New Pennsylvania Sales Tax Rules

The Pennsylvania Department of Revenue has published additional information regarding the new economic nexus requirements in light of the Supreme Court decision in South Dakota v. Wayfair, U.S. S. Ct., Dkt. No. 17-494, 06/21/2018. Pennsylvania’s sales tax nexus has been expanded to include businesses making at least $100,000 in annual gross sales in Pennsylvania, and all marketplace facilitators and online sellers who meet the economic nexus threshold must now register, collect and remit Pennsylvania sales tax beginning July 1, 2019. The sales threshold will be measured by calendar year, and after the first year, collection will begin in the second quarter to allow taxpayers adequate time to compile their calendar year sales. The first collection period is July 1, 2019 through March 31, 2020 and will use calendar year 2018 sales to determine nexus; the next collection period is April 1, 2020 through March 31, 2021 and will use 2019 sales to determine nexus, and subsequent collection periods will follow the same pattern as 2020-2021. Economic nexus will only be determined by the $100,000 sales threshold, and no transactional count will be required. The Department of Revenue is working with certified service providers to offer vendors who meet the new economic nexus requirements assistance with registration, collection, reporting and remittance of Pennsylvania sales tax.

Act 43 of 2017 (“Act”) amended the Tax Reform Code of 1971 (“TRC”) to level the retail playing field by establishing marketplace sales tax collection, notice, and reporting requirements. The provisions of the DOR Pennsylvania’s Marketplace Sales Act, which requires marketplace facilitators and out-of-state sellers making more than $10,000 per year in sales to collect sales tax or report its sales to the DOR (and notify its customers that it will do so), thereby allowing the DOR to assess tax directly against Pennsylvania buyers will remain valid, and will apply to those vendors who have neither a physical presence nexus, nor an economic nexus (the $100,000 threshold in annual gross sales) in Pennsylvania.

Pennsylvania customers will receive information notices from businesses who have elected not to collect sales tax that list the customer’s purchases, with purchase price, for all products for which the seller did not collect sales tax. This information is also being reported to the Department of Revenue. Pennsylvania purchasers who buy goods without paying Pennsylvania sales tax are required to remit Pennsylvania use tax. Individuals’ use tax liabilities may be reported annually on the PA Personal Income Tax Return (PA-40). Please provide these use tax letters to your tax advisors with your tax documents for your return preparation. If you have any questions please contact your tax professional at Isdaner & Company (610) 668-4200.