Services” are generally not subject to sales tax while tangible personal property generally is subject to sales tax. This oversimplification can get you sideways in various states as there are lots of exceptions to these general rules. Kentucky is the latest in terms of taxing specific services.

The Bluegrass State looks to expand sales tax on what it calls high-growth services. Those taxable in the state as of this year:

Background check services; executive employee recruitment; labor and services to repair or maintain commercial refrigeration equipment and systems when no tangible personal property is sold in the transaction, including service calls and trip charges; lobbying; marketing; public opinion and research polling; and telemarketing.

Body modification services, including tattooing, piercing, scarification, branding, tongue splitting, transdermal and subdermal implants, ear pointing, teeth pointing, and any other modifications not necessary for medical or dental health; labor to repair or alter apparel, footwear, watches or jewelry when no tangible personal property is sold in that transaction; lapidary, including cutting, polishing and engraving precious stones; and specialized design, including the design of clothing, costumes, fashion, furs, jewelry, shoes, textiles, and lighting.

Household moving; and interior decorating and design.

Bodyguard services; leisure, recreational and athletic instruction; massage services, except when medically necessary; fitness training; private investigation; private mailroom services, which includes presorting mail and packages by postal code, address barcoding, tracking, delivery to postal service and private mailbox rental; recreational camp tuition and fees; and social event planning and coordination.

Property/real estate
Condominium time-share exchange services; cosmetic surgery (excluding reconstruction of facial and body defects due to birth disorders, trauma, burns, or disease); parking services (excluding any parking services at an educational institution); rental of space for meetings, conventions, short-term business uses, entertainment events, weddings, banquets, parties, and other short-term social events; residential and nonresidential security system monitoring; and road and travel services provided by automobile clubs.

Facsimile transmission services; photography and photofinishing (excluding that necessary for medical and dental health); prewritten computer software access services; website design and development; and website hosting.

Process server services; repossession of tangible personal property services; and testing services, except for medical, educational, or veterinary reasons.

Businesses providing these services must charge and remit a 6% sales tax on the total sales price of the service effective last Jan. 1. Businesses without a sales and use tax account must apply for one.

Kentucky has also released a “Sales Tax Facts” sheet detailing some now-taxable services.

You can read more about the general taxation of services here, or download a free eBook here to learn more about the intricacies of sales tax taxability across various industries.  

Get in touch to learn more about our Services

If you think your business may be impacted by sales tax developments, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department. Get in touch to learn more about the new Kentucky sales tax on services.

Robert Dumas

Written by Robert Dumas

Accountant, consultant and entrepreneur, Robert Dumas began his public accounting career on the tax staff at Arthur Young & Co., followed by a brief stint at Grant Thornton. In 1998, Robert founded Tax Partners, which became the largest sales tax compliance service bureau in the country, and later sold it to Thomson Corporation. Robert founded TaxConnex in 2006 on the principle that the sales tax industry needed more than automation to truly help clients, thus building within TaxConnex a proprietary platform and network of sales tax experts to truly take sales tax off client’s plates.