Emergency Regulation Requiring Sales and Use Tax Number for Vendors Made Permanent
The Kentucky Department of Revenue (“Department”) recently made permanent Administrative Regulation 200 KAR 5:390, which requires that a vendor must register with the Department for a sales and use tax number in order to contract with the Commonwealth of Kentucky to provide goods or services subject to sales and use tax.
The Regulation provides that “any person awarded a contract with the Commonwealth to provide goods or services subject to sales and use tax […] shall submit to the contracting agency, prior to execution of a contract, […] Form 51A101(a), (b), (c), or (d) or Form 10A100.” The Emergency Regulation previously in effect provided that the deadline to submit these Forms to the contracting agency was to be set forth in the bid contracts, rather than requiring them to be submitted prior to execution of the resulting contracts.
Those registered with the Department to collect and remit sales and use tax use Form 51A101, Sales and Use Tax Permit. Those not registered use Form 10A100, Kentucky Tax Registration Application.
The Regulation also provides that a vendor’s failure to submit the required documentation or to remain registered and in compliance with sales and use tax filing and remittance requirements during the time that the contract is in effect will constitute a material breach of contract unless the Secretary of the Finance and Administration Cabinet determines in writing that continuing the procurement is necessary to protect substantial interests of the Commonwealth. The Emergency Regulation had no such provision.
If you have questions about this topic or any other legal issue, please contact any member of the firm's State and Local Tax Team.