SB 99

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1AN ACT relating to transactional precious metals.
2WHEREAS, several states have introduced or enacted legislation to recognize
3 transactional gold and silver; and
4WHEREAS, the use of gold and silver as a medium of exchange has a historical
5 basis in fostering economic stability and individual liberty; and
6WHEREAS, the Constitution of the United States under Article 1, Section 10,
7 allows for the states to declare gold and silver legal tender for use in payment of debts,
8 taxes, fees, and other obligations; and
9WHEREAS, recognizing gold and silver as legal tender promotes economic justice
10 by allowing citizens of every economic stratus access to the ability to preserve their
11 wealth by hedging against inflation with precious metals; and
12WHEREAS, establishing voluntary mechanisms for the use of precious metals in
13 transactions enhances Kentucky's economic resilience; and
14WHEREAS, allowing the use of gold and silver as legal tender provides individuals
15 and businesses within Kentucky an alternative option for preserving and exchanging
16 wealth;
17NOW, THEREFORE,
18 Be it enacted by the General Assembly of the Commonwealth of Kentucky:
19SECTION 1.  A NEW SECTION OF KRS CHAPTER 41 IS CREATED TO
20 READ AS FOLLOWS:
21 (1)    As used in this section:
22(a)    "Bullion depository" means an entity providing vault facilities within the
23United States for the storage of gold bullion and silver bullion that:
241.  Complies with the prescribed London Bullion Market Association or
25equivalent best practice guidelines; and
262.  Provides accounts that:
27a.   Hold gold bullion and silver bullion; and
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1b.   Allow account holders to buy, sell, save, and spend gold bullion
2and silver bullion;
3(b)    "Depository agent" means a private entity authorized by the State Treasurer
4to operate a bullion depository or perform related services under this
5section;
6(c)    "Electronic payment system" means an electronic platform or payment
7system that enables participating vendors to receive and process a payment
8from an account holder of a bullion depository using gold specie and silver
9specie held in the bullion depository as the basis for the payment
10transaction;
11(d)    "Gold bullion" and "silver bullion":
121.  Means, as applicable, refined precious gold or silver metal that is:
13a.   In any shape or form; and
14b.   Valued primarily based on its metal content and not on its form
15or function; and
162.  Includes, as applicable, gold coin and silver coin;
17(e)    "Gold coin" and "silver coin" means, as applicable, gold or silver metal
18that is:
191.  In bars or other physical forms certified at least:
20a.   For gold metal, ninety-nine and one-half percent (99.5%) pure;
21and
22b.   For silver metal, ninety-nine and nine-tenths percent (99.9%)
23pure; and
242.  Coined, stamped, or imprinted with its weight and purity;
25(f)    "Gold specie" and "silver specie" means, as applicable, gold or silver
26bullion that:
271.  Has intrinsic value; and
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12.  Is used or intended for use as money;
2(g)    "Governing authority":
31.  Means       any        government,    agency,   authority,   board,   bureau,
4commission, committee, council, department, government corporation,
5institution, legislative body, political subdivision, instrumentality, or
6other entity of this state; and
72.  Includes:
8a.    Any city, county, charter county government, urban-county
9government, consolidated local government, unified local
10government, public school district, public institution of
11education, special district, or municipal corporation of this state;
12and
13b.    Any government, agency, authority, board, bureau, department,
14commission, council, committee, instrumentality, or other entity
15of an entity referenced in subdivision a. of this subparagraph;
16(h)    "Legal tender" means a recognized medium of exchange for the payment of
17debts, taxes, fees, and other obligations;
18(i)    "Person" includes:
191.  A natural person;
202.  Any     type      or     form   of    corporation,   company,    partnership,
21proprietorship, association, or other legal entity; and
223.  A government, governmental subdivision or agency, governing
23authority, or other body politic; and
24(j)    "Social credit scoring system" means a system of recordkeeping, data
25collection, or scoring that:
261.  Evaluates, monitors, or ranks an individual's or entity's behavior,
27beliefs, associations, or compliance with government or corporate
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1standards; and
22.  Conditions access to services, benefits, or opportunities based on an
3evaluation, monitoring, or ranking referenced in subparagraph 1. of
4this paragraph.
