Kentucky Enacts Marketplace Nexus Provisions

Effective Date: July 1, 2019 for Marketplace Providers

Threshold: $100,000 or 200 or more separate retail sales transactions

Measurement Date: The immediately preceding or current calendar year

Includable Transactions: Retail sales

When You Need to Register Once You Exceed the Threshold: The first day of the calendar month that begins no later than 30 days after you meet either of the thresholds

Kentucky has enacted marketplace nexus provisions that affect marketplace providers (facilitators), effective July 1, 2019. The provisions replace the definition of “marketplace facilitator” with “marketplace provider” and expand it.

Marketplace providers are required to register and collect tax in Kentucky if, in the immediately preceding or current calendar year, the marketplace provider:

  • Makes $100,000 in retail sales on its own behalf or in facilitated retail sales of tangible personal property, digital property, or services that are delivered or transferred electronically to a Kentucky purchaser; or
  • Makes 200 or more separate retail sales transactions on its own behalf or in facilitated sales

Marketplace providers that exceed either of these thresholds must register for a sales and use tax permit number to report and remit tax due on their own sales through the marketplace and register for a separate sales and use tax permit number to report and remit tax due on sales it facilitates for its marketplace retailers.

Marketplace providers must begin collecting tax by the first day of the calendar month that begins no later than 30 days after it meets either of the thresholds.

All sales made on a marketplace provider’s platform, whether on its own behalf or facilitated on behalf of marketplace retailers, will be subject to audit.

Under the provisions, a marketplace provider means a person who directly or indirectly performs activities such as listing a marketplace retailer’s products/services, operating an electronic or physical marketplace infrastructure to connect retailers and purchasers, providing fulfillment or storage services, offering customer service to a marketplace retailer or their customers, and providing payment processing services. For full descriptions of marketplace provider activities, you can read the legislation.

(H.B. 354, Laws 2019, effective July 1, 2019)

Posted on April 8, 2019