Kentucky sales tax guide
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You are reading 1stopVAT’s Kentucky sales tax guide. This guide will go into specifics regarding sales tax in Kentucky (KY).
Our experts at 1stopVAT have updated the article with the current and relevant information on how sales tax works in the Bluegrass State.
You’ll find a wide variety of information related to sales tax as it relates to consumers and businesses, including who is responsible for paying state sales tax and where you can find information about the taxes.
Whether you’re wondering what is the sales tax rate in Kentucky, whether you need to register for Kentucky tax sales, or the filing frequency of Kentucky state sales tax, our sales tax guide will help.
Please don’t hesitate to ask the 1stopVAT team or assistance or if you have any additional questions.
A Digest on Kentucky sales tax (KY)
Sales tax is the tax that is applied to sales of goods or services except for certain items. Kentucky enacted a general state sales tax in 1960, and the sales tax rate in Kentucky has since climbed to 6%.
There are no local taxes in the state on top of the Kentucky sales tax rate.
Kentucky Tax Nexus
The requirement to collect Kentucky sales tax is dependent on having a solid link with the state. This is referred to as nexus and determines whether the state has the legal right to oblige your company to collect, pay, and return sales tax.
Sales tax nexus can be established by remote or out-of-state sellers who have no physical presence in Kentucky in the following ways:
Affiliate nexus includes having someone as a solicitor of sales of goods on the retailer’s behalf in Kentucky.
Economic nexus is created, and the remote seller must register with the state and collect and pay sales tax in Kentucky when the company generates more than $100,000 in sales of taxable or exempt items or services or completes 200 or more distinct sales transactions to Kentucky.
Inventory in the State includes products held by Fulfillment by Amazon (FBA) merchants and kept at warehouses in Kentucky.
Trade show nexus is established when you (the business) participate in trade shows with the purpose of taking orders and making sales. However, no nexus is established if you only participate in trade exhibitions.
Kentucky sales tax online registration
To register for a Kentucky seller’s permit online, you must submit specific information regarding your business through the Kentucky Department of Revenue(via their website).
The DoR will ask you to provide company and personal details and estimates of your future sales.
There is no cost to register for a seller’s permit in Kentucky, but other business registration fees may apply.
If you have trouble with the registration for a seller’s permit or anything involving the sales tax rate Kentucky, don’t hesitate to get in touch with the 1stopVAT team for assistance.
Kentucky Taxable Items and Services
Before we continue on calculating how much is the sales tax in Kentucky, we must figure out what items and services are taxed or exempted.
State law exempts certain items from sales tax Kentucky; Farm equipment, food stamp purchases, and prescription medicines are examples.
State law also exempts non-profit organizations, government agencies, and merchants purchasing goods for resale from the Kentucky state sales tax rate.
Tangible personal property includes items such as boats, machinery and equipment, tools, planes, furniture and fixtures, and other items.
Businesses are taxable for Kentucky sales tax rates on tangible personal property.
What is the current sales tax in Kentucky?
According to the Kentucky Department of Revenue, the total Kentucky sales tax percentage is 6%.
Kentucky Tax Frequency
Once you’ve registered with the Kentucky DOR and started collecting sales tax rates Kentucky, you (the business) become responsible for transferring tax revenue from customers to tax authorities.
The Kentucky Department of Revenue will assign your company a filing frequency.
You will either be assigned a monthly, quarterly, or yearly frequency. The frequency depends on the quantity or volume of your company’s sales.
For example, more prominent companies must file more frequently.
The filing terms are applicable to both sales and use tax Kentucky.
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