2014 Kentucky Revised Statutes CHAPTER 139 - SALES AND USE TAXES 139.795 Certified service provider is agent of seller -- Liability -- Exemption for purchaser, seller, and certified service provider.
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139.795 Certified service provider is agent of seller -- Liability -- Exemption
for purchaser, seller, and certified service provider.
(1)
(2)
(3)
(4)
(a)
A certified service provider is the agent of a seller, with whom the certified
service provider has contracted, for the collection and remittance of sales
and use taxes.
(b) The certified service provider is liable for sales and use tax due each
member state on all sales transactions it processes for the seller, except
when the liability for not collecting the sales or use taxes results from the
certified service provider's reliance on software certified by the state.
Relief from liability shall not be granted if the certified service provider has
incorrectly classified an item or transaction into a product-based
exemption certified by the state, except when the item or transaction is
classified based upon the individual listing of items or transactions within
a product definition approved by the governing board or the member
state.
(c) A person that is responsible for the certified automated system is
responsible for the functioning of the system and is liable to the state for
underpayments of tax attributable to errors in the functioning of the
certified automated system.
(a) A seller that contracts with a certified service provider is not liable to the
state for sales or use tax due on transactions processed by the certified
service provider unless the seller misrepresented the type of items it sells
or committed fraud;
(b) In the absence of probable cause to believe that the seller has committed
fraud or made a material misrepresentation, the seller is not subject to
audit on the transactions processed by the certified service provider; and
(c) A seller is subject to audit for transactions not processed by the certified
service provider.
The member states acting jointly may perform a system check of the seller and
review the seller's procedures to determine if the certified service provider's
system is functioning properly and the extent to which the seller's transactions
are being processed by the certified service provider.
(a) A model 2 seller shall be relieved of liability for not collecting sales and
use taxes if the liability resulted from the model 2 seller's reliance on
software previously certified by the state. Relief from liability shall not be
granted if the certified service provider has incorrectly classified an item
or transaction into a product-based exemption certified by the state,
except when the item or transaction is classified based upon the
individual listing of items or transactions with a product definition
approved by the governing board or the member state.
(b) The department shall notify the certified service provider or model 2 seller
if an item or transaction has been incorrectly classified as to its taxability.
(c) The certified service provider or a model 2 seller shall have ten (10) days
to revise the classification after the receipt of notice.
(d) Upon expiration of the ten (10) days, the certified service provider or the
model 2 seller shall be liable for the failure to collect the amount of sales
(5)
(6)
(7)
(8)
or use taxes due and owing.
A model 3 seller that has signed a performance agreement establishing a
performance standard for that system is liable for the failure of the system to
meet the performance standard.
A purchaser, purchaser's seller, or certified service provider shall not be
subject to the additional tax, related penalties imposed under KRS 131.180, or
related interest provided under KRS 131.183 for having failed to pay the
correct amount of sales or use tax on specific transactions if:
(a) The purchaser's seller or certified service provider relied on erroneous
data provided by the department on tax rates, boundaries, or taxing
jurisdiction assignments; or
(b) The purchaser, purchaser's seller, or purchaser's certified service
provider relied on erroneous data in the taxability matrix completed and
made available to the public by the department. The relief prescribed in
this paragraph for additional tax and related interest provided under KRS
131.183 shall be limited to the department's erroneous classification in
the taxability matrix as "taxable" or "exempt," "included in sales price" or
"excluded from sales price," or "included in the definition" or "excluded in
the definition."
(a) If the department does not provide the seller with at least thirty (30) days'
notice from the enactment of a sales and use tax rate change to the
effective date of the rate change, the seller shall be relieved of liability for
failing to collect tax at the new rate if:
1.
The seller collected tax at the immediately preceding effective rate;
and
2.
The seller's failure to collect tax at the new rate does not extend
beyond thirty (30) days after the date of enactment of the new rate.
(b) Notwithstanding paragraph (a) of this subsection, if the department
establishes that the seller fraudulently failed to collect tax at the new rate
or solicits purchasers based on the immediately preceding effective rate,
the relief provided to the seller in paragraph (a) of this subsection shall
not apply.
A purchaser shall not be subject to the additional tax, related penalties
imposed under KRS 131.180, or related interest provided under KRS 131.183
for failing to pay the correct amount of sales or use tax on specific transactions
if the purchaser holds a direct pay authorization and relied on erroneous data
provided by the department on the tax rates, boundaries, or taxing jurisdiction
assignments.
Effective:July 1, 2011
History: Amended 2011 Ky. Acts ch. 33, sec. 8, effective July 1, 2011. -- Amended
2008 Ky. Acts ch. 95, sec. 3, effective August 1, 2008. -- Amended 2007 Ky.
Acts ch. 141, sec. 12, effective July 1, 2007. -- Created 2001 Ky. Acts ch. 6,
sec. 9, effective June 21, 2001.
Legislative Research Commission Note (7/1/2007). A manifest clerical or
typographical error in this section has been corrected by the Reviser of Statutes
under the authority of KRS 7.136.
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