Effective Date: October 1, 2018
Threshold: Gross receipts exceed $100,000 or 200 or more separate transactions
Measurement Date: Previous or current calendar year
Includable Transactions: Gross sales; Marketplace sales included towards the threshold for individual sellers
When You Need to Register Once You Exceed the Threshold: First of the month following 30 days after threshold is met
The Kentucky Legislature has overridden Gov. Matt Bevin’s veto of a tax bill which contains economic nexus provisions. Effective July 1, 2018, the definition of a “retailer engaged in business in this state” that is required to collect and remit Kentucky sales tax is expanded to include any remote retailer selling tangible personal property (TPP) or digital property delivered or transferred electronically to a purchaser in Kentucky if:
The legislation also adds the following marketplace sales definitions to Kentucky sales and use tax law.
“Remote retailer” means a retailer with no physical presence in Kentucky. “Remote retailer” does not include a marketplace facilitator or a referrer. These provisions mirror the South Dakota law currently under evaluation by the U.S. Supreme Court. If the South Dakota law is upheld, it is presumed this will be valid. If the South Dakota law is found unconstitutional, we expect the Kentucky provision to be challenged. (H.B. 366, Laws 2018, effective April 13, 2018)
UPDATE: On June 27, 2018, the Kentucky Department of Revenue issued an announcement regarding the South Dakota v. Wayfair decision. In the announcement, the DOR states that “…the Supreme Court decision positions Kentucky to move forward with implementation of these provisions for remote sellers with sales into the state” and “Remote sellers that meet the threshold transaction or receipt thresholds should prepare to begin the registration process for collection of Kentucky sales and use tax on a prospective basis.”
UPDATE: Kentucky has created a “Remote Retailers Frequently Asked Questions” page with helpful information regarding remote seller’s obligations. Click here to view the page.
UPDATE: Kentucky will be giving remote retailers some time to comply with their economic nexus legislation. “The Department recognizes there may be some planning and preparatory steps remote retailers may need to address before collections begin.” The Department updated their announcement on July 30 saying, “Registrations should be completed with sales and use tax collections beginning by October 1, 2018.”
UPDATE: Per H.B. 354 (the state’s marketplace facilitator bill) and Kentucky Revenue Statute 139.430, any remote retailer that meets either threshold described above shall register for a sales and use tax permit and collect the tax imposed from the purchaser by the first day of the calendar month that begins no later than thirty days after either threshold is reached.
To find more information for remote sellers following the Wayfair decision, visit our Remote Seller Resources page.