5 (2)    (a)    Subject to paragraphs (b) and (c) of this subsection, gold specie and silver
6specie are recognized as legal tender by the Commonwealth of Kentucky.
7(b)    Gold specie or silver specie may be used for the payment of:
81.  Debts between private parties, if the parties mutually agree to use of
9the specie; and
102.  Taxes, fees, or other obligations owed to the Commonwealth of
11Kentucky or a governing authority, if the Commonwealth of Kentucky
12or governing authority agrees to accept the specie as payment.
13(c)    Except as provided in paragraph (b) of this subsection, a person shall not be
14required to accept gold specie or silver specie as payment.
15 (3)    Subject to subsections (4) and (9) of this section, the State Treasurer:
16(a)    Shall promulgate administrative regulations in accordance with KRS
17Chapter 13A:
181.  To designate or establish a bullion depository for the secure storage of
19gold bullion and silver bullion to facilitate transactions under this
20section;
212.  To authorize and approve one (1) or more electronic payment systems
22to facilitate transactions under this section; and
233.  That are otherwise necessary to implement this section; and
24(b)    May:
251.  Operate the bullion depository directly or contract with a depository
26agent; and
272.  Contract with one (1) or more private entities to develop or operate
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1any electronic payment system.
2 (4)    The administrative regulations promulgated by the State Treasurer under
3subsection (3) of this section shall establish requirements for ensuring:
4(a)    The designated or established bullion depository is:
51.  Secure;
62.  Transparent to account holders; and
73.  Accessible for use by any person;
8(b)    Each authorized and approved electronic payment system:
91.  Is reliable; and
102.  Complies with applicable state and federal laws, including this section
11and any lawful administrative regulations promulgated under this
12section;
13(c)    That any depository agent or contracted entity operates in the best interests
14of the Commonwealth of Kentucky and the account holders of the
15designated or established bullion depository;
16(d)    With respect to the designated or established bullion depository, that the
17following is regularly verified:
181.  The gold bullion and silver bullion held by the depository; and
192.  Compliance with this section by the depository, including any lawful
20administrative regulations promulgated under this section;
21(e)    That each authorized and approved electronic payment system and any
22participating vendors are:
231.  Authorized to do business in this state; and
242.  Compliant with state and federal money transmitter laws;
25(f)    That appropriate fraud prevention measures are implemented by:
261.  The designated or established bullion depository;
272.  Any depository agent or contracted entity;
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13.  Each authorized and approved electronic payment system; and
24.  Each participating vendor of an authorized and approved electronic
3payment system; and
4(g)    1.  The privacy of the bullion depository's account holders and the
5participants of each authorized and approved electronic payment
6system, which shall include, at a minimum, that transaction
7information shall not, except to the extent the State Treasurer deems
8necessary to enforce and effectuate this section, be:
9a.   Shared with any person other than the account holder or
10participant without proper court authorization; or
11b.   Used in any sort of social credit scoring system implemented or
12maintained by the United States, a state of the United States, a
13foreign    country    or    jurisdiction,   an     intergovernmental
14organization, or any government, agency, agent, instrumentality,
15central bank, or other entity thereof.
162.  a.   The United States, a state of the United States, a foreign country
17or jurisdiction, an intergovernmental organization, or any
18government, agency, agent, instrumentality, central bank, or
19other entity thereof shall not use an account holder's or
20participant's    transaction    information        in   violation       of
21subparagraph 1.b. of this paragraph.
22b.   Any account holder or participant aggrieved by a violation of
23subdivision a. of this subparagraph shall have a cause of action
24against the alleged violator in any court of competent
25jurisdiction to obtain all appropriate relief, which shall include,
26without limitation:
27i.    Injunctive relief;
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1ii.    Declaratory relief;
2iii.   Compensatory damages;
3iv.    Costs; and
4v.     Attorney's fees.
5 (5)    A bullion depository designated or established by the State Treasurer under this
6section shall have a contractual relationship with each electronic payment system
7that is authorized and approved by the State Treasurer under this section to
8provide services for deposits of gold bullion and silver bullion as provided by the
9State Treasurer under this section.
