Last year on June 21st, the Supreme Court issued a ruling on the Wayfair case, overriding a previous ruling and allowing states to require out of state businesses to collect sales tax on sales shipped into the state. The previous ruling, which was deemed “unsound and incorrect” by the Supreme Court, basically said that if the business does not have a physical presence in the state they could not be required to register and collect sales tax.
Prior to the Wayfair case, many states had been attempting to find creative ways to get around this rule and Pennsylvania is no exception. Currently under Act 43 of 2017, if an out of state business generates at least $10,000 in sales to Pennsylvania customers, they are required to either collect and remit tax to the state or provide use tax notices to customers with each sale, informing them of their requirement to remit use tax to the state. Additionally, if opting to provide notice to customers rather than collecting, sellers are required to send an annual summary of purchases to both the customer and the Department of Revenue. Many businesses find it easier to simply collect and remit tax rather than to comply with complicated reporting requirements.
The Department of Revenue has issued Tax Bulletin 2019-01 outlining Pennsylvania’s take on Wayfair. Effective July 1, 2019, marketplace facilitators and remote sellers who generate over $100,000 in Pennsylvania sales will be required to register for a license and collect, report, and remit sales tax to Pennsylvania. Businesses with sales between $10,000 and $100,000 will still be subject to the notice and reporting requirements if they do not collect and remit tax, but if sales are over $100,000, there is no longer a choice. Additionally, a marketplace facilitator with sales over $100,000 will be required to collect tax even if the sale is for a seller that does not individually have any nexus. Pennsylvania does not have a transaction count threshold at this time.
For questions regarding this article, please contact McKonly & Asbury Tax Supervisor, Lindsey Waltemyer, at email@example.com.