Kentucky Sales Tax Guide for Businesses
- Sales Tax Rate
- Local Taxes
- Department of Revenue
- Tax Line
We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Kentucky, and if so, how best to tackle the sales tax situation in the Bluegrass State.
After reading this, you’ll know:
- Do you or don’t you need to collect Kentucky sales tax?
- Which customers do you collect from?
- How much do you collect?
- What do you do with all the sales tax you’ve collected?
- Way more than you probably ever wanted to know about Kentucky sales tax!
Do you have sales tax nexus in Kentucky?
Good news! You only have to begin thinking about Kentucky sales tax if you have sales tax nexus in Kentucky.
“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.
Kentucky considers a seller to have sales tax nexus in the state 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 sales tax nexus in Kentucky if you sell on FBA?
If you sell on Amazon FBA, you may have sales tax nexus in Kentucky. Storing physical products in a state can create sales tax nexus, and Kentucky is home to eleven Amazon Fulfillment Centers.
To determine whether or not you have items stored in an FBA warehouse in Kentucky, you can do one of two things:
- Login to Amazon Seller Central and pull your inventory report
- Sign up for a 30-day free trial of TaxJar and find out from where your Amazon inventory ships with our Amazon badge feature
You may find that your inventory is stored in one or all of Kentucky’s Amazon fulfillment centers in this list:
|Warehouse Code||Address||County||Tax Rate|
|SDF1||1105 S Columbia Ave Campbellsville, KY 42718||Taylor||6%|
|SDF2||4360 Robards Ln Louisville, KY 40218||Jefferson||6%|
|CVG1||1155 Worldwide Blvd. Hebron, KY 41048||Boone||6%|
|CVG2||1600 Worldwide Blvd. Hebron, KY 41048||Boone||6%|
|CVG3||3680 Langley Dr. Hebron, KY 41048||Boone||6%|
|LEX1||1850 Mercer Rd Lexington, KY 40511||Fayette||6%|
|LEX2||172 Trade St. Lexington, Kentucky, 40511||Fayette||6%|
|SDF4||376 Zappos.com Blvd Shepherdesville, KY 40165||Bullitt||6%|
|SDF6||271 Omega Pkwy Shepherdsville, KY 40165||Bullitt||6%|
|SDF7||300 Omicron Court Shepherdsville, KY 40165||Bullitt||6%|
|SDF9||100 W. Thomas P. Echols Lane Shepherdsville, KY 40165||Bullitt||6%|
Is what you’re selling even taxable?
You’ve probably read this far because you realized you have sales tax nexus in Kentucky. Your next step is to determine if what you’re selling is even taxable.
Services in Kentucky are generally not taxable. So if you’re a mural painter or a clothing designer, you’re in luck and you don’t have to worry about sales tax. But watch out – if the service you provide includes repairing or modifying a product, you may have to deal with the sales tax on products.
Tangible products are taxable in Kentucky , with a few exceptions. These exceptions include prescription medicine, farm equipment and construction equipment.
So if you sell books, then charge sales tax to your Kentucky customers.
But if you’re an attorney, don’t charge sales tax to your Kentucky customers.
If you have sales tax nexus in Kentucky and your products are taxable, your next step is to register for a sales tax permit.
How to Register for a Sales Tax Permit in Kentucky
Sellers with sales tax nexus in Kentucky must apply for an Kentucky sales tax permit.
How to Collect Sales Tax in Kentucky
So you’ve determined that you have sales tax nexus in Kentucky and what you’re selling is taxable. And you’re all set and registered for your Kentucky sales tax permit(s).
The next step is to determine how much sales tax to collect.
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.
What are the Amazon sales tax settings for Kentucky?
If you are an Amazon pro seller and use Amazon to collect sales tax, be sure you have your Kentucky sales tax settings entered correctly. Find step-by-step instructions for setting up your Amazon sales tax settings here.
|If you are a…||State tax||County tax||City tax||District tax||Custom rate||Is shipping taxable?||Is gift wrapping taxable?|
|Seller living in Kentucky||X||N/A||Yes||No|
|Seller living outside of Kentucky||X||N/A||Yes||No|
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 Kentucky Sales Tax Returns Due?
Kentucky sales tax returns are always due the 20th of the month following the reporting period. You’ll be assigned a sales tax filing frequency when you apply for your Kentucky sales tax permit.
To break it down:
2016 Kentucky Monthly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|January||February 22, 2016*|
|February||March 21, 2016*|
|March||April 20, 2016|
|April||May 20, 2016|
|May||June 20, 2016|
|June||July 20, 2016|
|July||August 22, 2016*|
|August||September 20, 2016|
|September||October 20, 2016|
|October||November 21, 2016*|
|November||December 20, 2016|
|December||January 20, 2017|
*indicates a due date pushed back due to a weekend or holiday
2016 Kentucky Quarterly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Q1 (Jan - Mar)||April 20, 2016|
|Q2 (Apr - Jun)||July 20, 2016|
|Q3 (Jul - Sep)||October 20, 2016|
|Q4 (Oct - Dec)||January 20, 2017|
2016 Kentucky Annual Sales Tax Filing Due Date
|Taxable Period||Due Date|
|Year 2016||January 20, 2017|
How to File Sales Tax in Kentucky
When it comes time to file sales tax in Kentucky you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
We’ll walk you through these steps.
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:
File online - File online at the Kentucky Department of Revenue. You can remit your payment through their online system. Check out our step-by-step guide to filing your Kentucky sales tax return here.
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.
Other Facts You Should Know about Kentucky Sales Tax Filing
There are a few more things you should know about sales tax in Kentucky:
Late Filing - 2 percent of the total tax due for each 30 days or fraction thereof that a tax return or report is late. The maximum penalty is 20 percent of the total tax due. If the return is filed late after a jeopardy assessment has been issued, pursuant to KRS 131.150, the minimum penalty is $100; otherwise the minimum penalty is $10.00.
Late Payment and Failure to Withhold or Collect Tax as Required by Law - 2 percent of the total tax due for each 30 days or fraction thereof that a payment is late. The maximum penalty is 20 percent of the tax not timely withheld, collected or paid. The minimum penalty is $10.
Other penalties for fraud or serial offenses include higher penalties and even criminal charges.
Kentucky requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay. Click here for a list of states that require zero sales tax returns.
Many states understand that collecting sales tax is a difficult burden on merchants, and will provide a discount to help alleviate some of this burden. In Kentucky, you may keep 1.75 percent of the first $1,000 and 1 percent of tax due in excess of $1,000 on each return up to a maximum of $1,500 for reporting and remitting the taxes on or before the due date. Compensation is not allowed on returns filed or paid late. Click here for more about state sales tax discounts.
And that’s it. You’ve mastered Kentucky sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.
Kentucky Sales Tax Resources
For more about Kentucky sales tax, check out the Kentucky section of the TaxJar blog.