Exploring the New Services From the Expanded Sales Tax

House Bill 8 has expanded sales tax to 34 new services beginning January 1, 2023. Businesses that provide any of the following services are required to collect 6% sales tax from customers. The comprehensive list of services includes:

Clarifications of the Bill on Most Common Services Impacted

Cosmetic Surgery Services

House Bill 8 now requires businesses to collect sales tax on an expanded list of services, some of which though come with exceptions. For example, cosmetic surgery services. Cosmetic surgery services should be taxed in all cases that involve modifications to all areas of the head, neck, and body to enhance appearance through surgical and medical techniques. This excludes any reconstruction of facial and body defects due to birth disorders, trauma, burns or disease. This also excludes any surgeries deemed medically necessary. The new bill does include teeth-whitening and removal of blemishes, skin tags or moles. Furthermore, massages are subject to sales tax, whereas facials are not. This does include med-spa services, such as:

• Body contouring (cosmetic skin removal)
• Botox injections
• Breast augmentation
• Buttock enhancement and lifts
• Chemical peels
• Dermal fillers (lips, cheeks)
• Facelifts
• Fat reduction/body sculpting procedures
• Hair transplantation
• Liposuction
• Micro-needling (collagen induction therapy)
• Microblading of eyebrows
• Neck lifts
• Rhinoplasty
• Tummy tucks
• Tattoo removal

Utilities

More exceptions have been made in the case of residential utilities. The only cases in which sales tax is not collected include where the resident declares the dwelling to be their principle place of domicile. In the case of multi-unit facilities, individual residents must declare their place of domicile and the property owner or landlord may collect and submit the forms on behalf of the residents. 

Space Rental

Space rental, including short-term storage, is subject to further exceptions (not including pods) which is not subject to sales tax. Nonprofit organizations that rent their facilities for short-term use should begin collecting sales tax. Nonprofits can use their exemption certificate when renting a space themselves, but the rental must be consistent with the exemption function. Other examples of space rentals now subject to sales tax include:

• Booth at home/garden show
• Clubhouse
• Park Shelter
• Athletic Field
• Swimming Pool for a Group Outing
• Pop-up Retail Sales Event
• Banquet Space at a Restaurant

For more information on the new sales tax regulations, please review the attached additional resources or contact our team for help.

Additional Resources:

• https://revenue.ky.gov/News/Publications/Sales%20Tax%20Newsletters/Sales%20Tax%20Facts%202022%20-%20Jun.pdf
• https://revenue.ky.gov/News/Publications/Sales%20Tax%20Newsletters/Sales%20Tax%20Facts%202022%20-%20Sep.pdf
• https://taxanswers.ky.gov/Sales-and-Excise-Taxes/Pages/default.aspx

If you need to register for sales tax filings, please contact our team.