIS

Services Branch to assure prompt turnaround.

Counties utilizing GIS should consider the Department as a partner and as a valuable resource.

A goal of maintaining an up-to-date cadastral layer in GIS should be part of the philosophy of both

state and local levels of administration. The PVA GIS Services Branch coordinated 34 county

conversion projects with Correctional Industries. This Branch has also worked with the Area

Development Districts and universities to complete parcel digitizing in additional counties. Other

counties have been digitized in-house at the Office of Property Valuation when the workload

allows. The option of performing this task at the PVA office has also been utilized in counties

which have personnel with the appropriate skills. PVAs considering this option for training and

advice on procedures and accuracy specifications should consult the Department.

Several events can result in changes to maps, from simple "splits" of parcels to subdivision

development. In any case, the changes should be kept current, whether on the PVA's paper copies

of maps or in a GIS. Each parcel split should have a corresponding map number change, which is

the link to the revised ownership and assessment data.

A critical part of maintaining maps involves keeping the corresponding parcel data record

current. This means adjusting not only acreage sales and ownership data in the case of parcel splits

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or transfers, but property characteristic data when improvement changes are made. All new

improvements built in every county must have their characteristics collected and maintained by

the respective PVA office staff. Inevitably, property characteristics must be maintained for all of

Kentucky's estimated 2.3 million parcels of real property, if property tax assessment administration

is to have credibility. These characteristics also have great value to numerous other community

agencies and businesses.

In addition to collecting characteristic data on all new improvements, it is recommended that

all property which transfers be inspected, and the characteristics updated. This information is

essential to sales analysis, as a parcel can be the subject property today and the comparable sale

property tomorrow. Property characteristic data should include, as a minimum, the following:

1. Square Feet of Living Area

2. Year of Construction

3. Type of Building (number of stories, etc.)

4. Exterior Type (frame, masonry, etc.)

5. Foundation Type (poured concrete, block, etc.)

6. Interior Data (number of bathrooms, etc.)

7. Garage Data (capacity, type, etc.)

8. Basement Data (size, percent finished, etc.)

9. Utilities (city water, heating and a/c, etc.)

10. Subjective Factors (Location, Neighborhood, Condition, Utility, etc.)

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Although property record cards vary with regard to the level of detail or number of

characteristics, nearly all contain space for a photograph and building sketch. The latter functions

have been automated in many counties, based on cost and efficiency considerations. Digital

photographs and sketches can be tied to the database through the entry of property identification

map numbers. These are easily updated on the next quadrennial inspection cycle and can be

automatically coded with the inspection date and time. A photograph of a property also provides

proof to the taxpayer that the property has actually been physically inspected by the PVA office

staff.

Plotting deeds is an excellent means of verifying property boundaries and converting verbal

property descriptions to graphic form. All deeds of current conveyances of property should have

their legal property descriptions plotted and referenced or transferred to the respective property

identification map. This procedure is particularly critical for parcel splits and subdivisions. While

plotting deeds used to be a time-consuming process involving a parallel glider and protractor,

computer programs now exist that can do the work in a few keystrokes using coordinate geometry

(“COGO”). Deeds plotted in this manner can be dropped into the appropriate digital location in a

GIS.

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C. The Future of Mapping

Many technological advances have been developed within the past twenty-five years that make

the task of creating and maintaining maps easier. Geographic Information Systems (GIS) were in

use in several of the urban counties in the late 1980’s. With the decreasing cost of computer

hardware, paralleled by a corresponding increase in capability, GIS has proliferated throughout

the smaller counties during the past twenty-five years. GIS can be combined with Global

Positioning Systems (GPS) to ensure the accuracy of parcel boundaries and improvements. An

automated mapping system not only enables the PVA office to perform much more effectively,

but it is an invaluable community resource and a potential source of cost recovery. As the

statewide base map and other layers of data have become available, PVAs have assumed a role as

the custodians of the parcel layer and the associated ownership data.

D. Upgrading Obsolete Mapping Systems

Despite numerous efforts by the Department, past and present PVAs with the best intentions,

it is a fact that mapping systems can become obsolete relatively quickly. Some outdated mapping

systems are the result of poorly executed mapping projects, while others were allowed to decay

through lack of constant updating. Regardless of the reasons, some PVAs are faced with the

seemingly insurmountable task of upgrading an obsolete mapping project.

The approach to bringing an obsolete mapping project into current status depends upon the

degree of obsolescence and the available resources. Some property identification mapping systems

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have fairly accurate property lines but incomplete characteristic data. Others are totally unreliable,

with duplicate or inconsistent parcel numbers. It is obvious that in either case a full-scale mapping

project is in order. Counties which have maintained their maps over the years but need updated

aerial photography face a lesser cartographic task. Now current color digital aerial photography is

available for download on the Kentucky Geography Network internet website (kygeonet.ky.gov).

This website is a valuable resource for an enormous amount of digital geographic data. In any

event, all substandard mapping projects are being identified with the biennial review of mapping

systems required under KRS 132.670. These reviews consider ownership records as well as maps,

and will form the basis for remapping, revision, and updating projects to be conducted by the

Department.

PVAs in counties with up-to-date mapping systems must continue to follow the standards as

outlined herein, and in accordance with the IAAO Standard on Cadastral Maps and Parcel

Identifiers. PVAs with substandard or obsolete mapping systems should also attempt to adhere to

these standards, in order to begin the effort that must be initiated and sustained for the upgrading

process to be successful. The most expensive and time-consuming part of any mapping or

revaluation project is the data collection effort. PVAs with outdated mapping resources or needing

mapping technical assistance should contact the Department for assistance.

E. Map Sales and Data (customer requests)

Original reproducible mylar copies of the property identification maps for many counties were

previously maintained at the Office of Property Valuation facilities in Frankfort. These maps are

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no longer available for inspection and sale to the general public unless there is a special request

for a copy of a scanned map image in .jpg format. Digital maps are printed and sold to the public

at a cost of $25.00 per map sheet using the latest updated parcels and newest aerial photo

background available to the Department. For the counties that utilize total digital maps it is

important to send current copies of the parcel layer periodically to the PVA GIS Services Branch

for map sales printing. Eighty percent (80%) of map sales money is routed to the local PVA

offices. Map printing funds are sent to the PVA’s periodically by the Finance Cabinet as funds are

distributed into the county account. This program was initiated to help PVA’s recover the cost of

a GIS system or to help purchase new computers and GIS software in counties where needed.

The PVA GIS Services Branch assists counties with customer requests for purchases of parcel

data and tax roll data when needed. Branch personnel also assist with the preparation of a GIS

license agreements to help protect data from being given or re-sold to unauthorized, unlicensed

users. For assistance with parcel and data requests contact the PVA GIS Services Branch at 502-

564-8334.

F. Aerial Photography

The 2020 General Assembly provided $17 million ($8.5 million in Fiscal Year 2022-2023 and

$8.5 million in Fiscal Year 2023-2024) for a state-wide aerial mapping project. A company named

NV5 was selected to complete this work through a competitive bidding process and a contract was

signed on June 29, 2022. A representative from the Department of Revenue’s GIS Services

Division and a property valuation administrator will assist the Department of Geographic

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Information in reviewing, correcting and distributing high resolution aerial photographs that will

be obtained from this vendor through the contract.

These aerial photographs will include both ortho (looking straight down on the parcel) and

oblique (photographs where the sides of improvements can be seen) photography. These images

will enable PVAs to correct existing parcels and locate new or inaccessible properties that have

not been previously assessed with current processes.

The goal is to fly the entire State by fall of 2024. The aerial photographs will be released in the

fall of 2023 for the first half of the State and late 2024 for the second half.

In addition to the funding for the aerial mapping, the 2022 session of the General Assembly

also included $3,188,000 for equipment upgrades for PVA offices for the 2023-2024 fiscal year.

This funding is designed to help ensure all PVA offices have the equipment needed to fully take

advantage of the new digital photography that is going to be provided to them. Procedures on how

to prioritize the spending of these funds will be developed by the Department of Revenue and the

PVA Association in early 2023.

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CHAPTER TWELVE

ASSESSMENT OF REAL PROPERTY

A. Introduction

The valuation of real property is not only the largest job of the Property Valuation

Administrator, it is also the most complex. In addition to revaluing all property in the county on

an annual basis and reinspecting each parcel quadrennially, the PVA must collect and maintain

property characteristics on all parcels, maintain the property identification mapping system, and

develop a sales file with cost and income data where relevant.

Classic appraisal theory rests upon the three approaches to value: sales comparison, income,

and cost. Each of these approaches has its roots in the twelve basic principles of value, which have

evolved from economic doctrine. An in-depth discussion of these principles, in the context of their

influences on the approaches to value, is presented in Property Assessment Valuation (Third

Edition, 2010, International Association of Assessing Officers), the textbook for the basic IAAO

Courses.

