If you operate or do business in Pennsylvania, you may be responsible for collecting and remitting payment of sales and use tax to the State of Pennsylvania. With a state tax and a number of local counties and cities charging additional sales tax, it’s important to know how the system works in this state and whether you are responsible for collecting.
In this guide we will review the Pennsylvania sales tax rates, the process of acquiring a permit, how to determine if you have nexus from out of state and need to collect sales tax, and what the due dates and penalties for late filing entail.
Pennsylvania has both state and local sales tax rates depending on where you operate. They include:
Because the additional sales tax rates apply mostly to these two large cities and a handful of other municipalities, you will likely deal with them at some point depending on the transactions you perform in the state.
If you operate your business and do business with other people in Pennsylvania, then you are required to collect and remit payment for sales tax here. However, it’s not always so simple for those who operate outside of Pennsylvania but do business in the state in one form or another. For those businesses, it is important to establish nexus.
The following factors will allow you to determine if you have sales tax nexus in Pennsylvania and therefore are required to collect sales tax here:
For more information about what constitutes nexus and how Pennsylvania defines the term, they offer a detailed breakdown on the Department of Revenue website here.
One final situation to consider for nexus is if you use the Amazon FBA program to fulfill shipments for your company. Because there are 9 fulfillment centers in Pennsylvania there is a good chance that at least some of your items are stored here. It is recommended that you check inventory with Amazon to determine if this will affect you and require you to collect sales tax in the state.
Like most states, Pennsylvania charges sales tax on physical goods and only a few specific types of services. Here are some additional details on what you will be required to collect sales tax on and what will be eligible for exemption.
The State of Pennsylvania maintains an up to date document with a list of all applicable sales tax and exemptions on their website for review of these items in greater detail.
If you have nexus in Pennsylvania and must collect sales tax, you will need to register with the state to acquire a permit. This can be done either online or with a form that can be mailed to the Department of Revenue. Here are links for both:
There is no charge to apply for a sales tax permit, though if you are also registering a business at the same time, you will need to pay a fee for that depending on the type and location of your business. Be sure to have business information and licenses ready at the time of application.
You will pay Pennsylvania sales and use tax by:
Like many other states, Pennsylvania offers a discount for paying on time all of your sales and use tax owed. If you pay on time, you will receive a 1% deduction on your return. This discount is only available for amounts over $20,000 if you pay via EFT.
The deadline for payment will be determined by the filing frequency assigned to you at the time you receive your permit. This will be affected by the total amount owed with each return.
Quarterly: For those with less than $600 in liability for the third quarter of the previous calendar year, you will pay quarterly.
|January – March (Q1)||April 20|
|April – June (Q2)||July 20|
|July – September (Q3)||October 20|
|October – December (Q4)||January 20|
Monthly: For those who owe greater than $600 from the third quarter of the previous calendar year, you will be required to pay on a monthly basis. Pennsylvania also requires those whose liability was greater than $25,000 in that time period to prepay each month 50% of that estimated liability for this time period.
Semi-Annual: If your liability for the third quarter of the previous calendar year was less than $75, then you can pay semi-annually.
If you pay your sales tax remittance late, there is a 5% late fee per month overdue up to a maximum of 25% penalty. If you underpaid or did not pay your tax due, then there is also a 3% per month of tax unpaid penalty up to 18% maximum. There are additional penalties as well for fraudulent returns and repeat offenders to the above situations.
If you operate in the State of Pennsylvania and know you’ll need to collect sales tax there for upcoming transactions, there are a number of things you’ll need to keep track of. From data review to sorting of transactions and determining the best rate for each sale made into the state, it’s important that you get it right. That’s why TaxTools sales tax software is a good fit for so many sellers who do business in the state. If you have an ecommerce site or other online platform, it can work with your existing system and help you get the sales tax collection process right. Contact us today to learn more or to sign up for a free trial.