Pennsylvania Economic Nexus Updates

Sovos
January 12, 2021

Pennsylvania’s economic nexus rules were impacted by the South Dakota v. Wayfair, Inc. Supreme Court decision. Pennsylvania passed Act 13-2019, which suspended its previous Marketplace Sales laws and determined “that a substantial economic nexus satisfies the Tax Reform Code’s definition of maintaining a place of business, requiring a person to collect and remit Pennsylvania’s sales tax.” We have highlighted key points for remote sellers and marketplace facilitators in the following blog.

Enforcement date:
July 1, 2019.

Sales/transactions threshold:
$100,000.

Measurement period:
Threshold applies to the previous calendar year.

Included transactions/sales:
Sales or delivery of tangible personal property or the performance of services for use, storage or consumption in the state.

When You Need to Register Once You Exceed the Threshold:
Remote sellers must determine if they have economic nexus on a year-to-year basis. For 2020 and beyond, the collection period is April 1 through March 31, using the previous calendar year to determine economic presence.

Summary: Remote sellers have economic presence and must collect and remit sales tax if they made more than $100,000 in annual Pennsylvania gross sales. Remote sellers should determine if they are required to collect sales tax on a year-to-year basis. For 2020 and beyond, the collection period is April 1 through March 31, using the previous calendar year to determine economic presence.

A marketplace facilitator with physical or economic presence in Pennsylvania must collect and remit sales tax on all taxable sales facilitated through its marketplace. Additionally, marketplace facilitators must include both their own sales and sales facilitated on behalf of marketplace sellers when determining if they have economic presence.

“If your business has nexus in Pennsylvania under these new standards, the previous Marketplace Sales provisions allowing a choice of either collecting sales tax or providing notices to Pennsylvania customers will no longer apply to you after that date,” according to the Pennsylvania Department of Revenue. “To be clear, the option that previously existed for online sellers to elect to send their customers notices informing them that they may owe Pennsylvania use tax is no longer available.” 

Pennsylvania Sales Tax Resources: For more information on the Pennsylvania economic nexus, reach out to our team. Also check out our interactive sales tax nexus map for the latest changes on each state.

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Author

Sovos

Sovos is a leading global provider of software that safeguards businesses from the burden and risk of modern transactional taxes. As VAT and sales and use tax go digital, businesses face increased risks, costs and complexity. The Sovos Intelligent Compliance Cloud is the first complete solution for modern tax, giving businesses a global solution for tax determination, e-invoicing compliance and tax reporting. Sovos supports more than 7,000 customers, including half of the Fortune 500, and integrates with a wide variety of business applications. The company has offices throughout North America, Latin America and Europe. Sovos is owned by London-based Hg. For more information visit www.sovos.com and follow us on LinkedIn and Twitter.
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