03/23/2001
Paragraph 21 of KRS 132.200 exempts for the purpose of taxation in the county, city, school or other taxing district in which it has taxable situs:
Any nonferrous metal that conforms to the quality, shape, and weight specifications set by the New York Mercantile Exchange's special contract rules for metals, and which is located or stored in a commodity warehouse and held on warrant, or for which a written request has been made to a commodity warehouse to place it on warrant, according to the rules and regulations of a trading facility.
(a) "Commodity warehouse means a warehouse, shipping plant, depository, or other facility that has been designated or approved by a trading facility as a regular delivery point for a commodity on contracts of sale for future delivery; and
(b) "Trading facility" means a facility that is designated by or registered with the federal Commodity Futures Trading Commission under 7 U.S.C. secs. 1 et seq. "Trading facility" includes the Board of Trade of the City of Chicago, the Chicago Mercantile Exchange, and the New York Mercantile Exchange.
Please note that aluminum inventory remains taxable at the state level if the aluminum is not deemed to be "in transit". Paragraph 10 of KRS 132.020 "State ad valorem taxes" states that an ad valorem tax for state purposes of five cents ($0.05) upon each one hundred dollars ($100) of value shall be paid upon goods held for sale in the regular course of business. KRS 132.097, "Exemption from state ad valorem tax of personal property held for shipment out of state", states that "there shall be exempt from ad valorem tax for state purposes, personal property placed in a warehouse or distribution center for the purpose of subsequent shipment to an out-of-state destination. Personal property shall be deemed to be held for shipment to an out-of-state destination if the owner can reasonable demonstrate that the personal property will be shipped out of state within the next six (6) months."
Therefore, aluminum on warrant or for which a written request has been made to place aluminum that meets the specification for delivery against the New York Mercantile Exchange, Inc.'s Aluminum Futures Contract on warrant is now uniformly taxed throughout the State of Kentucky regardless of the local jurisdiction in which an Exchange Licensed Warehouse is located.
Companies who own aluminum inventory at Exchange Licensed Warehouses should obtain professional advise regarding their particular tax situation.