The Appellees originally filed separate tax returns. In 1994, this Court decided GTE v. Revenue Cabinet, Commonwealth of Kentucky, 889 S.W.2d 788 (Ky. 1994), which held that related corporations (such as a parent and subsidiary) could file a combined tax return under the unitary business concept. After GTE was decided, the Appellees in this case sought to amend their returns by substituting combined returns under the unitary business concept as allowed in GTE, because they would owe less tax under such an approach and could therefore claim a refund of taxes they claim to have overpaid.

According to the doctrine of contemporaneous construction, if an administrative agency has a policy according to which it has interpreted an ambiguous statute, it may not change its long standing interpretation. GTE v. Revenue Cabinet, Commonwealth of Kentucky, 889 S.W.2d 788, 792 (Ky.1994) (superseded on other grounds by statute, as recognized by Miller v. Johnson Controls, 296 S.W.3d 392 (Ky.2009)). We agree with the trial court that this case is not subject to contemporaneous construction.

According to the doctrine of contemporaneous construction, if an administrative agency has a policy according to which it has interpreted an ambiguous statute, it may not change its long standing interpretation. GTE v. Revenue Cabinet, Commonwealth of Kentucky, 889 S.W.2d 788, 792 (Ky. 1994) (superseded on other grounds by statute, as recognized by Miller v. Johnson Controls, 296 S.W.3d 392 (Ky. 2009)). We agree with the trial court that this case is not subject to contemporaneous construction.

GTE challenged the Cabinet's policy shift in a case that reached the Kentucky Supreme Court in 1994. SeeGTE v. Revenue Cabinet, 889 S.W.2d 788, 790 (Ky. 1994). A "unitary business" is defined as "[a] business that has subsidiaries in other states or countries and that calculates its state income tax by determining what portion of a subsidiary's income is attributable to activities within the state, and paying taxes on that percentage."

Revenue asserts that the Board of Tax Appeals "elevated the doctrine of contemporaneous construction to controlling importance in this case." That doctrine was succinctly stated by our highest court in GTE v. Revenue Cabinet, Commonwealth of Kentucky, Ky., 889 S.W.2d 788 (1994): This Court has held that interpretation of a statute made by an administrative agency, once made and applied over a long period of time, cannot be unilaterally revoked by the agency.

In 1994, the Kentucky Supreme Court interpreted the corporate income-tax statutes differently, holding that multi-state unitary corporations must calculate their income on the basis of their combined group as a whole, not separately as the Revenue Cabinet insisted. GTE and Subsidiaries v. Revenue Cabinet, 889 S.W.2d 788, 793 (Ky. 1994) [hereinafter GTE]. The "Revenue Cabinet" used to be a separate state agency under Kentucky law. Due to an Executive Branch reorganization, however, the Revenue Cabinet now exists as the Department of Revenue, a branch of the Finance Cabinet.

Notwithstanding this broad remit, the Commission, like all administrative agencies, may not exceed its statutory authority. GTE v. Revenue Cabinet , 889 S.W.2d 788, 792 (Ky. 1994). Thus, an agency may not assume any power not expressly granted to it by the general assembly.

The courts below relied on the doctrine of contemporaneous construction to prohibit the Cabinet from taxing the newspaper inserts. In GTE v. Revenue Cabinet, Ky., 889 S.W.2d 788, 792 (1994), this Court explained the doctrine of contemporaneous construction as follows: This Court has held that interpretation of a statute made by an administrative agency, once made and applied over a long period of time, cannot be unilaterally revoked by the agency.

We find no reason that this policy should differ in regard to water. We further acknowledge that long standing statutory construction of a law by an administrative agency charged with its interpretation should be honored by a reviewing court. GTE Subsidiaries v. Revenue Cabinet, Ky., 889 S.W.2d 788 (1994); Hagan v. Farris, Ky., 807 S.W.2d 488 (1991); Allphin v. Joseph E. Seagram Sons, Inc., Ky., 294 S.W.2d 515 (1956). We find no reason to disturb the interpretation followed by the Revenue Cabinet in such matters.

Under the doctrine of contemporaneous construction, an agency's interpretation of a statute or regulation, once made and applied over a long period of time, cannot be unilaterally revoked by the agency and without notice. Revenue Cabinet v. Lazarus, Inc., 49 S.W.3d 172, 174 (Ky. 2001) (citing GTE v. Revenue Cabinet, 889 S.W.2d 788, 792 (Ky. 1994), superseded by statute on other grounds as recognized in Miller v. Johnson Controls, Inc., 296 S.W.3d 392, 395 (Ky. 2009)). Thus, the Ellis letter and its progeny, although not binding, may demonstrate a long-standing interpretation of a regulation.