Kentucky Sales Tax Guide for Businesses

Economic Sales Threshold

$100,000

Transactions Threshold

200

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Do you need to collect sales tax in Kentucky?

You’ll need to collect sales tax in Kentucky if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.


Do you have sales tax nexus in Kentucky?

Kentucky considers a seller to have physical nexus if you have any of the following in the state:

  • Owned or leased property that is utilized or located in the state.
  • An employee or independent contractor present in the state
  • Goods in a warehouse
  • Services completed in the state
  • Computer software used by a third party in the state
  • Participating in trade or craft shows and festivals in the state for 15 days or more per year

You can click here to read exactly what the Kentucky Department of Revenue (Kentucky’s taxing authority) has to say about what constitutes sales tax nexus in Kentucky.Kentucky considers a seller to have physical nexus if you have any of the following in the state:

  • Owned or leased property that is utilized or located in the state.
  • An employee or independent contractor present in the state
  • Goods in a warehouse
  • Services completed in the state
  • Computer software used by a third party in the state
  • Participating in trade or craft shows and festivals in the state for 15 days or more per year

You can click here to read exactly what the Kentucky Department of Revenue (Kentucky’s taxing authority) has to say about what constitutes sales tax nexus in Kentucky.


Do you have economic nexus in Kentucky?

Effective July 1, 2018, Kentucky considers vendors who make more than $100,000 in sales annually in the state or more than 200 transactions in the state in the previous or current calendar year to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read Kentucky’s economic nexus guidance for sellers here and you can read more about economic nexus in every state here.


Is what you’re selling taxable?

Services in Kentucky are sometimes taxable. Check with the Kentucky Department of Revenue if you are unsure whether the service you provide is taxable.

Tangible products are taxable in Kentucky, with a few exceptions. These exceptions include prescription medicine, farm equipment and construction equipment.


How to get a sales tax permit in Kentucky

You can register for your Kentucky sales tax license online at the Kentucky Business One Stop Portal.

Or file by paper using the Kentucky 10A100 form. You can also register for a sales tax permit when you register your business. A sales and use tax permit is contained within correspondence mailed to every new registrant.

Contact the Kentucky Taxpayer Service Center by contacting the Department’s Division of Sales and Use Tax:

Kentucky Taxpayer Service Center

Department’s Division of Sales and Use Tax

PO Box 181

Frankfort, KY 40602-0181

Phone: 502-564-5170

This is the required information needed to register for a sales tax permit in Kentucky:

  • Effective date
  • Legal business name
  • Previous account numbers
  • Primary business location
  • Ownership type
  • Information about types of sales
  • North American Industrial Classification System (NAICS) code required for all businesses. Look up NAICS code.
  • Social Security Number

There is no charge to register your business to collect sales tax. Other business registration fees may apply.


Collecting Sales Tax

Kentucky doesn’t have local tax rates, only a statewide tax rate of 6%. So you would simply charge 6% sales tax to buyers in Kentucky.

This is true whether you are based in Kentucky or whether you are based in another state and have sales tax nexus in Kentucky.

Should you collect sales tax on shipping charges in Kentucky?

As long as the product you are selling is taxable, you should generally charge sales tax on shipping charges to buyers in Kentucky.

Read a full explanation of sales tax on shipping in Kentucky here.


When are Returns Due?

When you file and pay Kentucky sales tax depends on two things: your assigned filing frequency and your state’s due dates.

How often will you file sales tax returns in Kentucky?

States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Kentucky, you will be required to file and remit sales tax either monthly, quarterly or annually (calendar year or fiscal annual).

Kentucky sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.


Filing Sales Tax

When it comes time to file sales tax in Kentucky you must do three things:

  1. Calculate how much sales tax you owe
  2. File a sales tax return
  3. Make a payment
How to Calculate How Much Sales Tax You Owe in Kentucky

Calculating how much sales tax you should remit to the state of Kentucky is easy with TaxJar’s Kentucky sales tax report.

All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Kentucky sales tax return will be waiting for you in TaxJar. All you have to do is login.

How to File and Pay Sales Tax in Kentucky

You have two options for filing and paying your Kentucky sales tax:




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