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Pennsylvania Sales Tax Collection, Reporting ‘Deadline’ for Online Retailers, Others Looms

Remote sellers, marketplace facilitators, and referrers facilitating, making, or referring sales to Pennsylvania customers are required to make an election to either register to collect and remit sales tax or comply with notice and reporting requirements by March 1, 2018.

Pennsylvania’s new economic nexus and reporting law contains a fast-approaching March 1, 2018 deadline.[1] The law applies to remote sellers,[2] marketplace facilitators,[3] and referrers[4] (collectively, companies) with at least $10,000 in aggregate sales of tangible personal property to Pennsylvania customers in the immediately preceding 12-month period.[5] Under this new law, a company must decide whether to collect and remit sales tax going forward. If it elects not to collect, or fails to make an election, the company will automatically be required to comply with the notice and reporting provisions of the new law.[6] The noncompliance penalties for both options are severe; the full text of the law sets forth the reporting requirements and penalties for noncompliance.

The new law raises constitutional privacy concerns and is contrary to the US Supreme Court’s decision in Quill, which requires that a company have physical presence in a state before that state can collect sales tax.[7] The Court recently decided to revisit the oft-debated Quill decision by accepting certiorari in South Dakota v. Wayfair.[8] The outcome of Wayfair will likely have far-reaching consequences that will impact many state laws, including this new law in Pennsylvania. We will continue to monitor these developments and update our clients and readers as new information becomes available.

[1] 72 P.S. § 7213.1(a).

[2] A remote seller is anyone other than a marketplace facilitator, marketplace seller, or referrer that does not maintain a place of business in Pennsylvania but sells tangible personal property that would be subject to sales tax in Pennsylvania. 72 P.S. § 7213(h).

[3] A market facilitator is anyone that facilitates the sale of tangible personal property.

[4] A referrer is anyone that receives consideration to advertise a seller’s products and transfers a buyer to the seller, facilitator, or other party to complete a sale without collecting a receipt from the purchaser. The statute specifically excludes internet advertising services and those who do not provide the marketplace or remote seller’s shipping terms or advertise whether a marketplace or remote seller collects sales or use tax. 72 P.S. § 7213(g).

[5] Id.

[6] 72 P.S. § 7213.1(e)-(f). A company’s election to merely report can be changed at any time by filing a new election and obtaining a Pennsylvania sales tax license.

[7] Quill Corp. v. North Dakota, 504 U.S. 298 (1992).

[8] South Dakota v. Wayfair, Inc., No. 17-494.

Copyright © 2020 by Morgan, Lewis & Bockius LLP. All Rights Reserved.National Law Review, Volume VIII, Number 45


About this Author

Justin Cupples, Morgan Lewis, Tax attorney
Of Counsel

Justin D. Cupples focuses his practice on providing the highest quality State and Local Tax (SALT) counsel and advocacy to Fortune 500 companies and large multistate organizations. Justin obtains significant state tax savings for his clients by developing and implementing state tax return positions, defending state tax audits, and advocacy through administrative appeals and litigation.

Daniel Dixon, Morgan Lewis Law Firm, Tax Attorney
Of Counsel

Daniel Dixon focuses his practice on providing the highest quality State and Local Tax (SALT) counsel and advocacy to Fortune 500 companies and beyond. Often this counsel and advocacy results in saving corporations significant state taxes. He has resolved both through litigation and settlement, difficult state tax matters before administrative appeal boards, tax tribunals, and courts in more than 25 states.