FBA sellers receive Kentucky tangible property tax notice
by November 1, 2023
Please note: This blog was originally published in 2015. It’s since been updated for accuracy and comprehensiveness.
Are you an FBA seller (or other out-of-state seller) who received a notice from the state of Kentucky about “tangible property tax”?
The letter looked like this:
Registered sellers, even those who don’t live in Kentucky, were asked to file a “tangible property tax return”.
Should online sellers file this Kentucky return?
We caught up with two sales tax experts who shed some light.
CPA Chris Stout of Sales Tax Solutions said, “I spend enough free time explaining sales tax that to go into every scenario in which you may or may not be required to file a property tax return would take a lot of time. It is my opinion that for most FBA Sellers there isn’t a requirement to file [this form] — primarily because of situs [where the property is treated as being located.] If all the inventories would be sold in Kentucky, and you consider yourself ‘doing business’ in Kentucky, then file the return. However, it is my opinion that you are not ‘doing business’ in Kentucky, and that without knowing the destination of the goods, that you do not know if Kentucky is even entitled to assess the tax.”
Sales tax attorney Mike Dillon of Dillon Tax Consulting added, “As for the KY notice, and other states who do the same, they are likely taking a list from Amazon of all FBA sellers and reaching out to each to see what comes up – a big fishing expedition.”
In a nutshell, the experts agree that some states go on “fishing expeditions” to try and find more revenue. But that doesn’t always mean that you are legally liable to file the return or pay the amount they ask. As always, for questions about your specific situation, turn to a reliable sales tax expert.
Please note: This blog is for informational purposes only. Be advised that sales tax rules and laws are subject to change at any time. For specific sales tax advice regarding your business, contact a tax advisor.
