Multi-State Tax Law Blog
Pennsylvania jumped on the bandwagon of states making it difficult for businesses to continue to do business. Pennsylvania wants to place onerous requirements on remote sellers to either collect sales tax or comply with a “notice and reporting” requirement.
Interestingly enough, Pennsylvania provides a “remote seller” is someone who does not have a place of business (nexus) in Pennsylvania and makes taxable sales of tangible personal property. The reason this is interesting is because the very definition of “remote seller” contemplates federal constitutional provisions regarding nexus (i.e., a connection a business has with a state and whether the state can force the seller to collect sales tax) in providing sellers an option to collect sales tax or provide notice to the purchasers about owing tax and submitting a written report to the Department of Revenue.
With this in mind, Pennsylvania appears to be indirectly attempting to force businesses to comply with another administrative burden the business may not otherwise have to do. By making the notification to customers and reporting requirements to the Department so burdensome, Pennsylvania is hoping to force businesses, which otherwise lack nexus, to register and collect sales tax. Collecting the sales tax may be less burdensome than the administrative requirements Pennsylvania is attempting to impose. And if this was not bad enough, the law provides that if a business does not make an election, the business is “deemed” to have elected to comply with the “notice and reporting” requirements.
Whether the “notice and reporting” requirements enacted into law by Pennsylvania are constitutional is something for the courts in that part of the country to decide. A business that fails to comply with the requirements is staring down the barrel of a penalty of the lesser of $20,000 or 20% of the total sales in Pennsylvania during the previous 12 months. Of course, the sponsor of the bill slants the legislation to say the law “would remind consumers that they are responsibly for remitting” sales and use tax and not require the vendor to collect tax. Unfortunately, the full impact of the bill is not disclosed until one parses through the legislation.
A copy of the law can be found here.
About the Author: Gerald “Jerry” Donnini II is a partner of the Law Offices of Moffa, Sutton, & Donnini, P.A. Mr. Donnini concentrates in the area of Florida and Federal tax matters, with a heavy emphasis on the tobacco, convenience store and petroleum industries. He also handles a myriad of multi-state state and local tax issues. Mr. Donnini is a co-author for CCH’s Expert Treatise Library: State Sales and Use Tax and writes extensively on multi-state tax issues for SalesTaxSupport.com.
ADDITIONAL ARTICLES TO READ
THE VOLUNTARY DISCLOSURE PROGRAM, published October 11, 2017, by Jerry Donnini, Esq.
SALES TAX NEXUS AND SELLERS USING AMAZON’S FBA, published September 13, 2017, by Jerry Donnini, Esq.
STATES OFFER AMNESTY FOR FBA AMAZON PRORGAM, published August 13, 2017, by Jerry Donnini, Esq.
Tennessee Jumps on Economic Nexus Train, published March 13, 2017, by Jerry Donnini, Esq.