Tax Audit Protest and Appeal — Kentucky

Tax Audit Protest and Appeal (KENTUCKY)

Quick-Reference Summary

Part A — Informal Conference Request Letter

Sender Letterhead

[LAW FIRM / TAXPAYER REPRESENTATIVE]
[________________________________]
[________________________________]
[City], Kentucky [Zip Code]
Phone: [________________________________]
Email: [________________________________]
KY Bar No.: [________________________________]

Date: [__/__/____]

SENT VIA:
☐ Certified Mail, Return Receipt Requested — Tracking No. [________________________________]
☐ Hand Delivery
☐ Email to [________________________________]

TO:
Kentucky Department of Revenue
Division of Protest Resolution
P.O. Box 1074
Frankfort, KY 40602-1074

RE: Request for Protest Conference — Notice of Tax Due
Taxpayer: [________________________________]
Account/Taxpayer ID: [________________________________]
Case No.: [________________________________]
Notice No.: [________________________________]
Notice Date: [__/__/____]
Tax Type: ☐ Individual Income ☐ Corporate Income ☐ LLET ☐ Sales & Use ☐ Withholding ☐ Property ☐ Other: [____]
Tax Period(s): [________________________________]
Total Amount Assessed: $[____] (tax: $[____]; interest: $[____]; penalty: $[____])

To Whom It May Concern:

This firm represents [TAXPAYER NAME] ("Taxpayer") with respect to the above-referenced Notice of Tax Due issued by the Kentucky Department of Revenue ("DOR") on [__/__/____]. A "Declaration of Representative" (Form 20A100) executed by Taxpayer is enclosed.

Pursuant to KRS 131.110(2), Taxpayer hereby requests a protest conference with the Division of Protest Resolution prior to the issuance of any Final Ruling. A timely written protest with supporting statement is being filed contemporaneously (see Part B). Taxpayer requests that the conference be:

• ☐ In person at DOR's Frankfort office
• ☐ By telephone
• ☐ By videoconference

Taxpayer further requests that DOR provide:

1. A complete copy of the audit narrative, workpapers, and any exhibits relied upon;
2. The identity and contact information of the auditor and reviewing supervisor;
3. The legal authorities and regulations relied upon for each adjustment; and
4. Any internal DOR rulings or technical advice memoranda cited or applied.

We look forward to a productive conference. Please contact the undersigned at [phone/email] to schedule.

Respectfully submitted,

[Signature]
[Counsel Name], KY Bar No. [____]

Enclosures: Form 20A100 Declaration of Representative; Copy of Notice of Tax Due; Written Protest with Supporting Statement (Part B).

Part B — Formal Protest / Petition

TAXPAYER'S WRITTEN PROTEST OF NOTICE OF TAX DUE

Filed Pursuant to KRS 131.110 and 103 KAR 1:010

Date: [__/__/____]

SENT VIA:
☐ Certified Mail, Return Receipt Requested — Tracking No. [________________________________]
☐ Hand Delivery — receipted by [____]

TO:
Kentucky Department of Revenue
Division of Protest Resolution
P.O. Box 1074
Frankfort, KY 40602-1074

I. Statement of Protest

Taxpayer, through undersigned counsel, PROTESTS the above-referenced Notice of Tax Due pursuant to KRS 131.110(1) and 103 KAR 1:010. This Protest is timely filed within the 60-day period prescribed by KRS 131.110(1)(a)(2). Taxpayer expressly preserves all rights to (a) a protest conference under KRS 131.110(2); (b) a Final Ruling under KRS 131.110(3); (c) appeal to the Kentucky Claims Commission under KRS 49.220 and KRS 131.340; (d) judicial review in Franklin Circuit Court under KRS 13B.140 / KRS 49.250; and (e) any related refund claim under KRS 134.580 and KRS 141.235.

II. Statement of Facts

2.1. Taxpayer is a [Kentucky resident / domestic corporation / pass-through entity / nonresident with Kentucky-source income] with its principal place of business / residence at [ADDRESS].

2.2. For the periods at issue, Taxpayer filed Kentucky [Form 740 / 720 / 725 / OL-D / KY Sales-Use Return / other: ____], reporting income/receipts of $[____] and tax due of $[____].

2.3. On [DATE], DOR issued the Notice of Tax Due following [a field audit / desk audit / federal RAR adjustment / nexus investigation / sales-tax exemption review / other: ____].

2.4. The Notice proposes adjustments comprising: [itemized adjustments — e.g., disallowance of NOL carryforward of $___; recharacterization of $___ as Kentucky-source business income; disallowance of resale-exemption certificates totaling $___ in tax; assertion of economic nexus under Wayfair-equivalent thresholds; reclassification of contractor as employee for withholding].

2.5. Taxpayer disagrees with the Notice on the grounds set forth in Section IV below.

III. Statement of Timeliness (KRS 131.110(1)(a))

The Notice of Tax Due was mailed on [__/__/____]. The 60th day after mailing is [__/__/____]. This Protest is filed on [__/__/____], which is within the 60-day period. The Protest is accompanied by this Supporting Statement of Grounds as required by KRS 131.110(1)(c).