10 (6)    For each deposit made in a bullion depository designated or established by the
11State Treasurer under this section, the bullion depository shall insure the deposit
12under an all-risk insurance policy issued by a nongovernmental operated insurer
13for one hundred percent (100%) of the full replacement value of the deposit.
14 (7)    A deposit made in a bullion depository designated or established by the State
15Treasurer under this section shall:
16(a)    Be the sole property of the account holder; and
17(b)    Not be subject to appropriation by any state or the United States without due
18process of law.
19 (8)    By July 1 of each year, the State Treasurer shall submit an annual written report
20to the Legislative Research Commission for referral to the appropriate interim
21joint committees or other appropriate committees that details the following:
22(a)    The status and operations of the designated or established bullion
23depository;
24(b)    The implementation and usage of authorized and approved electronic
25payment systems; and
26(c)    The economic impact of recognizing gold specie and silver specie as legal
27tender.
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1 (9)    The State Treasurer shall implement this section within one (1) year of the
2effective date of this section.
3 (10) Nothing in this section shall be construed to authorize, endorse, create, or
4implement:
5(a)    A central bank digital currency; or
6(b)    Any mechanism for surveillance, social credit scoring, or behavioral
7conditioning, or any other form of social or economic control, by the
8Commonwealth of Kentucky or a governing authority.
9Section 2. KRS 141.019 is amended to read as follows:
10 In the case of taxpayers other than corporations:
11 (1)    Adjusted gross income shall be calculated by subtracting from the gross income of
12those taxpayers the deductions allowed individuals by Section 62 of the Internal
13Revenue Code and adjusting as follows:
14(a)    Exclude income that is exempt from state taxation by the Kentucky
15Constitution and the Constitution and statutory laws of the United States;
16(b)    Exclude income from supplemental annuities provided by the Railroad
17Retirement Act of 1937 as amended and which are subject to federal income
18tax by Pub. L. No. 89-699;
19(c)    Include interest income derived from obligations of sister states and political
20subdivisions thereof;
21(d)    Exclude employee pension contributions picked up as provided for in KRS
226.505, 16.545, 21.360, 61.523, 61.560, 65.155, 67A.320, 67A.510, 78.610,
23and 161.540 upon a ruling by the Internal Revenue Service or the federal
24courts that these contributions shall not be included as gross income until such
25time as the contributions are distributed or made available to the employee;
26(e)    Exclude Social Security and railroad retirement benefits subject to federal
27income tax;
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1(f)    Exclude any money received because of a settlement or judgment in a lawsuit
2brought against a manufacturer or distributor of "Agent Orange" for damages
3resulting from exposure to Agent Orange by a member or veteran of the
4Armed Forces of the United States or any dependent of such person who
5served in Vietnam;
6(g)    1.  a.   For taxable years beginning after December 31, 2005, but before
7January 1, 2018, exclude up to forty-one thousand one hundred ten
8dollars ($41,110) of total distributions from pension plans, annuity
9contracts, profit-sharing plans, retirement plans, or employee
10savings plans; and
11b.   For taxable years beginning on or after January 1, 2018, exclude
12up to thirty-one thousand one hundred ten dollars ($31,110) of
13total distributions from pension plans, annuity contracts, profit-
14sharing plans, retirement plans, or employee savings plans.
152.  As used in this paragraph:
16a.   "Annuity contract" has the same meaning as set forth in Section
171035 of the Internal Revenue Code;
18b.   "Distributions" includes but is not limited to any lump-sum
19distribution from pension or profit-sharing plans qualifying for the
20income tax averaging provisions of Section 402 of the Internal
21Revenue Code; any distribution from an individual retirement
22account as defined in Section 408 of the Internal Revenue Code;
23and any disability pension distribution; and
24c.   "Pension plans, profit-sharing plans, retirement plans, or employee
25savings plans" means any trust or other entity created or organized
26under a written retirement plan and forming part of a stock bonus,
27pension, or profit-sharing plan of a public or private employer for
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1the exclusive benefit of employees or their beneficiaries and
2includes plans qualified or unqualified under Section 401 of the
3Internal Revenue Code and individual retirement accounts as
4defined in Section 408 of the Internal Revenue Code;
5(h)    1.  a.   Exclude the portion of the distributive share of a shareholder's net
6income from an S corporation subject to the franchise tax imposed
7under KRS 136.505 or the capital stock tax imposed under KRS
8136.300; and
9b.   Exclude the portion of the distributive share of a shareholder's net
10income from an S corporation related to a qualified subchapter S
11subsidiary subject to the franchise tax imposed under KRS
12136.505 or the capital stock tax imposed under KRS 136.300.
