“And there off, here at Churchill Downs in this year’s Run for the Roses”.
Those are probably the most famous words in horse racing, at what is probably the most famous horse race, ‘The Kentucky Derby’, even though the Derby is but the first of the Triple Crown of Thoroughbred Racing each year. There is just something special about the Kentucky Derby which is held in Louisville on the first Saturday in May each year. The Derby is not only the oldest continuously held horse race in the United States, but it is certainly the most ‘social’ with a wealth of traditions including Derby attire where women not only adorn themselves in lavish outfits but large elaborate hats, as they sip their mint juleps. As the horses are paraded before the grandstands, Stephen Foster’s “My Old Kentucky Home” is sung by spectators who have come from all over the world for this most prestigious race. Having been lucky enough to attend the Derby in the past I can honestly say, “There is nothing else like it!” Besides horse raising and racing, Kentucky is also know for its bourbon, tobacco, bluegrass music and Kentucky Fried Chicken. There certainly has to be at least 2 or 3 of those things you must like. All those things are subject to Kentucky Sales Tax at the time of purchase.
Kentucky is referred to as "the Bluegrass State." But is bluegrass really blue? The grass itself is green, but the buds produced in spring are a blue-purple in color, which gives the grass fields a bluish hue. And there certainly is a lot of that 'bluegrass'. The state has an area of slightly more than 40,400 square miles, making it the 37th most extensive state in the US. But even with so much area, it is only the 26th most populous state, with just over 4.4-million residents. The lower 'human' density gives way to wildlife since the state has the highest per capital number of deer and wild-turkeys in the US. The largest free-range herd of elk east of the Mississippi can also be found within the state.
Of course Kentucky is a wealth off other opportunities. One such opportunity began more than 70 years ago in the little town of Corbin where a fry cook was perfecting his soon to be a world-famous recipe of herbs and spices added to the flour in which he dredged his fried chicken. That fry cook was Colonel Harland Sanders, and today his 18,000 outlets of Kentucky Fried Chicken can be found in more than 115 countries. Louisville is home to KFC Corporation one of the few brands in America that can boast a rich, decades-long history of fast food success.Yep folks, it may be 'finger licking good' but you will pay sales tax when you buy that chicken even in Kentucky.
Speaking of wealth, did you know that Fort Knox is the name of the 109,000 acre United States Army Post located south of Louisville.
The base is the location of the General George S. Patton Museum, and for 60 years was home to the U.S. Army Armor School which trained Army and Marine troops in the art of 'tank' and 'armored' military warfare, in part based upon concepts of engagement created by General Patton. Old "Blood and Guts" as he was known would indeed be proud that his legacy of turning American Soldiers into the finest military combat troops lives on. I bet you thought I was going to mention something about Fort Knox being the 'Gold Depository' for the U.S., didn't you? Well, how could I not.
The Treasury Department has operated and maintained the United States Bullion Depository on a highly-restricted section of the military base since it was first opened in 1937. When President Franklin D. Roosevelt outlawed the ownership of 'gold' by Americans in 1933, and required it to be sold to the Federal Reserve, the value of gold under government control rose from 4-billion to 12-billion dollars, but there was no safe place to house the bullion.
The Treasury Department ordered construction of the depository on what was then considered the most secure military base within the U.S., Fort Knox. More than 500 rail cars of gold were delivered to the depository, subsequent shipments followed the initial supply. The most recent 'book value' of gold held by the U.S. in the depository is $6,920,429,398.79. And NO, Auric Goldfinger did not detonate a nuclear device inside Fort Knox in 1964, James Bond foiled the attack.
By the way, the picture on the right is one of the few 'photographs' ever permitted within the actual 'gold vault' of the depository, during a formal inspection on September 23, 1974 by members of the U.S. Congress accompanied by the press under supervision by Treasury personnel. So if the Depository sold samples in the 'gift shop', would you have to pay 'sales tax' to the State of Kentucky?
The Kentucky tourism promotional motto is 'Find Awesome' in Kentucky, and I have a hard time thinking that you will find much that isn't. I have never lived there, but I know that every time I have visited that state it is a world of wonder and beauty. Mammoth Cave is the longest cave in the world. It is also the second oldest tourist attraction in America (Niagara Falls is the first). We think of Kentucky as being land locked, but did you know that it has more navigable miles of water than any other state in the union, other than Alaska. Kentucky has been part of two of the most successful wildlife reintroduction projects in United States history.
Early in its history Kentucky gained recognition for its farming, even today the state ranks 5th nationally in goat farming, 8th in beef production,and 14th in corn production within the US. Today Kentucky has expanded its economy into non-agricultural areas such auto manufacturing, energy production at Paducah's Gaseous Diffusion Plant (the only domestic facility for low grade uranium enrichment), and medical services. Kentucky ranks 4th among U.S. states in automobiles and truck assembly much of which is centered around Bowling Green which is home to the Chevrolet Corvette.
About Sales Taxes and this series:
Thanks to Avalara, the 'tax people', this article is one in a 50 part series covering sales tax issues associated with each and every state tax jurisdiction in the United States. We have been publishing "Sales Tax Tuesday" every week during 2015.
Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
Sales Tax Facts:
- Kentucky’s state sales tax rate is 6%.
- It is one of the few states with a single statewide rate.
- Kentucky is one of the few southern states that does not to offer a sales tax holiday.
- Kentucky is a destination sourcing state. This means that sales tax is based on the location of the buyer, not the seller.
- Kentucky is a member of Streamlined Sales Tax (SST)
- To help with disaster relief and recover efforts, Kentucky offers a sales and use tax refund on building materials used for disaster recovery. These materials must be used to repair or rebuild real property and become a permanent part of the building. Only the legal owner of the property may quality for the refund, although the eligible materials make be purchased by a contractor, and refund requests must be filed with the DOR after the work is complete but within three years’ time from the disaster date.
- In September 2015, the Kentucky Board of Tax Appeals determined that Netflix is exempt from pay sales tax, excise tax or telecommunications tax on its digital streaming services. The company briefly reported and paid these taxes in 2012, but then sought a refund. The decision is key in that it could set precedence for how Kentucky taxes or exempts digital goods and services as a whole.
- In 2013, Kentucky passed a bill requiring out-of-state sellers to provide customers with a use tax notification on their sales invoices, websites, and retail catalogs. The law applies to retailers who have more than $100,000 in gross total sales from Kentucky customers and don’t collect sales tax. The 6% use tax applies to both physical and digital goods that have been purchased, leased or rented outside of Kentucky for storage, use or consumption in the state. Kentucky also encourages these retailers to include a “prominent link” to the state’s DOR website to facilitate reporting and payment of use taxes.
Did You Know?
- Best in Breeding doesn't go un-taxed. Kentucky isn’t hedging any bets on what brings money into their state. The Derby-host state charges a 6% sales tax on thoroughbred stud fees.
- Post-It Notes are manufactured exclusively in Cynthiana. The exact number made annually is a company-held trade secret. But each one sold in Kentucky is subject to Sales Tax.
- Abraham Lincoln, Jefferson Davis, and Alben Barkley were all born in Kentucky.
- More than 100 native Kentuckians have been elected governors of other states; obviously it would be kind of hard for all those 100 to be elected governors in only Kentucky.
Manual sales and use taxes are prone to error and can consumes hours of your time in collection, accounting and reporting for what is pass-through rather than revenue-generating activities. Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation of your sales tax process allows businesses to be fully sales tax compliant without sacrificing productivity whether you are ringing up post-it-notes, or stud fees, Avatax has you covered.