B. The Sales Comparison Approach

While all three approaches to value have some basis in market analysis, the sales comparison

approach, also known as the “market approach”, is a method for predicting the market value of a

subject property based on a direct comparison of recently sold similar properties. This approach

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can range in complexity from a simple correlation of data on property record cards to very

sophisticated computer analyses. Whatever the level of detail employed, the critical step is the

selection of comparable properties. In addition to possessing the desired characteristics (i.e.,

bearing a similarity to the subject property), the comparables must represent recent arms-length

transactions. Not only is this in keeping with standard statistical, economic and appraisal theory,

but it is the key to meeting the “fair market value” standard of the Kentucky Constitution.

The ideal market situation is one in which a large number of recent sales have occurred between

buyers and sellers who are prudent, knowledgeable, and familiar with local market conditions.

Homogeneity, a market trait in which most properties resemble one another, is a very desirable

condition which can be optimized through delineation of the jurisdiction into neighborhoods.

While the scenario described above is generally available in Kentucky’s more populous counties,

a PVA is typically faced with a situation in which sales must be carefully screened for validity and

the “neighborhood” consists of entire towns, or every rural residential parcel in the county. While

a less than an ideal market situation presents a challenge and can result in values which are

somewhat less defensible, the basic steps in the sales comparison approach remain the same:

1. Data collection and analysis;

2. Selection of appropriate units of comparison;

3. Adjustment of comparable properties to the subject property;

4. Correlation of the data to the value of the subject property.

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The first step, data collection and analysis, is the most time-consuming and should be an on-

going effort in every PVA office. Determining what data to collect and maintain is a crucial

decision with long-term consequences. Data collection and maintenance are usually the costliest

aspects of a mass appraisal system. Therefore, collecting data that are of little importance should

be avoided.

The next step (selection of appropriate units of comparison) involves selecting the

characteristics that the PVA considers having the most influence on value, which the subject and

comparables have in common. For residential property this includes characteristics such as square

footage, number of bathrooms, lot size, etc. Commercial properties must be compared based on

the types of characteristics which potential buyers would consider, such as stalls per garage,

number of units in an apartment complex, etc. The contributory value of each of these

characteristics must be considered, which can again be based on the PVA’s judgement or a

computerized formula-driven cost approach. Cost manuals and standard depreciation tables may

also be used to determine the value of various characteristics, as long as they have been calibrated

to the local market.

Once the comparable sale properties and the units of comparison have been identified, the

appropriate adjustments must be made to the comparables for each characteristic by which they

differ from the subject property. A total adjustment in the sale price of each comparable property

is based on a series of adjustments for each characteristic considered. These adjustments, which

can be expressed in percentages, although usually in dollar amounts, are always applied to the

sales prices of the comparable properties and never to the subject property. In effect, each sale so

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adjusted becomes an indication of value of the subject. Characteristics of the comparable property

which are inferior to the subject property are adjusted upward, based on the unit value of the

characteristic, times the difference in characteristic values. Conversely, characteristics of the

comparable which are superior to the subject are lowered in the same manner. The net result yields

an adjusted sale price for each comparable property.

The final step, correlation to the final value estimate, involves a bit more intuition on the part

of the PVA. It is considered extremely inappropriate to simply average the adjusted sales prices

of all comparable properties in order to produce a value estimate for the subject property.

Therefore, the PVA must reconcile all the adjusted sale prices into a single value estimate for the

subject. This should be done by examining each of the comparable properties and selecting the

most comparable, or two of the most comparable, and inferring a value. It is of course much easier

to deduce a value for the subject if all or most of the comparable value indications fall within a

narrow range. Otherwise, the most comparable property will be the one with the fewest

adjustments, or the adjustments of the least magnitude. By placing the greatest reliance on actual

sales data in this manner, the PVA has the benefit of proof from the marketplace, provided that the

objective data are correct, the sales are representative of market conditions, and the proper

judgements have been exercised based on the PVA’s experience.

C. The Cost Approach

The cost approach to value relies upon the theory that the value of a parcel equals the sum of

the land value plus the depreciated cost of improvements. This approach has its roots in the

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principle of substitution, which holds that an informed buyer will pay no more for a property than

the cost of acquiring an acceptable substitute property of similar utility within a reasonable period

of time. The cost approach can be table-oriented or formula-driven in the context of mass

appraisal. The table-oriented cost approach, which is the most utilized, relies upon cost data

supplied in the form of manuals or in computer format by national appraisal service organizations,

with adjustment factors (such as time-location multipliers) for local conditions. Formula-driven

cost approach programs are computer-assisted methods for deriving unit costs (per bathroom, per

fireplace, etc.) which are calibrated to the local market.

The cost approach involves the following basic steps:

1. Estimate land value, as if vacant;

2. Estimate replacement cost new (or reproduction cost new) of improvements;

3. Estimate the amount of accrued depreciation;

4. Subtract the estimated depreciation from replacement or reproduction cost new of

improvements;

5. Add resulting improvement value to land value.

The first step is to estimate the land value. The sales comparison approach should be used if

adequate vacant land sales are available. After geographic (neighborhood) stratification, land

should be valued according to appropriate units of comparison based on market factors. These

units of comparison can be square footage, front footage, lot shape, or per parcel or lot for

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residential parcels, square footage or frontage for commercial land, and square footage or acreage

for industrial land.

When vacant land sales are scarce, the PVA must use an alternative method to determine the

land value. The land residual technique combines aspects of the sales comparison and cost

approaches. Using this method, building values estimated using the cost approach are subtracted

from sales prices of recently sold improved parcels to yield residual land value estimates. These

land residuals can then be used to supplement sales data in areas where vacant sales are scarce.

Another technique for land valuation is the land ratio technique, which is based on the theory

that, for a given area and property type, there tends to be a consistent overall relationship between

land and improvement values. If the typical ratio of land to improvement value can be determined,

it can be applied to the subject neighborhood in order to extract land values from sales data.

Appraised values may also be utilized but are generally less preferable than actual sales. These

values may be used to establish average unit (per square foot) or base lot values (in areas of

homogeneous lot sizes) to be applied to the rest of the subject neighborhood. The advantage of

this technique over the land residual technique is that it is not necessary to make as many estimates

of improvement values, which enables it to be useful in established or older neighborhoods with

fewer vacant land sales or recently improved parcels.

These techniques for land valuation, as well as others, are explained in detail in the IAAO

textbook Property Assessment Valuation.

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Once an estimate of land value has been made, it is necessary to estimate the cost of

improvements. Two concepts of cost are generally recognized: replacement cost and reproduction

cost. Replacement cost is the cost of reconstructing an improvement of identical utility, using

modern design, materials and workmanship. Reproduction cost is the cost of producing an exact

replica of an improvement, using the same or very similar materials, design and workmanship.

Replacement cost is more appropriate in mass appraisal and requires fewer adjustments for

depreciation.

The process of estimating replacement cost must consider all direct and indirect costs of labor,

materials and any other expenditures required to construct a building, such as overhead and profit.

The concept of market value implies that all costs must be considered. Therefore, the improvement

and all its components must be identified in terms of size, age, and condition.

Four major types of cost estimation are recognized: the quantity survey method, the unit-in-

place method, the comparative unit method, and the factored historical cost method. The quantity

survey method is the most detailed and expensive type of cost estimation, and as such has little

place in practical mass appraisal. Its primary use is for contractor bidding. PVAs must be aware

of this method, however, as it could be presented in the process of a listing or appeal. The unit-

in-place method is not quite as detailed as the quantity survey method, as many direct and indirect

component costs are combined into unit costs. This method is feasible for specialized appraisals

such as large scale commercial or industrial properties. The comparative unit method is based on

units of cost in which all direct and indirect costs of construction have been combined. This

method is not as accurate on an individual parcel basis as the two previous methods. However, it

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does have the advantage of being easy to apply and explain, two very desirable traits in mass

appraisal. It is probably the most widely used method of cost estimation in the field of assessment

administration.

The factored historical cost method is the least detailed method of cost estimation. It is based

on the application of building cost indices to the original cost of a structure. This requires data

regarding the age or effective age of the structure, as well as typical cost data for the period of

construction in order to ensure that the original cost was representative of the era. This method

has limited usefulness in the case of unusual or special-purpose structures, and, in the context of

mass appraisal, is more applicable to personal property than real property.

The third step in the cost approach is estimation of the amount of accrued depreciation, which

is basically defined as a loss in value due to any cause. Depreciation may be estimated indirectly

or measured directly. Indirect methods include the comparative sales data method and the income

capitalization method. The comparative sales data method is particularly suited to mass appraisal,

in that it is easily calculated based on existing data. The values of comparable sale properties, less

their estimated land values, are subtracted from the replacement cost of the sale property to yield

estimates of accrued depreciation. These estimates are then converted to percentages which can

be applied to subject properties.

Direct methods of estimating accrued depreciation include the overall age/life method, the

engineering breakdown method, the observed condition method, and the use of depreciation tables.

Of these the latter is the most suitable for mass appraisal. However, it takes time to develop in-

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house localized depreciation tables, and, while there are some excellent sources available on the

market, they must be tested in order to determine local applicability. The overall age/life method

is also widely used in mass appraisal, due to its simplicity. It is based on the ratio of effective age

to total economic life multiplied by replacement cost, which yields an estimated accrued

depreciation.

