Important Reminder from the Department of Revenue About Out-of-State Purchases:
If you made untaxed purchases from out-of-state retailers, the use tax line on your return should contain a number. Like every other state that has a sales tax, Kentucky has a use tax that requires that out-of-state purchases of tangible personal property, digital property and extended warranties for use in Kentucky be taxed at the same amount as if they had taken place in Kentucky and subjected to Kentucky’s sales tax. This ensures equality of treatment between in-state and out-of-state transactions. Although the use tax has been in the tax code since 1960, it is now more relevant than ever because of the increasing percentage of online sales. Pursuant to KRS 139.330, a 6 percent use tax is due if you make out–of–state purchases for storage, use or other consumption in Kentucky and did not pay at least 6 percent state sales tax to the seller at the time of purchase. For example, if you order from catalogs, make purchases through the Internet, or shop outside Kentucky for items such as clothing, shoes, jewelry, cleaning supplies, furniture, computer equipment, pre-written computer software, office supplies, books, souvenirs, exercise equipment or subscribe to magazines, you may owe use tax to Kentucky. It is important to remember that use tax applies only to items purchased from a retailer outside Kentucky, including another country, which would have been taxed if purchased in Kentucky.
For your convenience, a Use Tax Calculation Worksheet and Optional Use Tax Table are provided below. The Optional Use Tax Table is designed for those purchases of less than $1,000. If you made untaxed out-of-state purchases in amounts under $1,000, but do not have records readily available that show the amount of those purchases, you may use the Optional Use Tax Table below to estimate the compensating use tax based on your Kentucky Adjusted Gross Income (KYAGI). All untaxed purchases in the amount of $1,000 or greater must be accounted for on an actual basis using the Use Tax Calculation Worksheet. Failure to timely report may result in assessment of penalty and interest in addition to the tax amount due
Optional Use Tax Table
KY AGI* Tax
$0 - $10,000 ....................................... $4
$10,001 - $20,000 ............................ $12
$20,001 - $30,000 ............................ $20
$30,001 - $40,000 ............................ $28
$40,001 - $50,000 ............................ $36
$50,001 - $75,000 ............................ $50
$75,001 - $100,000 .......................... $70
Above $100,000 ..............................Multiply AGI by 0.08% (0.0008) * AGI from line 9 on KY Form 740 or KY Form 740-NP
Call 502-564-5170 for assistance.