Pennsylvania explains recently enacted sales and use tax requirements for marketplace sales, including online marketplaces.
Under the new law, certain marketplace facilitators, remote sellers, and referrers must make one of two elections:
- collect and remit Pennsylvania sales tax, or
- comply with certain notice and reporting requirements.
These requirements, as well as definitions of affected entities, were previously reported.
Certain entities who had aggregate taxable sales in Pennsylvania worth at least $10,000 in the prior 12 months must file the election. The election requirement applies to marketplace facilitators, remote sellers, and referrers that do not maintain a Pennsylvania place of business.
The election must be filed by March 31, 2018.
Entities that do not file an election will be deemed to have elected to comply with notice and reporting requirements.
Notice and Reporting Requirements
Entities electing to comply with notice and reporting requirements must:
- notify their customers that they may owe use tax; and
- report customer or remote seller information to the Department of Revenue.
Customer information to be reported includes customers’:
- addresses, and
- dollar amounts of each purchase.
Only marketplace facilitators who do not maintain a place of business in Pennsylvania can file an election.
A marketplace facilitator that maintains a Pennsylvania place of business must collect sales tax on:
- its own sales, and
- sales it makes on behalf of any marketplace seller for which it facilitates a Pennsylvania sale.
Pennsylvania marketplace sellers must collect the tax on sales facilitated by an out-of-state marketplace facilitator. However, a Pennsylvania marketplace seller can contract with an out-of-state facilitator to collect the tax.
The referrers’ option to elect to collect or report applies only to:
- retail sales from referrals to out-of-state marketplace sellers;
- sales directly resulting from referrals to remote sellers; and
- sales of the referrer’s own products, if the referrer does not maintain a Pennsylvania place of business.
A referrer can make different elections for sales resulting from referrals and sales of its own products. However, a referrer must collect tax on sales of its own products if the referrer maintains a Pennsylvania place of business.
All remote sellers with taxable sales in Pennsylvania worth at least $10,000 in the prior 12 months must file an election. Remote sellers meeting the $10,000 threshold must:
- collect sales tax from their Pennsylvania customers, or
- notify the customers that they may owe use tax and report all of their Pennsylvania sales to the department.
Change of Election
An election to comply with notice and reporting requirements can be changed to an election to collect tax. This is done by filing a new election any time during the fiscal year when the notice and reporting election is valid.
Sales and Use Tax Bulletin 2018-01, Pennsylvania Department of Revenue, January 26, 2018, ¶204-622