IV. Grounds for Protest — Assignments of Error

Taxpayer assigns the following errors to the proposed assessment:

4.1. ☐ The assessment is barred by the statute of limitations. The audit period(s) ending [____] is/are outside the 4-year limitations period of KRS 141.210 (or applicable tax-type SOL). No exception (fraud, unfiled return, federal-audit adjustment) applies.

4.2. ☐ Adjustments are factually incorrect. Specifically: [________________________________]. Documentary support is enclosed as Exhibits [____] through [____].

4.3. ☐ DOR misapplied the law. Specifically: [________________________________]. See KRS [____]; [REG][____]; [CASE][____].

4.4. ☐ Mathematical / computational error. Specifically: [________________________________].

4.5. ☐ Improper use of statistical sampling / projection methodology. The sample is unrepresentative because: [________________________________].

4.6. ☐ DOR failed to credit valid exemption / resale certificates. Exemption certificates for the following customers are valid under KRS 139.270 / 139.280: [________________________________].

4.7. ☐ Constitutional infirmity. ☐ Commerce Clause / due process / equal protection / Kentucky uniformity (Ky. Const. § 171). Argument: [________________________________].

4.8. ☐ Penalty waiver under KRS 131.175, KRS 131.180, and 103 KAR 1:040. Reasonable cause exists because: [________________________________]. Taxpayer requests full abatement of penalties.

4.9. ☐ Interest abatement to the extent attributable to DOR delay (KRS 131.081(6) — reliance on DOR written advice).

4.10. ☐ Other: [________________________________].

V. Relief Requested

Taxpayer respectfully requests that DOR:

1. Withdraw or modify the Notice of Tax Due to reflect tax of $[____] (or, ideally, $0);
2. Abate all penalties in full under KRS 131.175 / 131.180;
3. Abate interest to the extent attributable to DOR delay;
4. Schedule a protest conference under KRS 131.110(2); and
5. Issue any Final Ruling promptly upon written request under KRS 131.110(3)(b).

VI. Verification and Signature

I, [NAME], being duly authorized [as Taxpayer / as Taxpayer's counsel of record], declare under penalty of perjury under the laws of the Commonwealth of Kentucky that the statements of fact in this Protest are true and correct to the best of my knowledge.

Date: [__/__/____]

[Signature]
[Name], [Title / KY Bar No.]

VII. Enclosures

• ☐ Copy of Notice of Tax Due
• ☐ Form 20A100 Declaration of Representative
• ☐ Audit workpapers and exhibits
• ☐ Tax returns at issue
• ☐ Documentary evidence (exemption certificates, books and records, third-party confirmations)
• ☐ Legal authorities relied upon
• ☐ Computation schedule reconciling Taxpayer's proposed tax to DOR's assessment

Part C — Appeal Cover Letter to Tax Tribunal / Court

TAXPAYER'S PETITION OF APPEAL TO THE KENTUCKY CLAIMS COMMISSION

Filed Pursuant to KRS 131.340 and KRS 49.220

Date: [__/__/____]

SENT VIA:
☐ Certified Mail, Return Receipt Requested — Tracking No. [________________________________]
☐ Hand Delivery — receipted by [____]

TO:
Kentucky Claims Commission
Tax Appeals Division
500 Mero Street, 5th Floor SW
Frankfort, KY 40601

I. Jurisdictional Statement

1.1. The Kentucky Claims Commission has jurisdiction over this appeal under KRS 49.220, KRS 131.340, and KRS 131.110(4).

1.2. DOR issued a Final Ruling on [__/__/____]. This Petition is filed on [__/__/____], which is within the 30-day period prescribed by KRS 131.340.

1.3. Petitioner is represented by undersigned counsel admitted to the Kentucky Bar (802 KAR 1:010).

II. Parties

2.1. Petitioner is [TAXPAYER NAME], a [Kentucky resident / domestic corporation / etc.], with principal address at [____], FEIN/SSN ending in [____].

2.2. Respondent is the Kentucky Department of Revenue, an executive agency within the Finance and Administration Cabinet of the Commonwealth of Kentucky.

III. Decision Being Appealed

3.1. Petitioner appeals the Final Ruling issued by DOR on [__/__/____], Case No. [____], regarding [tax type, period, and amount]. A true and correct copy of the Final Ruling is attached as Exhibit A.

3.2. The total amount in controversy is $[____] (tax: $[____]; interest: $[____]; penalty: $[____]).

IV. Procedural History

4.1. On [__/__/____], DOR issued Notice of Tax Due No. [____].

4.2. On [__/__/____], Petitioner timely filed a written Protest with supporting statement under KRS 131.110.

4.3. A protest conference was held on [__/__/____] / [☐ Petitioner requested a Final Ruling under KRS 131.110(3)(b)].

4.4. On [__/__/____], DOR issued its Final Ruling, sustaining the assessment in [full / part: $___].

V. Assignments of Error

Petitioner assigns the following errors to the Final Ruling, each of which is incorporated by reference from Petitioner's Protest (attached as Exhibit B):

5.1. [Statute-of-limitations bar — KRS 141.210 / applicable];
5.2. [Factual error — overstated taxable receipts / improper imputation];
5.3. [Legal error — misapplication of KRS ___ / regulation ___ / controlling case ___];
5.4. [Computational / sampling error];
5.5. [Constitutional infirmity — Commerce Clause / due process / uniformity];
5.6. [Penalty / interest abatement under KRS 131.175 / 131.081(6)];
5.7. [Other: ____].

