Kentucky – Newsletter Addresses Recently Enacted Sales and Use Tax Legislation

SALT Report 2572 – The June 2013 issue of Kentucky Sales Tax Facts, the Department of Revenue’s monthly newsletter, addresses sales and use tax legislation that was recently passed or enacted in the state.

Vendor Compensation

The newsletter provides guidance regarding the changes to the vendor collection discount once House Bill 440, Laws 2013, takes effect on July 1, 2013. On that date, the collection discount will increase from 1% to 1.5% for each return in which the tax due is in excess of $1,000. However, the 1.75% discount on the first $1,000 of tax due remains unchanged, and the maximum reimbursement allowed to a seller in a reporting period will be reduced from $1,500 to $50. The state will update their paper forms and electronic forms to reflect these changes beginning with the July 2013 returns.

Use Tax Notification

Effective July 1, 2013, out-of- state retailers with no legal requirement to collect tax in Kentucky must notify their Kentucky customers that use tax must be reported and paid to the DOR on all taxable purchases in accordance with KRS 139.330. The reminder must also contain guidance on how Kentucky residents may pay use tax on purchases that have been shipped into Kentucky.

The notifications must be posted on the retailer’s website, on electronic order confirmations, and on any other invoicing documents. The notification can also be provided as a supplemental page or by an electronic link. The following is a sample of the information required on the notification:

  • The retailer is not required to and does not collect Kentucky sales or use tax,
  • The purchase may be subject to Kentucky use tax unless the purchase is exempt from taxation in Kentucky, and
  • The purchase is not exempt merely because it is made over the Internet, by catalog, or by other remote means

Surcharges

Credit card surcharges are included in the gross receipts and are subject to sales and use tax if the product sold is subject to tax. This requirement is regardless of whether the credit card surcharges are imbedded in the cost of the product sold, or if they are separately stated.

Restaurant Tax

KRS Sec. 91A.400 authorizes fourth and fifth class cities to impose a tax of up to 3% on all restaurant receipts in order to support local tourist and convention activities. If a restaurant passes this tax on to the customer, they will be considered part of gross receipts, and subject to sales tax.

For Further Information

Kentucky Department of Revenue – Kentucky Sales Tax Facts June 2013