When the three figures described above (land value, replacement cost new, and accrued

depreciation) have been calculated, it becomes a simple matter to arrive at a value through the cost

approach. The estimated accrued depreciation is subtracted from replacement cost new to produce

a value for the principal building and any other improvements which are to be considered; then the

land value is added to the improvement value to arrive at the total parcel value.

D. The Income Approach

The income approach to value is based upon the theory that the current market value of a

property is the present worth of the net return (income) that it can be expected to produce during

its useful life. The income-producing capability of property should therefore be reflected in the

market, as knowledgeable investors will offer no more than the present worth of anticipated

benefits, represented by a return of the capital investment (principal) and a return on the capital

(interest). This return is measurable through a process known as capitalization. Mathematically,

capitalization is simply the division of the net income by a capitalization rate representing recovery

of the investment, interest and depreciation to obtain an indication of value, or as expressed by the

following simplified formula, commonly known as the “IRV” formula:

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VALUE = INCOME

RATE

Use of the income approach requires the PVA to have access to income and investment data

in addition to the usual property characteristics. The eight steps in the income approach are as

follows:

1. Estimate potential gross income;

2. Deduct for vacancy and collection loss;

3. Add miscellaneous income to obtain the effective gross income;

4. Determine operating expenses;

5. Deduct operating expenses from the effective gross income to determine net

income before discount, recapture, and taxes;

6. Determine the appropriate capitalization procedure to be used;

7. Select the proper capitalization rate;

8. Capitalize the net operating income into an estimated property value.

The first step is to determine the potential gross income of the subject property. This is the

maximum economic income before the deduction of any expenses; it also connotes 100 percent

occupancy in the case of rental units. From this figure, vacancy and collection losses are deducted

(step two), based on amounts which are typical of the market. After the vacancy and collection

losses have been deducted from the potential gross income, any miscellaneous income other than

rents must be added to result in an effective gross income figure. Miscellaneous income includes

parking fees, vending machines, coin laundries, etc.

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Step four consists of determining operating expenses. Taxpayers will sometimes provide an

operating statement. However, it should be reviewed carefully to ensure all expenses are allowable

for appraisal purposes. Proper expenses include management, insurance, salaries, utilities, repairs,

maintenance, supplies, or reserves for replacement. Property taxes are sometimes deducted here

by private sector appraisers, but it is recommended that assessors incorporate property taxes into

the capitalization process. While it is mathematically correct to deduct property taxes as an

expense, it is more logical to account for them in the capitalization rate as a typical effective tax

rate, since the valuation process precedes the establishment of tax rates and amounts due.

Examples of expenses which are inappropriate and should be disallowed include depreciation and

debt service (which are incorporated into the capitalization rate), capital improvements (which

may be considered under a cost approach application), income taxes, and business expenses of the

owner which are not directly related to maintaining the income stream. Once the operating

statement has been analyzed and proper expenses have been determined, they are deducted from

the effective gross income.

The capitalization rate is comprised of three components: the discount rate, the recapture rate,

and the effective tax rate. The discount rate represents the investor’s return on the investment.

The recapture rate represents the return of the investment. The third component is the effective

tax rate, which is the ratio of the property tax to the market value of the property. The capitalization

rate should be complete with the discount rate, recapture rate and effective tax rate. For cases in

which the property is unimproved, the recapture rate is left out of the equation (because the land

will always have a value which is independent of the improvements). The overall capitalization

rate expresses a direct relationship between income and value. If the overall rate is based on a

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representative market sample, it can be applied to similar subject properties through direct

capitalization in order to produce reliable value estimates.

E. The Concept of Mass Appraisal

The concept of mass appraisal involves applying one or more of the three approaches to value

described above to more than one subject property; in practice, this typically means hundreds or

thousands of subject properties. The goal of fair market value remains the same. Instead of

applying to only one appraisal, however, it must prevail over a broad spectrum of properties

representing all ranges of sizes, age and quality within the jurisdiction. Mass appraisal procedures

must employ a consistent methodology, be based on dependably accurate data, and be evaluated

through the use of standard statistical testing methods, in order to ensure adherence to the fair

market value standard. For a more detailed presentation of the methods used in mass appraisal,

please refer to the IAAO Standard on Mass Appraisal of Real Property and the Standard on the

Application of the Three Approaches to Value in Mass Appraisal.

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CHAPTER THIRTEEN

ASSESSMENT OF PERSONAL PROPERTY

A. Introduction

The trend toward centralized personal property assessment began in 1984 with the

implementation of the motor vehicle assessment and collection system (MOTAX). This system

provided a mechanism for systematic, uniform assessments, and had an immediate impact on the

high delinquency rates that were experienced in the early 1980s. The standardized valuation of

motor vehicles greatly reduced the time and effort required to assess motor vehicles and

incorporated a greater degree of equity in assessment. The implementation of the centralized

tangible personal property assessment system in 1988 had a similar impact on the assessment of

this property class. The tangible personal property system relies upon input through an on-line

statewide network, with computer terminals and accessory equipment in every PVA office in order

to create and maintain a centralized personal property tax roll.

The basic design characteristics of the system include:

1. On-line inquiry screen structure that allows a five-year history of returns to be reviewed by the

Department as well as in PVA offices.

2. On-line maintenance of current year returns, including data entry and maintenance, and

calculation of assessed values by rate class.

3. An electronic tax roll file furnished back to the counties based on the returns existing on the

centralized data base as of the certification date. (This tax roll is the input to the county billing

systems.)

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B. Listing of Personal Property

Taxpayers are required to list all tangible personal property (with the exclusion of registered

motor vehicles and boats) with either the Property Valuation Administrator or the Office of

Property Valuation by May 15 of each year. Revenue Form 62A500, Tangible Personal Property

Tax Return, is used to list tangible personal property. Although taxpayers may file returns in

Frankfort, returns received timely by the Department are forwarded to the PVA offices for

districting and data entry. Therefore, taxpayers should be encouraged to file with the local Property

Valuation Administrator.

C. Return Processing and Entry

The processing of personal property returns should be accomplished in two phases:

preparation and verification, followed by actual data entry. Preparing a return for data entry

involves the following steps:

1. Check for complete taxpayer identification information, including correct name

and address;

2. Check for Social Security Number (SSN) or Federal Employer Identification

Number (FEIN). If a taxpayer neglects to provide a social security number, an

attempt should be made to obtain it through the MOTAX screen; assistance can

also be requested from staff in the Personal Property Branch;

3. Verify that the property location has been given by street address or geographic

location for the purpose of tax district identification;

4. Verify current year filing status; prior year returns are omitted and should be sent

to State Valuation (see #9);

5. Record the proper tax district code and PVA account number;

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6. Verify all values have carried forward to summary page of return; verify the

taxpayer is using the correct form factors. Returns where factors are changed should

be entered and a copy of the return forwarded to Frankfort along with reason return

being sent;

7. Compare prior year; if taxpayer misclassified inventory you can contact taxpayer

and get corrected (i.e., motor vehicle inventory reported on line 31);

8. Verify all computations for mathematical accuracy;

9. If a return is received after May 15, date stamp it, record the district code, and mail

it to the State Valuation Division, 501 High Street, Sta. 32, Frankfort, KY 40601.

Once these steps have been completed, the return is ready for data entry. For specific details

on data entry and system functions, please refer to the Tangible Personal Property System User

Manual or the Personal Property Data Entry User’s Guide.

D. Valuation of Personal Property

Personal property can be valued using all three approaches to value: sales comparison, income,

and cost approach. Often, one of the three approaches will be the primary, if not the exclusive,

method of valuation. Some property, such as automobiles, have an extensive market for units of

all models and ages. Whenever such markets exist, the sales comparison approach is the most

appropriate method of valuation. This approach should be used for property such as aircraft, boats,

automobiles, trucks, motorcycles and recreational vehicles. The Department provides each PVA

office with valuation guides each year for this purpose. The income approach has more limited

use than the other two methods of valuation, due to the difficulty in obtaining the necessary data.

However, it can be used to value machinery in cases where sufficient data is available to establish

an income stream over the remaining economic life of the property. The most probable use of the

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income approach would be to appraise leased equipment since the income stream is usually a

known factor in lease situations. The most common method of valuing personal property is by

using the cost approach. This approach is particularly suited to the valuation of inventories,

supplies, furniture and fixtures, machinery, equipment, and professional trade tools.

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CHAPTER FOURTEEN

SPECIAL OR UNIQUE VALUATION PROCEDURES

A. Introduction

Some properties, because of their unique nature or legal requirements, must be valued by

different methods than other real property. In 2005, the general assembly passed major tax reform

legislation, which transferred the assessment responsibility of all telecommunication companies’

real property from the Public Service Branch to the PVA beginning with the 2006 assessment year.

B. Telecommunications Property

Beginning in 2006, PVAs were tasked by the legislature (see 2005’s House Bill 272) with

assessing real property owned by telecommunications companies. Tangible personal property

owned by telecommunications companies is centrally assessed using the same valuation

procedures that are used to assess tangible personal property locally. (KRS 132.825).

Table A on the next page illustrates where the assessment responsibility lies with respect

to telecommunications companies, tower management companies, TV and radio companies, and

public service companies real and personal property. In addition, recapitulation classification and

the proper personal property tax form each type of company should be using are listed.

