Kentucky Tax Nexus

Businesses with nexus in Kentucky are required to register with the Kentucky Department of Revenue and to charge, collect, and remit the appropriate tax.

Generally, a business has nexus in Kentucky when it has a substantial physical presence in the state, such as a retail store, warehouse, inventory, or the regular presence of traveling salespeople or representatives. However, out-of-state sellers can also establish nexus in the ways described below.

Kentucky nexus for out-of-state sellers

Under Kentucky law  (139.340), a retailer is “engaged in business in this state” and required to collect and remit Kentucky tax if any of the following are true:

  • The retailer solicits orders for tangible personal property or digital property from Kentucky residents on a continuous, regular, or systematic basis, and placement of the order or payment utilizes the services of any financial institution, telecommunication system, radio or television station, cable television service, print media or other facility or service located in this state
  • The retailer solicits orders for tangible personal property or digital property from Kentucky residents on a continuous, regular, or systematic basis, if the retailer benefits from an agent or representative operating in this state under the authority of the retailer to repair or service tangible personal property or digital property sold by the retailer
  • The retailer located outside Kentucky uses a representative in Kentucky, either full-time or part-time, if the representative performs any activities that help establish or maintain a marketplace for the retailer, including receiving or exchanging returned merchandise

Use tax notification requirement

According to the Kentucky Department of Revenue, “Out-of-state retailers with no legal requirement to collect tax in this state, 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 Department of Revenue on applicable purchases in accordance with KRS 139.450

See the Kentucky Department of Revenue, Consumer Use Tax, and Kentucky Revised Statutes Chapter 139.