Request By:
Ms. Bonnie K. Biemer
Assistant Director of Law
Department of Law
City of Louisville
Room 200, City Hall
Louisville, Kentucky 40202-2771
Opinion
Opinion By: David L. Armstrong, Attorney General; Kevin M. Noland, General Counsel
As an Attorney for the City of Louisville, you have informed us that the Economic Development Department for the City of Louisville and Jefferson County is interested in procuring floating restaurants which would anchor on barges on the Ohio River on the Kentucky side to serve patrons from Indiana and Kentucky.
You have asked our office to provide an opinion as to which jurisdiction such restaurants would lie for purposes of both state income tax and local occupational taxes.
For purposes of state income tax, the barges anchored on the Kentucky side of the river would be within the jurisdiction of the Commonwealth of Kentucky. In
Ohio v. Kentucky, 444 U.S. 335, 100 S. Ct. 588, 62 L. Ed. 2d 530 (1980), the U.S. Supreme Court placed the official boundary between the states of Ohio and Kentucky at the low water mark on the northwest side of the Ohio River as it existed in 1792. Subsequently, that boundary was more specifically identified through surveys and historical maps and a series of geodetic points along the river as developed by the U.S. Geological Survey. Along the Ohio River in the vicinity of Jefferson County, in no place does the official boundary come close to the center of the river, but rather is closer to the northwest shore of the river. As a result, it can be stated with certainty that restaurants on barges anchored to the Kentucky side of the Ohio River in the vicinity of Jefferson County would lie within the Commonwealth of Kentucky for purposes of state income tax.
Turning to your question as to jurisdiction for collection of local occupational taxes relating to the proposed floating restaurants on the Ohio River, we refer to KRS 67.010, which states:
"Each county whose boundary is described in part by the Mississippi and Ohio Rivers shall be considered as bounded in that particular by the state line, and the islands thereof shall be within the respective counties holding the main land in this state opposite thereto."
Pursuant to KRS 67.010, that part of the Ohio River that is within the jurisdiction of the Commonwealth of Kentucky is also considered the boundary line for the contiguous Kentucky county, which for purposes of your question is Jefferson County. As a result, the proposed floating restaurants on barges anchored to the Kentucky side of the Ohio River near Louisville would be within the jurisdiction of Jefferson County for purposes of local occupational taxes.
The only possibility for the City of Louisville to have jurisdiction over the area of the Ohio River in which the proposed floating restaurants are to be located would be if the City of Louisville annexed that area of the River pursuant to KRS 81A.005 - 81A.480. However, considering the requirements for valid annexation, annexation of a portion of the Ohio River by the City of Louisville would seem highly unlikely and may be impossible.
In conclusion, it is our opinion that as to proposed floating restaurants to be anchored on the Ohio River near Louisville, such restaurants would be within the jurisdiction of Kentucky for purposes of state income tax and within the jurisdiction of Jefferson County for the purposes of local occupational taxes.