132.  The shareholder's basis of stock held in an S corporation where the S
14corporation or its qualified subchapter S subsidiary is subject to the
15franchise tax imposed under KRS 136.505 or the capital stock tax
16imposed under KRS 136.300 shall be the same as the basis for federal
17income tax purposes;
18(i)    Exclude income received for services performed as a precinct worker for
19election training or for working at election booths in state, county, and local
20primaries or regular or special elections;
21(j)    Exclude any capital gains income attributable to property taken by eminent
22domain;
23(k)    1.  Exclude all income from all sources for members of the Armed Forces
24who are on active duty and who are killed in the line of duty, for the
25year during which the death occurred and the year prior to the year
26during which the death occurred.
272.  For the purposes of this paragraph, "all income from all sources" shall
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1include all federal and state death benefits payable to the estate or any
2beneficiaries;
3(l)    Exclude all military pay received by members of the Armed Forces while on
4active duty;
5(m) 1.  Include the amount deducted for depreciation under 26 U.S.C. sec. 167
6or 168; and
72.  Exclude the amounts allowed by KRS 141.0101 for depreciation;
8(n)    Include the amount deducted under 26 U.S.C. sec. 199A;
9(o)    Ignore any change in the cost basis of the surviving spouse's share of property
10owned by a Kentucky community property trust occurring for federal income
11tax purposes as a result of the death of the predeceasing spouse;
12(p)    Allow the same treatment allowed under Pub. L. No. 116-260, secs. 276 and
13278, related to the tax treatment of forgiven covered loans, deductions
14attributable to those loans, and tax attributes associated with those loans for
15taxable years ending on or after March 27, 2020, but before January 1, 2022;
16[and]
17(q)    For taxable years beginning on or after January 1, 2020, but before March 11,
182023, allow the same treatment of restaurant revitalization grants in
19accordance with Pub. L. No. 117-2, sec. 9673 and 15 U.S.C. sec. 9009c,
20related to the tax treatment of the grants, deductions attributable to those
21grants, and tax attributes associated with those grants; and
22(r)    Ignore any capital gains and losses attributable to the sale or exchange of
23gold specie and silver specie as defined in Section 1 of this Act; and
24 (2)    Net income shall be calculated by subtracting from adjusted gross income all the
25deductions allowed individuals by Chapter 1 of the Internal Revenue Code, as
26modified by KRS 141.0101, except:
27(a)    Any deduction allowed by 26 U.S.C. sec. 164 for taxes;
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1(b)    Any deduction allowed by 26 U.S.C. sec. 165 for losses, except wagering
2losses allowed under Section 165(d) of the Internal Revenue Code;
3(c)    Any deduction allowed by 26 U.S.C. sec. 213 for medical care expenses;
4(d)    Any deduction allowed by 26 U.S.C. sec. 217 for moving expenses;
5(e)    Any deduction allowed by 26 U.S.C. sec. 67 for any other miscellaneous
6deduction;
7(f)    Any deduction allowed by the Internal Revenue Code for amounts allowable
8under KRS 140.090(1)(h) in calculating the value of the distributive shares of
9the estate of a decedent, unless there is filed with the income return a
10statement that the deduction has not been claimed under KRS 140.090(1)(h);
11(g)    Any deduction allowed by 26 U.S.C. sec. 151 for personal exemptions and
12any other deductions in lieu thereof;
13(h)    Any deduction allowed for amounts paid to any club, organization, or
14establishment which has been determined by the courts or an agency
15established by the General Assembly and charged with enforcing the civil
16rights laws of the Commonwealth, not to afford full and equal membership
17and full and equal enjoyment of its goods, services, facilities, privileges,
18advantages, or accommodations to any person because of race, color, religion,
19national origin, or sex, except nothing shall be construed to deny a deduction
20for amounts paid to any religious or denominational club, group, or
21establishment or any organization operated solely for charitable or educational
22purposes which restricts membership to persons of the same religion or
23denomination in order to promote the religious principles for which it is
24established and maintained; and
25(i)    A taxpayer may elect to claim the standard deduction allowed by KRS
26141.081 instead of itemized deductions allowed pursuant to 26 U.S.C. sec. 63
27and as modified by this section.
