Sales and Use Tax
2018 Kentucky legislation expanded the types of services subject to sales tax, established economic nexus thresholds for remote retailers, and amended certain excise taxes. 2019 Kentucky legislation made further changes to provide an exemption for resale for newly taxable services, established sales and use tax collection responsibility for marketplace providers, expanded the exemption on certain sales by nonprofits, and equalized the tax base for telecommunications and the utility gross receipts license tax by adding video streaming services. The Kentucky Department of Revenue is committed to helping you understand these changes, keeping you updated, and answering your questions.
Do You Need to Register?
Effective July 1, 2018, businesses that provide many types of services are required to collect the Kentucky sales tax from their customers for providing these services.
Click here for a listing of new services subject to sales tax for transactions on or after July 1, 2018 to determine if you need to register your business for a Sales and Use Tax account.
View this video tutorial for new Sales and Use Tax information.
Remote Retailer and Marketplace Provider Sales and Use Tax Collections in KY
The United States Supreme Court ruled in
South Dakota v. Wayfair on June 21, 2018, that states can require sellers to collect and remit sales or use tax on sales delivered to locations within their state regardless of physical presence. The nexus standards that Kentucky adopted in HB 487, effective July 1, 2018, are the same thresholds at issue in the Wayfair case. This legislation in conjunction with the Supreme Court decision positions Kentucky to move forward with implementation of these provisions for remote sellers with sales into the state.
In addition, HB 354 in the 2019 session adopted the same nexus thresholds and collection requirements for marketplace providers, effective July 1, 2019. The measure defines "marketplace provider" to include the operation of internet sites, digital platforms and application stores for the purpose of making retail sales. The definition includes several components, so affected parties should consult KRS 139.010 and KRS 139.450 to verify its application to specific business models.
Remote Retailers and Marketplace Providers Frequently Asked Questions
Video streaming services provided to Kentucky customers are subject to the 3% excise tax (KRS 136.604) and the 2.4% gross revenues tax (KY telecommunications taxes) as well as the utility gross receipts license tax (school tax) imposed at local school district rate not to exceed 3% (KRS 160.614) billed on or after July 1, 2019.
Read the June 2019 Sales Tax Facts for more detail.