The LLC you form to sell on eBay from Kentucky comes with its own tax the moment you form it.

The Bottom Line for Kentucky eBay Sellers

Kentucky's Limited Liability Entity Tax is the fact that should shape how you think about forming an LLC here, more than the marketplace-collection question this cluster usually leads with. It applies to LLCs specifically because they carry limited liability, it's measured on gross receipts rather than net income, and the federal statute that shields many remote sellers from a state's ordinary corporate income tax doesn't extend the same protection to a gross-receipts tax like this one.

Kentucky's own Department of Revenue describes the LLET as reaching every business protected from liability under Kentucky law (corporations, LLCs, S corporations, and limited partnerships) while excluding sole proprietorships and general partnerships precisely because they lack that protection. The statute's "doing business in this state" test is a list of conditions rather than a single bright line, and a Kentucky-formed LLC satisfies the very first one just by being organized under Kentucky law, regardless of what or where it sells. An out-of-state LLC shipping into Kentucky can independently fall within the same test through the conditions covering income derived from Kentucky sources or activity directed at Kentucky customers. None of this is offset by eBay collecting sales tax on your behalf. The LLET is a completely separate tax on a completely different base.

If every one of your sales into Kentucky runs through eBay, you do not need your own Kentucky sales-tax registration — eBay is the one collecting and remitting. Your eBay sales count toward Kentucky's $100,000 threshold, so marketplace volume alone can push you over it. Kentucky uses the federal reporting threshold, so eBay issues a 1099-K once you pass $20,000 and 200 transactions.

eBay Collects Kentucky Sales Tax. What Is Still Yours?

If every one of your sales into Kentucky runs through eBay, you do not need your own Kentucky sales-tax registration — eBay is the one collecting and remitting.

Kentucky's marketplace-seller registration rule, separate from the LLET question, is comparatively generous: the state's own guidance states that a remote marketplace retailer selling exclusively through a Kentucky-registered marketplace provider and not otherwise obligated to collect Kentucky tax doesn't need to register for a Kentucky sales and use tax account just to report those marketplace sales. That answers the sales-tax registration question cleanly. It says nothing about the LLET, which is a business-entity tax rather than a sales-tax registration, and a seller who reads the marketplace answer as covering their whole Kentucky tax picture is missing the piece that actually applies to their LLC specifically.

Do Your eBay Sales Count Toward Kentucky's Nexus Test?

Your eBay sales count toward Kentucky's $100,000 threshold, so marketplace volume alone can push you over it.

Kentucky's remote-seller statute is unusually direct about counting marketplace-facilitated sales toward your own threshold: its text explicitly folds sales facilitated by a marketplace provider on your behalf into the same gross-receipts figure used to determine whether you cross Kentucky's economic-nexus line, even though the marketplace provider is the one actually collecting and remitting tax on those same sales. That's a different structure from states that exclude marketplace sales from a seller's own threshold calculation entirely, in Kentucky, crossing the threshold and being relieved of remittance duty on marketplace sales are two separate outcomes of the same statute, not one exemption covering both.

Kentucky's 1099-K Threshold

Kentucky uses the federal reporting threshold, so eBay issues a 1099-K once you pass $20,000 and 200 transactions.

Kentucky's own guidance ties its state 1099 filing requirement to Kentucky withholding rather than to an independent dollar or transaction test for third-party settlement organizations, so there's no Kentucky-specific figure pushing a 1099-K to appear earlier than the federal test would produce. When it arrives, it's reporting gross payment volume to tax authorities, not calculating your LLET liability or your income tax bill. Those are separate calculations built on your actual net figures after fees, refunds, and cost of goods, not on the number printed on the form.

Buying Inventory to Resell in Kentucky

Kentucky accepts a resale certificate issued by another state, so you can buy inventory for resale without registering here first.

