Automate sales tax calculations, reporting and filing today to save time and reduce errors. Pennsylvania Sales Tax Calculator. Results Total Sales Tax Rate:. Table of Contents Do you need to collect sales tax in Pennsylvania? Do you have physical nexus in Pennsylvania?
Do you have economic nexus in Pennsylvania? Filing Sales Tax. Featured Content Download the report Sales tax compliance in Changes you need to know Share this. Do you need to collect sales tax in Pennsylvania?
Pennsylvania considers a seller to have physical nexus if you have any of the following in the state: An office or place of business An employee present in the state Goods in a warehouse Ownership of real or personal property Delivery of merchandise in Pennsylvania Independent contractors or other representatives in Pennsylvania Leasing property in the state You can click here to read exactly what the Pennsylvania Department of Revenue has to say about what constitutes sales tax nexus in Pennsylvania.
Those who do not meet the economic threshold should make an election by March 1 of every year and do one of two things: Register for a Pennsylvania sales tax permit , collect sales tax on sales that ship into Pennsylvania, and remit sales tax to the state. How to get a sales tax permit in Pennsylvania Pennsylvania has an online option to register for most licenses and other business registrations.
Collecting Sales Tax The sales tax rate you collect in Pennsylvania depends on whether you are based in Pennsylvania or out-of-state. This guide aims to assist by summarizing key tax topics in an easy to read format.
Sales tax is a tax paid to a governing body state or local on the sale of certain goods and services.
Pennsylvania first adopted a general state sales tax in , and since that time, the rate has risen to 6 percent. On top of the state sales tax, there is a 1 percent local sales tax in Allegheny County and a 2 percent local sales tax in Philadelphia.
Currently, combined sales tax rates in Pennsylvania range from 6 percent to 8 percent, depending on the location of the sale. As a business owner selling taxable goods or services, you act as an agent of the commonwealth of Pennsylvania by collecting tax from purchasers and passing it along to the appropriate tax authority. Any sales tax collected from customers belongs to the commonwealth of Pennsylvania, not you. Failure to do so can lead to penalties and interest charges.
Use tax may apply to businesses, individuals, or nonprofits that don't have an exemption granted by the CDTFA and attempts to level the playing field for purchases that avoid sales tax. Use tax is one of the most overlooked and misunderstood taxes. Two types of use tax exist, sellers use tax and consumers use tax.
Sellers use tax is a transaction tax. It is determined by applying the use tax rate equal to the sales tax rate to the purchase price of qualifying goods and services. Generally speaking, a business is required to pay sellers use tax if the following two conditions are satisfied:. To determine the amount of sellers use tax owed, the retailer should apply the sales tax rate where the item is used, stored, or otherwise consumed to the total purchase price.
Sellers use tax may also be referred to as "retailers use tax" or a "vendors use tax". Consumers use tax is typically imposed on taxable transactions where sales tax was not collected. A good example is an taxable online purchase where the retailed fails to collect sales tax. The responsibility shifts from the seller to the buyer who can report, file, and remit total use tax on their annual California income tax return.
In some cases, an out-of-state purchase may be taxed at a sales tax rate different from that in California. If they paid a lower out-of-state tax rate, the CDTFA expects them to report, file, and remit the difference.
In Pennsylvania, sales tax is levied on the sale of tangible goods and some services. The tax is collected by the seller and remitted to state tax authorities. The seller acts as a de facto tax collector. To help you determine whether you need to collect sales tax in Pennsylvania, start by answering these three questions:. Introducing our Sales Tax Automation series. The first installment covers the basics of sales tax automation: what it is and how it can help your business.
Read Chapter 1. The need to collect sales tax in Pennsylvania is predicated on having a significant connection with the state. This is a concept known as nexus. Sales tax nexus in all states used to be limited to physical presence: A state could require a business to collect and remit sales tax only if it had a physical presence in the state, such as employees or an office, retail store, or warehouse.
Wayfair, Inc. States are now free to tax businesses based on their economic and virtual connections to the state, or economic nexus. Out-of-state sellers with no physical presence in Pennsylvania can establish sales tax nexus in the following ways:. Affiliate nexus : Having ties to businesses or affiliates in Pennsylvania. Click-through nexus : Having an agreement to reward a person s in the state for directly or indirectly referring potential purchasers of goods through an internet link, website, or otherwise.