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TABLE A

Real Estate

Assessment

Responsibility

Personal

Property

Assessment

Responsibility

and Form

Recap Area

Classification

Telecom

Companies

PVA

PSB

Form 61A500

Telecom

Real

Personal

Tower

Management

Companies

PVA

PVA - PPB

Form 62A500

Commercial

Real

Tangible

TV and Radio

Companies

PVA

PSB

Form 62A500

Commercial

Real

Tangible

Public Service

Companies

PSB

Form 61A200

Commercial

Real

Tangible

Abbreviations

PVA - Property Valuation Administrator

PPB - Personal Property Compliance Branch

PSB - Public Service Branch

Revenue Forms

Form 61A500 - Tangible Personal Property Tax Return for Communication Service Providers and

Multi-channel Video Programming Service Providers

Form 62A500 - Tangible Personal Property Tax Return

Form 61A200 - Public Service Company Tax Return

Telecommunications companies consist of three basic types of companies: communication

service providers such as long distance, local exchange, and wireless telephone companies; multi-

channel video providers such as cable television and satellite television; and tower management

companies. The owner of the property is required to report both the real and personal property.

Since tower management companies are not telecommunication companies, all of their real and

personal property are locally assessed. TV and radio companies report their real and personal

property locally as well. However, towers and all other personal property owned by

telecommunications companies are centrally assessed. This distinction is important as it creates a

unique assessment situation. Most real property will be locally assessed but the personal property

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assessment responsibility will be split between local and central assessment depending on who

owns the tower. Note: telecommunications towers owned by public service companies subject to

the provisions of KRS 136.120 are simply assessed as property of the public service company.

As with any real estate valuation, PVAs should determine the market values for tower sites

based on what is typical for this type of property. The Division of State Valuation recommended

a Gross Rent Multiplier (GRM) of 9 as the basis of valuation of tower sites. Data collection within

each county could cause fluctuation with the GRM and could be used as well. However, the

ultimate values for each site should be consistent. In some instances, this could create a leasehold

interest to the lessee. This is when the site is leased at less than typical market rent. When property

is leased from an exempt entity, the real property is a leasehold interest to the lessee under KRS

132.193 and KRS 132.195. In such instances, the real estate notice and bill should be sent to the

lessee. The real estate would also be classified as telecommunication company real estate for recap

purposes.

A capital lease, which is in essence a sale of property to the lessee, is taxable to that lessee.

Real property leased by a telecommunication company from a tax-exempt entity is taxable to the

telecommunication company, and such property would be classified as telecommunication real

property for recap purposes.

These same rules apply to personal property as well. Any property leased to a

telecommunication company by a for-profit entity should be listed by the for-profit entity on the

locally assessed Tangible Personal Property Tax Return (Revenue Form 62A500). Only tangible

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personal property owned by a telecommunication company or leased by a telecommunication

company from a tax-exempt entity should be listed on the Telecom Personal Property Tax Return

(Revenue Form 61A500).

Due to HB 272, assessment recapitulation procedures were modified starting January 1, 2006

to include the telecom real property by tax district. This change was necessary since school districts

and special districts rely in part on telecommunication company real property assessments to

determine the amount of distribution each district receives from the Growth Fund established

pursuant to KRS 136.654. Each PVA provides a summary of telecommunication real property

assessed value for purposes of the new Telecommunication Company Tax.

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CHAPTER FIFTEEN

MOTOR VEHICLE ASSESSMENT (MOTAX) SYSTEM

A. Introduction

The centralized system for property tax assessments on motor vehicles (MOTAX) is a

"piggyback" program that is supported by the Automated Vehicle Information System (AVIS).

AVIS contains ownership records and various facts on motor vehicles and is maintained by the

Transportation Cabinet. Information is entered and maintained through on-line computer

terminals located in each County Clerk's office and in each PVA office. A person who titles a

vehicle or boat with the County Clerk is also listing the vehicle with the PVA for property tax

purposes. (Boats are included in KAVIS and are registered in the same manner as motor vehicles.)

This titling/registration process leads to a property tax assessment based on values determined by

a standardized market approach. The property tax is collected by the County Clerk during the

registration process. If a vehicle’s taxes are not paid by the time of transfer, a transfer notice is

sent to the January 1 owner.

B. Vehicle Valuation

Each year the Commonwealth Office of Technology (COT) receives a data file from J. D.

Power with the current January 1 trade-in value for most vehicles. This is the method used to assess

most vehicles. As of January 1, 2022, there were 4.5 million vehicles in Kentucky with an assessed

value of $38.9 billion. Brand new vehicles that have not established a trade-in value, vehicles older

than 18 years, and values for all special type vehicles (trailers, boats, recreational vehicles, etc.)

are not included in this file. If any of these type vehicles were assessed in the previous year, their

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assessments are adjusted centrally during the valuation process. If these vehicles are “new” to the

system, they may require manual assessment, which is the responsibility of the PVA office.

Determining taxable situs and taxable status is also the PVAs’ responsibility. PVA offices are

provided quarterly files via Move-it for utility trailers and recreational vehicles to input an

assessment value and the situs code. Boats are included in KAVIS which is a live online system

where the transaction can be updated with an assessment value and situs code daily, weekly, and/or

monthly

The valuation of non-standard vehicles, any situs change initiated by the PVA office, and the

creation of any new tax liability entered into the system will not require an exoneration to be

completed. Any changes in assessment or taxable status do require an exoneration to be signed by

the taxpayer, and any documentation provided by the taxpayer must be attached to the exoneration

form. Exonerations must be kept for three years and are subject to review and audit by the

Department of Revenue.

C. Valuation Guides

The Department furnishes each PVA office either the JD Power online subscription or books as

listed below. The PVA can purchase their own books if they choose the online subscription from

JD Power.

1. Late model used cars one to seven years old, NADA Value Guides, Official Used Car Guide;

2. Automobiles and light trucks eight to eighteen years old, NADA Appraisal Guides, Official

Older Car Guide;

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3. Motorcycles, NADA Appraisal Guides, Motorcycle/Snowmobile/ATV/Personal Watercraft

Guide;

4. Recreation Vehicles and Camping Trailers, NADA, Recreational Vehicle Appraisal Guide;

5. Classic Cars, NADA, Classic, Collectible, and Special Interest Car Appraisal Guide;

6. Boats, NADA Marine Appraisal Guide;

D. The Collection of Motor Vehicle Taxes

The County Clerk is the collector of motor vehicle property tax. The clerk does have the ability

to waive penalty during the collection process. Information regarding penalty waivers is on the

Clerk network (https://revenue.ky.gov/clerknetwork/Pages/default.aspx) under Penalty Waiver

Guidelines. Generally, tax is due on or before the last day of the month in which the registration

renewal is required.

E. Reports From the Department

The Commonwealth Office of Technology (COT) generates several reports which allow the

PVA to create, correct, and modify the motor vehicle tax roll. These reports have been automated

and are sent via a secure ftp site for download by the PVA office. Each PVA office has a username

and password to log on and download the reports (Move-it Link – https://ftp.ky.gov). An

automated e-mail is sent when the reports are available at the beginning of each month.

The On Line County Transfer Report (Rpt 5532) is a printout of all motor vehicle records

which have been transferred into a county from another county. County code changes are made

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by the PVA when a vehicle is relocated intrastate during the assessment cycle. The PVA can only

transfer vehicles out of the county; therefore, the purpose of the county transfer report is to inform

the PVA of vehicles that have been transferred into the county by another PVA office. These

vehicles must be assigned to the proper taxing district by the PVA so that the respective tax rates

can be applied by the system.

The Batch Vehicle Record Update (Rpt 5504) is a printout of all vehicles that have been

entered into the AVIS system for a county during the month and will be included on the tax roll

for the next year. It includes all new vehicles registered in a county, all transfers of ownership, all

address changes, and all other changes in the registration record. The update must be examined

by the PVA, and correct tax districts and other information changes must be entered directly into

the computer terminal.

The Ad Valorem Monthly On Line Change Report (Rpt 5537) is a comprehensive listing of

all actions performed in a PVA office which have changed a vehicle tax record for the previous

month. A change report is sent to the PVA but does not require PVA action. It is simply a record

of PVA activities and should be reviewed each month. Each record listed on the report shows the

status of the vehicle before and after any change. Changes shown are county code, tax status, tax

district, and value.

There are two quarterly reports for utility trailers and recreational vehicles that are

generated and placed on Move-it. These vehicle types require a manual valuation and need a

district code.

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The naming convention for the files are

COUNTY UT QTR# YYYY.xlsx – Need to value and district code trailers

COUNTY TT QTR# YYYY.xlsx – Need to value and district code recreational vehicles

There are some annual reports placed on Move-it and KAVIS as well.

Rpt5500 (Motor vehicle tax roll) – Rpt 5500 COUNTY YYYYMMDD.xlsx (AVAILABLE IN

MAY 2023 via Move-it)

Annual 88 report – these were not fixed monthly and need district coding for the prior year

of when report is generated in January.

Annual 00 report – Need to verify district code and input value if applicable for prior year

of when report is generated in January.

