Cheryl Ganim, CPAEffective July 1, 2013, out-of-state retailers with no legal requirement to collect Kentucky sales and use tax and who expect more than $100,000 in gross annual sales to Kentucky residents must notify their Kentucky customers that use tax must be reported and paid directly to the Kentucky Department of Revenue on applicable purchases from that retailer.[1]

Applicable purchases by Kentucky customers include tangible personal property or digital property from a retailer outside Kentucky for storage, use, or other consumption in Kentucky.

This notification must be posted on the retailer’s website (including online auction websites), in retail catalogs and on any electronic confirmation order or other invoicing documents. However, rather than inserting the notification on various sales documents and platforms, the required notification detail may be provided as a supplemental page or by electronic link (see further detail below). A retailer that chooses to adopt the alternate supplement page notification must provide a prominent reference to a supplemental page in the retailer’s catalog or the retailer’s website or a prominent linking notice that states the following:

“See important Kentucky sales and use tax information regarding tax you may owe directly to the Commonwealth of Kentucky.”

In addition, retailers are prohibited from stating or implying on their websites or in their catalogs that there is no Kentucky tax due on such purchases.

Key Vendor Notice Requirements

The notice must be readily visible and contain the information set forth as follows:

  • 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;
  • The purchase is not exempt merely because it is made over the Internet, by catalog, or by other remote means; and
  • The Commonwealth of Kentucky requires Kentucky 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.

[1] KRS 139.450.