Marketplace facilitators and marketplace sellers with no physical presence in Pennsylvania should use both facilitated and direct sales to determine if the threshold has been met. Inventory in the state : Storing property for sale in the state. This includes merchandise owned by Fulfillment by Amazon FBA merchants and stored in Pennsylvania in a warehouse owned or operated by Amazon. Trade shows : Participating in conventions or trade shows in Pennsylvania. You may be liable for collecting and remitting Pennsylvania use tax on orders taken or sales made during Pennsylvania conventions or trade shows.
All businesses that make taxable sales in the state are required to register and collect sales tax. This is known as trailing nexus. If you sell taxable goods to Pennsylvania residents and have inventory stored in the state, you likely have nexus and an obligation to collect and remit tax. To begin to understand your unique nexus obligations, check out our free economic nexus tool or consult with a trusted tax advisor.
In some states, sales tax rates, rules, and regulations are based on the location of the seller and the origin of the sale origin-based sourcing. In others, sales tax is based on the location of the buyer and the destination of the sale destination-based sourcing. Pennsylvania is a modified origin-based state. For a Pennsylvania-based seller, sales and use tax is generally based on the location of the seller. However, sales from an out-of-state vendor to a Pennsylvania consumer interstate sales are generally sourced to the location where the consumer receives the property.
After determining you have sales tax nexus in Pennsylvania, you need to register with the proper state authority and collect, file, and remit sales tax to the state. We get a lot of questions about this and recognize it may be the most difficult hurdle for businesses to overcome. Avalara Licensing can help you obtain your Pennsylvania business license and sales tax registration.
You must register with the Pennsylvania Department of Revenue if you acquire an existing business in Pennsylvania. At the date of this guides most recent publication January , Pennsylvania is not a member of SST. Once you've successfully registered to collect Pennsylvania sales tax, you'll need to apply the correct rate to all taxable sales, remit sales tax, file timely returns with the Pennsylvania Department of Revenue, and keep excellent records.
Brick-and-mortar store : Have a physical store? Brick-and-mortar point-of-sale solutions allow users to set the sales tax rate associated with the store location. New tax groups can then be created to allow for specific product tax rules.
Hosted store : Hosted store solutions like Shopify and Squarespace offer integrated sales tax rate determination and collection. Hosted stores offer sellers a dashboard environment where Pennsylvania sales tax collection can be managed.
Marketplace : Marketplaces like Amazon and Etsy offer integrated sales tax rate determination and collection, usually for a fee. As with hosted stores, you can set things up from your seller dashboard and let your marketplace provider do most of the heavy lifting.
However, many marketplaces in Pennsylvania are required to collect and remit sales tax on behalf of their marketplace sellers. Mobile point of sale : Mobile point-of-sale systems like Square rely on GPS to determine sale location.
The appropriate tax rate is then determined and applied to the order. Toggle navigation. Click here to learn more about automating sales tax. Cancel Send Feedback. SalesTaxHandbook visitors qualify for a free month by signing up via our partner program here: Learn More Now! With a resale certificate , also known as a reseller's permit, your business does not have to pay sales tax when purchasing goods for resale.
Download Resale Certificate. Instruction: Present the certificate to the seller at the time of purchase. After getting your seller's permit and launching your business, you will need to determine how much sales tax you need to charge different customers. To avoid fines and the risk of costly audits, it's important for business owners to collect the correct rate of sales tax. For traditional business owners selling goods or services on-site, calculating sales tax is easy: all sales are taxed at the rate based on the location of the store.
Mary owns and manages a bookstore in Altoona, Pennsylvania. The state of Pennsylvania follows what is known as an origin-based sales tax policy. This means that goods shipped within Pennsylvania are taxed according to the address of the buyer.
This policy applies to state, county, and city sales taxes. Steve runs his own business selling electronics on eBay out of his home in Lancaster, Pennsylvania. Pennsylvania businesses only need to pay sales tax on out-of-state sales if they have nexus in other states.
Nexus means that the business has a physical presence in another state. Just be sure to keep up with all filing deadlines to avoid penalties and fines. Recommended: Hiring a business accountant can help your business file tax returns as well as issue payroll and manage bookkeeping.
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