When your business makes transactions in Kentucky, you’ll generally need collect sales tax from your buyer, and that means you’ll need a sales and use tax permit from the state Department of Revenue. Both home-grown Kentucky companies and ones doing business from out of state are required to get the permit, barring a few exceptions, and remote retailers over a certain threshold will need to register as well. We’ll show you the ropes regarding sales and use tax in this guide.
What is Kentucky Sales and Use Tax?
The Kentucky Department of Revenue requires most businesses that sell or lease tangible and digital goods or provide services inside the state’s borders to collect sales tax at a rate of 6%. Kentucky domestic companies and foreign businesses with brick and mortar locations usually must collect sales tax—and online sellers and other remote businesses that make 200 or more sales in Kentucky or $100,000 or greater in gross receipts must also collect the tax.
Are there any exemptions to Kentucky sales tax requirements?
Grocery food, prescription medicine, medical devices and services, fuel, vehicle rentals, and fuel are exempt from state sales tax. Occasional sales (such as a private citizen selling their car) are also exempt.
Are there county- or city-level sales taxes in Kentucky?
Kentucky counties are not permitted to add their own sales taxes, but certain cities level an additional tax, such as Albany (3.75%), Fort Campbell (3.5%) and Middlesboro (3.25%). These additional taxes are filed separately from the state-level taxes.
How to Register for a Kentucky Sales Tax Permit
To register for a Kentucky Sales Tax Permit, you can apply at the Department of Commerce’s online Kentucky Business One Stop portal, or with Form 10A100, the Kentucky Tax Registration Application. This form registers many other Kentucky business taxes for your company, such as withholding tax, corporation and LLC taxes, and more—so bear that in mind when you see the length of the form!
Applications take two to three weeks to process.
What is the cost of a Kentucky sales tax permit?
Registration for a sales tax permit is free.
Filing Kentucky Sales Tax Returns
Once you have a sales tax permit, you are required to file sales tax returns with the Kentucky Department of Revenue. Sales tax returns are used to report the amount of sales tax you collected during the filing period and remit any tax due. When filing your sales tax returns, you will need to report your total sales, taxable sales, and the amount of sales tax collected. You will also need to provide any deductions or exemptions that apply to your business.
Where can I file Kentucky sales tax returns?
In Kentucky, sales tax returns can be filed online using Business One Stop Filing or with paper forms. These forms are not available online and must be obtained at a Department of Revenue field office.
What happens if I don’t get a sales tax permit or file returns?
If you fail to file or pay your sales tax on time—or register for a sales tax permit at all, you may be subject to legal action and penalty fees from the Kentucky Department of Revenue, including the revocation of your sales tax permit.