1. KRS 139.470(7) provides that the sales and use tax does not apply to purchases of tangible
personal property or services made by any cabinet, department, bureau, commission, board, or
other statutory or constitutional agencies of the State. This exemption applies only to purchases
of property or services for use solely in the governmental function. A purchaser not qualifying as
a governmental agency or unit is not entitled to the exemption even though such purchaser may
be the recipient of public funds or grants.
2. The exemption applies only to sales made directly to units of State Government and cannot be
claimed by a construction contractor purchasing property to be used in fulfilling a contract with
State Government.
3. Under the provisions of KRS 139.495, schools, colleges, and universities are exempt from the
sales and use tax on purchases which are used within the educational function of the institutions.
Organized athletics conducted by an exempt educational institution are an integral part of the
educational activities and the exemption is extended to the purchase of athletic equipment and
supplies by such institutions.
4. Each unit of State Government, which performs a specific function and makes purchases in its
own name must file an application for exemption. "Application for Purchase Exemption Sales and
Use Tax", Revenue Form 51A125 must be completed and returned to the Revenue Cabinet.
5. Units of State Government qualifying for exemption must obtain an authorization letter
bearing an exemption number. A copy of that letter must be supplied to vendors to be retained in
their records as evidence of non-taxable sales. Every invoice should show that delivery was made
to a unit of State Government and should bear the unit's exemption number.
(KRS 139.470(7) - KRS 139.495)