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Pennsylvania Sales Tax Guide

By Cristina Garza

What you think of when you think of Pennsylvania may come down to food. Philadelphia is, of course, home to the eponymous “Philly cheese steak,” but Hershey, PA is the Chocolate Capital of the US! Decisions, decisions. Beyond matters culinary, Pennsylvania is also unquestionably an historical powerhouse. The first baseball stadium was erected there, the first daily newspaper delivered there, and the first general purpose computer, ENIAC, was operated in Pennsylvania. If you’re one of the happy small business owners who calls Pennsylvania home, you’re going to want to be sure your business stays in line with Pennsylvania's sales tax laws. No problem! That’s why we have assembled this all-in-one guide; so that you can readily meet the sales tax compliance requirements for a small business in Pennsylvania. 

After reading this guide, you will have learned:

  • How to be prepared for your call with the Pennsylvania Department of Revenue.
  • How to contact the Pennsylvania Department of Revenue.
  • When to charge sales tax in Pennsylvania.
  • What goods, products, and services are taxable in Pennsylvania.
  • When you establish a sales tax nexus with the state of Pennsylvania, and the nuances of various thresholds.
  • How to register for a sales tax license in Pennsylvania.
  • How to collect sales tax in Pennsylvania.
  • How to file and pay sales tax in Pennsylvania.

If, after reading, you still have any questions to help you determine your tax sales obligations in Pennsylvania and how to fulfill them, we are here for your small business bookkeeping needs! 

 

 


Pennsylvania Sales Tax Contacts

Pennsylvania Sales Tax Contacts

 

✅  Do you need to get in touch with the Pennsylvania Department of Revenue?

✅  Are you uncertain about whether to visit, call them, or contact them through their website?  

✅ Do you wonder what information you should have ready before you contact them?

 

If you answered “Yes” to any of these questions, please read onward, as we have just the information you need! :)

The Pennsylvania Department of Revenue is reachable by phone at 717-787-1064. 

You can also visit their one of their regional & district offices or ask them a question via their website. If you are hoping for the fastest response, we always suggest that you call rather than visit in person. 

When you do call the Pennsylvania Department of Revenue, you will want to have some information on hand. It will save time to have the following information easily accessible before you call: 

  • Taxpayer Name
  • EIN
  • Sales & Use Tax ID Number

If you plan on having a third party contact them on your behalf, you’ll want to be sure to have completed a power of attorney form (REV-677, PDF). If you don’t have a completed form they won’t be able to assist someone else on your behalf.

If you have any more questions, please feel free to contact us so we can assist you with your sales tax needs.

 

 


Pennsylvania Sales Tax Registration

Pennsylvania Sales Tax Registration

 

Are you a new business selling tangible property in Pennsylvania? If yes, you are going to want to register your business with the Pennsylvania Department of Revenue so that you can pay your sales tax on time. 

You need not fret as this is a relatively simple process and one for which you’re about to be fully prepared. We are going to outline the steps below so you are totally ready to register for your sales tax license.

Here we go! Remember...

Preparation is key. 

Let’s get started!

 

 

How do I register to collect sales tax in Pennsylvania?

You can apply or register for a Pennsylvania sales tax permit by visiting the Pennsylvania Online Business Entity Registration site and following the instructions provided.

Pennsylvania does offer an old school paper based form (PDF) you can print and mail in, but this is going to be a slower setup (six weeks!) and with greater possibility for errors. We don’t recommend it, and Pennsylvania discourages it on their website, but we wanted to make the option available in case it suits the needs of someone out there. 

 

 

What information do I need to register for a Pennsylvania sales tax permit?

Great question!

Before you sign up for Pennsylvania sales tax permit you’ll want the following information on hand:

  • Business name
  • Business entity type 
  • Description of business activities
  • Date business activities began or will begin
  • Business address and mailing address
  • Business contact information
  • Associated business entities 
  • NAICS code that best matches the business
  • Federal Employer Identification Number (FEIN)
  • List of business officers, partners, managing members, and/or trustees

Don’t forget! Preparation is key. When you have all this information ready, you can go online and register for your permit at the Pennsylvania Online Business Entity Registration site

 

 

How much does it cost to register for a Pennsylvania sales tax permit?

Zilch! Pennsylvania doesn’t charge anything at all to register a new business sales tax permit.

 

 

Do I need a Federal Tax ID Number or EIN to register for a Pennsylvania sales tax permit?

Definitely, yes! You will most assuredly need one, but if you don’t already have one and need to get a new EIN, it’s a painless process. You can register for a Federal EIN right here :). 

 

 

Which agencies in Pennsylvania do I need to additionally register with?

You may need to check with some of the following agencies or resources: 

You’ll want to give this some thought and do a little research or investigating; since every business is unique, and there are such different rules, regulations, and laws that may apply. 