Projection Report Motor Vehicle

The Department will provide each PVA with an estimate of the amount of property tax which

may be collected for each taxing jurisdiction for each month. The projection report for boats and

motor vehicles is provided in May or June of each year. Since this projection assumes that vehicles

in the AVIS data base will be registered during the year, some variation between projected

revenues and actual collections can be expected. Vehicle taxes may not be collected in some

situations, including those sold out of state and those wrecked beyond repair, and will reduce actual

revenues collected. However, delinquent property taxes, collected every year by the clerk, will add

to revenues projected.

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BOATS - ALL ON KAVIS

Tax District Assignment Queue – Live report generates daily when transfer or title application

is processed via the Clerk’s office. Need to value and district code boats and motors.

Boat Tax Roll – Generated in May on KAVIS in report section

Projected Monthly Collection Report – Available for download in May on KAVIS in report

section.

F. Delinquent Motor Vehicle Taxes

Property taxes due on motor vehicles become delinquent if they have not been paid by the

earlier of the end of the month in which registration renewal is required by law or the last day of

the second calendar month following the month in which a vehicle was transferred. KRS

134.810(3) provides a penalty of 3 percent if the taxes are paid within thirty days of being

delinquent and 10 percent if they are not paid within thirty days. In addition, interest at an annual

rate of 15 percent shall accrue on said taxes and penalty from the date of delinquency. This statute

allows for the waiver of these penalties if the tax is paid within five days of becoming delinquent.

KRS 186.021 permits a person other than the owner of record to pay any delinquent property

taxes due on a motor vehicle to facilitate transfer of registration. County clerks are also prohibited

from requiring the person to pay the delinquent taxes due on all other motor vehicles owned by

the owner of record from which he is purchasing his motor vehicle as a condition of registration.

KRS 186.020 allows for the waiver of penalty and interest on delinquent taxes of military

personnel stationed or assigned to a base outside the United States. The following conditions must

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be met to qualify for this waiver: The motor vehicle must have been stored on a military base

during the time of deployment and not been operated on the public highways during that time and

the vehicle’s registration must have expired during the individuals’ absence.

G. Assessment Appeals

Any taxpayer questioning the value of a motor vehicle should first present evidence to the PVA

showing why the assessment is incorrect. The standard guides are based on vehicles in average

condition but if a vehicle has obviously depreciated at a greater rate due to neglect, collisions, or

excessive mileage, etc., the PVA should adjust the value accordingly and document the change on

an exoneration form. If the taxpayer continues to dispute the value after talking with the PVA, the

taxpayer can file a written protest with the Department of Revenue. In order to be a valid protest,

it must be received within 60 days of the notice date in accordance with KRS 131.110.

16 - 1

CHAPTER SIXTEEN

ASSESSMENT OF MINERAL PROPERTY

A. Introduction

KRS 132.820 grants the Department of Revenue sole authority for assessing unmined coal, oil

and gas reserves and other mineral or energy resources. Oil, gas, and solid minerals are assessed

by the Natural Resources Valuation Branch of the Office of Property Valuation. Unmined coal is

assessed by the Unmined Coal Property Tax Branch.

B. Reporting of Mineral Resource Property

Taxpayers are required to list all mineral resource property (coal, oil, gas, clay, and limestone

reserves) with the Department by April 15 (KRS 132.820). The Department mails the forms to

taxpayers in January of each year.

The Department has developed separate forms for each type of mineral resource property:

62A200 - Unmined Coal Property Tax Information Return

62A384G - Natural Gas Property Tax Return

62A384O - Oil Property Tax Return

62A384L - Limestone, Sand and Gravel Property Tax Return

62A384C - Clay Property Tax Return

These forms require that many different types of maps be submitted. These maps are used in

developing and maintaining a Geographic Information System (GIS). The Unmined Coal Property

16 - 2

Tax Branch utilizes this information to calculate the tonnage of remaining mineable coal on a

parcel basis for compliance purposes.

C. Billing and Appeals Procedures

The Department calculates the tax and sends the bills to the sheriff for collection. Protests of

mineral property assessments are made directly to the Department of Revenue.

D. Responsibility of the PVA

The main responsibility of the PVA is directing technical questions and information

concerning the valuation of unmined minerals to the Natural Resources Property Tax Branch or to

the Unmined Coal Property Tax Branch. PVAs also assist by submitting transfers of mineral

properties to the Department. This information is vital in ensuring compliance.

17 - 1

CHAPTER SEVENTEEN

STATE ASSESSED PROPERTY

A. Introduction

Several types of property are assessed directly by the Department of Revenue based on

information submitted by property owners or their representatives. The Property Valuation

Administrator should direct questions concerning assessments on the following property to the

Department.

B. Domestic Life Insurance Companies

Domestic life insurance companies are assessed for the total capital and reserves that they own.

The Department assesses a state tax at the rate of 1/10¢ per $100 of taxable capital and taxable

reserves. In addition, both the county and city in which a life insurance company's main office is

located may impose a tax at the rate of 15 cents per $100 of taxable capital. The Department

assists in the assessment of this local tax by "certifying" the value of each company to the

respective county clerk by September 1 of each year.

C. Bank Deposits

An intangible personal property tax of 1/10¢ per one hundred dollars is assessed on funds on

deposit in any financial institution. This tax is assessed by the State Valuation Division and paid

17 - 2

directly to the Department of Revenue. No other property tax shall be assessed by the state or any

county, city or other taxing district on the deposits or against the depositors on account of the

deposits, except as provided in KRS 136.575. (See KRS 132.030 and KRS 132.040.)

D. Public Service Companies

Public Service Companies (companies that provide services such as electricity, gas, water, oil

and gas transmission) are regulated by federal and/or state laws. By regulating these companies,

restrictions are placed on the profit they may earn on investments and on the areas in which they

may operate. The Public Service Branch of the Department has full responsibility for assessing

Public Service Companies. (KRS 136.120.) Many facts and reports are used for the lengthy

valuation process. The assessed value of operating property is allocated among the various taxing

districts in Kentucky.

Once the valuations are determined, the Department will certify to the County Clerk the

amount due for county, city, or district tax in the qualifying counties. These tax assessments are

billed by the Clerk and collected by the Sheriff. All state taxes due are billed and collected directly

by the Department. Any public service company seeking information from the PVA should be

directed to the Public Service Branch of the Office of Property Valuation. (See KRS 136.120

through KRS 136.180.)

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E. Commercial Watercraft

The assessment, billing, collection, and distribution of local property taxes on commercial

watercraft is centralized pursuant to KRS 136.1801 through 136.1806. Kentucky based taxpayers

owning commercial watercraft must file such property on the Commercial Watercraft Property

Tax Return (Revenue Form 61A207). Tangible property other than the fleet of commercial

watercraft must be listed on the Tangible Personal Property Tax Return (Revenue Form 62A500)

and be filed locally with the PVA in the county of situs. Also, real property owned by barge lines

formerly assessed under KRS 136.120 must be reported locally to the PVA in the county of situs.

F. Distilled Spirits

The state tax rate on distilled spirits in bonded warehouses is 5¢ per $100 of value, with full

local rates applicable (KRS 132.020). The Public Service Branch of the Department is required to

assess this property (KRS 132.140). When the value is set by the Department, it is reported to the

County Clerk to be billed on behalf of county, city, and other taxing districts.

G. Trucks, Tractors, Semi-trailers and Buses

Apportioned vehicles are taxed via an ad valorem fee collected at the time of registration

through the International Registration Plan administered in conjunction with the Kentucky

Transportation Cabinet. Other vehicles that have regular Kentucky registration are taxed through

the Motor Vehicle Tax System (MOTAX), administered by the County Clerks.

18 - 1

CHAPTER EIGHTEEN

PROPERTY TAX COLLECTION

A. Introduction

Property tax collection duties are usually the responsibility of the Sheriff or collecting agent of

individual counties. Although, some taxes are collected directly by the Department of Revenue,

and motor vehicle and boat taxes are collected by the County Clerk. Although the PVA is not

actively involved in the collection process, the office will typically receive numerous inquiries

from taxpayers about their tax bills. For this reason, the PVA should have a thorough

understanding of the tax bill collection schedule and of the various penalties, interest, and fees that

are applied to delinquent property tax bills.

The property tax collection cycle is outlined on the following pages.

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B. Property Tax Collection Cycle

Date Action

January 1

September 15 - November 1

November 2 - December 31

January 1 following January assessment date

February 1 and thereafter

April 15

By May 15

By June 15

Starting July 14 and continuing for the next

45 calendar days. (Additional time is allowed

for counties with oil and gas or unmined coal

tax bills.)

Assessment Date

Taxes due and payable: A 2% discount is

applicable. (KRS 134.015)

Taxes are payable at face value.

