E-books, music, and software are just a few examples of the digital items that have grown in popularity recently. However, the regulations governing sales tax can be perplexing. The taxability of digital goods varies by a number of criteria in Kentucky, including the nature of the commodity and the method of delivery.
The Kentucky Department of Revenue states that sales tax is typically charged on digital goods that are delivered electronically. This covers anything that can be downloaded from the internet, such as e-books, music, and software. The item might be exempt from sales tax if it is delivered on a physical media, like a CD or DVD.
It’s important to keep in mind that certain digital goods may qualify for a sales tax exemption if they are deemed to be “intangible personal property.” Products like domain names and online advertising fall under this category. The product must meet specific requirements, such as being accessible to clients outside of Kentucky, in order to be eligible for this exemption.
If you sell digital items in Kentucky, you might need to apply for a sales tax permission, collect and remit sales tax from your customers, and register for the permit. Through the Kentucky Business One Stop Portal, this can be done online. Penalties and interest may apply if you don’t register and collect sales tax.
You can file an updated return online via the Kentucky Business One Stop Portal if you need to make changes to your sales tax return for the state of Kentucky. You must state the justification for the modification as well as the accurate data for the modified timeframe.
In Kentucky, obtaining a tax identification number is both simple and inexpensive. Through the Kentucky Business One Stop Portal, you can apply online for a tax ID number in the state of Kentucky. The fee is $40, however there is a $10 discount if you apply online.
By submitting Form 51A126, you can request a Kentucky tax exempt number if your business or government institution is exempt from paying sales tax. You can download this form from the Kentucky Department of Revenue website and mail or fax it in.
In conclusion, if digital goods are delivered electronically in Kentucky, they are often taxable. You might need to apply for a sales tax permit, collect and remit sales tax, and register if you want to sell digital goods in Kentucky. Through the Kentucky Business One Stop Portal, you can make any necessary changes to your sales tax return online. In Kentucky, obtaining a tax identification number is inexpensive and simple. Nonprofit organizations and governmental bodies can also apply for a tax exempt number by submitting Form 51A126.