Businesses are pouring over a new Tax Bulletin from the Pennsylvania Department of Revenue, which clarifies existing sales tax nexus law. The law requires businesses with a physical presence in Pennsylvania to collect and remit sales taxes on items sold online, by phone or by catalog. “Thousands of retailers and businesses that employ people throughout the state, and collect and remit 6% sales tax – 7% in Allegheny [County] and 8% in Philadelphia – felt that they were being treated unfairly,” explains Revenue Secretary Dan Meuser.
The bulletin informs remote sellers, which have nexus in Pennsylvania, that they have until February to become licensed to collect sales tax. Failure to do so could result in audits, liens or other enforcement measures.
It could have a broad application across online-only retailers that have not been collecting and remitting state sales taxes, according to Dan Hayward with the Pennsylvania Alliance for Main Street Fairness. The Pennsylvania Retailers’ Association joins Hayward in calling it a great first step toward equity and fairness. “Pennsylvania’s retailers, and the more than 600,000 jobs they have created, deserve fairness and a level playing field with their Internet competition,” says PRA President & CEO Brian Rider.
Testifying before the House Finance Committee in May, the Department of Revenue estimated that PA is missing out on $350-million dollars a year because online retailers aren’t collecting sales taxes.
But just because state sales tax isn’t collected on many online purchases, it doesn’t mean taxes aren’t due. Beginning in January the state will provide a line, on Pennsylvania personal income tax returns, which allows individuals to self-report their use tax. Use tax rates are identical to the sales tax; they’re due when consumers make taxable purchases for which no sales tax is collected.