(KRS 134.015)

Unpaid taxes become delinquent, and

property assessed has a lien against it by

operation of law. A 5% penalty applies. (KRS

134.015)

A 10% penalty and an additional 10%

sheriff’s add-on fee is applied. The sheriff

can distrain or attach nonexempt personal

property of taxpayer. (KRS 134.015)

All delinquent property tax bills are

transferred from the sheriff’s office to the

county clerk’s office as of the close of

business. The county clerk begins accepting

payments on April 16. (KRS 134.122)

The county attorney mails the first notice to

all delinquent taxpayers advising them of the

delinquency, that the delinquent tax bill is

subject to being sold to a third-party

purchaser at a later date and that a partial

payment plan is available. (KRS 134.504)

The county attorney mails the second notice

to all delinquent taxpayers who did not

respond to the first notice. (KRS 134.504)

The county clerk will offer for sale all current

year certificates of delinquency. (KRS

134.128)

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By September 1

The 10-year period following the date real

property and personal property tax bills

become delinquent.

11 years after the date real property taxes and

personal property taxes become delinquent.

The sheriff shall make settlement with all

taxing districts and a quietus shall be issued

from the Office of Property Valuation.

(KRS 134.192)

Any action to collect any amount due on a

certificate of delinquency or personal

property certificate of delinquency may be

brought between the date one year after the

date the taxes became due, up to the day

before the date 11 years after the taxes

became due. (KRS 134.546)

All further action on certificates of

delinquency (real property) is barred by

statute of limitations. (KRS 134.546)

19 - 1

CHAPTER NINETEEN

OMITTED PROPERTY

A. Introduction

The responsibility of locating and assessing omitted property is assigned to either the PVA or

the Office of Property Valuation, depending on the class of property involved. Omitted real

property (with the exception of unmined minerals) is assessed by the PVA and omitted personal

and unmined mineral property is assessed by the Department.

B. Omitted Real Property

Real property is classified as omitted if it has not been listed for taxation, for any year in which

it is taxable, by the time the Board of Assessment Appeals adjourns for that year. KRS 132.290.

Omitted property may be listed at any time by either the property owner or the PVA. Once the

property is listed and assessed, the PVA must immediately notify the taxpayer of the amount of

the assessment. Revenue Form 62A379, Listing of Omitted Property, is used to list omitted real

property. The PVA certifies the omitted assessment in triplicate and delivers all copies to the

County Clerk. The Clerk prepares the tax bill, retains one copy of the form, returns one copy to

the PVA, and mails one copy to the Office of Property Valuation. A separate bill must be prepared

for each year that the property is omitted. Applicable interest rates for omitted assessments are

listed at the bottom of Form 62A379. A ten percent penalty is added to assessments voluntarily

listed and the penalty is twenty percent if the property is involuntarily listed by the PVA.

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C. Omitted Personal Property

The location and assessment of omitted tangible personal property is the responsibility of the

State Valuation Division. Omitted personal property is defined by the Department of Revenue as

any personal property which has not been listed for taxation, for any year in which it is taxable, by

May 15 of that year.

A property owner may list omitted personal property with the Department or with the PVA.

However, the PVA must forward any submissions to the Department for further action.

KRS 132.290 provides a five (5) year statute of limitations for the assessment of omitted

property. This limitation period begins on the due date and ends five (5) years subsequent.

Omitted assessments are subject to statutory penalties and interest. Inquiries from taxpayers

on any personal property omission should be referred to the Division of State Valuation of the

Office of Property Valuation. (See KRS 132.310 - KRS 132.340.)

20 - 1

CHAPTER TWENTY

EXONERATIONS AND PROPERTY TAX REFUNDS

A. Introduction

Occasionally, errors made in assessments go unnoticed until the tax bills have been printed and

sent to the property owner. In some cases, a property owner may pay an erroneous assessment and

then discover an error. The PVA is usually instrumental in verifying and correcting these errors.

B. Exonerations

Exonerations are made when clerical errors, mathematical errors, unintentional omissions, or

duplications have been made on a taxpayer's bill. (KRS 133.110.) Revenue Form 62A366,

Executive Order Correcting Erroneous Assessment, is used to correct a tax bill that is not yet

delinquent. Revenue Form 62A366-D is used after a bill has become delinquent.

The PVA must approve all exonerations and sign the proper forms. After signing the correct

form the PVA must make three copies and send the copies to the Department of Revenue, the

Sheriff, and the taxpayer. If property has been assessed to an incorrect owner, the PVA must

immediately list it to the rightful owner. The PVA cannot change the assessed value of real

property based on alleged errors in appraisal methodology or opinion of value. (KRS 133.110.)

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C. Property Tax Refunds

When a taxpayer pays an incorrect tax bill, a refund is due if it is requested within two years

from the date of payment or the date the amount due was finally determined. KRS 134.590.

Documentation must be provided by the taxpayer showing that the bill was actually paid. This

verification can be obtained from the Sheriff. The PVA will prepare a special exoneration form

used when a refund is involved (62A366-R), which will describe the reason an assessment

adjustment is being made and the amount of the change.

The refund, even if it is for a prior year, can be issued from the current year’s tax funds in the

sheriff's possession. If sufficient funds are not available in the sheriff’s office, the refund request

must be directed to each taxing district in the county. Each district will then refund its share of the

total paid to the taxpayer. Refund requests for the state’s portion of the amount should be sent to

the Office of Property Valuation. KRS 134.590.

D. Clerical Errors

KRS 133.110 allows the Property Valuation Administrator to correct clerical errors.

133.110 Correction of clerical errors in assessment.

(1) After submission of the final real property recapitulation or certification of the

personal property assessment, the property valuation administrator may correct

clerical, mathematical, or procedural errors in an assessment or any duplication of

assessment. Changes in assessed value based on appraisal methodology or opinion

of value shall not be valid. All corrections shall be reviewed by the Department of

Revenue and those changes determined by the department to be invalid shall be

rescinded. Any taxpayer affected by this rescission shall not be subject to additional

penalties.

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Below are some examples of what you can correct via KRS 133.110 at the PVA office:

Clerical

• Returns misplaced and/or stapled to processed returns.

• All Information not carried forward to summary pages on return, i.e., supplies listed on

schedule C not carried forward to line 60.

Mathematical Errors

• Addition or subtraction errors made in data entry of returns.

Procedural Errors

• There is no relevant case law interpreting the term “procedural errors.” The dictionary

definition of “procedural” is “of or relating to the procedure used by courts or other bodies

administering substantive law.” Consult with the Department if you receive a request for

correction pursuant to KRS 133.110 based on alleged “procedural error(s).”

Duplication

• Return entered twice

Unintentional omissions

• Return timely filed with correct county name on form but mailed to wrong county, and

when it reached the correct county that county’s tax roll was closed.

Correcting clerical errors at the local level allows the taxpayer to receive the tax bill and be

provided the opportunity to pay within the discount period. It will hopefully create positive public

relations between the taxpayer, PVA and Department when the taxpayer receives a bill on time.

The Office of Property Valuation, Omitted Tangible Branch will enter a dummy assessment into

the Omitted Property Tax System with a note “offline bill done at local level” provided the PVA

office provides the office with a copy of the return and/or bill. This will ensure the taxpayer does

not receive any unnecessary notices from the Department for failure to file a return.

When correcting clerical errors you should:

• Complete the appropriate form for your PVA office.

• When Sheriff receives regular tax bills send exoneration and or a bill to sheriff.

• Send copy of return, exoneration and/or a bill to OPV. OPV will create a dummy

assessment in the OPT database and adjust off any applicable tax dollars. A memo note

will be put in the system that bill was created at the local level. This ensures returns or

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adjustments are entered into the system, so taxpayers do not receive any unnecessary

requests for returns or requests for audit.

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CHAPTER TWENTY-ONE

ASSESSMENT APPEALS

A. Introduction

Taxpayers have extensive rights for appealing their property tax assessments. Locally assessed

real property is appealed on the local level and appeals for personal property and state assessed

property are administered from the state level.

Any real property owner who does not agree with an assessment on real property has the right

to appeal under the provisions of KRS 133.120. The property owner may file an appeal with the

county clerk at any time before the inspection period and no later than one workday following the

conclusion of the inspection period.

B. Conference with Taxpayer

Property owners wishing to appeal their real property assessment must first have a conference

with the PVA or a designated deputy. This conference should be held prior to or during the period

that the tax roll is open for public inspection. During this conference, the PVA or designated

deputy is required to explain the constitutional and statutory provisions governing property tax

administration, including the appeals process and the procedures followed in deriving the

taxpayer’s assessment. The PVA should keep a record of the conference which includes the initial

assessed value, the value claimed by the taxpayer, an explanation of any changes offered or agreed

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to by each party and a brief accounting of the conference’s outcome. The Department provides

form 62A307, Property Owner’s Conference Record, for this purpose. A copy should be given to

the property owner as proof that a conference was held with the PVA.

C. Local Board of Assessment Appeals

If, after the conference with the PVA, the property owner is still not satisfied with his or her

real property assessment, he or she may appeal to the local board of tax appeals.

All appeals must be filed in the county clerk’s office. The county clerk will schedule the

hearings and notify the affected property owners as to when and where their appeals will be heard.

The last day to file an appeal is one working day after the close of the inspection period.

The local board of assessment appeals consists of three members. The judge/executive

appoints one member, the fiscal court appoints one member and the mayor of the city with the

largest assessment using the county tax roll appoints one member. The terms of board members

run for three years and are staggered to allow for continuity.