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1Section 3. KRS 141.039 is amended to read as follows:
2 In the case of corporations:
3 (1)    Gross income shall be calculated by adjusting federal gross income as defined in
4Section 61 of the Internal Revenue Code as follows:
5(a)    Exclude income that is exempt from state taxation by the Kentucky
6Constitution and the Constitution and statutory laws of the United States;
7(b)    Exclude all dividend income;
8(c)    Include interest income derived from obligations of sister states and political
9subdivisions thereof;
10(d)    Exclude fifty percent (50%) of gross income derived from any disposal of
11coal covered by Section 631(c) of the Internal Revenue Code if the
12corporation does not claim any deduction for percentage depletion, or for
13expenditures attributable to the making and administering of the contract
14under which such disposition occurs or to the preservation of the economic
15interests retained under such contract;
16(e)    Include the amount calculated under KRS 141.205;
17(f)    Ignore the provisions of Section 281 of the Internal Revenue Code in
18computing gross income;
19(g)    Include the amount of deprecation deduction calculated under 26 U.S.C. sec.
20167 or 168;
21(h)    Allow the same treatment allowed under Pub. L. No. 116-260, secs. 276 and
22278, related to the tax treatment of forgiven covered loans, deductions
23attributable to those loans, and tax attributes associated with those loans for
24taxable years ending on or after March 27, 2020, but before January 1, 2022;
25[and]
26(i)    For taxable years beginning on or after January 1, 2020, but before March 11,
272023, allow the same treatment of restaurant revitalization grants in
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1accordance with Pub. L. No. 117-2, sec. 9673 and 15 U.S.C. sec. 9009c,
2related to the tax treatment of the grants, deductions attributable to those
3grants, and tax attributes associated with those grants; and
4(j)    Ignore any capital gains and losses attributable to the sale or exchange of
5gold specie and silver specie as defined in Section 1 of this Act; and
6 (2)    Net income shall be calculated by subtracting from gross income:
7(a)    The deduction for depreciation allowed by KRS 141.0101;
8(b)    Any amount paid for vouchers or similar instruments that provide health
9insurance coverage to employees or their families;
10(c)    All the deductions from gross income allowed corporations by Chapter 1 of
11the Internal Revenue Code, as modified by KRS 141.0101, except:
121.  Any deduction for a state tax which is computed, in whole or in part, by
13reference to gross or net income and which is paid or accrued to any
14state of the United States, the District of Columbia, the Commonwealth
15of Puerto Rico, any territory or possession of the United States, or to any
16foreign country or political subdivision thereof;
172.  The deductions contained in Sections 243, 245, and 247 of the Internal
18Revenue Code;
193.  The provisions of Section 281 of the Internal Revenue Code shall be
20ignored in computing net income;
214.  Any deduction directly or indirectly allocable to income which is either
22exempt from taxation or otherwise not taxed under the provisions of this
23chapter, except for deductions allowed under Pub. L. No. 116-260, secs.
