KENTUCKY SALES TAX FACTS

KentucKy SaleS tax FactS

A REVENUE PUBLICATION FOR THE BUSINESS OWNER JUNE 2021

ADMINISTRATIVE UPDATES

Online Filing—Effective October 1, 2021, the department

has mandated electronic ﬁling and payments for all taxes

that are already part of the eFile system. These taxes

include sales tax, consumer’s use tax, transient tax and

waste tire fee. To enroll your business for electronic ﬁlings,

users should follow these steps: www.onestop.ky.gov

1. Click “One Stop Business Services” to sign in to your

KBOS account (ﬁrst time users will be asked to create

an account by using the One Stop Business Service

Link).

2. Link your business to your KBOS account

a. From the dashboard, click “Link My Business” at

the bottom of the screen.

b. Link the business to your account using the CBI

number.

c. If you do not have the CBI number click the

hyperlink “click here” and answer the questions

to be provided your business’s CBI number and

security token immediately.

d. Once the CBI and security token are provided, enter

the email you used for your OneStop account.

e. Following this step, click Invite User.

f. Click Return to dashboard.

3. To File Taxes

a. Click the business name.

b. Click on the obligations tab.

c. Click on ﬁle taxes.

d. Click on the account number.

e. Click on ﬁle now for the period you would like to

ﬁle.

4. To Create a Payment

a. Complete the return.

b. On the right hand side of the screen, click make a

payment.

c. You can also use our stand alone payment site at

https://epayment.ky.gov/

Agricultural Exemption Number—Effective January

1, 2021, KRS 139.481 requires that farmers apply for an

Agriculture Exemption Number for use on Forms 51A158

and 51A159 to make purchases exempt from sales tax.

The application Form 51A800 is currently available on the

Revenue website www.revenue.ky.gov under Sales Tax

Forms.

Submit applications to

DOR.Webresponsesalestax@ky.gov

or to the department address located on page 2 of

the application. After approval of the application, the

department will issue an Agriculture Exemption Number to

the applicant by letter.

Until an Agriculture Exemption Number has been assigned,

the farmer may still issue a farm exemption certiﬁcate by

using the farmer’s driver’s license number as an identiﬁer.

The driver’s license number can no longer be used on

the farm exemption certiﬁcate after July 1, 2022. Please

contact the Division of Sales and Use Tax at 502-564-5170,

option 1 with any additional questions.

2021 LEGISLATIVE CHANGES

Cryptocurrency—HB 230 & SB 255

HB 230, effective July 1, 2021—Commercial mining

of cryptocurrency through the process of blockchain

technology at a colocation facility is eligible for a sales

tax and utility gross receipts license tax exemption on

electricity that is used or consumed in the commercial

mining process. In order to qualify, the facility must

consume at least two hundred thousand (200,000) kilowatt

hours of electricity per month. The exemption shall apply

to electricity sold or purchased on or after the effective

date of application and before July 1, 2030. The facility

must apply for approval, and if approved, the department

will provide an exemption letter that the facility can issue

to electricity vendors in order to make purchases of the

electricity exempt from sales tax and utility gross receipts

license tax. By November 1 each year, the approved

applicant shall annually report to the department the

amounts of the tax exemption claimed for each ﬁscal year

as long as the exemption applies.

SB 255, effective July 1, 2021—Sales and use tax

incentives are available for commercial mining facilities

of up to one hundred percent (100%) of the sales and

use tax paid on purchases of tangible personal property

to construct, retroﬁt, or upgrade an eligible project,

including commercial cryptocurrency mining equipment

at a facility, as set forth in KRS 139.517. Applications for

the incentive must be made on or after July 1, 2021, and

on or before June 30, 2025. Each location must submit

a separate application. These applications shall include

name and mailing address of the person seeking the

exemption, description of the business activities, the

business location, and any other pertinent information.

The Cabinet for Economic Development must ﬁrst approve

the project before the department will issue a refund.

Marketplace Providers—The passage of HB 249 amends

KRS 139.340 and KRS 139.450, changing the registration

procedures for marketplace providers that meet either

of the threshold requirements (200 transactions or over

$100,000 in sales) to collect sales and use tax for the state

of Kentucky, effective July 1, 2021.

JUNE 2021 PAGE 2

The amendment to KRS 139.340 also extends the number

of days allotted to marketplace providers and remote

retailers to register and begin collecting Kentucky tax from

thirty (30) days to sixty (60) days. Marketplace providers

must register and begin collecting tax by the ﬁrst day of

the calendar month that is no more than sixty (60) days

after reaching the threshold.

The amendment to KRS 139.450 eliminates the requirement

of a marketplace provider to register for a second sales and

use tax number for the sales of its marketplace retailers.

The amendment allows two options to a marketplace

provider when registering for a Kentucky sales and use

tax permit:

1. Report all sales on its own number and provide the

department, upon request, with a separate breakdown

of receipts for its marketplace retailers.

2. Register for a second sales and use tax account to

collect and remit Kentucky tax for third party sales it

facilitates through the sales platform.

Separately Stated Alcohol Regulatory License Fees

Excluded From Gross Receipts—HB 249

Under the provisions of KRS 243.075, just over 120 cities

across the commonwealth levy an alcohol regulatory

license fee on retailers’ gross receipts from the sale of

alcoholic beverages. In the past, when retailers have

passed these charges on to their customers, these

charges have been part of gross receipts subject to sales

tax. Effective for periods beginning July 1, 2021 forward,

these charges, when separately listed on the receipt given

to the customer, are no longer included in gross receipts

subject to sales tax based upon the new language in

KRS 139.010(15)(c)(4).