Kentucky's own resale-certificate regulation, 103 KAR 31:111 Section 3, states: 'If the purchaser is not required to hold a permit because the purchaser is a nonresident purchaser not required to register in Kentucky, the purchaser may issue a fully completed [Streamlined Sales and Use Tax Agreement Certificate of Exemption, or] Resale Certificate (Form 51A105)... [noting] that the purchaser is a nonresident purchaser not required to register and obtain a permit in Kentucky.' Section 2 also confirms Kentucky accepts the Multistate Tax Commission's Uniform Sales and Use Tax Exemption/Resale Certificate as an alternative valid form. No Kentucky permit is required for a nonresident seller with no Kentucky registration obligation.

Kentucky's resale regulation explicitly authorizes a nonresident purchaser with no Kentucky registration obligation to issue a valid resale certificate without holding a Kentucky permit number, using either the state's own annotated form or the streamlined multistate certificate. A supplier here should accept either without insisting on Kentucky paperwork you've no reason to hold. On used-goods resale, Kentucky's one statewide statute in this space is titled and scoped narrowly to pawnbrokers; it doesn't reach an ordinary reseller of used clothing, books, or general merchandise. Louisville Metro fills that gap with its own local ordinance treating secondhand dealers as a distinct category from pawnbrokers, so check your specific city or county rather than assuming the state pawnbroker statute is the whole story.

Kentucky leaves second-hand dealer licensing to cities and counties, so check your own. Kentucky's statewide statute in this area, KRS Chapter 226, is titled and scoped to 'Pawnbrokers' only. It does not reach general resale of ordinary used goods by an online reseller. General secondhand-dealer regulation is layered on top locally: e.g., Louisville Metro Code of Ordinances Chapter 123, 'Regulations Governing Pawnbrokers, Secondhand Dealers, and...' treats 'secondhand dealers' as a distinct, broader local licensing category alongside pawnbrokers, confirming that Kentucky's own state chapter does not itself cover secondhand dealers generally and that municipalities fill the gap.

The Kentucky Tax eBay Does Not Handle

Kentucky levies Limited Liability Entity Tax (LLET), which can still reach you even though eBay handles the sales tax: Kentucky's LLET (KRS 141.0401) is imposed on 'every corporation and every limited liability pass-through entity doing business in Kentucky', so LLCs, S corporations, C corporations and limited partnerships are in scope, while sole proprietorships and general partnerships are not, because they lack limited liability. It is measured on Kentucky GROSS RECEIPTS or Kentucky gross profits, not on profit, so marketplace facilitation does not answer it. The trigger is 'doing business in this state', and KRS 141.010(13) gives it as a list rather than a dollar threshold. It 'includes but is not limited to: (a) Being organized under the laws of this state; (b) Having a commercial domicile in this state; (c) Owning or leasing property in this state; (d) Having one (1) or more individuals performing services in this state; (e) Maintaining an interest in a pass-through entity doing business in this state; (f) Deriving income from or attributable to sources within this state ...; or (g) Directing activities at Kentucky customers for the purpose of selling them goods or services.' Read those limbs against an eBay business. A Kentucky-formed LLC is caught by (a) on day one, whatever it sells. An out-of-state seller listing goods that ship to Kentucky buyers is within the plain words of (f) and (g). The statute adds one brake: 'Nothing in this subsection shall be interpreted in a manner that goes beyond the limitations imposed and protections provided by the United States Constitution or Pub. L. No. 86-272.' P.L. 86-272 shields only NET-INCOME taxes, and LLET is measured on gross receipts and gross profits, so it does not shield you from LLET the way it can from Kentucky corporate income tax. What it costs: if gross receipts (or gross profits) from ALL sources are $3,000,000 or less, 'the limited liability entity tax shall be one hundred seventy-five dollars ($175)', a flat $175 minimum, which is what almost every eBay seller would face. Between $3,000,000 and $6,000,000 a sliding formula applies with the same $175 floor; at or above $6,000,000 the rate is $0.095 per $100 of Kentucky gross receipts or $0.75 per $100 of Kentucky gross profits, whichever produces less. Bottom line: a Kentucky-formed eBay LLC should expect the $175 minimum. An out-of-state LLC shipping into Kentucky is within the statutory limbs on their face, Kentucky publishes no de minimis sales figure for LLET, and (f)/(g) contain no physical-presence qualifier, so if you are selling into Kentucky through an LLC, get this checked rather than assuming the sales-tax marketplace rules cover you.

Setting Up to Sell on eBay from Kentucky

1. Understand the LLET applies to your entity choice, not your sales channel

   Forming an LLC in Kentucky, or shipping into Kentucky from an LLC formed elsewhere, can trigger this tax regardless of how compliant eBay is on the sales-tax side. Budget for it before you file, not after.

2. Form the LLC anyway, with the LLET priced into the decision

   The liability protection an LLC provides is still worth having. The LLET is a cost of that protection in Kentucky specifically, not a reason to skip forming the entity.

3. Confirm your marketplace-only registration status separately from the LLET

   Kentucky's sales-tax registration exemption for marketplace-only sellers is a different question from the LLET. Don't let a clean answer on one lead you to assume the other is also settled.

4. Use Kentucky's nonresident resale certificate path when buying wholesale

   Kentucky doesn't require its own permit number from a nonresident purchaser with no Kentucky registration obligation. Use the annotated form or the multistate certificate rather than assuming you need Kentucky paperwork first.

5. Check Louisville or your local ordinance before reselling used goods

   Kentucky's state pawnbroker statute doesn't cover general secondhand resale. Louisville treats secondhand dealers separately in its own code; other localities may too.

Who to Ask in Kentucky

The Kentucky Department of Revenue's Corporation Income and Limited Liability Entity Tax page is the essential read for any Kentucky-connected LLC, since it's the office administering the tax this page centers on. Bring your specific facts (where the LLC is formed, where inventory ships from, what volume you run) rather than trying to self-diagnose from general statutory language. The Kentucky Secretary of State handles LLC formation itself, separately from anything the Department of Revenue tracks. For used-goods licensing questions, Louisville Metro or your own city/county clerk is the right call, since general secondhand-dealer regulation is layered on locally rather than governed by the state pawnbroker statute.

Sources

• https://taxanswers.ky.gov/Sales-and-Excise-Taxes/Pages/Remote-Retailers-Marketplace-Providers-FAQs.aspx
• https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=58190
• https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=58184
• https://revenue.ky.gov/News/Publications/Sales%20Tax%20Newsletters/Sales%20Tax%20Facts%20-%20Summer%202026.pdf
• https://revenue.ky.gov/Forms/2025%20Specifications%20for%20Electronic%20Submission%20of%201099B%2c%201099DIV%2c%201099G%2c%201099INT%2c%201099K%2c%201099MISC%2c%201099NEC%2c%201099OID%2c%201099R%20and%20W2G%20Tax%20Information%20on%20CD%20or%20MyTaxes.ky.gov.pdf
• https://apps.legislature.ky.gov/law/kar/titles/103/031/111/
• https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=38345
• https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57941
• https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57913
• https://apps.legislature.ky.gov/law/kar/titles/103/016/240/
• https://revenue.ky.gov/Business/Corporation-Income-and-Limited-Liability-Entity-Tax/Pages/default.aspx
• https://www.irs.gov/instructions/i1099k

Federal 1099-K threshold: IRC § 6050W(e), as amended by § 70432(a) of the One, Big, Beautiful Bill Act (P.L. 119-21, July 4, 2025). A third-party settlement organization such as eBay must file Form 1099-K only if BOTH tests are met for the calendar year: gross payments exceed $20,000 AND the number of transactions exceeds 200. These are the figures for tax year 2026. There is no forward phase-in: § 70432(a) takes effect "as if included in section 9674 of the American Rescue Plan Act," so the same $20,000 / 200 figures apply retroactively to calendar years after 2021 (tax years 2022 through 2026 alike). The $600 threshold enacted by ARPA § 9674 (P.L. 117-2) was repealed before it operated, and the IRS transition-relief thresholds previously announced for 2024 and 2025 are superseded. A platform may issue a 1099-K below these figures, and a state may set a lower TPSO threshold, in which case a seller can receive a 1099-K without meeting the federal test.. Verified 2026-08-08.