Deadline Approaching for Out-of-State Sellers to Comply with Pennsylvania Sales Tax Collection and Reporting Requirements
The Act gives certain out-of-state “remote sellers,” “marketplace facilitators,” and “referrers,” as defined in the Act, with Pennsylvania sales of $10,000 or more during the immediately preceding 12-month period the option to either collect sales tax due on sales within Pennsylvania or elect to notify their customers that use tax may be due and report to the Department names, addresses, and the aggregate dollar amounts of each customer’s purchases.
Pursuant to the Bulletin, remote sellers, marketplace facilitators, and referrers must file an election with the Department on Form REV-1830 by March 1, 2018 to either: (1) register to collect and remit sales tax, or (2) to comply with Act 43’s notice and reporting requirements. The election becomes effective on April 1st. (Note: Sellers of electronically or digitally delivered goods, including canned software, are not subject to the notice and reporting requirements until March 31, 2019.) Subsequent elections must be made annually on or before June 1 starting June 1, 2019.
Where a party to which the Act applies fails to make a required election, such party will be deemed to have elected to comply with the notice and reporting requirements. An election may be changed from the notice and reporting requirement to the collection and remittance requirement at any time during a fiscal year by filing a new election with the Department.As noted, the sales tax collection/reporting requirements apply to certain remote sellers, marketplace facilitators, and referrers, which are defined in the Act as follows:
- Remote sellers. An out-of-state seller who sells taxable tangible personal property at retail through a forum (e.g., on its own website)
- Marketplace facilitators. Someone who facilitates the retail sale of tangible personal property by listing or advertising tangible personal property for sale in any forum, collects the payment from the purchaser, and transmits the payment to the marketplace seller (e.g., eBay)
- Referrers. Someone who is paid to advertise a seller’s products and refers potential buyers to a seller
Pennsylvania joins a growing list of states enacting sales and use tax notice reporting requirements (see the below chart for a list of states imposing sales and use tax notice and reporting requirements on remote sellers). Such requirements place significant compliance burdens on out-of-state sellers and many states impose heavy penalties for non-compliance. Significantly, the notice reporting rules apply to all “remote sales” – not just to sales over the internet. These rules vary by state, and compliance can be time consuming and expensive. All sellers subject to notice reporting rules who are not collecting sales tax on their sales should ensure that they understand how these rules can impact their business and should consider the cost of collecting and remitting the sales tax as compared to the cost of complying with (or contesting) the notice reporting requirements.
States with notice reporting rules include:
|Pennsylvania||2/1/2018 for products and services other than digital products. 2/1/2019 for digital products and relates services.
ContactFor more information, please contact Scott Smith, Director, State and Local Tax Services, at Scott.Smith@CohnReznick.com or 973-364-7720.
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