24276 and 278, related to the tax treatment of forgiven covered loans and
25deductions attributable to those loans for taxable years ending on or
26after March 27, 2020, but before January 1, 2022; and deductions
27allowed under Pub. L. No. 117-2, sec. 9673 and 15 U.S.C. sec. 9009c,
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1related to the tax treatment of restaurant revitalization grants and
2deductions attributable to those grants for taxable years beginning on or
3after January 1, 2020, but before March 11, 2023. Nothing in this
4chapter shall be construed to permit the same item to be deducted more
5than once;
65.  Any deduction for amounts paid to any club, organization, or
7establishment which has been determined by the courts or an agency
8established by the General Assembly and charged with enforcing the
9civil rights laws of the Commonwealth, not to afford full and equal
10membership and full and equal enjoyment of its goods, services,
11facilities, privileges, advantages, or accommodations to any person
12because of race, color, religion, national origin, or sex, except nothing
13shall be construed to deny a deduction for amounts paid to any religious
14or denominational club, group, or establishment or any organization
15operated solely for charitable or educational purposes which restricts
16membership to persons of the same religion or denomination in order to
17promote the religious principles for which it is established and
18maintained;
196.  Any deduction prohibited by KRS 141.205; and
207.  Any dividends-paid deduction of any captive real estate investment
21trust; and
22(d)    1.  A deferred tax deduction in an amount computed in accordance with this
23paragraph.
242.  For purposes of this paragraph:
25a.    "Net deferred tax asset" means that deferred tax assets exceed the
26deferred tax liabilities of the combined group, as computed in
27accordance with accounting principles generally accepted in the
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1United States of America; and
2b.    "Net deferred tax liability" means deferred tax liabilities that
3exceed the deferred tax assets of a combined group as defined in
4KRS 141.202, as computed in accordance with accounting
5principles generally accepted in the United States of America.
63.  Only publicly traded companies, including affiliated corporations
7participating in the filing of a publicly traded company's financial
8statements prepared in accordance with accounting principles generally
9accepted in the United States of America, as of January 1, 2019, shall be
10eligible for this deduction.
114.  If the provisions of KRS 141.202 result in an aggregate increase to the
12member's net deferred tax liability, an aggregate decrease to the
13member's net deferred tax asset, or an aggregate change from a net
14deferred tax asset to a net deferred tax liability, the combined group
15shall be entitled to a deduction, as determined in this paragraph.
165.  For ten (10) years beginning with the combined group's first taxable
17year beginning on or after January 1, 2026, a combined group shall be
18entitled to a deduction from the combined group's entire net income
19equal to one-tenth (1/10) of the amount necessary to offset the increase
20in the net deferred tax liability, decrease in the net deferred tax asset, or
21aggregate change from a net deferred tax asset to a net deferred tax
22liability. The increase in the net deferred tax liability, decrease in the net
23deferred tax asset, or the aggregate change from a net deferred tax asset
24to a net deferred tax liability shall be computed based on the change that
25would result from the imposition of the combined reporting requirement
26under KRS 141.202, but for the deduction provided under this paragraph
27as of June 27, 2019.
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16.  The deferred tax impact determined in subparagraph 5. of this paragraph
2shall be converted to the annual deferred tax deduction amount, as
3follows:
4a.    The deferred tax impact determined in subparagraph 5. of this
5paragraph shall be divided by the tax rate determined under KRS
6141.040;
7b.    The    resulting    amount     shall   be further   divided   by      the
8apportionment factor determined by KRS 141.120 or 141.121 that
9was used by the combined group in the calculation of the deferred
10tax assets and deferred tax liabilities as described in subparagraph
115. of this paragraph; and
12c.    The resulting amount represents the total net deferred tax
13deduction available over the ten (10) year period as described in
14subparagraph 5. of this paragraph.
157.  The deduction calculated under this paragraph shall not be adjusted as a
16result of any events happening subsequent to the calculation, including
17but not limited to any disposition or abandonment of assets. The
18deduction shall be calculated without regard to the federal tax effect and
19shall not alter the tax basis of any asset. If the deduction under this
20section is greater than the combined group's entire Kentucky net income,
21any excess deduction shall be carried forward and applied as a deduction
22to the combined group's entire net income in future taxable years until
23fully utilized.
248.  Any combined group intending to claim a deduction under this
25paragraph shall file a statement with the department on or before July 1,
262019. The statement shall specify the total amount of the deduction
27which the combined group claims on the form, including calculations
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1and other information supporting the total amounts of the deduction as
2required by the department. No deduction shall be allowed under this
3paragraph for any taxable year, except to the extent claimed on the
4timely filed statement in accordance with this paragraph.
5Section 4.  Section 1 of this Act may be cited as the Kentucky Transactional
6 Gold and Silver Act.
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