The Pennsylvania Senate agreed to several tax changes recently passed by the House of Representatives and sent a bill to the Pennsylvania Governor on October 26, 2017. The Governor has ten days to sign or veto this legislation. Under the bill, remote sellers, marketplace facilitators and referrers would have two options:
- Comply with existing sales tax law and collect and remit the tax themselves, or;
- Observe the law’s sales tax notice and reporting requirements.
The notice requirement includes: “providing written notice to each purchaser at the time of the sale stating that sales tax is not being collected, and the purchaser may be required to remit the use tax,” to the state themselves. The reporting requirements are for remote sellers with sales exceeding $10,000, and is not contingent upon the remote seller having nexus with Pennsylvania for sales tax.
Remote sellers would also be required to file a report with the state government outlining relevant information about all Pennsylvania purchasers. Effective February 1, 2018 (except with regard to electronically or digitally delivered, streamed or accessed material), remote sellers, marketplace facilitators or referrers with aggregate sales of $10,000 or more in the prior calendar year must file an election to either collect and remit sales tax or comply with notice and reporting requirements before March 1, 2018.
Notice requirements include:
- Posting notice on the remote seller, marketplace facilitator or referrer’s platform informing purchasers with a delivery location in Pennsylvania that sales tax may be due on purchases and the filing of a use tax return is required;
- Providing written notice to each purchaser at the time of sale that sales tax is not being collected and the purchaser may be required to remit use tax to Pennsylvania;
- Providing instructions on how to obtain information from the Department on how to remit use tax;
- Prominently displaying all information on each invoice, order form, sales receipt or similar document; and
- Filing a report with the Department that provides the names and addresses of purchaser (including the mailing address and the address to which the product was delivered), the aggregate dollar amount of purchases, and the name and address of the remote seller, marketplace facilitator or marketplace seller.
A remote seller, marketplace facilitator or referrer that is required to make an election that does not elect to collect and remit sales tax is still required to comply with the notice requirements. This provision is estimated to generate additional revenues of $10.0 million in 2017-18 and $50.5 million in 2018-19.
If you have questions about these tax changes, and how to make the most out of this bill, a member of the Barnes Dennig state and local tax team is available to help. Ask us a quick question here, and we’ll have someone reach out to you.