The U-Drive-It program is an alternative
method for the payment of Usage Tax as prescribed by KRS
138.460. This allows for deferment of this tax at
the time of registration. Payment will be made based on
rental and lease receipts generated by use of the vehicle.
The laws governing this program are found in KRS
138.463 and are supplemented by the following four
administrative regulations found at:
Title
601 Administrative Regulations
601 KAR 1:140 Applications & Permits
601 KAR 1:145 Tax Reporting
601 KAR 1:146 Fair Market Values
601 KAR 1:147 Records & Audits
Proper accounting systems to record all
usage of the vehicles licensed under the U-Drive-It program
are required. The taxpayer must account for all use of
the vehicle and revenue generated from its operation on
Kentucky highways.
Items to Note:
-
The tax due the Transportation Cabinet
for vehicles rented or leased under this program are
the DIRECT obligation of the taxpayer who registers
the vehicle. The tax due may be passed on to the user
of the vehicle. Any tax exempt status of the renter
or lessee is not applied to the permit holder.
-
All transactions will be taxed at the
Fair Market Value (FMV) of the vehicle being rented
or leased.
-
Taxpayers should retain every void or
damaged rental agreement.
-
You are allowed a reimbursement from
insurance or auto manufacturer on service loaner vehicles
but may NOT charge the customer for use thereof. Service
loaner vehicles may NOT be rented for consideration.
Loaner Permits:
Taxpayers who offer service loaners from
an established service department may qualify for a Loaner
Permit. For more information, please contact the Division
of Motor Carriers at (502) 564-4540.
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Record Retention
Requirements
All records must be retained by the taxpayer
for a period of six (6) years.
Rental Operation Records:
Rental operation records must include:
-
Pre numbered rental agreements
-
Original Vehicle Invoice (copy)
-
Copies of all executed rental agreements
The rental agreement must include:
-
Rental Agreement Number
-
Beginning Date of Rental
-
Ending Date of Rental
-
Vehicle Identification (VIN, Make, Model,
Year)
-
Beginning Odometer Reading
-
Ending Odometer Reading
-
Amount charged Rental Customer
-
Details of Customer Charge
-
Identification of person renting vehicle
Records for loaner program should be the
same but may be kept in a log. There should be no charges
to the customer for loaner vehicles.
Lease Operation Records:
Lease operation records must include a completed
and signed copy of the lease agreement.
The lease agreement must include:
-
Full name and address of lessee
-
Beginning and Ending date of lease
-
Lease Term
-
Vehicle Identification (VIN, Make, Model,
Year)
-
Certificate of Title (copy)
-
Lease Calculation Worksheets
-
Early Termination Documentation
-
Lease Extension Agreements
-
Documentation of any alteration to the
original lease agreement
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