Key Points in the Kentucky Sales Tax Nexus

Sam Wichman
November 17, 2020

The Kentucky sales tax nexus is one example of how states have started to evolve their economic nexus requirements after the South Dakota v. Wayfair, Inc. decision. Kentucky adopted HB 487, which kept the same thresholds as were in the Wayfair case. Even so, we have outlined key points for remote sellers and marketplace facilitators to help maintain compliance with collecting and remitting sales tax.

Enforcement date:
October 1, 2018.

Sales/transactions threshold:
$100,000 or 200 transactions.

Measurement period:
Threshold applies to the previous or current calendar year.

Included transactions/sales:
Retail sales of tangible personal property delivered into the state.

When You Need to Register Once You Exceed the Threshold:
The Kentucky Department of Revenue states that once one of the thresholds is met, “remote sellers should prepare to begin the registration process for collection of Kentucky sales and use tax on a prospective basis.”

Summary: Kentucky requires remote retailers to collect and remit sales tax if the remote retailer made 200 or more sales into the state or had more than $100,000 in gross receipts from sales into the state during the previous or current calendar year. Effective July 1, 2019, marketplace providers that meet those same thresholds must register and remit state use tax on all sales sold into Kentucky through their platforms.

“This provider reporting requirement includes all Kentucky sales conducted on behalf of the remote retailers that sell goods via the provider’s platform,” according to the Commonwealth of Kentucky. “For remote marketplace retailers that sell exclusively through a Kentucky-registered marketplace provider, or providers, and are not otherwise required to collect and remit Kentucky sales and use tax, they are not required to register for a Kentucky sales and use tax account to report their marketplace sales.”

Working with the right partner can help ensure that your business stays compliant with the Kentucky sales tax nexus, even if changes occur.

Kentucky Sales Tax Resources: Contact our team for more information on the Kentucky economic nexus and how it may impact your business. Additionally, check out our interactive sales tax nexus map for real-time updates on each state.

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Sam Wichman

Sam Wichman is a Junior Regulatory Counsel at Sovos. Within Sovos’ Regulatory Analysis function, Sam focuses on international VAT, global sales tax, and domestic sales tax issues. Sam received his B.A. in Political Science and Economics from the University of Wisconsin-Madison and his J.D. from Boston College Law School. Sam is pending admission to the Massachusetts Bar.
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