Kentucky State Income Tax Protest Letter

KENTUCKY STATE INCOME TAX PROTEST LETTER

TABLE OF CONTENTS

1. Sender / Taxpayer Header
2. Department Address Block
3. Identification of the Disputed Notice
4. Statement of Timeliness
5. Statement of Grounds for Protest
6. Specific Errors and Legal Argument
7. Request for Conference and Reservation of Rights
8. Power of Attorney / Representative Authorization
9. Signature and Verification
10. Exhibit List
11. Appeal Roadmap (Post-Final Ruling)
12. Kentucky Practice Notes
13. Sources and References

1. SENDER / TAXPAYER HEADER

[TAXPAYER FULL LEGAL NAME]

[TAXPAYER MAILING ADDRESS — STREET]

[CITY, STATE ZIP]

SSN / FEIN: [XXX-XX-XXXX or XX-XXXXXXX]

KY Account Number: [________________________________]

Date: [__/__/____]

2. DEPARTMENT ADDRESS BLOCK

Kentucky Department of Revenue

[DIVISION INDICATED ON NOTICE — e.g., Division of Individual Income Tax / Division of Corporation Tax]

501 High Street

Frankfort, Kentucky 40601-2103

Re: WRITTEN PROTEST PURSUANT TO KRS § 131.110

Notice Type: [Notice of Tax Due / Notice of Refund Denial / Notice of Adjustment]

Notice Number: [________________________________]

Notice Date: [__/__/____]

Tax Type: [Kentucky Individual Income Tax / Corporation Income Tax / LLET]

Tax Period(s): [YEAR(S)]

Amount in Dispute: $[________________________________]

3. IDENTIFICATION OF THE DISPUTED NOTICE

3.1. The undersigned Taxpayer files this WRITTEN PROTEST under KRS § 131.110 against the [Notice of Tax Due / Refund Denial / Adjustment] identified above (the "Notice").

3.2. The Notice asserts an additional liability of $[AMOUNT] in tax, $[AMOUNT] in penalty, and $[AMOUNT] in interest, for total alleged liability of $[AMOUNT], for tax period(s) [YEAR(S)].

3.3. Taxpayer disputes the entirety of the asserted liability except as expressly stated in Paragraph 3.4. Taxpayer's protest is comprehensive and preserves all defenses, including but not limited to defenses based on Kentucky statutory law, the Kentucky Constitution, and the United States Constitution.

3.4. Uncontested portion (if any): Taxpayer concedes only $[AMOUNT or "None"] of the assessment and has remitted that amount under separate cover via [check / EFT confirmation #] dated [__/__/____], without prejudice to the protest of the contested portion.

4. STATEMENT OF TIMELINESS

4.1. The Notice is dated [__/__/____]. This Protest is postmarked [__/__/____], which is within sixty (60) days of the Notice date as required by KRS § 131.110(1)(a) for notices issued on or after July 1, 2018.

4.2. This Protest is therefore timely filed. Taxpayer respectfully invokes the Department's obligations under the Kentucky Taxpayer Bill of Rights, KRS §§ 131.041 to 131.081, including the right to a fair and impartial review and the right to be represented by counsel or other taxpayer representative pursuant to KRS § 131.051.

5. STATEMENT OF GROUNDS FOR PROTEST

Taxpayer protests on each of the following independent grounds. Each ground is stated in compliance with KRS § 131.110(1)(b) and 103 KAR 1:010, which require a "supporting statement" identifying the basis of the protest.

5.1. Factual Error. The Notice rests on a misapprehension of the underlying facts, in that [DESCRIBE — e.g., the Department treated nonresident wages as Kentucky-source; the Department double-counted Schedule C income; the Department disregarded properly substantiated deductions].

5.2. Misapplication of Law. The Department has misapplied [KRS § 141.XXX / 103 KAR XX:XXX] to the facts of Taxpayer's return. The correct application requires [STATE CORRECT LEGAL CONCLUSION].

5.3. Improper Disallowance of Deduction or Credit. Taxpayer is entitled to the [deduction / credit] claimed on Line [#] of Form [740 / 720 / 725] because [STATE BASIS — e.g., the expenses are ordinary and necessary under KRS § 141.010 conformity to IRC § 162].

5.4. Statute of Limitations. The assessment is barred in whole or in part by KRS § 141.210 (four-year general limitation on income-tax assessments) because the underlying return was filed on [__/__/____], more than four years before the Notice date.

5.5. Penalty Abatement. Any penalty asserted should be abated for reasonable cause under KRS § 131.175 and KRS § 131.180 because [DESCRIBE REASONABLE CAUSE — reliance on professional advice, ambiguity in the law, first-time abatement, etc.].

5.6. Constitutional Defenses. To the extent the Department's position would impose tax on income not constitutionally taxable by Kentucky, Taxpayer asserts the protections of the Due Process and Commerce Clauses of the United States Constitution and Sections 2 and 171 of the Kentucky Constitution.

6. SPECIFIC ERRORS AND LEGAL ARGUMENT

6.1. Issue 1 — [SHORT TITLE].

• Facts: [FACT NARRATIVE].
• Law: KRS § [CITATION]; 103 KAR [CITATION]; [CASE].
• Application: [APPLY LAW TO FACTS].
• Conclusion: Taxpayer respectfully requests that the Department withdraw $[AMOUNT] of the assessment attributable to this issue.

6.2. Issue 2 — [SHORT TITLE].

• Facts: [FACT NARRATIVE].
• Law: [CITATIONS].
• Application: [ANALYSIS].
• Conclusion: [REQUESTED RELIEF].

6.3. Issue 3 — [SHORT TITLE].

• Facts: [FACT NARRATIVE].
• Law: [CITATIONS].
• Application: [ANALYSIS].
• Conclusion: [REQUESTED RELIEF].

