Sales Tax Rate/Due Dates/Nexus/When to Collect

1. Sales Tax Rate:

• The state sales tax rate in Kentucky is 6%. This is a flat rate applied to all taxable sales, without any local sales tax add-ons. Therefore, the total sales tax rate across the state remains at 6%.

2. Due Dates for Sales Tax Filing:

• Monthly Filers: Sales tax returns are generally due on the 20th of the month following the end of the reporting period. For example, sales made in January must be reported by February 20th.
• Quarterly Filers: If your business is a quarterly filer, the due dates are:
  • Q1 (Jan-Mar): Due April 20
  • Q2 (Apr-Jun): Due July 20
  • Q3 (Jul-Sep): Due October 20
  • Q4 (Oct-Dec): Due January 20 of the following year.
• Annual Filers: If you file annually, your due date is January 20 of the following year.

3. Accelerated Due Dates:

• Businesses that have an average monthly sales tax liability of $100,000 or more may be required to file and pay on an accelerated basis. This means they might need to make advance payments of sales tax before the regular due date.

4. Nexus:

• Physical Nexus: If your business has a physical presence in Kentucky, such as a storefront, warehouse, office, or employees, you have a physical nexus and are required to collect and remit sales tax.
• Economic Nexus: Kentucky follows the economic nexus standard, meaning that if your sales into the state exceed $100,000 or 200 separate transactions within a calendar year, you must register to collect sales tax, even without a physical presence.

5. When to Collect Sales Tax:

• You must collect sales tax at the point of sale on all taxable goods and services sold to customers within Kentucky. Sales tax should be collected on all retail sales unless the buyer provides a valid exemption certificate (e.g., for resale purposes or non-profit organizations).

This article was written by Tamara Henderson. Tamara is a Payroll Specialist II with Baldwin CPAs. For more information on the support Baldwin CPAs can provide you, contact tamara.henderson@baldwincpas.com.