However, if the retailer does not separately state the

alcohol regulatory license fee on the receipt or if the

retailer bundles this license fee with other charges such

as the local restaurant tax, these bundled charges are

still considered part of gross receipts subject to sales tax

under the provisions of KRS 139.010(15)(a). Furthermore,

other local license taxes imposed upon the retailer such as

restaurant or transient room taxes remain part of taxable

gross receipts even if the retailer chooses to pass these

charges on to the customer as a separate charge.

Direct Shippers (HB 415)—A manufacturer or other

authorized licensee that supplies alcoholic beverages in

the state where it is located may make direct shipments to

Kentucky consumers by obtaining a Direct Shipper’s license

from the Kentucky Alcoholic Beverage Control (ABC). Then

the manufacturer or supplier must contact the Kentucky

Department of Revenue (DOR) to set up a revenue account

to fulﬁll its tax reporting obligations. The direct shipper

should contact the Excise Tax Section at 502-564-6823,

Option 3 for alcohol-related inquiries, or submit an email to

DOR.WEBResponseExciseTax@ky.gov .

Direct Shippers must ﬁle:

• Form 73A550—Monthly Return of Direct Shippers of

Alcohol, for remittance of the excise and wholesale

sales tax.

Effective for tax periods April 2021 forward, complete the

tax return and ﬁle and remit taxes due by the 20th of each

month following the reporting period. Monthly returns are

due even if there are no direct shipments that month.

If the wholesale price is available, then use this amount

in calculation of the wholesale sales tax. If not available,

then calculate by taking seventy percent (70%) of the retail

price to apply the wholesale sales tax.

Depending on alcohol type, complete either:

• Form 73A551—Direct Shippers’ Detailed Quarterly

Report of Distilled Spirits or Wine

• Form 73A552—Direct Shippers’ Detailed Quarterly

Report of Malt Beverages

Each quarter, submit one or both of the detailed reports

of direct shipments to Kentucky consumers, depending

on alcohol type. These forms are due by the 20th of the

month following the end of each quarter. If the direct

shipper ﬁles and reports no sales on each monthly return

(Form 73A550) for the quarter, then no quarterly report is

due for that reporting period.

The 6% state sales and use tax is also due on direct

shipments of alcohol to Kentucky consumers along with

applicable local taxes.

CURRENT ISSUES

Catering Services—Charges for prepared food and

associated catering services, including set-up fees, are

subject to sales and use tax based on KRS 139.485(3)(g)

and KRS 139.010(15)(a).

KRS 139.485(3)(g) deﬁnes prepared food as:

1. Food sold in a heated state or heated by the retailer;

2. Two (2) or more food ingredients mixed or combined

by the retailer for sale as a single item except food that

is only cut, repackaged, or pasteurized by the retailer,

eggs, ﬁsh, meat, poultry, and foods containing these

raw animal foods requiring cooking by the consumer

as recommended by the Food and Drug Administration

in Chapter 3, Part 401.11 of the FDA Food Code so as to

prevent food-borne illnesses; or

3. Food sold with eating utensils provided by the retailer,

including plates, knives, forks, spoons, glasses, cups,

napkins, or straws.

Bakery items sold without eating utensils are excluded

from the deﬁnition of “prepared food”.

JUNE 2021 PAGE 3

This newsletter is intended to provide practical information to

assist persons in fulﬁlling their sales and use tax obligations to

the Commonwealth.

This newsletter is archived on the Department of Revenue website

at www.revenue.ky.gov

and future editions may be accessed at the website.

To submit additional questions or suggestions for future topics,

please write to:

Kentucky Sales Tax Facts, Division of Sales and Use Tax,

Station 53, P.O. Box 181, Frankfort, KY 40602-0181

or call (502) 564-5170, Fax (502) 564-2041,

website www.revenue.ky.gov.

The Kentucky Department of Revenue does not discriminate on the

basis of race, color, national origin, sex, age, religion, disability,

sexual orientation, gender identity, veteran status, genetic

information or ancestry in employment or the provision of services.

Andy Beshear, Governor

Commonwealth of Kentucky

Holly M. Johnson, Secretary

Finance and Administration Cabinet

Thomas B. Miller, Commissioner

Department of Revenue

Printed on recycled paper and paid for with state funds.

According to the deﬁnition for “gross receipts” and “sales

price” in KRS 139.010(15), catering charges associated

with the sale of prepared food are subject to sales and

use tax as services necessary to complete the sale and

services rendered with the sale of taxable tangible

personal property.

Additionally, catering charges that include rental of tables,

chairs, silverware, and the like are also subject to sales

and use tax as the rental of tangible personal property.

The caterer may purchase items such as silverware,

tables, chairs, linens, etc. under a resale certiﬁcate if the

caterer uses the items exclusively in the catering business

and they are always resold/rented and billed as separate

line items on the invoice to the customer.

Separately stated general facility rental charges are not

subject to sales and use tax.

Emergency Broadband Beneﬁt (EBB)—Part of Gross

Receipts Subject to Sales Tax

This beneﬁt is an emergency federal program developed

in response to the COVID-19 pandemic to help families

and households struggling to afford internet service.

For those qualifying, the program provides a discount

up to $50 per month towards broadband service, which

may include landline and wireless communications

service. It also grants a one-time discount of up to

$100 on the purchase of a laptop, desktop computer

or tablet. Further program details are available at

www.fcc.gov/broadbandbeneﬁt .

These discounts to eligible consumers represent the

reimbursement amounts participating retailers receive

from the program to recover the costs of providing

internet service or eligible devices to their customers at

the discounted prices. Under the terms of KRS 139.010(15)

(b), payments from the EBB program received by providers

meet the deﬁnition of gross receipts from a third party

that are part of consideration for the products sold.

Participating providers should calculate sales tax only on

the portion of the reimbursement applied to the taxable

components of the customer’s bill.