Kentucky Sales Tax Filing Update July 2019

What's changing in Kentucky?

Kentucky has passed a law requiring Marketplaces to collect and remit sales tax on sales facilitated through the marketplace effective July 1, 2019.

How does this affect me?

If you sell through a Marketplace that has agreed to begin collection in this state, you'll see sales tax collected in Kentucky for sales on and after July 1, 2019 on your TaxJar Dashboard and on your Kentucky Transactions page.
  • If you have never set up a filing frequency for Kentucky in your account's State Settings, our system will default the state to a monthly frequency and due date on your Dashboard after we see tax collected there. (We default to a monthly frequency and due date if you haven't yet adjusted any frequencies on your end, but the state itself would ultimately determine your exact filing frequency.) 
  • If you are currently opted in to receive email reminders for your sales tax due dates, you'll also see Kentucky listed as a state where you have an upcoming monthly return due in those emails.

How does this affect my TaxJar Report for Kentucky?

Your Kentucky Sales Tax Report was updated in August 2019 (when returns for sales after July 1, 2019 are due) to specifically reflect sales that had tax collected and remitted by Marketplaces that are supported as Marketplace Facilitators in TaxJar Reports.

I've never registered for a KY license. Do I need to register for a sales tax license in this state now?

If a seller meets the definition of engaged in business, then state registration is required. 

I have already registered for a license in Kentucky and all of my sales are Marketplace-only sales. Should I cancel my existing registration?

If you are a marketplace seller who has already registered due to physical presence (such as inventory stored in your Marketplace's warehouse) or you have voluntarily registered, you should remain registered, according to the DOR.

However, the state of Kentucky has instructed sellers that only have sales through a Marketplace Facilitator and who have no physical presence in the state that they do not have to remain registered in Kentucky. 

  • Sellers have the right to remain registered and there may be circumstances where they want to remain registered but they are not required to do so.
  • You can read more about this here and if you have questions about how this specifically affects your business operations, we recommend contacting the Commonwealth of Kentucky directly.

Do I still need to file returns in Kentucky?

Yes. Once you register for a license, you will be required to file a return based on the frequency the state has assigned you.
  • If you've previously registered, the state expects you to remain registered and continue to file returns. 

If all my sales are Marketplace sales, do I need to file a $0 return?

Yes. If your only sales are Marketplace sales, the state still expects you to remain registered and file a return. 

Do I need to collect taxes on my Kentucky sales through other platforms?

Yes. If you have nexus in the state (physical or economic) and you make sales to customers in Kentucky on platforms outside of the marketplace that is automatically collecting and remitting, you will also need to collect tax on your end on the Kentucky orders that are processed on the other platforms.

I still need to file returns in Kentucky. How do I do this without paying double tax on the sales that were collected and remitted by my Marketplace?

When filing your Kentucky sales tax return, include the marketplace sales on the Total Receipts line. Then, add a corresponding deduction in the deductions worksheet using the description "Sales Tax Collected by Marketplace."