Kentucky Responds to Wayfair: New Sales/Use Tax Collection Requirements Effective October 1st
On July 30, 2018, The Kentucky Department Revenue issued updated guidance that “remote sellers must register and begin sales and use tax collections under the state’s new economic nexus requirements by October 1, 2018. If there are concerns about complying with this timeframe, contact the Department directly for further assistance at KRS.WebResponseSalesTax@ky.gov.” Such a clarification was expected given the recency of the Wayfair decision and the widespread impact to the business community.
In late June, Kentucky Department of Revenue issued the following statements:
“Remote sellers that meet the [omitted] transaction or receipt thresholds [see below] should prepare to begin the registration process for collection of Kentucky sales and use tax on a prospective basis.”
“As a charter member of the Streamlined Sales Tax Governing Board, Kentucky and other Streamlined member states, such as South Dakota, have worked for years with the business community to eliminate difficulties in the collection and remittance of state sales and use tax. As the ruling itself indicates, the [SCOTUS] took note of these efforts in making its ultimate decision to overturn its earlier Quill decision.”
“Remote sellers required to register for sales and use tax collections in Kentucky may go through the Governing Board’s central registration system to register in all twenty-four Streamlined member states in one process. There are also Certified Service Providers (CSPs) available to assist with the tax collection and filing process. See central registration and CSP information here.”
“On June 21, 2018, the U.S. Supreme Court ruled in South Dakota v. Wayfair to remove the physical presence requirement for state sales tax collection authority it established in its 1992 Quill decision. This reversal was due in part to the recognition that South Dakota and similarly situated states have removed the “undue burdens” which the Court was concerned with in the earlier watershed case. The nexus standards that Kentucky adopted in HB 487 are the same thresholds at issue in the Wayfair case. This legislation in conjunction with the Supreme Court decision positions Kentucky to move forward with implementation of these provisions for remote sellers with sales into the state.”
The Kentucky Department of Revenue is one of the first states to respond to the SCOTUS’ June 21, 2018 decision issued in South Dakota vs. Wayfair, Inc. et. al.
Kentucky House Bill 487, which was enacted on April 27th, 2018, codified a remote seller’s requirement to collect sales tax under Ky. Rev. Stat. Ann. § 139.340(2)(g) (effective 7/1/2018) and states:
“Any remote retailer selling tangible personal property or digital property delivered or transferred electronically to a purchaser in this state if:
- The remote retailer sold tangible personal property or digital property that was delivered or transferred electronically to a purchaser in this state in two hundred (200) or more separate transactions in the previous calendar year or the current calendar year; or
- The remote retailer’s gross receipts derived from the sale of tangible personal property or digital property delivered or transferred electronically to a purchaser in this state in the previous calendar year or current calendar year exceeds one hundred thousand dollars ($100,000)”
Please contact a member of Barnes Dennig’s State and Local Tax practice here if you’d like to discuss the impact to your business.