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139.777 Direct mail sourcing.
(1)
(2)
(a)
This section applies for purposes of uniformly sourcing:
1.
Advertising and promotional direct mail transactions;
2.
Other direct mail transactions; and
3.
Bundled transactions that include advertising and promotional direct
mail if the primary purpose of the transaction is the sale of
advertising and promotional direct mail.
(b) This section does not:
1.
Impose requirements regarding the taxation of advertising and
promotional direct mail or other direct mail or the application of sales
for resale or other exemptions; or
2.
Apply to any transaction that includes the development of billing
information or the provision of any data processing services that is
more than incidental, regardless of whether advertising and
promotion direct mail is included in the same mailing.
(c) For a transaction characterized as a sale of services, this section applies
only if the service is an integral part of the production and distribution of
printed material that meets the definition of advertising and promotional
direct mail or other direct mail.
(a) A purchaser of advertising and promotional direct mail may provide the
retailer with:
1.
A direct pay permit;
2.
A fully completed Streamlined Sales and Use Tax Agreement
Certificate of Exemption or other written statement approved,
authorized, or accepted by the department; or
3.
Information to show the jurisdictions to which the advertising and
promotional direct mail is to be delivered to recipients.
(b) If the purchaser provides the retailer with a direct pay permit, a fully
completed Streamlined Sales and Use Tax Agreement Certificate of
Exemption, or other written statement approved, authorized, or
accepted by the department:
1.
The retailer, in the absence of bad faith, shall be relieved of all
obligations to collect, pay, or remit the applicable tax involving
other direct mail to which the direct pay permit, Streamlined
Sales and Use Tax Agreement Certificate of Exemption, or
written statement apply; and
2.
The purchaser shall source the sale to the jurisdictions to
which the advertising and promotional direct mail is to be
delivered to the recipients and shall pay or remit the applicable
tax on a direct-pay basis.
(c) If the purchaser provides the retailer information showing the jurisdictions
to which the advertising and promotional direct mail is delivered to
recipients, the retailer shall source the sale and collect the tax according
to the delivery information provided by the purchaser. In the absence of
bad faith, the retailer is relieved of any further obligation to collect the tax
(3)
(4)
(5)
on any transaction where the retailer has collected the tax pursuant to the
delivery information provided by the purchaser.
(d) If the purchaser of advertising and promotional direct mail does not
provide the retailer with a direct pay permit, a fully completed Streamlined
Sales and Use Tax Agreement Certificate of Exemption, or other written
statement approved, authorized, or accepted by the department or
delivery information, as provided by subsection (2)(a)of this section, the
retailer shall source the sale to the address from where the advertising
and promotional direct mail was shipped.
(e) Nothing in this subsection shall prohibit the department from disallowing
credit for tax paid in another jurisdiction on sales sourced according to
this subsection if the advertising and promotional direct mail is delivered
to recipients in this state.
(a)
The purchaser of other direct mail may provide the retailer with:
1.
A direct pay permit; or
2.
A fully completed Streamlined Sales and Use Tax Agreement
Certificate of Exemption or other written statement approved,
authorized, or accepted by the department.
(b) If the purchaser provides the retailer a direct pay permit, a fully completed
Streamlined Sales and Use Tax Agreement Certificate of Exemption, or
other written statement approved, authorized, or accepted by the
department:
1.
The retailer, in the absence of bad faith, shall be relieved of all
obligations to collect, pay, or remit the applicable tax involving other
direct mail to which the direct pay permit, Streamlined Sales and
Use Tax Agreement Certificate of Exemption, or written statement
apply; and
2.
The purchaser shall source the sale to the jurisdictions to which the
other direct mail is to be delivered to the recipients and shall report
and remit the applicable tax on a direct-pay basis.
(c) If the purchaser of other direct mail does not provide the retailer with a
direct pay permit, a fully completed Streamlined Sales and Use Tax
Agreement Certificate of Exemption, or other written statement approved,
authorized, or accepted by the department as provided in paragraph (a) of
this subsection, the retailer shall source the sale to the location indicated
by an address for the purchaser that is available from the retailer's
business records that are maintained in the ordinary course of the
retailer's business when use of this address does not constitute bad faith.
If both advertising and promotional direct mail and other direct mail are
combined in a single mailing, the sale shall be sourced as other direct mail as
provided in subsection (3) of this section.
Nothing in this section shall limit a purchaser's:
(a) Obligation for sales or use tax to any state to which the advertising and
promotional direct mail or other direct mail is delivered;
(b) Right under local, state, federal, or constitutional law to a credit for sales
or use taxes legally due and paid to other jurisdictions; or
(c)
Right to a refund of sales or use taxes overpaid to any jurisdiction.
Effective:July 1, 2011
History: Amended 2011 Ky. Acts ch. 33, sec. 7, effective July 1, 2011. -- Created
2003 Ky. Acts ch. 124, sec. 25, effective July 1, 2004.
Legislative Research Commission Note (7/1/2011). The Reviser of Statutes has
corrected a manifest clerical or typographical error in subsection (2)(e) of this
statute under the authority of KRS 7.136.
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