KY States

Collecting Sales Tax in Kentucky: Tips for Online Sellers

by Mark Faggiano

Kentucky Sales Tax TaxJarThis older article may be out of date. For our most updated information about Kentucky, please go to our Kentucky Sales Tax Guide for Businesses
Here are the most common scenarios our customers (particularly if you use Amazon’s Fulfillment by Amazon) want to know when it comes to Kentucky and sales tax.

Before I get specific, this helpful FAQ from the Kentucky DOR says the following about sales tax and who should collect it. There’s also this guide we wrote to help you get acquainted with Kentucky sales tax.

Sales tax is a tax on tangible personal property that is sold, leased or rented in Kentucky and selected services. It is the seller’s responsibility to collect the sales tax from the customers and to remit the sales tax to the Department of Revenue.

Now for those common seller scenarios I promised.

Out-of-state seller
If you operate your business outside the state of Kentucky, then you’ll be pleased to know that you don’t have to collect sales tax from your customers in Kentucky.

So, for example, let’s say you live in Ohio and operate your business our of your dining room (makes it tough to eat a family dinner). Whenever you sell a taxable item to a customer in Kentucky, you do not have to charge that customer sales tax.

Living/operate your business in Kentucky
Now let’s assume that you live in Kentucky and operate a business out of your home. In this scenario you are required to apply for a sales tax number and collect sales tax on orders of taxable items that are delivered to customers in Kentucky.

How much sales tax do you collect? I’ll get to that a little later in the post.

Out-of-state selling through FBA

Here’s where things get more interesting/complicated. Let’s assume you live in Orlando, FL but use FBA. As you probably know, Amazon happens to have a number of warehouse locations in Kentucky. Those warehouses equal nexus, meaning that if your stuff is in one of those warehouses you need to collect sales tax on orders delivered to Kentucky.

The proof is in the fine print in the KRS 139.330 published by the Kentucky Department of Revenue. Here’s a screenshot of Part 2 that mentions warehouses.

amazon-fba-kentucky-rules

Collecting the correct sales tax rate
The only chance you’re still reading this is if your business has nexus in Kentucky and you want to know at what rate you need to collect sales tax. The good news is that Kentucky makes it super simple. Even though Kentucky is considered a destination-based state, collect 6% from every customer, no matter where in the state they’re located. Kentucky does not impose a local tax for any cities or counties, and that’s why it’s 6% across-the-board. So stop looking for a local rate table for KY. It doesn’t exist!

Filing sales tax in Kentucky
If you need to file a sales tax return in Kentucky, TaxJar has your back. You can now enroll in AutoFile for the state of Kentucky and we’ll automatically file your sales tax return for you! Find out more at TaxJar.com.

Summing it all up: sellers charge the same rate for everyone
Let’s recap. Collect sales tax from customers on orders shipped to Kentucky if you A) live and work in the Blue Grass State or B) use Amazon’s FBA to store inventory in one of Kentucky’s facilities. When it comes time to collect, don’t sweat. Kentucky makes it easy. Just collect 6% from every customer in the state.

Got questions? Have a nexus to Kentucky? Tell me about your experience selling in KY in the discussion section below.

This post is brought to you by TaxJar. Start your free 30 day trial today.

Start your 30 day free trial of TaxJar. No credit card required.
Processing...
Thank you! Your subscription has been confirmed. You'll hear from us soon.
Subscribe to the TaxJar Sales Tax Blog
ErrorHere