U.S. Supreme Court ruled in South Dakota v. Wayfair to remove the physical presence requirement for state sales tax collection authority.
(Updated July 30, 2018) House Bill 487 defines remote retailers as those with no physical presence in Kentucky. The legislation also requires remote retailers with 200 or more sales into the state or $100,000 or more in gross receipts from sales into the state to register and collect Kentucky sales and use tax. The transaction and gross receipts thresholds are based on the previous or current calendar year sales.
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 effective July 1, 2018 and 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.
Remote sellers that meet the threshold transaction or receipt thresholds should prepare to begin the registration process for collection of Kentucky sales and use tax on a prospective basis.Registrat
Registrations should be completed with sales and use tax collections beginning by October 1, 2018. If there are concerns about complying with this timeframe, please contact the Department of Revenue directly for further assistance at KRS.WebResponseSalesTax@ky.gov.
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 Court 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.
To register only for Kentucky tax collections, go to www.onestop.ky.gov.