VI. Standard of Review and Burden

The Commission conducts a de novo hearing under KRS 49.250 and KRS 13B.080. While DOR's assessment is presumed correct, Petitioner intends to rebut that presumption with documentary and testimonial evidence.

VII. Relief Requested

Petitioner respectfully requests that the Commission:

A. Reverse or modify the Final Ruling and reduce the assessment to $[____] (or $0);
B. Abate all penalties in full;
C. Abate interest accrued by reason of DOR delay;
D. Award Petitioner its costs to the extent permitted by law; and
E. Grant such other relief as the Commission deems just.

VIII. Hearing Request

Petitioner requests an evidentiary hearing before a hearing officer of the Tax Appeals Division. Petitioner estimates [half / one / two] day(s). Petitioner anticipates calling [__] witnesses and introducing [__] exhibits.

Respectfully submitted,

[Signature]
[Counsel Name], KY Bar No. [____]
[Firm], [Address], [Phone], [Email]

Exhibits: A — Final Ruling; B — Written Protest with Supporting Statement; C — Notice of Tax Due; D — Audit workpapers; E — Form 20A100; F — Documentary evidence schedule.

(Optional) Cover Pleading for Circuit Court Judicial Review (KRS 13B.140 / KRS 49.250)

If the KCC issues an unfavorable Final Order, Petitioner may file a petition for judicial review in Franklin Circuit Court within 30 days of the Final Order under KRS 13B.140 and KRS 49.250. The Circuit Court reviews the KCC record under the standards in KRS 13B.150 (not de novo). Further review lies in the Kentucky Court of Appeals as a matter of right and in the Kentucky Supreme Court on discretionary review.

Part D — Pre-Filing Checklist

• ☐ Confirmed Notice of Tax Due date and calendared 60-day protest deadline (KRS 131.110(1)(a)(2))
• ☐ Calendared 30-day final-ruling-request availability (KRS 131.110(3)(b))
• ☐ Calendared 30-day KCC appeal deadline from any Final Ruling (KRS 131.340)
• ☐ Calendared 30-day Circuit Court appeal deadline from any KCC Final Order (KRS 13B.140)
• ☐ Verified statute of limitations on assessment (KRS 141.210 / applicable)
• ☐ Verified refund SOL — 4 years from payment (KRS 134.580; KRS 141.235)
• ☐ Obtained complete audit workpapers, narrative, and exhibits from DOR
• ☐ Identified each adjustment and assigned error
• ☐ Confirmed Form 20A100 (Declaration of Representative) executed and enclosed
• ☐ Drafted supporting statement with factual narrative, legal authority, and computation
• ☐ Requested protest conference under KRS 131.110(2)
• ☐ Requested penalty waiver under KRS 131.175, 131.180, and 103 KAR 1:040
• ☐ Requested interest relief under KRS 131.081(6) if reliance on DOR advice
• ☐ Sent protest via certified mail, return receipt requested (or hand delivery with receipt)
• ☐ Saved tracking number and delivery confirmation
• ☐ Issued litigation hold to client; preserved books, records, communications
• ☐ Identified third-party witnesses and exemption-certificate counterparties
• ☐ Considered paying disputed amount under KRS 134.580 to stop interest accrual while pursuing refund claim
• ☐ Confirmed entity is represented by attorney for KCC filing (802 KAR 1:010; JDOT, LLC)
• ☐ Removed all `` comments and bracketed placeholders prior to filing

Sources and References

• Kentucky Department of Revenue — Protest Procedures: https://revenue.ky.gov/Get-Help/Pages/Protest-Procedures.aspx
• KRS 131.110 — Protest of assessment by Department of Revenue: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53106
• KRS 49.220 — Tax appeals to Kentucky Claims Commission: https://apps.legislature.ky.gov/law/statutes/
• KRS 131.340 — Time for petition of appeal (30 days): https://apps.legislature.ky.gov/law/statutes/
• KRS 134.580 — Refund of taxes: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=51506
• KRS 141.235 — Action interfering with collection; refund limitations: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=49949
• KRS 13B.140, 13B.150 — Judicial review of administrative orders
• 103 KAR 1:010 — Protests: https://apps.legislature.ky.gov/law/kar/titles/103/
• 103 KAR 1:040 — Waiver of penalties
• 802 KAR 1:010 — Practice before Kentucky Claims Commission
• Kentucky Claims Commission: https://kcc.ky.gov/
• Form 20A100 — Declaration of Representative: https://revenue.ky.gov/Forms/
• Dentons, Tax Appeals to the Kentucky Claims Commission (Apr. 26, 2019): https://www.dentons.com/en/insights/newsletters/2019/april/26/us-tax-law-insights/tax-appeals-to-the-kentucky-claims-commission