Sales Tax Updates in Kentucky

Tax Professionals' Resource
January 10, 2013 — 1,434 views  
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The state of Kentucky has a sales and use tax rate of 6%. The sales tax is imposed on the gross receipts of a retailer. The tax is shifted to the purchaser at the time of purchase. Any Kentucky sales tax paid at the time of transaction should be clearly visible, and separately listed, on the sales receipt.

The state of Kentucky prohibits by law any seller offering to refund all or part of any money collected. It is also illegal for sellers to advertise or promote that they will absorb any applicable sales tax. It is a legal requirement that the sales tax is added to the actual sale.

The sales tax in Kentucky is levied on the gross receipts from any retail sale and the sale, lease, or rental of any personal property, including specified services. The state has granted tax exempt status to certain items as well. For example, Kentucky does not charge a sales tax for certain prescription drugs.

A use tax may also be owed to the state for the use, consumption, or storage of actual personal properties purchased outside state lines. This tax isn't applicable if the sales tax has already been collected or paid to the seller.

For example, whenever items like jewelry, furniture, clothing, computer equipment or software, books, souvenirs or exercise equipment are purchased outside of Kentucky via online or catalog shopping, and delivered to a Kentucky residence, a use tax is then applicable. There are three ways to pay this use tax.

1. The Consumer Use Tax Return - Form 51A113(O) can be used to file throughout the year whenever a taxable purchase is made.

2. Taxable purchases can be reported and paid at the time Kentucky individual income tax forms are filed.

3. The use tax can be paid to county clerks for any property bought out-of-state requiring a title or first-time state registration.

The use tax can either be reduced or completely negated if it is paid to the state at the time of purchase. For instance, the Georgia sales tax is 4%. If a purchase is made in Georgia, and that 4% state sales tax is paid, only the additional 2% is owed to the state of Kentucky. The state of Illinois has a 6.25% sales tax. Any purchase made in Illinois where a sales tax is paid would completely eliminate any money owed to Kentucky.


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