Kentucky – Remote Seller Notice Requirement in Effect

SALT Report 3058 – The Kentucky Department of Revenue issued a reminder for out-of-state retailers who are not required to collect Kentucky sales and use tax. Under the provisions of KRS 139.450 out of state retailers who make more than $100,000 in sales to Kentucky residents and businesses, must notify their Kentucky customers that they are required to self report and pay use tax directly to the Department of Revenue for all taxable purchases, when the retailer does not collect sales tax.

The use tax notice must be readily visible in the retailer’s catalogs, or on their Web sites, online auction Web sites, or invoices and contain the following language:

  • “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 tax in Kentucky
  • The purchase is not exempt simply because it is made over the Internet, by catalog, or by other remote means, and
  • Kentucky requires purchasers to report all purchases of tangible personal property or digital property that are not taxed by the retailer and pay use tax on those purchases unless exempt under Kentucky law. The tax may be reported and paid on the Kentucky individual income tax return or by filing a consumer use tax return with the Kentucky Department of Revenue. These forms and corresponding instructions may be found on the Kentucky Department of Revenue’s Internet Web site.”

The retailer may also provide a reference to a supplemental page or an electronic link that contains the use tax notification language above.  In addition, the retailer can provide a consolidated notice to their customers if another state requires the retailer to provide a similar type of use tax notification. However, the consolidated notice must include the information required by Kentucky, specifically reference Kentucky, and meet Kentucky’s notice location requirements.

To report and pay use tax:

  • Businesses can report any use tax due on Form 51A113 – Consumer’s Use Tax Return (O), or on line 23a of Form 51A102, or Form 51A103 – Sales and Use Tax Return
  • Individuals can report or pay use tax on Form 51A113(O) – Consumer’s Use Tax Return each time a taxable purchase is made, or they can report use tax on an annual basis on their individual income tax return, and
  • To the county clerks office when out-of-state purchases are titled or registered in Kentucky

These notification requirements were effective July 1, 2013.

For Further Information

Kentucky Department of Revenue – Hot Topics

Notice to Retailers