Certainly the most publicized development in Kentucky tax law during the last five years was the series of decisions in St. Ledger v. Kentucky Revenue Cabinet, striking down two of Kentucky's intangibles taxes. The St. Ledger decisions, however, were not the only tax law development to receive attention.
There were a number of legislative developments of some significance. Specifically, Governor Brereton Jones formed a Tax Policy Commission that comprehensively reviewed Kentucky's tax structure. Although the 1996 General Assembly did not fully embrace the Commission's recommendations over the last five years, the General Assembly did enact some significant legislation. For example, the General Assembly enacted legislation permitting affiliated corporations to choose between filing their income tax returns on a separate or consolidated basis. In addition, it replaced Kentucky's century-old bank shares tax with a franchise-based tax. Finally, the General Assembly enacted legislation phasing out much of the inheritance tax.
On the judicial side, a number of unreported decisions also received a good deal of attention. For example, in a decision that has yet to become final, the Supreme Court of Kentucky upheld the constitutionality of the Revenue Cabinet's interim method of assessing unmined coal for tax years 1989 through 1991. In an unpublished opinion that subsequently was withdrawn, the Kentucky Court of Appeals denied a foreign holding company a remedy for unconstitutional discrimination imposed by a preferential license tax scheme.
This Article discusses the legislative and judicial developments described above. In addition, it discusses a few other developments that may be of interest to tax practitioners.