Sales Tax
A business is required to collect Pennsylvania sales tax when:
- It maintains inventory in Pennsylvania and makes direct sales to Pennsylvania customers through a website, phone orders or any other means.
- It sells tangible personal property through a “marketplace facilitator” and the marketplace facilitator does not collect or remit sales tax.
In either case, the business must register for a Sales, Use and Hotel Occupancy Tax License by completing the Pennsylvania Online Business Tax registration process via myPATH at mypath.pa.gov.
For more information on sales tax, see Online Retailers Selling Goods and Services to Pennsylvania Customers.
Personal Income Tax
Only individuals, including sole-proprietors, estates and trusts, are subject to personal income tax (PIT). For PIT purposes, a single member limited liability company (SMLLC) owned by an individual or a limited liability company jointly owned by husband and wife is a disregarded entity. The income of the limited liability company is reported on PA-40 Schedule C, Profit or Loss from Business or Profession, or PA-40 Schedule E, Rent and Royalty Income (Loss), of the member’s PA-40, Pennsylvania Income Tax Return.
In addition, members/owners of a pass-through entity must file a PA-40 to report their share of income and losses based on the RK-1 or NRK-1 received from the pass-through entity. See Personal Income Tax Forms to find the PA-40 and applicable schedules.
Partnerships, Limited Liability Companies, S-Corporations and Corporations are not subject to personal income tax. However, if using 3-factor apportionment to allocate business income, the inventory located in Pennsylvania must be included in the property factor for income allocation purposes.
Corporate Net Income Tax
Domestic and foreign corporations are subject to the corporate net income tax for the privilege of doing business; carrying on activities; having capital or property employed or used in Pennsylvania; or owning property in Pennsylvania. A corporation that maintains inventory in Pennsylvania is subject to corporate net income tax.
This tax is levied at the rate of 9.99 percent on federal taxable income, without the federal net operating loss deduction and special deductions, and modified by certain additions and subtractions.
For more information, see Corporation Tax Bulletin 2019-04 – Nexus for Corporate Net Income Tax Purposes [PDF], and Corporation Tax Bulletin 2004-01 – Application of P.L. 86-272 and de minimis standards [PDF].
Other Taxes
Please keep in mind that other Pennsylvania taxes such as cigarette and/or fuels tax may apply.
Voluntary Compliance Program For Retailers With Inventory in Pennsylvania
The Department of Revenue is offering a Voluntary Compliance Program for any business that has inventory or stores property in Pennsylvania but is not registered to collect and pay Pennsylvania taxes. This program offers a limited lookback period and penalty relief when the business becomes compliant.
Taxpayers that choose to participate in this program will not be liable for taxes owed prior to January 1, 2019. Taxpayers who participate in the program also will be given penalty relief for any non-compliance for past due tax returns that were not filed and taxes that were not paid.
To participate or determine if you have nexus in Pennsylvania, complete the online Physical Presence Business Activity Questionnaire (BAQ) or, print and complete the paper version [PDF] and submit the questionnaire via email to ra-rv-brtm-discovery@pa.gov or fax to 717-425-2952.
The department will complete a review of your business once the Physical Presence BAQ is received. You then will be contacted to discuss how to become compliant. Once the business is registered, has filed any tax returns that were due, and remitted payment of taxes, all penalties from non-compliance will be abated. This is conditional on the business continuing to maintain tax compliance with the department.
Questions should be directed to the Department of Revenue, Discovery Division. Call 717-772-2960, Option 1 (Nexus) or email your question to ra-rv-brtm-discovery@pa.gov.