Revenue Cabinet v. Budget Rent-A-Car of Cincinnati, Inc., RENT-A-CAR

CourtUnited States State Supreme Court (Kentucky)
Writing for the CourtGANT
Citation704 S.W.2d 199
PartiesREVENUE CABINET, Commonwealth of Kentucky, Movant, v. BUDGETOF CINCINNATI, INC., Respondent.
Decision Date16 January 1986
Docket NumberRENT-A-CAR,No. 84-SC-991-DG

Page 199

704 S.W.2d 199
REVENUE CABINET, Commonwealth of Kentucky, Movant,
v.
BUDGET RENT-A-CAR OF CINCINNATI, INC., Respondent.
No. 84-SC-991-DG
Supreme Court of Kentucky.
Jan. 16, 1986.

Page 200

Ross T. Carter, Legal Services Section, Revenue Cabinet, Frankfort, for movant.

Robert S. Miller, Miller, Griffin & Marks, P.S.C., Lexington, for respondent.

GANT, Justice.

Budget Rent-A-Car of Cincinnati, Inc., among its operations, maintains an automobile rental outlet at Greater Cincinnati Airport, which is located in Boone County, Kentucky. Rentals at that site comprise some 60% of the total business of the corporation. Pursuant to the applicable statutes and regulations of this state, an allocation formula was devised and agreed to by which Budget registered some 19% of the vehicles used at this location in Kentucky, the remainder being registered in Ohio. This action concerns the usage tax payable to the Commonwealth under the applicable law of the state.

The statute pertaining to the question is:

KRS 138.463. Collection of tax on U-Drive-It.--(1) A holder of a certificate as required under KRS 281.615 to operate as a U-Drive-It as defined in KRS 281.014 may pay the usage tax as provided in KRS 138.460 or, subject to the provisions of subsection (2), may pay a usage tax of five per cent (5%) levied upon the amount of the gross rental or lease charges paid by a customer or lessee renting or leasing a motor vehicle from such holder of the certificate.

(2) A holder of a certificate shall pay the usage tax as provided in KRS 138.460 unless he shows to the satisfaction of the Cabinet that he is regularly engaged in the renting or leasing of motor vehicles to retail customers as part of an established business. Persons first engaging in the renting or leasing of motor vehicles to retail customers shall, in addition to obtaining a certificate required under KRS 281.615, demonstrate to the satisfaction of the Cabinet that they are prepared to qualify under the standards set forth in this subsection.

(3) In the event the holder of such certificate qualifies under subsection (2) and elects to pay the usage tax by the alternate method as provided in subsection (1), he shall present his certificate to the county clerk at the time the motor vehicle is offered for registration in Kentucky and the following provisions shall be applicable.

(4) The tax shall be the direct obligation of the holder of the certificate but it may be charged to and collected from the customer in addition to the rental or lease charges. The tax due shall be remitted to the Revenue Cabinet.

The applicable regulation in this case is 103 KAR 44:020(6)(b):

Fleets of vehicles operating under a U-Drive-It permit which are registered

Page 201

pursuant to an allocation formula by the Department of Transportation may, upon approval of the Department of Revenue, elect to pay the five per cent (5%) usage tax on revenue derived from rental or leasing of all vehicles rented or leased in Kentucky.

Under KRS 138.463(1), Budget chose to operate under this second option, which provides a usage tax of 5% upon "gross rental or lease charges paid by a customer or lessee," rather than paying the usage tax on the vehicles registered in Kentucky. However, they paid this optional tax only on the rental or lease charges on those vehicles registered in Kentucky, and not on the rental or lease charges for the entire fleet of U-Drive-Its rented at the Kentucky location. Relying upon the above quoted regulation and statute, and after a complete audit of Budget, Revenue assessed a deficiency of $255,526, plus penalties and interest, contending the regulation and the statute clearly required under the option selected by Budget that the 5% usage tax applied to all Kentucky rentals, not merely to rentals of those vehicles registered in the state.

The audit conducted by Revenue on the records...

