Pennsylvania Tax Nexus Generally, a business has nexus in Pennsylvania when it has a physical presence there, such as a retail store, warehouse, inventory, or the regular presence of traveling salespeople or representatives.
What creates sales tax nexus in Pennsylvania?
Do you have economic nexus in Pennsylvania? Effective July 1, 2019, sales into Pennsylvania that exceeded $100,000 in the previous 12-month period are considered to have economic nexus. The notice and report is still in effect for those with taxable sales greater than $10,000 but less than $100,000 in a calendar year.
What triggers tax nexus?
Nexus Triggers
Having a physical location within the state. Having employees work within the state or regularly travel to the state to perform business functions. Holding property (including intangible property and inventory) in the state. Delivering tangible goods to that state’s residents (even if by common carrier)
Does payroll create nexus in Pennsylvania?
For sales tax purposes, the guidance said a business that employs a Pennsylvania resident working from home after June 30 may also have nexus for 2021 and future years based on the employee’s activities.
What creates state nexus?
State tax nexus is the connection between a taxpayer and a state that requires a taxpayer to file returns in the state. Certain business activities, including having a physical presence or reaching a certain sales threshold, may establish nexus within a state.
What two categories are exempt from PA sales tax?
Major items exempt from the tax include food (not ready-to-eat); candy and gum; most clothing; textbooks; computer services; pharmaceutical drugs; sales for resale; and residential heating fuels such as oil, electricity, gas, coal and firewood. The Pennsylvania sales tax rate is 6 percent.
Do I charge PA sales tax for out-of-state customers?
Yes. Individuals who purchase taxable products or services from out-of-state locations or buy within Pennsylvania but pay no sales tax to the seller are responsible for paying use tax.
What counts as a nexus?
“Nexus” is the requisite contact between a taxpayer and a state before the state has jurisdiction to tax the taxpayer. Prior to the U.S. Supreme Court’s 2018 decision in South Dakota v. Wayfair, a physical presence in the state was required for sales and use tax nexus.
How do you know if you have nexus?
You’ll always have nexus in your home state where you are located.
The most common causes for nexus in other states are:
- Offices.
- Employees.
- A warehouse.
- An affiliate.
- Stored inventory.
- Economic nexus.
- Temporarily doing physical business in a state for a trade show or craft fair.
What is considered a physical presence or nexus?
Physical presence nexus means a business has a direct connection to a state; that connection allows the state or locality to levy sales tax on purchases from that business and imposes requirements to collect and remit taxes.
Does PA have economic nexus?
The Pennsylvania Department of Revenue (Department) released Corporate Tax Bulletin 2019-04 (Bulletin) on Sept. 30, 2019, which establishes that nexus is created for corporate net income tax (CNIT) for out-of-state corporations when gross receipts sourced to Pennsylvania surpass $500,000.
Does Pennsylvania have convenience of employer rule?
Some states, including Pennsylvania, follow the “Convenience of the Employer Rule.” Generally, PA can only tax a non-resident individual’s compensation if it was earned in PA.
Do remote workers create nexus?
An employee living in a different state would normally not create nexus for the employer, but as a remote worker, that employee attributes presence to the employer through their performance of their employment duties at home.
What is the economic nexus threshold by state?
In most states, the threshold for economic nexus is $100,000 in sales or 200 transactions over 12 months. There are exceptions, though; for example, in Texas and California the threshold is $500,000.
How do states enforce economic nexus?
Commonly, a state will identify remote sellers with nexus by sending out nexus questionnaires. Recipients must complete a series of questions about their activities in the state and return the form within a specific time period. If nexus is confirmed, the state will require the seller to register and remit sales tax.
Does payroll create nexus?
Having even a single out-of-state remote employee can create a tax nexus in certain states. If you have payroll in another state, it most likely creates a nexus.
What is not taxed in PA?
Prescription and non-prescription medicine, groceries, gasoline, and clothing are all tax-exempt. Some services in Pennsylvania are subject to sales tax.
Who qualifies for PA sales tax exemption?
To be exempt from Pennsylvania sales tax: The retail purchase must be made by the university using university funds (e.g., purchasing card, purchase order, university check). A completed Pennsylvania Exemption Certificate (PA REV-1220) must be provided to the vendor at the vendor’s request at the time of purchase.
Who must collect sales tax in PA?
All marketplace facilitators and online sellers who maintain a place of business by having economic presence (i.e. Pennsylvania annual gross sales of greater than $100,000) must now register, collect and remit Pennsylvania sales tax starting July 1, 2019.
How do I sell something without paying taxes?
The rule of thumb is that if you used the items and then sold them for less than you bought them for, then you owe no taxes on the sale. However, if you sold an antique or collectible that had appreciated since you first acquired it, you likely would be on the hook for taxes on the profit.
Is Pennsylvania a origin or destination state for sales tax?
origin-based state
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.