We suggest contacting the Pennsylvania Department of Revenue to verify which additional government agencies you may be required to register with. 

 

*****

 

Huzzah!!!

You are now prepared to register for your Pennsylvania sales tax permit in Pennsylvania. 

Let’s summarize what we have covered:  

  • Have all the required information easily accessible before registering online.
  • Acquire a tax ID or EIN before registering for a Pennsylvania sales tax permit.
  • Register online at the Pennsylvania Online Business Entity Registration site.
  • Look into what other agencies you may have to additionally register with.

Registering for your Pennsylvania sales tax permit will be stress free as long as you are prepared. We recommend organizing all the essential information in a folder, preferably using a system like Box.com or Dropbox (something we’re happy to handle for our customers). 

 

 


Pennsylvania Sales Tax FAQ

Pennsylvania Sales Tax FAQ 

By now, you may have already contacted the Pennsylvania Department of Revenue and applied for a Pennsylvania sales tax permit. 

Once you have a license to collect and remit sales taxes in Pennsylvania, you will probably be asking yourself two questions: 

  • When do I charge a sales tax in Pennsylvania?
  • What goods and services are subject to sales taxes in Pennsylvania? 

We are going to go over some common questions that our clients have asked. We believe these questions will help you appreciate the nuances of taxable goods so you can be confident in fulfilling your tax obligations. 

Let’s start with the first question…

 

 

What goods and services are considered taxable in Pennsylvania?

The following items are all taxable in the state of Pennsylvania: 

  • Sales of tangible goods at retail.
  • Repairs or alterations of tangible personal property.
  • Property rentals, leases, or licenses [e.g. commercial, mini-warehouse]
  • Selling service warranty contracts.
  • Short-term rentals for living accommodations (e.g. motel/hotel, beach houses, condos, timeshares, vacation homes, or RV homes).
  • Rental/lease of personal goods (e.g.: machinery, vehicles, equipment, or other property).
  • Charges for admission to any place of amusement, sport, or recreation.
  • Manufacturing or producing goods for retail sales.
  • Operating vending machines or amusement rides.
  • Services are mostly exempted

 

 

The bottom line is …

Your business must pay taxes on sales of any non-exempt goods, and some taxable services.

 

*****

 

 

Let’s now review some of our clients’ frequently asked questions:

  • Is Pennsylvania an Origin or Destination sales tax State?
  • What creates a sales tax nexus in Pennsylvania?
  • What is the economic threshold in Pennsylvania?
  • Does Amazon have fulfillment centers in Pennsylvania?
  • Does Pennsylvania have a Click-Through Nexus?

To best understand your tax obligations, new businesses need to consider how they are doing business and the type of relationships they have with buyers and any third parties to their transactions. 

 Let’s discuss some questions that will help you understand the nature of your small business and the subsequent tax implications.   

 

 

Is Pennsylvania an origin or destination-based sales tax state?

Pennsylvania is an Origin-Based sales tax state. This just means you’ll need to have a Point-of-Sales system configured to track tax based off your business location vs the buyer’s location.

 

 

 Protip: Charge sales tax based on your location rather than your buyer’s location

 

 

What creates a tax nexus with the state of Pennsylvania?  

Having nexus, also known as "sufficient business presence,” with Pennsylvania means your business has established a taxing connection with a state. When this happens, you are required to collect and remit sales tax in Pennsylvania because you created a sales tax Nexus.

Even if your business maintains its main headquarters in another state, you may still have to charge and pay sales tax to the Pennsylvania Department of Revenue even if you never step foot in Pennsylvania.   

So, how do you create a sales tax Nexus in Pennsylvania?

 

A business establishes a nexus in Pennsylvania by:

  • having a business location in Pennsylvania;
  • having property stored in Pennsylvania;
  • employing any person in Pennsylvania;
  • contracting with a salesperson or other agent in Pennsylvania;
  • leasing equipment used in Pennsylvania;
  • performing services in Pennsylvania;
  • licensing the use of intangible property in Pennsylvania, or transporting property in Pennsylvania using the taxpayer’s vehicles.

Let’s talk a bit more specifically about where your goods are stored, such as in the instance of an Amazon warehouse. 

 

 

Does Amazon have fulfillment centers in Pennsylvania?

Yes, there are thirteen Amazon fulfillment centers in PA. Why does this matter?

This is relevant if you sell your products on Amazon or are recognized as an Amazon FBA (Fulfillment by Amazon) seller. When Amazon stores your products in one of its fulfillment centers in any state, including Minnesota, this triggers a sales tax requirement. If Amazon is storing your products in a warehouse in Minnesota, you have created a taxing connection with the state of Minnesota.

We can help guide your small business through this! We use tools like A2X and Wherestock to identify where our clients' inventory is currently being held and shipped from so that we can keep them in compliance.

