Navigating Kentucky’s sales tax guidelines
Kentucky requires businesses or remote sellers to have a sales tax permit and collect and remit sales tax if they hold physical or economic nexus in the state. What defines sales tax nexus in the state of Kentucky, and is your business required to collect sales tax in the state? TaxJar’s sales tax guide provides insights and directives about nexus to help businesses ensure they remain compliant. Explore the guide and use the sales tax calculator to estimate potential liabilities.
Do you need to collect sales tax in Kentucky?
A business (or remote seller) needs to collect sales tax in Kentucky if they have either physical or economic nexus in the state. Businesses have physical nexus when they have a tangible presence or activity in Kentucky. A business has an economic nexus in Kentucky when it meets the state’s economic threshold for total revenue or the number of sales transactions.
Do you have physical nexus in Kentucky?
The state of Kentucky considers a seller to have physical nexus if they meet one of these criteria:
- 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
Do you have economic nexus in Kentucky?
Effective July 1, 2018, Kentucky considers vendors who make more than $100,000 in annual sales or more than 200 transactions in the state in the previous or current calendar year to have economic nexus. This means Kentucky considers these vendors obligated to collect sales tax from buyers in the state. The Kentucky Department of Revenue provides an FAQ page for remote sellers to learn more about economic nexus guidelines.
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, including prescription medicine, farm equipment, and construction equipment.
Is SaaS taxable in Kentucky?
SaaS is taxable in Kentucky as of January 1, 2023.
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 visit TaxJar’s registration page to request for TaxJar to manage your Kentucky registration.
Businesses can also file for a sales tax permit 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 through 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
Businesses and remote sellers must provide the following information 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.
- Social Security Number
There is no charge to register your business to collect sales tax. Other business registration fees may apply.
Use the Streamlined Sales Tax™ Registration System (SSTRS)
Kentucky is a Streamlined Sales Tax™ Member state. The Streamlined Sales Tax™ Registration System serves as a central hub for businesses to register for sales tax permits in member states. The system streamlines the sales tax permit process for businesses and online sellers that have economic nexus across multiple states.
Use the system to apply for a license in any member state and contract with a Certified Service Provider™ (CSP™ ) through the system for sales tax assistance in all the states where your business is registered through the SSTRS.
Collecting sales tax in Kentucky
Kentucky doesn’t have local sales tax rates, only a statewide tax rate of 6%. Businesses and remote sellers only charge 6% sales tax to buyers in Kentucky.
Remote sellers who meet economic nexus in Kentucky and businesses who have physical nexus in Kentucky charge the same 6% rate for sales to buyers 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.
When are Kentucky sales tax 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 in Kentucky
When it’s time to file sales tax in Kentucky, follow these three simple steps:
- Calculate how much sales tax you owe
- File a sales tax return
- 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.
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.
How to file and pay sales tax in Kentucky
You have two options for filing and paying your Kentucky sales tax:
- File online at the Kentucky Department of Revenue. You can remit your payment through their online system. To simplify the process, use TaxJar’s step-by-step guide to filing a Kentucky sales tax return.
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations, or filling out complex sales tax returns.
