KEN KIRSCHENBAUM, ESQ
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Is monitoring subject to sales tax in Kentucky?  
February 13, 2025
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Is monitoring subject to sales tax in Kentucky
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Ken,
      Back in the summer of 2023 you received a comment from one of your readers stating that “monitoring was taxable in Kentucky starting September 1 (2023).  I researched this a bit and found that beginning on January 1, 2023 (not September 1) Kentucky began taxing “intrusion monitoring.”  This made me wonder if fire monitoring would be taxable.  Of course, this being a new law, there wasn’t any interpretation or case law so I requested a technical ruling from the State of Kentucky as to whether fire monitoring would be taxable.   Technical rulings are beneficial because they are somewhat of a “get out of jail free” card in that the taxing authority issues clear guidance as to the taxability of a good or service, and a taxpayer can use the ruling to justify the treatment.
      Just to give you an idea of how complicated the process can be, I requested the ruling in July 2023.  After months of correspondence, questions, answers, etc… I was finally able to get the state of Kentucky to rule on it, and it is in my favor.  The state has ruled that:
      The sales of monitoring services where the Requestor provides both fire detection and intrusion monitoring service are not bundled transactions under the provision of KRS 139.215 because the charges for the respective services are separately itemized. However, the taxability of the separate charges on an invoice for monitoring services that includes both intrusion and fire detection depends upon whether the charges for the fire detection are part of the total sales price of the monitoring services billed. According to the provisions of KRS 139.010(17)(a)3, sales price includes “[c]harges by the retailer for any services necessary to complete the sale.”
        In other words, fire monitoring is not subject to sales tax in Kentucky if you bill for both burg and fire monitoring separately, and bill them for reasonable amounts.  For example, if you invoice a customer $65 per month for combined services, separating them out as $40 for fire monitoring and $25 for burg monitoring you should be OK.  Just be sure to separately state them on the invoice.  If you bill $60 for fire monitoring and $5 for burg monitoring, not so much.
        You may wonder why the State of Kentucky suddenly started taxing burg monitoring and not fire monitoring.  I give a presentation on sales tax theory to state and local associations.  For the last thirty years, states have started to figure out that an $800 residential alarm system that is installed for $99 down and $45 per month is partly an installment sale.  The alarm company has subsidized the installation cost and is recovering it by charging monthly monitoring.  If the state doesn’t tax monitoring it is losing the tax on $701 of the installation charge.  So states are coming up with ways to take the install.  Some are pretty straightforward, some are not.  Fire systems are generally paid for by the customer up front, and many states do not tax fire alarm monitoring.  What if you always charge full price for your installations?  Sorry.
         Why should anyone care?.  Sales and use tax is a major source of revenue for many states and they depend upon retailers to collect and remit these taxes.  If the taxes aren’t charged, the state loses its revenue.  State tax audits are much more common than IRS audits.  States don’t like it when you fail to collect their tax, or even worse, when you collect it and don’t turn it over.  If you don’t collect the tax from the customer the state will want your company to pay it.  Multiply your taxable sales not collected by your state’s tax rate over three years and this could be some substantial money.  Ignorance of the law is no excuse and you may find yourself writing a six-figure check for taxes that your customers should have paid.
  Mitch Reitman 
817 698 9999 XT 101
Reitman Consulting Group
Fort Worth, TX
http://www.reitman.us
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Featured listings of alarm companies or accounts for sale 
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          If you are ready to sell or buy K&K is here to represent your legal interests in the transaction.  As leading experts in the alarm/security/fire industry there is no learning curve and you can rely on our guidance throughout the process.  Sellers can also look to K&K to broker the accounts or company for sale.  The broker fee is one month net RMR, which is typically half of what the traditional brokers in the industry charge.  If interested in listing with K&K contract Ken Kirschenbaum, Esq at 5165 747 6700 x 301 or Ken@Kirschenbaumesq.com.
          Active listings are found on The Alarm Exchange in the Merger and Acquisition Category.  For those of you looking to acquire accounts here are the current listings available.  If interested contact Kathleen Lampert at 516 747 6700 x 319 or KLampert@Kirschenbaumesq.com
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NEW For Sale: Queens, NY. Approx. 100 security alarm accounts, divided evenly between residential and commercial customers, with aggregate of approximately $17,000 monitoring net RMR. Accounts located in 5 boroughs of NYC and Nassau County. Equipment: Hirsch Electronics, Bosch Cctv, Avigilon- Access / Cctv, Speco Cctv, Honeywell – Access Control / Panic / Intrusion, Resideo Panic / Intrusion; panels: Intrusion / Panic: Vista 20, Vista 40, Vista 128, Proa7; operation software: Hirsch Velocity, Microkey Central Station Software, Avigilon- Various, Speco Blue. Service calls “per call”. For more information contact our attorney Ken Kirschenbaum at 516 747 6700 x 301 or Ken@Kirschenbaumesq.com. K&K NDA will be required for more info and to contact Seller direct.