Each board member must have extensive knowledge of real estate values, preferably through

involvement in real estate appraisals, sales, management, financing or construction. However, the

appointing authorities may appoint qualified property owners residing in adjacent counties when

qualified members cannot be located within the county. (KRS 133.020.)

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The first meeting of the board is devoted to a training program conducted by the PVA office,

a review of the assessments of property owned by the PVA and his staff and a review of the appeals

filed. If no appeals were filed, the board adjourns after one day. The board meets for no more

than five days unless an extension is requested by the judge/executive and authorized by the

Department (KRS 133.030).

Property owners filing an appeal before the local board must provide factual evidence to

support the appeal. This includes the physical characteristics of the land and improvements,

insurance policies, the cost of construction, real estate listings, income and expense statements for

commercial property, and loans and mortgages. If the property owner fails to provide reasonable

information to support a lower value, the appeal will be denied (KRS 133.120).

The local board may only hear and consider evidence which has been submitted in the presence

of both the PVA or a designated deputy and the property owner or an authorized representative.

The local board must provide a written opinion justifying its actions for each assessment either

decreased or increased. The Department furnishes standardized forms for this purpose.

D. Personal Property and State Assessed Property Appeals

Protests and appeals for personal property valuations, which are derived through the

centralized assessment system, are made directly to the Department of Revenue (KRS 132.486),

as well as those of other centrally assessed properties. A notice of valuation is automatically sent

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through the system to the taxpayer for each tangible personal property assessment that has been

increased, similar to the same requirement that governs the activities of PVAs. Notices of

valuation are also sent by the Department to centrally assessed taxpayers, such as public service

companies (KRS 136.180) and owners of unmined minerals (KRS 132.820). The taxpayer has 60

days from the date of notice to file a protest. (KRS 131.110.) After a timely protest has been filed,

the taxpayer may make a written request for a conference with the Department. After considering

the taxpayer’s protest, including any matters presented at the conference, the Department of

Revenue issues a final ruling on the matter, stating the matters in controversy and its position. The

final ruling also presents the taxpayer with the option of further appealing the issue to the Kentucky

Board of Tax Appeals (KBTA). It is important to note that the taxpayer must pay all state and local

taxes due on the valuation claimed by the taxpayer as stated in the protest. Adjustments are billed

later if the appeal results in the assessment being increased over the value claimed in the taxpayer’s

protest.

E. Board of Tax Appeals

If the property owner is still not satisfied with an assessment after the final ruling of the local

board, it may be appealed to the Kentucky Board of Tax Appeals (KBTA). The KBTA consists

of three members appointed by the Governor. Each commissioner must be at least thirty-five years

old and at least one member must be an attorney who has been a resident of the state for two years

and practiced law for at least eight years. The other two members shall be persons with a general

business background.

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A property owner who fails to file an appeal with the local board or to appear before the local

board after filing an appeal, is not eligible to continue the appeal with the KBTA.

All proceedings before the KBTA shall be de novo. Members of the local board of assessment

appeals may be required to give evidence in support of the board’s findings in any appeals from

its actions to the KBTA. (KRS 133.120.) Pursuant to KRS 133.120(11) the county attorney is

required to represent the interest of the state and county in all hearings before the board of

assessment appeals and on all appeals therefrom. While the Department’s attorneys cannot

represent the PVAs in individual appeal matters, the Department and its counsel are available to

assist PVAs and county attorneys in preparing for hearings before the KBTA.

F. Appeals to the Courts

KRS 49.250 provides that decisions of the KBTA may be appealed to the Circuit Court. The

Circuit Court’s action may be appealed to the Court of Appeals. Appeals to the Kentucky Supreme

Court are subject to the Court’s discretionary review.

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CHAPTER TWENTY-TWO

DELINQUENT PROPERTY

A. Introduction

As noted in Chapter 18, property tax bills become delinquent on January 1

following the

assessment date. At the close of business on April 15

, the tax bills are transferred from the

sheriff’s office to the county clerk’s office and the delinquent bills are officially known as

certificates of delinquency. There are many statutory provisions that are followed by both the

county attorney and county clerk that lead to the sale of the certificates of delinquency to third

party purchasers at the tax sale conducted by the clerk.

B. The PVA’s Role Regarding Delinquent Property

The PVA’s role in this process is limited to preparing exonerations where it can be shown an

assessment error was made on a certificate of delinquency. Other types of errors – such as a

mistake in the address that was made by the PVA office – can be handled through the penalty

waiver process that is available and not by exonerating the certificate of delinquency. Guidelines

on the waiver of penalties and fees have been furnished to the sheriffs, county attorneys and county

clerks. PVAs should work with these officials to obtain a waiver if it is discovered an error made

by the PVA office contributed to a particular tax bill going delinquent.

Exonerations issued prior to the tax sale can be processed by the county clerk in the appropriate

manner. If an exoneration only partially reduces the assessed value on a property, then all

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delinquent penalties and fees must continue to be paid; however, they will be based on a lower

amount. If a mistake is discovered after a certificate of delinquency has been sold to a third-party

purchaser, an exoneration can still be issued, but the third-party purchaser must also be notified so

that a refund can be applied for in the county clerk’s office. It is also acceptable to initiate the

refund process on behalf of the third-party purchaser.

PVAs should be cautious when evaluating whether an exoneration should be issued for a

certificate of delinquency that has been acquired by a third-party purchaser. Exonerations should

be limited to the granting of homestead exemptions based on age or other assessment adjustments

that can be documented to have been caused by a mathematical, clerical or procedural error. As

noted above, certificates of delinquency are NOT to be exonerated for address changes or incorrect

property descriptions.

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CHAPTER TWENTY-THREE

OPEN RECORDS PROCEDURES

A. Introduction

The Open Records Act was originally enacted by the General Assembly in 1976 and became

effective on July 15, 1976. The Act has been substantially amended several times and can be

found in KRS 61.870 through 61.884.

A 1992 legislative amendment, KRS 61.871 provides:

The General Assembly finds and declares that the basic policy of KRS 61.870 to

61.884 is that free and open examination of public records is in the public interest

and the exceptions provided for by KRS 61.878 or otherwise provided by law shall

be strictly construed, even though such examination may cause inconvenience or

embarrassment to public officials or others.

The General Assembly in a 1994 legislative amendment to KRS 61.8715, provided that, “to

ensure the efficient administration of government and to provide accountability of government

activities, public agencies are required to manage and maintain their records according to the

requirements” of a comprehensive records management system (KRS 171.410 - 171.740) and the

Open Records Act. The General Assembly further recognized that “while all government agency

records are public records for the purpose of their management, not all these records are required

to be open to public access, some are exempt under KRS 61.878.”

Therefore, all public records shall be open for inspection by any person, except as otherwise

provided by the Act. Additionally, KRS 61.884 provides:

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Any person shall have access to any public record relating to him or in which he is

mentioned by name, upon presentation of appropriate identification, subject to the

provisions of KRS 61.878 (exceptions to disclosure of records).

B. Definitions

As used in KRS 61.870 to 61.884, unless the context requires otherwise:

1. “Public record” is defined in KRS 61.870(2) as:

all books, papers, maps, photographs, cards, tapes, discs, diskettes, recordings,

software, or other documentation regardless of physical form or characteristics,

which are prepared, owned, used, in the possession of or retained by a public

agency.

2. “Public agency” is defined in KRS 61.870(1) to include:

(a) Every state or local government officer;

(b) Every state or local government department, division, bureau, board,

commission, and authority;

(d) Every county and city governing body, council, school district, special

district board, and municipal corporation;

(e) Every state or local court or judicial agency;

(f) Every state or local government agency, including the policy-making board

of an institution of education, created by or pursuant to state or local statute,

executive order, ordinance, resolution, or other legislative act;

(g) Any body created by state or local authority in any branch or government;

(h) Any body which, within any fiscal year, derives at least twenty-five percent

(25%) of its funds expended by it in the Commonwealth of Kentucky from

state or local authority funds. However, any funds derived from a state or

local authority in compensation for goods or services that are provided by a

contract obtained through a public competitive procurement process shall

not be included in the determination of whether a body is a public agency

under this subsection;

(i) Any entity where the majority of its governing body is appointed by a public

agency as defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (j), or (k)

of this subsection; by a member or employee of such a public agency; or by

any combination thereof;

(j) Any board, commission, committee, subcommittee, ad hoc committee,

advisory committee, council, or agency, except for a committee of a hospital

medical staff, established, created, and controlled by a public agency as

defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (i), or (k) of this

subsection; and

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(k) Any interagency body of two (2) or more public agencies where each public

agency is defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (i), or (j) of

this subsection;

3. “Commercial purpose” is defined in KRS 61.870(4) as:

(a) ‘Commercial purpose’ means the direct or indirect use of any part of a

public record or records, in any form, for sale, resale, solicitation, rent, or

lease of a service, or any use by which the user expects a profit either

through commission, salary, or fee.

(b) ‘Commercial Purpose’ shall not include:

i. Publication or related use of a public record by a newspaper or

periodical

ii. Use of a public record by a radio or television station in its news or

other informational programs; or

iii. Use of a public record in the preparation for prosecution or defense

of litigation, or claims settlement by the parties to such action, or the

attorneys representing the parties.

