Tax on Applicable Purchases

The University of Louisville (University) is exempt from Kentucky sales and use tax on applicable purchases made by the University as long as the purchased items or services are used solely within the educational or charitable functions of the institution.

Presentation of the University’s Purchase Exemption Certificate to the vendor is required to make exempt purchases. Under Kentucky law, use of the University’s exempt status for the personal benefit of an employee or any other individual is punishable by fine and/or imprisonment.

Tax on Applicable Sales

The University must collect and remit sales tax as applicable under Kentucky law. The University is not exempt from collecting tax on applicable sales made by the University to customers. Note that under Kentucky law, the following sales are not taxable:

• Sales of food to students in school cafeterias or lunchrooms;
• Sales by school bookstores of textbooks, workbooks, and course materials.

All other sales of tangible property and certain services are considered taxable sales. This includes food sales to the general public, faculty, and staff. This also includes bookstore sales of items not considered course materials such as notebooks, paper, pencils, and similar student aids.

KRS 139.200 – Imposition of sales tax

KRS 139.495 – Application of taxes to resident nonprofit institutions

KRS 139.496 – Exemption of certain sales

• When a department makes a sale identified as a taxable sale, it should collect tax at a rate of 6%.
• All collected sales tax should be deposited and recorded to GL account 214200.
• The revenue from a taxable sale should be recorded to GL account 424240.
• The Tax Department will prepare the sales tax return and remit any sales tax to the Kentucky Department of Revenue by the appropriate due date.

Department – Identification of taxable sales; collects tax; records tax in GL as per procedure outlined above.

Tax Department – Reports and remits tax to the Kentucky Department of Revenue by the appropriate due date; consults departments on sales tax matters.