NEW Looking to purchase residential alarm accounts: East coast. We are ready, willing and able to purchase with minimum nonsense and delay; top multiples; contact Ken Kirschenbaum at 516 747 6700 x 301 or Ken@Kirschenbaumesq.com


NEW For Sale: Houston, Texas 350 alarm monitoring accounts; 78% residential; 22% commercial; 4 commercial fire alarms. Monitoring Net RMR $9.000; Fire Alarm Inspection and Service RMR $333 for commercial fire. Most accounts cellular, M2M cellular, some on alarm.com. If interest contact our attorney Ken Kirschenbaum at 516 747 6700 x 301 or Ken@Kirschenbaumesq.com; K&K NDA will be required for more information.


NEW For Sale: Riverside, CA: 171 alarm monitoring accounts; 90 alarm.com; 81 CMS; 43% residential; 57% commercial. Monitoring Net RMR $11.000; written contracts; Alarm.com, Uniview and Ubiquiti, 2GIG panels and Honeywell Vista; Quickbooks and alarm.com software; 3 techs; service vehicles. If interested contact our attorney Ken Kirschenbaum at 516 747 6700 x 301 or Ken@Kirschenbaumesq.com; K&K NDA will be required for more information.


For Sale: Southern California: commercial Net RMR $17,000.00; approximately 80 customers with 324 locations. No fire. Concentrated in Los Angeles, Riverside, San Bernardino, and San Diego counties. Third party vendors: Brivo, Eagle Eye, Cradlepoint. Equipment: Genetec, Brivo, Eagle Eye, Ocularius, DMP, Dell, Axis. Monitoring center: NMC. Most under K&K contracts. Panels: DMP. Significant EBITDA. More information requires a K&K NDA. Contact Ken Kirschenbaum at 516 747 6700 x 301 or Ken@Kirschenbaumesq.com


For Sale: Nassau County, New York. approx 221 alarm accounts. residential 190; commercial security and fire 31; RMR approx $13,230.00 [res $8844; comm security and fire $2118; Inspection RMR $2268; Resideo / Honeywell; some Radionics. Vista 20P / Vista 128BPT. Most accounts on updated K&K contracts. Contact Ken Kirschenbaum,Esq at 516 747 6700 x 301 or Ken@Kirschenbaumesq.com. K&K NDA will be required for more information.
For Sale. Phoenix area, Arizona., 181 alarm monitoring accounts [115 res; 66 commercial; commercial fire 5]. Net RMR $4700.00; DSC panel and equipment; Microkey software. Older contracts for most part. K&K NDA required for more information. Contact Ken Kirschenbaum,Esq at ken@kirschenbaumesq.com or 516 747 6700 x 301.


For Sale: Poughkeepsie, NY. Number of accounts 1580; Residential 30% or 471 accounts; Commercial 70% or 1109 accounts, Monitoring NET RMR approximately $50,000; RMR for Inspections $9,798, RMR for Service $17,345; Central Station Safeco and Affiliated Monitoring; Central Station monthly $15,414; Number of techs 7; Accounts are concentrated in Dutchess County NY; Equipment Honeywell Firelite Hikvision Unifi CDVIC; Panels Honeywell Firelite Silent Knight; Software Compass Silent Knight Software Suite HSS Strium Finder Napco Quick Loader. Contact Ken Kirschenbaum,Esq at 516 747 6700 301 or Ken@Kirschenbaumesq.com if serious buyer ready to close within 30 days.


For Sale: 15 Deep Sentinel accts; north of San Diego, Ca [one in La and one in Bay area]. RMR approx $5100; monitoring charges approx $1600 RMR. One year guarantee; 31 X; 20% Hold Back. Contact Ken Kirschenbaum for further info. 516 747 6700 x 301 or Ken@Kirschenbaumesq.com


For Sale: Shrevesport, Louisiana over 1300 Alarm accounts; residential and commercial, over 45K RMR monitoring accounts; Kirschenbaum Contracts. mid-sized turn-key operation fully staffed with RMR and growth. Contact our attorney Ken Kirschenbaum,Esq for details. Ken@Kirschenbaumesq.com or 516 747 6700 x 301
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com