C. General Requirements

Each public agency must make suitable facilities available for the inspection of public records.

Any person shall have the right to inspect public records without stating a purpose. However, if

the public record is to be used for a commercial purpose, the requester must specify that purpose.

The PVA may require a written application, signed by the requestor, to inspect public records.

This application may be hand delivered, mailed or sent via facsimile.

The PVA must respond to the request in writing, to the requestor, within five (5) business days

(excepting Saturdays, Sundays, and legal holidays). The general response must contain the PVA’s

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statement of whether he/she will comply with the request; and, if inspection of any or all of the

request is denied, the reason for denial (KRS 61.880).

If the public record is unavailable, the PVA shall immediately notify the requestor if the public

record is in active use, in storage, or not otherwise available, and provide a detailed explanation of

the cause of the delay and the place, time, and earliest date on which the public record will be

available for inspection.

If the public record does not exist, the PVA should specifically indicate that fact to the

requestor. There is no duty to compile information or to create a document that does not already

exist in response to an open records request.

If the requestor desires that copies of public records be mailed, the PVA, upon receipt of all

fees and the cost of mailing, must mail the copies. The PVA should utilize discretion in billing

for diminutive fees and postage.

D. Public Records Open for Inspection

KRS 133.047 specifically provides that certified property tax rolls are a public record of the

PVA office and subject to public inspection. Additionally, the following documents typically

maintained by PVA offices are generally considered public records:

• Documents in the PVA office received from other public offices, such as building

permits;

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• Lists of automobiles, boats or airplanes, whether compiled by the Office of Property

Valuation, the PVA office, or any other source;

• Real property record cards (mapping cards) and maps;

• Real property assessment cards, except for those portions containing information on

personal property other than motor vehicles, boats, and aircraft;

• Records concerning an individual’s own property or the individual. The PVA may

request identification.

E. Public Records NOT Open for Inspection

Pursuant to KRS 133.047, certain records are not open for inspection, including the following:

1. Personal property tax returns, accompanying documents, and assessment records

(confidential under KRS 131.190 and KRS 131.081(15)).

2. Real property tax returns and accompanying documents (confidential under KRS

131.190 and KRS 131.081(15)).

Pursuant to KRS 61.878(1) these public records are subject to inspection only upon a court

order. The PVA should contact the Department of Revenue if a court order requests confidential

records.

F. Fee Schedule for Open Record Requests

Pursuant to KRS 133.047, the Department of Revenue must develop and provide to each PVA

a reasonable fee schedule for compensating the cost of providing information and assistance to

persons seeking information to be used for commercial or business purposes.

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However, any person seeking information on his/her own property shall not be subject to fees

for personnel time. Pursuant to KRS 133.047(4)(c) if the press requests information directly

related to property tax assessment, appeals, equalization, requests for refunds, or similar matters

the fees for personnel time do not apply. However, as of December 1, 2022, this statutory

provision, along with the “newspaper exemption” under KRS 61.870(4)(b)1, is the subject of

ongoing federal litigation in which the U.S. District Court for the Eastern District of Kentucky

ruled that the “newspaper exemption” is unconstitutional. This section will be updated once the

case has reached finality.

A copy of the current fee schedule is shown on the following pages.

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62F015

08/12

PVA OPEN RECORDS COMMERCIAL FEE GUIDELINES

COPY CHARGES $.10 8½ X 11 OR 8½ x 14

(actual costs if higher may be charged)

FAX CHARGES $2.00 To fax information to a local number

(This charge is in addition to the fee for $5.00 To fax information to a long distant number

the actual data.)

DEED PLOTTING $10.00 per tract (where available)

REQUEST FOR OWNERSHIP and/or

ADMINISTRATIVE INFORMATION $2.00 per account (no building characteristics)

REQUEST FOR COMPARABLE SALES $5.00 per property (no more than 1 building)

and/or PROPERTY CHARACTERISTICS $2.00 each additional building

BULK RATE FOR PROPERTY $1.75 per property (no more than 1 building)

CHARACTERISTICS - ENTIRE COUNTY $2.00 each additional building

REQUEST FOR MAILING LIST $50.00 per request

Plus 8 cents per record for the first 5,000

Plus 7 cents for the next 10,000

Plus 5 cents for the next 15,000

Plus 4 cents for each additional record over 30,000

REQUEST FOR SALES & TRANSFER FILE & COMP BOOKS

PROVIDED ANNUALLY $150.00 per request

Plus 30 cents per record for the first 1,000 records

Plus 15 cents for next 5,000

Plus 5 cents for each record over 6,000

PROVIDED QUARTERLY add an additional 10% of annual cost

PROVIDED MONTHLY add an additional 25% of annual cost

REQUEST FOR PROPERTY TAX ROLL FILE

$250.00 per request

Plus 20 cents per record for the first 5,000 records

Plus 15 cents for the next 10,000

Plus 10 cents for the next 15,000

Plus 5 cents for each additional record over 30,000

THE PVA ASSUMES NO LIABLITY FOR THE VALIDITY OF THIS DATA

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62F015

08/12

COMMERCIAL WEBSITE FEE GUIDELINES*

WEBSITE SUBSCRIPTION FEE SCHEDULE:

120 records/year $100

300 records/year $200

600 records/year $400

1200 records/year $750

COMMERCIAL GIS FEE GUIDELINES

BASIC GIS MAPS AND PRODUCTS

1. Standard Topographic Map: (24 x 36 sheet in hard copy form containing all base layers; price per

sheet)

$25.00/Standard Map

Mylar prints (where available) at higher rates.

Map Size Variations (pre-made prints in hard copy format):

8½ x 11 $2.50

8½ x 14 $5.00

11 x 17 $7.50

17 x 22 $10.00

22 x 34 $20.00

34 x 40 $25.00

Additional Layers:

Layers of coverage will vary, as they are dependent on how involved the GIS program is to the area. The

need for (and types) of layers will increase with the size and urbanization of the area. The more advanced

programs with detailed layers will be more expensive since the start-up costs for them will be higher.

Therefore, there is no fair way to establish a uniform set of prices for layer across the state. Each PVA office

using GIS will have to determine their own layering schedules based on the amount of money invested into

their program.

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2. GIS/Topographic Data (in digital electronic data format):

$50.00 PER REQUEST PLUS:

No Data (shape file only - no parcel $0.30 (per parcel)

number)

Individual or Custom Parcel Data $0.40 (per parcel)

With parcel number ownership and mailing

address only

3. Aerial Photography:

As a point of clarification, DOQQ’s or aerial photos provided by the Department of Geographical Information

(DGI) cannot be sold by PVA offices. For purchase of DOQQ’s, contact DGI, (502) 573-1450. Flight patterns

flown by and paid for by the county are okay for resale.

Standard PVA Maps (GIS) $25.00

4. Digital Images or Sketcher:

$1.00 each with a $5.00 minimum order

5. Media:

Diskette $2.00

CD $10.00

Zip Disk $16.00

6. Staff Time:

If special GIS programming is required, typical rate for staff time charged by PVA offices is $20.00 per hour.

7. Mailing Fees: Actual costs

8. Updates:

Annual renewals at discount of 10% of original amount of purchase, plus cost of media.

Other formats: call for quote

* These are suggested fees only, actual cost of reproduction, actual cost of staff time, and actual cost of the

creation, purchase or other acquisition of records may be recovered if higher.

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CHAPTER TWENTY-FOUR

RECORDS RETENTION

A. Introduction

All local and state agencies encounter thousands of records every year, and the PVA office is

no exception. PVA records are classified as public records, and as such, must be maintained,

stored, and disposed of under the guidelines of the Kentucky Revised Statutes and the State

Archives and Records Commission. This body was created to advise the Department for Libraries

and Archives on matters relating to the management and safekeeping of important documents. The

Commission has the authority to review and approve schedules for the retention and destruction

of records used by state and local agencies and the final decision on the retention and destruction

of public records.

B. Public Records

KRS 171.410 defines public records as "all books, papers, maps, photographs, cards, tapes,

disks, diskettes, recordings, and other documentary material, regardless of physical form or

characteristics which are prepared, owned, used, in possession of, or retained by a public agency."

The proper management of these records ensures that unnecessary records are not created,

necessary records are maintained and used, and records are stored or disposed of according to the

law.

The Department of Revenue’s Record’s Officer or the staff of the Department of Libraries and

Archives is willing to work closely with PVAs in determining which records are permanent and

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how long other records should be kept before being destroyed. A copy of the Records Retention

Schedule is on the PVA network

Permanent records are stored free of charge at the Archives Center. Non-permanent records

(those records retained from two to twenty years) will be stored for a nominal fee. Since various

forms must be completed before any records are transferred to Archives, the PVA should call the

Department of Libraries and Archives at (502) 564-8300 for further instructions. All of this

information (retention schedule, forms. etc., are also available on the Kentucky Library and

Archives Website: https://kdla.ky.gov/pages/default.aspx

C. Local Disposal of Records

Local offices are responsible for the disposal of materials that do not require retention;

however, care must be given to the method used. The Department of Archives recommends using

landfills, shredders, or incinerators for this process. PVAs can follow the methods used by other

agencies in the county when dealing with sensitive record disposal.