Property Tax Alert: Kentucky

January 2006

Distilled spirits and the barrels used for storing them were subject to Kentucky personal property tax because state statutes specifically provide that distilled spirits are subject to both state and local taxes. The manufacturer argued that certain exemptions could be applied to distilled spirits that were stored for aging purposes in warehouses, as well as to the barrels in which they were stored. However, the legislative intent was clearly to tax distilled spirits regardless of whether they were stored for aging. The exemptions relied upon by the manufacturer were not intended for distilled spirits or storage barrels, and to hold otherwise would be to ignore the direct and specific language of the statutes. The manufacturer also contended that the tax violated its constitutional due process rights, but the Legislature's decision not to exempt distilled spirits from state and local taxes protected the revenue stream and was a legitimate state interest.

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