To continue reading

Request your trial
4 practice notes
  • Townley, Matter of, No. 15547
    • United States
    • Supreme Court of South Dakota
    • April 22, 1987
    ...completely dispositive, they substantially support the principles involved. In Revenue Cabinet v. Budget Rent-A-Car of Cincinnati, Inc., 704 S.W.2d 199 (Ky.App.Dist. 1986), app. dis. --- U.S. ----, 106 S.Ct. 2239, 90 L.Ed.2d 687, the court held that a gross rental or lease charge tax applie......
  • St. Ledger v. Com., Nos. 94-SC-468-D
    • United States
    • United States State Supreme Court (Kentucky)
    • October 19, 1995
    ...is satisfied by the same factors that satisfy the "substantial nexus" requirement. Revenue Cabinet v. Budget Rent-A-Car, Ky., 704 S.W.2d 199, 202 (1986). We agree, therefore, in this case the second prong is also satisfied. The fourth prong of the Complete Auto Transit test is also satisfie......
  • City of Phoenix v. Arizona Rent-A-Car Systems, Inc., RENT-A-CAR
    • United States
    • Court of Appeals of Arizona
    • April 11, 1995
    ...completely dispositive, they substantially support the principles involved. In Revenue Cabinet v. Budget Rent-A-Car of Cincinnati, Inc., 704 S.W.2d 199 [Ky.1986], app. dis. 476 U.S. 1137, 106 S.Ct. 2239, 90 L.Ed.2d 687 (1986), ... the court held that a gross rental or lease charge tax appli......
  • Bob Hook Chevrolet Isuzu, Inc. v. Com. Transp. Cabinet, No. 97-SC-776-DG
    • United States
    • Kentucky Supreme Court
    • November 19, 1998
    ...ambiguity in assessing the usage tax upon gross rental and lease charges. Revenue Cabinet v. Budget Rent-A-Car Of Cincinnati, Inc., Ky., 704 S.W.2d 199, 202 (1986). It also held that gross lease charge means any charge to the customer contained in the lease. The other option for Hook Chevro......
4 cases
  • Townley, Matter of, No. 15547
    • United States
    • Supreme Court of South Dakota
    • April 22, 1987
    ...completely dispositive, they substantially support the principles involved. In Revenue Cabinet v. Budget Rent-A-Car of Cincinnati, Inc., 704 S.W.2d 199 (Ky.App.Dist. 1986), app. dis. --- U.S. ----, 106 S.Ct. 2239, 90 L.Ed.2d 687, the court held that a gross rental or lease charge tax applie......
  • St. Ledger v. Com., Nos. 94-SC-468-D
    • United States
    • United States State Supreme Court (Kentucky)
    • October 19, 1995
    ...is satisfied by the same factors that satisfy the "substantial nexus" requirement. Revenue Cabinet v. Budget Rent-A-Car, Ky., 704 S.W.2d 199, 202 (1986). We agree, therefore, in this case the second prong is also satisfied. The fourth prong of the Complete Auto Transit test is also satisfie......
  • City of Phoenix v. Arizona Rent-A-Car Systems, Inc., RENT-A-CAR
    • United States
    • Court of Appeals of Arizona
    • April 11, 1995
    ...completely dispositive, they substantially support the principles involved. In Revenue Cabinet v. Budget Rent-A-Car of Cincinnati, Inc., 704 S.W.2d 199 [Ky.1986], app. dis. 476 U.S. 1137, 106 S.Ct. 2239, 90 L.Ed.2d 687 (1986), ... the court held that a gross rental or lease charge tax appli......
  • Bob Hook Chevrolet Isuzu, Inc. v. Com. Transp. Cabinet, No. 97-SC-776-DG
    • United States
    • Kentucky Supreme Court
    • November 19, 1998
    ...ambiguity in assessing the usage tax upon gross rental and lease charges. Revenue Cabinet v. Budget Rent-A-Car Of Cincinnati, Inc., Ky., 704 S.W.2d 199, 202 (1986). It also held that gross lease charge means any charge to the customer contained in the lease. The other option for Hook Chevro......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT