Sales Tax - Kentucky Auctioneers Association

Report
Auctioneers’ Training Guide
2013
•Background/History
•General
Forms
•Resources
Part I: (A)
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Sales and Use Tax Law is regulated by a
combination of Kentucky Revised Statutes (Chapter
139), Kentucky Administrative Regulations, and
case law.
Sales Tax: tax imposed on sellers at the rate of 6%
for the privilege of making “retail sales” within the
Commonwealth (KRS 139.200)
Use Tax: backstop for sales tax and applies to
tangible personal property or digital property
purchased for storage, use, or other consumption
in Kentucky upon which sales tax has not been
paid (KRS 139.310)
Part I: (A)1
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KRS 139.200(1)- A tax is hereby imposed upon
all retailers at the rate of six percent (6%) of
the gross receipts derived from retail sales,
regardless of method of delivery, made within
this Commonwealth
KRS 139.340(1)- Every retailer engaged in
business in this state shall collect the tax
imposed by KRS 139.310 from the purchaser…
the taxes collected or required to be collected
by the retailer shall be deemed to be held in
trust for and on account of the Commonwealth
Part I: (A)2
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KRS 139.010(12)(a)“Gross receipts” and
“sales price”
KRS 139.010(27)(a)(2)“Retailer”
KRS 139.010(33)“Tangible Personal
Property”
KRS 139.010(9)- “Digital
Property”
Part I: (B)
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Registration Application (Form 51A100)
Sales and Use Tax Return (Form 51A102)
Resale Certificate (Form 51A105)
Streamlined Sales Tax (SST) Certificate (Form
51A260)
Agricultural Certificates (Form 51A158 and
51A159)
Part I: (B)1
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One Stop Business Portal
www.revenue.ky.gov
Kentucky Tax Registration Application
www.revenue.ky.gov/business/register
Sales and Use Tax Permit (Form 51A101)
shows retailer is properly registered with the
Department and is authorized to collect sales
tax as required by KRS Chapter 139.
Part I: (B)2
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Must remit a sales and use tax
return (Form 51A102) according to
assigned filing schedule
Due date- the 20th day following
the end of the period (Accelerated
filers’ return is due by the 25th)
Online filing is available
Line 1 “Gross receipts”
Lines 2-19 Eligible Deductions
Line 23 Use Tax
Part I: (B)3
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KRS 139.270 provides guidance when
collecting a resale certificate (Form 51A105)
Relieves the retailer from the burden of proof
if the retailer obtains a completed certificate
and maintains the certificate on file
Must be collected within 90 days from the date
of the sale
May be designated as a “single purchase” or
“blanket”
Part I: (B)4
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SST Certificate (Form 51A260) is a valid
alternative to the resale and farm exemption
certificates
Relieves the seller from the burden of proof if
retailer obtains a completed certificate with
all relevant data
Form may be accepted if collected from outof-state buyers
Part I: (B)5
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103 KAR 30:091- “Farmer” is
defined as any person
regularly engaged in the
business of farming
Vendor must have a
completed agricultural
certificate on file
Farm Exemption Certificate
(Form 51A158)
On-Farm Facilities Exemption
Certificate (Form 51A159)
Part I: (C)
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Website www.revenue.ky.gov
Tax Alerts addresses topics regarding all
tax types; issued about 6 times a year
Sales Tax Facts provide assistance to
persons fulfilling their sales and use tax
obligations; issued 2 to 4 times per year
Guide for Auctioneers guide intended for
general information for licensed Kentucky
auctioneers
Part II
•Registration
•Collection
Requirements
•Property Subject to Sales and Use Tax
•Exemptions
•Non-Profit Charity Auctions
•Buyers’ Premium
Part II: (A) 1
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If starting a new business, must register with
DOR by completing Form 10A100, Kentucky
Tax Registration Application
If you need to update or correct your account
information, must complete Form 10A104,
Update or Cancellation of Kentucky Tax
Accounts
www.revenue.ky.gov/business/register
Will receive permit letter that must be posted
in a conspicuous place in the retailer’s
establishment (KRS 139.250)
Part II: (A) 2
KRS 139.240(1)
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Every person presently
engaged or desiring to
engage in or conduct
business as a retailer
or seller within this
state shall file with the
Department an
application of a permit
for each place of
business.
KRS 139.010(27)(a)
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“Retailer”- every
person engaged in the
business of making
sales at auction of
tangible personal
property or digital
property owned by the
person or others for
storage, use, or other
consumption
Part II: (B)
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Auctioneer’s Responsibility- KRS
139.105(1)- must collect and
remit sales and use tax even if
the tax is collected in error or
the purchaser refuses to pay
sales tax
Prohibited Advertising- KRS
139.220- retailers are
prohibited from advertising that
tax will not be charged or the
customer will receive a discount
equal to the amount of tax paid
Part II: (B)
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Auctioneers Acting as an Agent- if hired by
another auctioneer to control the bidding
process does not need to report sales made
at that auction
Customer Receipts-KRS 139.210(1)- must
provide each purchaser a receipt showing
separately the sales price and the amount of
sales tax collected
Returned Merchandise- 103 KAR 31:050may take a deduction only if the full sales
price plus sales and use tax is refunded
Part II: (C)
KRS 139.260- establishes the presumption that all gross receipts
are taxable “until the contrary is established”
Personal and
recreational boats and
boat trailers
Mobile Homes/Manufactured
homes when sold as tangible
personal property
Trailers- bumper hitch
trailers and trailers with
living quarters
Part II: (C)
Off-road vehicles: Dirt bikes,
4-wheelers, ATVs
Sales to individuals or
businesses from out of state
who take possession here
Horses unless they meet
qualifications for exemption
Collectibles (Coins,
Stamps, etc)
Part II: (D)
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Horses: 2 years or older sold to
a non-resident or purchased
exclusively for breeding
Items sold for resale
Sales to state and local
government
Sales to resident non-profit
501(c)(3) organizations
Food and food products
Interstate commerce
Farm machinery and
agricultural items
Semi-trailers
Part II: (E)
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KRS 139.010(27)(c) excludes from the definition of a
retailer, persons making sales at a charitable auction for
church, school, civic, and other resident nonprofit if…
1. The qualifying entity is sponsoring the auction
2. The purchaser directly pays the qualifying entity and
not the person making sales at the auction
3. The qualifying entity is responsible for the
collection, control, and disbursement of auction
proceeds
Non-profit subject to provisions of KRS 139.496
Part II: (F)
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KRS 139.010(12)- “gross receipts” is defined
as the total amount of the sale
Sales tax is computed on the total amount of
the sale including the buyers’ premium plus
Charges by the retailer for services necessary
to complete the sale are also subject to sales
tax  delivery, shipping, transportation,
postage, handling and packing charges
•Audits
•Non-Compliance
Examples
•Cost of Non-Compliance
Part III (A)
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Primary object of an audit is to determine the
correct measure of tax
Statute of Limitations: KRS 139.720- auctioneers
are required to keep all records for a minimum of
four (4) years from the date a return is filed
Verification of records: all records must be
complete and kept up to date
Deductions are reviewed to ensure they are valid
and substantiated with appropriate exemption
certificates
Part III (B)
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Lack of records: if the taxpayer has failed to
keep proper records or has lost, misplaced,
or destroyed them, an assessment of tax due
may be made (KRS 131.180)
Unsubstantiated Deductions: all deductions
not substantiated with appropriate
documentation are disallowed and are subject
to sales tax
Invalid Deductions: deductions taken in error
also become subject to sales tax (failure to
collect tax on trailers, boats, etc)
Part III (C)
Interest
KRS 131.183
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All taxes not paid at the
time prescribed by
statute shall accrue
interest at the applicable
year’s tax interest rate
plus 2%
2009: 5% + 2%
2010: 3% + 2%
2011: 3% + 2%
2012: 4% + 2%
2013: 4% + 2%
Penalties
KRS 131.180
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If additional tax is due,
the amount is considered
paid late. Penalties
should be calculated as
2% of the total amount of
tax due for each 1 to 30
day period. Penalty will
not exceed 20%, and
there is a $10.00
minimum. There is also a
late pay penalty that is
calculated the same way.

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