Kentucky Sales Tax Filing Update July 2019: Marketplace Facilitator Laws
Kentucky passed a law requiring Marketplaces to collect and remit sales tax on sales facilitated through the marketplace effective July 1, 2019.
• Amazon, eBay, Etsy, and Walmart began collecting on July 1, 2019.
Please review general information regarding Marketplace Facilitators and how your TaxJar Sales Tax Reports support these changes here in our FAQ.
In this article, we summarize Kentucky's state guidance on the following questions:
- Do I need to register for a sales tax license in Kentucky?
- Should I cancel my existing registration if all my sales are marketplace-collected?
- Do I need to collect sales tax on Kentucky sales on non-marketplace platforms?
- Do I still need to file returns in Kentucky?
- How do I file without paying double tax on the sales that were collected and remitted by my Marketplace?
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?
- If you've previously registered, the state expects you to remain registered and continue to file returns.
- If your only sales are Marketplace sales, the state may still expect you to file a zero 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."
If you make sales on other platforms in addition to the Marketplace, you'll need to make sure you remit the tax you collected for those sales when you file.
- If you're enrolled in AutoFile for Kentucky, our system will handle the Marketplace sales deduction process automatically.