 

 

Does Pennsylvania have economic nexus?

Yes, Pennsylvania does now have an economic nexus law. As of July 1st, 2019, remote sellers are liable to pay sales tax beyond a certain threshold. This means that even businesses without a physical presence or traditional nexus can be required to register for, collect, and pay sales taxes.

The threshold for registering is having a cumulative gross revenue of over $100,000 in a year to Pennsylvania purchasers.

For more information see the Pennsylvania DOT’s remote sellers page here.

 

 

Does Pennsylvania have click-through nexus?

Yes! This means if you’re an affiliate sales or third party marketer, you may have a tax liability even if you don’t meet nexus another way. If revenue exceeds $10,000/quarter four quarters in a row, affiliate marketers will need to register for and pay sales tax. For more information, check out this page about click-through nexus.

 

 

Is Pennsylvania a streamlined sales tax state?

Nope, Pennsylvania has unfortunately not yet joined into this potentially time-saving multi-state streamlined tax program.

 

 

More effectively manage your tax needs by keeping this guide handy. 

You and your business can be better equipped to avoid situations like paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in Pennsylvania.

 

 


Collecting Sales Tax in Pennsylvania

Collecting Sales Tax in Pennsylvania

By now you know if you are a business that has established a nexus with Pennsylvania. So you have an understanding about whether, or when, you are required to collect sales tax. Knowing this is just half the battle! Now, we are going to help you with the next half of the battle: how to navigate the process of collecting taxes.

Let’s review some common questions our clients have asked regarding their Pennsylvania Sales Tax obligations. 

  • How do I collect Pennsylvania Sales Tax?
  • Who is eligible for Pennsylvania Sales Tax exemptions?
  • What should I do if my customer is exempt from sales tax in Pennsylvania?
  • What happens if I lose a Pennsylvania nontaxable transaction certificate? 

After reading this, you will be better equipped to determine when --and when not-- to collect sales tax in Pennsylvania.

 

 

How do I collect Pennsylvania Sales Tax?

Because Pennsylvania is an origin-based sales tax state, your business should charge sales tax at the time of the transaction based on the business location rather than that of the buyer. 

 

 

What are the current Pennsylvania Sales Tax rates?   

Pennsylvania’s state-wide sales tax rate is 6% at the time of this article’s writing, with a couple local surtaxes potentially bringing that amount up to 8%. Since sales tax rates may change, we advise you to check out the Pennsylvania Department of Revenue Tax Rate page which has the current rate. Any change will be reflected on that page.

It always helps to be accurate and up to date with this type of information! :) 

 

 

What is exempt from Pennsylvania Sales Tax?

What is exempt from sales tax in Pennsylvania?

 

Here is a sample list of exemptions: 

  • Purchases for resale
  • Everyday clothing items
  • Medical supplies
  • Groceries 

Pennsylvania has many more specific regulations, which they list on their website.

 

 

Who are eligible for Pennsylvania sales tax exemptions?

At this point, you should know what products are exempt from sales tax in Pennsylvania. You also want to know who may be exempt. 

Under Pennsylvania law, the type of buyer or the way the goods will be used can qualify can buyer for a sales tax exemption. A good example of this is a merchant purchasing goods for resale, aka a wholesaler.

Other common examples of an exempt buyer may include:

  • Government agencies
  • Non-profit organizations
  • Religious groups
  • Out-of-state buyers (should their business not have nexus in their home state).

Note that a non-profit status doesn’t instantly confer tax exemption.

 

 

What should I do if my customer is exempt from sales tax in Pennsylvania?

Purchasers who are tax exempt must have completed resale certificate (PDF) and must present their completed exemption certificate at the time of purchase. It is then incumbent upon the seller to hold on to this exemption certificate. Failure to do so may leave you unable to justify tax exempt sales.

Remember, you always want to collect and file a copy of the exempt certificate. Such certificates must be produced upon request in the event of an audit to justify tax-exempt sales.

 

 

What happens if I lose a Pennsylvania sales tax exemption certificate?

Hmm... Obviously this issue is best to be avoided! Imagine finding out you’ll be audited and discovering you cannot produce an exemption certificate for a buyer! That nightmare scenario would mean you could be held liable to pay all taxes on behalf of the buyer. This is a bad scene and can be avoided by taking proper care with your paperwork… which happens to be one of our specialties! :) 

 

 

Does Pennsylvania have a sales tax holiday?

Nope, no break at all from Pennsylvania’s vigilant tax watchdogs :| 

 

***** 

 

We have now covered who you need to collect sales taxes from, how to determine whether goods for sale are deemed taxable, what goods and services fall under tax exemptions, who is eligible for tax exemption certificates, and, finally, the process of collecting sales tax in Pennsylvania state. 

Now that we’re this far down the rabbit hole there’s only one thing we need to learn about next… how to pay the piper! 

