September 30, 2020
Kentucky Governor signs Executive Order reestablishing Kentucky Board of Tax Appeals
Governor Andy Beshear has abolished the Kentucky Claims Commission, effective on September 1, 2020, and established the Office of Claims and Appeals within the Public Protection Cabinet (Executive Order 2020-708 (Order)).
The Kentucky Claims Commission was established in 2016 by an executive order issued by Governor Beshear's predecessor, Matt Bevin. The Claims Commission had assumed the duties of the abolished Board of Tax Appeals (BTA), Crime Victims Compensation Board and Board of Claims. The newly established Office of Claims and Appeals consists of the reestablished BTA, Crime Victims Compensation Board and Board of Claims.
The BTA has exclusive jurisdiction to hear appeals from final rulings, orders and determinations of any state or county government agency affecting revenue and taxation, including appeals currently pending before the Kentucky Claims Commission. The BTA will consist of three members appointed by the Governor. One member must be an attorney qualified to be a candidate for circuit court judge. The other two members must have a general business background, but the three members cannot be engaged in the same occupation or profession. Governor Beshear appointed members to the BTA, with one serving an initial two-year term, one a three-year term and the last a four-year term. After their initial terms expire, each of these members can serve one additional four-year term.
Administrative hearings before the BTA must be conducted in accordance with the Kentucky administrative procedure law set forth in the Albert Jones Act of 1994 (codified in Ky. Rev. Stat. Sections 13B.005 to 13B.170) (Kentucky Administrative Law). Under Kentucky Administrative Law, any party to an administrative hearing may participate in person or be represented by counsel.1 In informal proceedings, the Kentucky Administrative Law allows a party to be represented by other professionals if appropriate and if permitted by the affected agency by administrative regulation.
Any party aggrieved by a decision of the BTA (with the exception of an appeal from a county board of assessment appeals) may appeal to the Franklin County Circuit Court or the circuit court where the taxpayer resides or conducts its business. A state or county agency may petition the circuit court to require the taxpayer to post a bond or other security for the payment of any circuit court judgment if the agency believes its ability to obtain payment from the taxpayer is in jeopardy or if it believes that the appeal is for the purpose of delaying payment.
The Public Protection Cabinet has issued proposed rules on BTA practice and procedure and has invited the public to submit comments and participate in a public hearing. The public hearing is scheduled to begin at 10 a.m. EST on November 24, 2020.
The Order restores the BTA as it existed before Governor Bevin's Executive Order abolished it in 2016. Restoration of the BTA appears to be intended to clear a backlog of cases. A taxpayer, in consultation with its tax advisor or legal counsel, should consider the application of the Order, including the potential bond requirements, to matters it may currently have pending before the now-abolished Kentucky Claims Commission and for future appeals of any determinations of the Kentucky Department of Revenue or other county agencies.
1 See Ky. Rev. Stat. Section 13B.080(5).