Preface: Sales tax is a unique are of the tax code. You should periodically check on sales tax compliance for business revenues with your tax advisor who can assess nexus risks. 

PA Sales Tax 100.1

Sales tax is a State-per-State revenue tax assessed on regulated sales revenue that the legislation subjects to the sales tax within a specific State jurisdiction. Sales tax occurs when there is sales tax nexus. Rigid logic surrounds sales tax nexus, such as origin-based sales tax or destination-based sales tax, and the definition of nexus differs from state to state; most often it is considered to be a businesses physical presence in the state. Physical presence in PA can include such business activity as i) an office in the state, ii) a warehouse location, or storing inventory in the state, iv) an employee in the state, v.) delivery of merchandise in the state, or vi) leasing property in the state. If you are deemed to have sales tax nexus in the state, then you must charge sales tax on all applicable sales in that state.

Sales tax laws in Pennsylvania are unique and specific. If the sales revenues are infrequent and if the seller is not in a business trade, and does not hold reoccurring sales more than three times a year, for no more than seven days in the year, no sales tax needs charged, e.g. if your neighbor holds a yard sales 5 times a year they may be audited for sales tax in Pennsylvania. If your business repairs vehicles, your labor is subject to sales tax; but if your labor is to repair or install an item, i.e. a new roof, and that new roof is part of the real estate, the labor is not subject to sales tax assessment. Food purchased with food stamps is exempt from sales tax, as are dress shoes generally, but lawn care services and self-storage services in Pennsylvania are subject to sales tax. This is only a sample of the sales tax rules for Pennsylvania and you should consult with your tax advisor for specific advice on your sales tax nexus requirements and sales revenues that may be subject to sales tax.

If your business is subject to sales tax, you must register for a permit with the State before collecting the sales tax from customers. It is unlawful to charge sales tax without a compliant permit. The permit is obtained with the filing of the PA-100 in Pennsylvania.

Pennsylvania is an origin-based sales tax so sales tax collection is fairly easy – i.e. the tax is charged on the location at point of sale, e.g. if your business is in Lancaster County, you would charge the 6% Lancaster rate. If you are a New Jersey business registered and domiciled business, and you lease store frontage and sell goods in Lancaster, you would need to register with Pennsylvania and collect and remit sales tax on taxable revenues from your Lancaster location. Sales tax returns are due based upon the frequency assigned at registration of your permit, i.e. monthly, quarterly, and semi-annually for Pennsylvania.

Sales tax is an increasingly complex tax area and differs from state to state. If you plan to conduct sales in a new state tax jurisdiction, or are starting a new business, or selling specifically new inventory items, you should consult with a sales tax expert to verify the compliance of your business revenues with state sales tax rules and regulation.