Getting and Maintaining a Kentucky DTC License

Kentucky is home to some of the world’s most celebrated distilleries, and the state has opened a pathway for licensed spirits producers to ship directly to its citizens. Here’s what you need to know to get licensed and stay compliant.

Cost

Kentucky’s direct shipper license is one of the more affordable in the country at $100 per year. Ongoing compliance comes with several tax obligations you’ll need to account for on every order:

• 6% sales tax on each order
• 11% wholesale tax on the wholesale price of each order
• $1.92 per gallon of shipped spirits, remitted quarterly as excise tax

These taxes stack, so accurate per-shipment record-keeping is essential.

General Requirements

Federal BASIC Permit

Before you can apply for a Kentucky direct shipper license, you must hold a valid Federal BASIC Permit issued by the Alcohol and Tobacco Tax and Trade Bureau (TTB). There are no exceptions to this requirement.

Shipping Limits

You may ship no more than 10 liters per consumer per month. This limit applies per consumer, not per order, so you’ll need to track cumulative monthly volume by recipient.

Shipment Requirements

Every shipment into Kentucky must:

• Be properly labeled in accordance with state requirements
• Require the signature of a person 21 years of age or older upon delivery
• Not be delivered into dry counties, precincts, or cities. You are responsible for verifying the recipient’s address against dry jurisdiction lists before shipping.

Tax Reporting

Kentucky requires two separate tax filings:

1. Quarterly alcohol tax and shipping report filed each quarter, remitting both the wholesale tax and excise tax, with summary information on each shipment made during the previous quarter
2. Sales tax filings on a cadence determined by the Kentucky Department of Revenue based on your sales volume (monthly, quarterly, or yearly)

Record Keeping

You must maintain complete records of every order shipped into Kentucky, including:

• Name and address of the purchaser
• Date of purchase
• Name of the common carrier used
• Quantity and value of each purchase

All records must be made available to the Kentucky Department of Revenue for inspection upon request. The statute doesn’t specify a minimum retention period, but holding on to records for at least five years is a reasonable practice.

How Hearts Compliance Helps

Hearts Compliance handles the application on your behalf. For producers who want a fully managed experience, we offer an upgraded plan that covers tax filings and ongoing compliance reporting as well. You provide accurate shipping records and we take it from there.