7. REQUEST FOR CONFERENCE AND RESERVATION OF RIGHTS

7.1. Pursuant to KRS § 131.110(2) and 103 KAR 1:010 § 5, Taxpayer requests an in-person or telephonic conference with the Department's Division of Protest Resolution.

7.2. Taxpayer reserves the right to:

☐ Supplement this Protest with additional documentation and legal authority;

☐ Raise additional grounds discovered during conference or further investigation;

☐ Request a written extension of time under KRS § 131.110(1)(b) to file a more comprehensive supporting statement;

☐ Pursue all administrative and judicial appeals if the Final Ruling is unfavorable, including appeal to the Kentucky Board of Tax Appeals under KRS § 49.220.

7.3. Taxpayer requests that the Department, through the assigned Protest Officer, communicate exclusively through Taxpayer's representative identified below.

8. POWER OF ATTORNEY / REPRESENTATIVE AUTHORIZATION

The undersigned Taxpayer designates the following representative under KRS § 131.051 and authorizes the Department to discuss this matter with the representative as if with the Taxpayer directly. A signed Form 20A100 (Declaration of Representative) is attached.

[REPRESENTATIVE NAME]

[FIRM NAME]

[ADDRESS]

[PHONE] | [EMAIL]

KY Bar No. [####] / CPA License No. [####] / Enrolled Agent No. [####]

9. SIGNATURE AND VERIFICATION

I, the undersigned, declare under penalty of perjury under the laws of the Commonwealth of Kentucky that the foregoing Protest is true and correct to the best of my knowledge, that I have authority to file this Protest, and that the attached exhibits are authentic copies of the documents they purport to be.

Date: [__/__/____]

[________________________________]

[TAXPAYER NAME / OFFICER NAME / TITLE]

For corporate or LLC taxpayers, attach board or member resolution authorizing this Protest.

10. EXHIBIT LIST

11. APPEAL ROADMAP (POST-FINAL RULING)

12. KENTUCKY PRACTICE NOTES

• The 60/45-day window is jurisdictional. KRS § 131.110(1)(a) was amended effective July 1, 2018, to extend the protest period from 45 to 60 days. Notices issued before that date remain governed by the 45-day rule. Either deadline is strictly construed; an untimely protest forfeits all administrative and judicial remedies and converts the assessment into a final liability collectible under KRS Chapter 134.
• Pay-and-protest vs. protest-and-defer. Unlike federal practice in U.S. Tax Court, Kentucky permits a "protest-and-defer" approach: filing a timely protest stays collection during administrative review. However, statutory interest under KRS § 131.183 continues to accrue. Many practitioners pay the uncontested portion to stop interest on that segment while preserving the dispute over the contested portion.
• Kentucky Taxpayer Bill of Rights. KRS §§ 131.041–131.081 codifies rights including the right to representation, to written explanations of liability, to request abatement, and to recover certain costs. The current Bill of Rights publication is available at revenue.ky.gov.
• BOTA / Claims Commission structure. The Kentucky Board of Tax Appeals was reorganized into the Kentucky Claims Commission in 2017 (HB 453). The Tax Appeals Panel sits within the Office of Claims and Appeals (OCA). Hearings proceed under KRS Chapter 13B as formal administrative hearings; the taxpayer has the burden of proof and rules of evidence are relaxed.
• Venue for judicial review. KRS § 49.250 vests jurisdiction in the Franklin Circuit Court or, at the taxpayer's election, the Circuit Court of the taxpayer's county of residence. Many practitioners select Franklin County for tax-experienced bench; corporate taxpayers without a Kentucky residence default to Franklin Circuit.
• Burden of proof. The taxpayer carries the burden to demonstrate that the assessment is incorrect. Department of Revenue v. Cox Interior, Inc., 400 S.W.3d 240 (Ky. 2010), reaffirms strict construction against the taxpayer for tax-relief provisions.
• Penalty abatement. Under KRS § 131.175 the Department may waive penalties for reasonable cause; first-time abatement and reliance-on-counsel arguments are recognized.
• Settlement. The Department's Office of Tax Settlement (Final Resolution Branch) has authority to compromise disputed liability under KRS § 131.030(3). Settlement requests should be raised at conference.

13. SOURCES AND REFERENCES

• Kentucky Revised Statutes (apps.legislature.ky.gov/law/statutes):
• KRS § 131.110 — https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=51499
• KRS §§ 131.041 to 131.081 (Taxpayer Bill of Rights)
• KRS § 131.183 (Interest)
• KRS Chapter 49 (Office of Claims and Appeals; Board of Tax Appeals)
• KRS Chapter 13B (Administrative hearings)
• KRS Chapter 141 (Income Taxes)
• Kentucky Administrative Regulations:
• 103 KAR 1:010 (Protests)
• 802 KAR 1:010 (BOTA practice and procedure)
• Kentucky Department of Revenue, Protest Procedures — https://revenue.ky.gov/Get-Help/Pages/Protest-Procedures.aspx
• Kentucky Department of Revenue, Taxpayer Bill of Rights — https://revenue.ky.gov/Get-Help/Pages/Taxpayer-Bill-of-Rights.aspx
• Kentucky Claims Commission (Office of Claims and Appeals) — https://kycc.ky.gov/
• Department of Revenue v. Cox Interior, Inc., 400 S.W.3d 240 (Ky. 2010)
• Form 20A100 (Declaration of Representative) — https://revenue.ky.gov/Forms/

Disclaimer: This template is provided for informational purposes only and does not constitute legal or tax advice. A Kentucky-licensed attorney or CPA must review and customize this Protest before filing. Statutory citations, deadlines, and Department procedures change; verify all authority before use.