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Kentucky Sales Tax 2022 for Businesses: A Complete Guide

“The statewide sales tax for businesses in Kentucky is 6%”

What Does The Sales Tax For Businesses In Kentucky Mean?

Sales Tax for businesses In Kentucky means consumers must be charged sales tax in Kentucky, and payments collected by sellers must be made to the state. Whether or not this applies to you depends on a variety of factors, including where your business is located and what you’re selling, and each state has slightly different sales tax legislation. 

Kentucky has a 6% state sales tax with no local levies. That implies – you will charge your customers the same amount regardless of where your business is located in the state. Many states, on the other hand, enable local governments to levy their own taxes. 

This might result in a wide range of charges across a state, as well as the requirement for numerous registrations in some cases. Kentucky, fortunately, takes care of all of these issues by keeping the sales tax rate, as well as the registration and filing processes centralized.

Read More: Maryland Sales Tax 2022 for Businesses: A Complete Guide

How Much Is The Sales Tax For Businesses In Kentucky?

The state of Kentucky has a 6% statewide sales tax. If you have a nexus in Kentucky, you must collect sales tax. When it comes to nexus, sellers can be linked to a state in two ways: physically or economically. Physical nexus refers to having sufficient tangible presence or activity in a state to justify paying sales tax there. Passing a state’s economic threshold for total income or number of transactions is referred to as economic nexus.

Kentucky Sales Tax Threshold Limit
6%$100,000 economic sales threshold limit

Do You Need To Collect Kentucky Sales Tax For Your Ecommerce Business?

If you have a nexus in Kentucky, you must collect sales tax. When it comes to nexus, sellers can be linked to a state in two ways: physically or economically. Physical nexus refers to having sufficient tangible presence or activity in a state to justify paying sales tax there. Passing a state’s economic threshold for total income or number of transactions is referred to as economic nexus.

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What Types Of Goods and Services Are Taxable Under Kentucky Sales Tax?

Taxes on Transactions

Sales tax is legally required to be collected from tangible, physical things sold to consumers in the state of Kentucky. Most types of farming equipment, prescription drugs, and construction equipment are exempt from this tax. This means that someone selling furniture would have to charge sales tax, but someone selling farming equipment would not have to. 

Taxes On Services

The state of Kentucky does not normally collect sales taxes on the many services provided, but in 2018 it approved legislation expanding the services that can be taxed. Taxed services previously included those that modified or repaired a product. As of 2018, labor and services such as car repair, landscaping, janitorial services, and other similar services are subject to sales tax on both work and materials spent. 

Landscaping Services6%
Janitorial Services6%
Pet Care Services6%
Industrial Laundry Services6%
Certain Repair Services6%

Tax Collection

On the sale of certain products and services, a sales tax is paid to a governing authority. Kentucky enacted its first general state sales tax in 1960, and the rate has since climbed to 6%. Local governments in many states can levy local sales taxes in addition to the state sales tax. However, as of June 2019, Kentucky has no local sales taxes. 

As a business owner selling taxable goods or services, you represent Kentucky by collecting tax from customers and remitting it to the appropriate tax authority. The Kentucky Department of Revenue is in charge of collecting sales and use taxes (Kentucky DOR). 

The state of Kentucky owns any sales tax received from customers, not you. It is your job to keep track of the taxes you collect in order to comply with state and municipal regulations. Failure to do so could result in fines and interest.

Tax Filing

You’ve applied for sales tax registration with the Kentucky Department of Revenue to start collecting sales tax. Remember that those tax funds aren’t yours. As an agent for the state of Kentucky, your job is to act as a mediator between consumers and tax officials.

The two-step procedure of filing a Kentucky sales tax return consists of submitting the appropriate sales data and remitting the collected tax dollars to the Kentucky Department of Revenue. You must identify your total sales in the state, the amount of sales tax received, and the location of each sale as part of the filing procedure.

How Often Do You Need To File Kentucky Sales Tax Return?

You must remit sales tax to the Kentucky Department of Revenue by a specific date after collecting it. After that, the Kentucky Department of Revenue will scatter it as needed. Knowing the due dates associated with filing the taxes in Kentucky is important. Failing to file by the assigned date can turn into hefty fines and interest charges. 

The Kentucky DOR requires all sales tax filing to be completed by the 20th of the month following the tax period. For businesses with monthly sales and use tax liability of $10,000 or more, Kentucky DOR requires accelerated monthly filing, due by the 25th of the month of the current tax period.

What If You Fail To File Your Tax Return Before The Due Date?

If one forgets to file the sales tax on time, then that person has to further face penalties and interest charges. The longer you delay filing, the bigger the penalty you have to face. The only recommendation is to contact the Kentucky DOR and inquire about the current status of the potential acquisition. If you are running a business, you’ll be responsible for all the Kentucky sales and use tax liability. 

Get The Best Assistance For Kentucky Sales Tax 2022

If you require any assistance with the Kentucky Sales Tax in 2022, feel free to contact us. FreeCashFlow is a tax and accounting agency with over 20 years of experience in Los Angeles, California. We give you the best possible help with your tax and accounting problems.

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