Do You Need to Get a Sales Tax Permit in Kentucky?

by | Nov 13, 2019

Quick Answer: You need to get a sales tax permit in Kentucky if you meet economic nexus requirements or have a physical presence in the state. Read on for more detailed information.  

What is Sales Tax Nexus Anyway?

Your business owes sales tax in any state where it has “sales tax nexus”. In short, if you have sales tax nexus you need to collect and remit sales tax. If you don’t have sales tax nexus, you generally don’t need to get a permit. 

Sales tax nexus is a legal term that means you have crossed a threshold and now have a sales tax collection responsibility in the state. Nexus can be created by having a physical presence, economic presence, or by other factors.  Nexus rules vary by state and retailers have specific nexus rules based on where they have people, property or inventory.  

 

What Should You Do Once You Determine You Have Sales Tax Nexus?

Once you determine that you have sales tax nexus in Kentucky, your next step is to register for a sales tax permit in the state. Check out our blog post on getting a sales tax permit in Kentucky for more information about that process.  If you are not interested in doing the work of getting the permit yourself, TaxValet can handle the permit registration for you. 

 

Common Ways to Have Sales Tax Nexus in Kentucky

1. Economic nexus in Kentucky

If you made $100,000 of sales in Kentucky in the last 12 months OR had 200 or more separate transactions, then you are required to register for, collect, and pay sales tax to the state. If you meet this threshold, it does not matter if you have a physical presence in Kentucky.  Nexus has been created based on your volume of sales. 

For more information, please see HB 487

If you need help determining which states you have crossed economic nexus thresholds, check out our Sales Tax Starter Kit service.

2. Physical presence nexus in Kentucky

The following creates physical presence nexus in Kentucky. If you have any of the following in Kentucky, you will need to get a sales tax permit.

  1. Owned or leased property that is utilized or located in the state;
  2. An employee or independent contractor present in the state;
  3. Goods in a warehouse;
  4. Services completed in the state;
  5. Computer software used by a third party in the state;
  6. Participation in trade or craft shows and festivals in the state for 15 days or more per year.

For more information, see Kentucky Revised Statutes 139.340.

If you need help determining which states you have a physical presence in, check out our Sales Tax Starter Kit service.

Free State Audit Risk Guide

See which states pose the greatest risk to your business.

State-by-State Audit Risk Percentages

Do You Need a Sales Tax Permit in Kentucky If You Only Sell on Marketplaces?

If you are an online retailer who ONLY sells on approved marketplaces (such as Amazon, eBay, etc), Kentucky sales tax will be remitted by the marketplace and you are NOT required to get a sales tax permit. For more information, see FAQ: Should remote retailers (no physical presence in Kentucky) that sell exclusively through marketplace providers register for a Kentucky sales and use tax account? 

If you are an e-commerce seller who is unsure of where you need to get a sales tax permit, check out our Sales Tax Starter Kit service.

Disclaimer: Our attorney wanted you to know that no financial, tax, legal advice or opinion is given through this post. All information provided is general in nature and may not apply to your specific situation and is intended for informational and educational purposes only. Information is provided “as is” and without warranty.

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