 

 


Filing and Paying Sales Tax in Pennsylvania 

Filing and Paying Sales Tax in Pennsylvania

It is time to talk about filing and paying your sales taxes in Pennsylvania. In this section, We are going to cover the following frequently asked questions from our clients:

  • When is Pennsylvania Sales Tax due?
  • What are the Pennsylvania Sales Tax thresholds?
  • What if a Pennsylvania Sales Tax filing date falls on a weekend or holiday?
  • How do I file a Pennsylvania Sales Tax Return?
  • How do I correct a Pennsylvania Sales Tax return?
  • What happens if I don’t collect sales tax?
  • What happens if I file or pay my sales tax return late?
  • Do I need to file a return if I don’t collect any sales tax in Pennsylvania?
  • If I close my business, do I need to file a final sales tax return?
  • Does the Pennsylvania Department of Revenue offer a discount for filing on time?

By the time you finish reading this, you will feel confident enough to file and pay your Pennsylvania Sales Tax.

 

 

When is Pennsylvania sales tax due?

Pennsylvania sales tax payments are due based on the filing interval. Filing intervals are based on the company’s tax liability [detailed ahead, be patient! :p] 

The state of Pennsylvania requires payment by no later than the 20th day of the month following the reporting period

 

 

What are the Pennsylvania sales tax filing interval thresholds?

The thresholds for filing intervals are based on the expected or actual tax liability owed:

 

Average Tax Liability Owed Monthly*

Filing interval

From $0 to $300

Annual

From $300.01 to $600

Quarterly

More than $600.01

Monthly

 

 

*anticipated if new business, actual if existing company

 

Not sure how to determine your tax filing frequency?

You can review your eCommerce or Point-of-Sale Software to see the volume of sales you have generated. 

Don't worry though! The state will let you know when your due dates change. :) 

Keep an eye out for notices in your mail from the State of Pennsylvania so that you don't miss any shift in deadlines.

 

 

What if a Pennsylvania sales tax filing date falls on a weekend or holiday?

The deadline is moved to the next business day, typically the Monday following the weekend or the day after the holiday. Where possible, we always suggest filing well before the holiday, of course ;). 

 

 

How do I file a Pennsylvania sales tax return?

Paper: Build a time machine and travel to an era when paper was still acceptable :) (PA doesn’t have a paper filing option). 

Electronic: File online via e-TIDES site and submit payment via EFT.

  

 

How do I correct a Pennsylvania Sales Tax return?

Paper: N/A

Electronic: Amend the return within the e-TIDES portal.

 

 

What happens if I don’t collect sales tax?

If you were required to collect sales taxes and failed to do so for whatever reason, that’s a big no-no! Ultimately the business will be held liable for the due tax. Always be sure to collect sales tax at the point of sale. Attempting to collect after the fact will be time consuming and most likely unsuccessful. 

 

 

Protip: You are still responsible for remitting sales taxes even if you failed to collect them. 

 

 

What happens if I file or pay my sales tax return late?

Pennsylvania's Department of Taxation charges a penalty of 10% with interest no less than 12%.

 

 

Do I need to file a return if I don’t collect any sales tax in Pennsylvania?

Yep! Pennsylvania requires businesses file a “Zero-Tax” return even when they have no sales during a taxing period.

 

 

If I close my business, do I need to file a final sales tax return?

Absolutely, Pennsylvania requires businesses to file a “Final sales tax” return when closing their doors.

 

 

Does the Pennsylvania Department of Revenue offer a discount for filing on time?

Yes, they do! Pennsylvania offers 1% discount with no minimum or maximum. No reason to not capitalize on this potential saving, so be sure to file early!

 

*****

 

Now that we have covered all our bases for filing and paying sales taxes in the state of Pennsylvania, you should feel more at ease about the process.

 

Some things to remember:

  • Due dates are important. If anything, file and pay your taxes early.
  • There are three payment plans for filing and paying your sales taxes depending on how much you collect in sales tax on average in a month.
  • You can file and pay your taxes electronically or by mail
  • If you need to amend a return, you may do so electronically or by paper.
  • If you don’t collect sales tax and you were supposed to, you (not the buyer) is liable to pay the sales tax to the state of Pennsylvania.
  • You will have to pay late fees if you fail to file your tax return on time and/or if you fail to make your tax payment on time.
  • Even if you collect no sales tax, you still need to file a return.
  • You need to file a “Final sales tax report” when you close your business.

 

Now, you are ready to file and pay your sales tax in Pennsylvania. If you have any more questions, feel free to contact us.

  

Click here if you think sales tax is boring. Book a meeting.

 


Please note: This blog is for informational purposes only and the information is accurate as of 9/27/2019. If you want legal advice on sales tax law for your business, please contact a Sales Tax professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog possibly may be out of date by the time you review it.