Recent Pennsylvania Sales and Use Tax Bulletins and Letter Rulings

Recently, there have been a few new bulletins and letter rulings released by the PA Department of Revenue in the sales and use tax area.

PA Marketplace Sales (Bulletin 2018-01)

The legislation that was passed as part of Act 43 of 2017 is intended to improve sales tax collections and compliance for online sales of taxable items. The ultimate goal is to help brick-and-mortar stores compete on an even playing field with online sellers.

  • On or before March 1, 2018, a remote seller, a marketplace facilitator, or a referrer who is not maintaining a place of business within the Commonwealth, but who had aggregate taxable sales in PA worth at least $10,000 in the prior twelve months, must either file an election with the Department of Revenue to collect and remit sales tax going forward, or comply with the notice and reporting requirements.

Please see the PA Department of Revenue website for definitions of the terms used above.

Impact on Consumers

  • Beginning April 1, 2018, PA customers will begin receiving information notices from businesses who have elected not to collect sales tax. The information notice will list the purchases and purchase price of products for which sales tax was not collected by the seller.
  • PA customers will also receive annual notices detailing their purchases of products for which sales tax was not collected and similar information will be reported by the business to the Department of Revenue. PA individuals and businesses who purchase taxable items without paying PA sales tax are required to remit use tax. Individuals may report and pay use tax using PA-40 Personal Income Tax Return.

Support to Canned Computer Software (SUT-17-001)

  • Act 84 of 2016 updated the statutory definition of “tangible personal property” to expressly include certain specified items including video, books, applications, games, music, audio, canned software and other specified items for sales and use tax purposes.
  • The Act also specifically included in the definition of tangible personal property the “maintenance, updates and support” of the newly defined electronic and digital tangible personal property.

 See SUT-17-001 for additional guidance on what the Department of Revenue considers “support” and for specific examples.

Tangible Personal Property/Information Retrieval Products (SUT-17-002)

  • Act 84 of 2016 updated the statutory definition of “tangible personal property” to expressly include certain specified items including video, books, applications, games, music, audio, canned software and other specified items for sales and use tax purposes.
  • The Act also provides that such items constitute tangible personal property whether “electronically or digitally delivered, streamed or accessed” and “whether purchased singly, by subscription or in any other manner.”

 See SUT-17-002 for the Department’s ruling on informational retrieval products constituting tangible personal property and therefore subject to PA sales and use tax.

If you have any questions on the above information, please contact BSSF today!


ABOUT THE AUTHOR

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Matthew S. Fox, CPA

Matt is a Senior Tax Manager with Brown Schultz Sheridan & Fritz and a key member of the Firm’s Tax Department. Matt has over ten years of experience servicing closely held and family-owned businesses in numerous industries, including craft beverage, manufacturing, distribution and construction/real estate.