Attorney General says Corbin residents entitled to occupational tax credit
The Kentucky Attorney General says workers in the Knox County portion of Corbin are entitled to a tax credit on a portion of the Knox County Occupational Tax as they are also paying the Corbin Occupational Tax.
The letter announcing the ruling , which was addressed to Mayor Willard McBurney and Corbin City Commissioners, was issued on March 29, but just recently came to light.
Attorney General Andy Beshear stated that based on current state law, taxpayers were entitled to the full credit.
Under the most recent legislation concerning the occupational tax, HB 487, Section 145 which was passed during the 2018 legislative session, employees in the Corbin part of Knox County may claim a 0.2 percent credit.
“I’m glad to see the Attorney General, finally, after a year of deliberating over it, agrees with the notion that our Knox County taxpayers are entitled to the right to claim this tax credit … a credit which is clearly provided by law,” said Corbin City Commissioner Trent Knuckles.
Commissioner Andrew Pennington agreed.
“I believe with this letter from the Attorney General it has been proven, with little to no room for doubt, that it is well within the bounds of the law for the those that work in the Knox County portion of Corbin to pay their Corbin City Occupational Taxes, and then take a credit against the portion owed to the county. Tax credits that are written into and obviously allowable by law, should be taken. Tax relief for our citizens exists, its confirmed, its legal, and its time we give our people a break and let them take home more of what they rightfully earn,” Pennington said.
Patrick Hughes, an attorney with Dressman, Benzinger, LaVelle, the law firm representing Corbin in the lawsuit against Knox County, said it would be up to each affected employee to ask for the credit though the company’s payroll department.
“On the payroll tax return they would assert a credit is owed,” Hughes said.
“The opinion is just that, an opinion,” said Wayne Willis, Knox County Occupational License Fee Compliance Officer.
Hughes said the lawsuit remains in limbo as legal language concerning the subject of the lawsuit, how the occupational tax is to be divided, is set out in state law. However, the language has a sunset clause, ending on June 30, 2020.
“Nothing will happen for a minimum of two years,” Hughes said noting that could change if the language is included in future legislation.
Corbin passed its occupational tax in 2005, but did not begin collecting it in order to avoid stacking it on top of the Knox County tax.
Senate President Robert Stivers, R-Manchester, whose district includes Knox County, pushed through an amendment in 2012 that only permitted residents from claiming the credit if both the city and county in question were collecting occupational taxes by March 15, 2012. The moratorium was in effect for two years. Stivers had pushed through a similar amendment in 2014.
However, in the 2014 version, Stivers changed the language to permit Corbin residents to claim one-tenth of a percent in credit toward the Knox County tax in 2014 and two-tenths of a percent in 2015 so long as Corbin was collecting the tax by July 1 of the respective years.
In 2016, Stivers added the same language for 2016 and 2017.
In 2016, the Corbin City Commission voted to begin collecting its occupational tax in the Knox County portion of Corbin.
“Corbin has got to take care of Corbin,” Sams said when asked about the decision estimating the collections would generate an additional $500,000 annually for the city.
“We have for so long had to manage with revenue taken from Whitley occupational taxes and other taxes to do everything for the city with nothing coming from Knox County,” Sams said.
Whitley County also has an occupational tax. However, the county has reached an agreement with Corbin and Williamsburg where the county collects the occupational tax and then each city receives 75 percent of the revenue collected within its city limits.
Corbin city officials had been seeking a similar agreement with Knox County in an effort to avoid stacking the taxes on city residents in Knox County.
However, Knox County officials had declined to negotiate explaining the loss of revenue would be detrimental to the county.
Corbin City Manager Marlon Sams noted previously that Knox County has an agreement in place with Barbourville to divide the occupational tax.
Knox County Judge-executive J.M. Hall had previously stated there was nothing for the two sides to discuss regarding the occupational tax.
Knuckles said it is unknown why the commissioners were not made aware of the attorney general’s letter until more than fourth months after it arrived in the mail.
“It is unfortunate that this letter was withheld from the rest of the commission, the press and the public for so long for no good reason. Our workers in the Knox County portion of Corbin deserve to be refunded money they paid in excess of what they owed in occupational taxes. If it is denied them, I consider that outrageous because the law is clear. If governments don’t follow the law and play by the rules, what kind of example does that set for the rest of society,” Knuckles said.
The Corbin City Commission is scheduled to meet at 5 p.m. Monday for its regular monthly meeting at Corbin City Hall.