Kentucky Governor Signs Comprehensive Sales and Use Tax Bill for SSTP Conformity.

On March 18, 2005, Kentucky Governor Ernie Fletcher signed into law H.B. 272. Among the provisions of the bill is an adoption of affiliate agency nexus; and new taxes on telecommunication services and prepaid calling services. The bill adopts a definition of a retailer engaged in business in this state to include any retailer located outside the state of Kentucky that utilizes a representative in Kentucky, either full or part-time, if the use of the representative constitutes a marketplace for the retailer. The definition has an effective date of August 1, 2005. The state also provides that effective January 1, 2006, the provision of a prepaid calling service is subject to Kentucky sales and use tax. The bill defines a prepaid calling service as the right to access exclusively communications services, which are paid for in advance and which enable the origination of calls using an access number or authorization code, whether manually or electronically dialed, and that is sold in predetermined units or dollars of which the number declines in a known amount with use. Also, the bill provides for a 3% excise tax on the purchase of cable service, satellite broadcast and wireless cable service provided to a person whose primary use is in Kentucky billed after 2005. This is regardless of where or to whom those services are billed or paid. The bill allows for vendor compensation in regards to the collection of such tax. The full text of the bill can be found at (H.B. 272, Kentucky Revenue Cabinet, enacted March 18, 2005)

Posted on March 25, 2005