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New Law Makes Changes to Conform Kentucky’s Sales and Use Tax Laws with Streamlined Sales and Use Tax Agreement


The Kentucky General Assembly enacted House Bill 429 [H.B. 429] during its 2011 Regular Session in March. The Fiscal Note to H.B. 429 indicates that it is intended to conform Kentucky’s sales and use tax laws with the requirements of the national Streamlined Sales and Use Tax Agreement, as of December 2010.

 H.B. 429, sponsored by Representative Rick Rand, Chair of the House Appropriations & Revenue Committee, requires sales of digital property to be sourced like sales of tangible personal property, rather than to the place of primary use where the end user received the digital property or where the end user primarily accessed the digital property.

H.B. 429 amends KRS 139.010 [Definitions for sales and use taxes] to define “direct mail,” “advertising and promotional direct mail” and “other direct mail” and amends KRS 139.777 [Direct mail] to provide sourcing rules for sales of same.

H.B. 429 also amends KRS 139.270 [Resale certificate or certificate of exemption] to accept Streamlined Sales and Use Tax Agreement Certificates of Exemption, as well as resale certificates and certificates of exemption, to shift the burden of proof to the Department of Revenue (“Department”) regarding the taxability of sales transactions. Significantly, H.B. 429 also amends KRS 139.270 to provide that “relevant data elements that correspond to the information that the purchaser would otherwise provide to the retailer or seller on the Streamlined Sales and Use Tax Agreement Certificate of Exemption” will also be accepted to establish exempt sales or sales for resale. H.B. 429 allows retailers and sellers an additional 120 days to substantiate a sale for resale or an exempt sale if a request is made by the Department.

H.B. 429 also amends KRS 139.795 [Certified service provider is agent of seller; liability; exemption for purchaser] to provide a seller relief from tax liability in certain instances if the Department does not provide the seller with at least 30 days notice of a rate change.

H.B. 429 was signed by the Governor on March 15, 2011 and is effective July 1, 2011.

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.

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