KRS 139.777 — Direct mail sourcing

(1) (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.
(2) (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 ap proved, 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 abs ence 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 reta iler 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 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 promo tional 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 inform ation,
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.
(3) (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 full y 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 addres s 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.
(4) 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.
(5) Nothing in this section shall limit a purchaser's:
(a) Obligation for sales or use tax to any state to wh ich 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.