Sales and Use Tax in Pennsylvania

Pennsylvania first introduced its sales and use tax in 1953, and it has since risen to the current 6%. Apart from the state tax, local governments can also charge a sales tax. Currently, Allegheny County charges a 1% sales tax, while Philadelphia County’s sales tax is at 2%.

Who Should Collect the Sales Tax in Pennsylvania?

The Pennsylvania Department of Revenue (DOR) administers the sales tax, while the sellers and consumers act as its agents. Sellers are required to pay a sales tax when they sell goods to Pennsylvania residents. All sellers collecting a sales tax must register with the DOR by filling and submitting form PA-100. On their part, consumers are required to pay a use tax if they buy taxable goods and services out-of-state. Failure to file and remit sales or use tax can lead to the DOR fining you for late filing and remitting of taxes. The offender may also be required to pay interest on the tax due.

Pennsylvania Sales and Use Tax

The total sales and use tax in Pennsylvania range from 6.0% to 8.0% due to the varying local sales taxes. The local sales taxes range from 0.0% to 8.0%, with the average local sales tax being 0.122%. That makes the state’s sales tax average to be around 6.122% for the 69 counties.

When to Charge Sales Tax in Pennsylvania

You must charge a sales tax if you have a sales tax nexus in Pennsylvania. That means you have to pay a sales tax if your business has one or more economic connections with the state. Such connections include a physical presence, business affiliate, click-through sale agreements, or use of third-party warehouses located in the state.

Sales Tax Exemptions

Goods Exempted from Sales Tax in Pennsylvania

Some goods are exempted from sales and use tax. Such goods include medical supplies, some clothes, and non-prepared food items. Foods bought using food stamps are also tax exempted.

Pennsylvania Tax-Exempt Customers

Pennsylvania law exempts government agencies, merchants buying goods for resale, and non-profit organizations from paying sales taxes. However, sellers must collect and validate tax exemption or resale certificates from exempted buyers to validate the exempted transactions. Sellers may be held responsible for all uncollected sales taxes or exempt transactions that they cannot validate. That can lead to late fees, fines, and interest charges on the taxes due, which can result in high-unexpected bills.

Sales Tax Filing and Frequency

All new businesses are required to file and pay their sales tax returns quarterly. Sellers and buyers must file their sales or use tax by the 20th of the month following the end of the quarter whose tax is due. If the 20th falls on a holiday or weekend, then the next business day applies. And if a business remits at least $100,000 during the third calendar quarter of the preceding year, then they are required to pay 50% of the tax due for that same month of the preceding year. Moreover, for payments of $1,000 or more, sellers must file their taxes online. Sellers can do it manually on the DOR website, free of charge.

Other useful articles: