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Kentucky Enacts Use Tax Notification Requirement

  • Apr 2, 2013 | Will Frei

 Kentucky passes use tax notification law.

The use tax notification. 

Use Tax Notifications

Kentucky is not the first state to enact a use tax notification requirement. The basic idea is that state sales tax is owed on all non-exempt purchases, whether the tax is collected and remitted by the seller (sales tax) or remitted straight to the state by the purchaser (use tax). However, use tax is notoriously hard to collect. So some states encourage their residents to remit use tax by having retailers remind purchasers of their obligation.

HB 440 and Kentucky Use Tax

Kentucky has tried to encourage consumers to pay use tax in the past.  However, HB440 is Kentucky's first use tax notification law. The bill amends Kentucky Revised Statute 139.450 so that that retailers not required to collect Kentucky sales tax must display a use tax notification on their Web sites, retail catalogs, and invoices provided to the customers. This does not include retailers that made total gross sales of less than $100,000 from Kentucky residents and businesses the previous year, and that reasonably expect to make less than that amount in the current year.

The notifications must read:

  • The retailer is not required to and does not collect Kentucky sales or use tax.;
  • The purchase may be subject to Kentucky use tax unless the purchase is exempt from taxation in Kentucky.;
  • The purchase is not exempt merely because it is made over the Internet, by catalog, or by other remote means.; and
  • The Commonwealth of Kentucky requires Kentucky purchasers to report all purchases of tangible personal property or digital property that are not taxed by the retailer and pay use tax on those purchases unless exempt under Kentucky law. The tax may be reported and paid on the Kentucky individual income tax return or by filing a consumer use tax return with the Kentucky Department of Revenue. These forms and corresponding instructions may be found on the Kentucky Department of Revenue's Internet Web site.

Alternatively, retailers may provide "a prominent reference" or link to a supplemental page on their website or the Kentucky Department of Revenue's website that contains this information.

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photo credit: SeeMidTN.com (aka Brent) via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.