The Pennsylvania Legislature modified its state sales and use tax laws for 2018. Some of the changes are already in effect and others will be rolling out in the coming months.
House Bill 542 was passed on October 30, 2017 after several amendments. The biggest change in the law will affect out-of-state vendors.
The law imposes new requirements on marketplace facilitators, referrers and remote vendors that do at least $10,000 worth of annual sales in Pennsylvania. Starting March 1, 2018 they will now have an obligation to collect and remit tax on sales delivered into the state.
Pennsylvania is offering an opt-out to businesses that comply with reporting requirements and register with the Department of Revenue by March 31.
Pennsylvania businesses affected by new sales taxes
HB 542 also establishes new sales taxes on certain industries. Consumer fireworks will have a special 12 percent tax on the purchase price, which includes state and local taxes. This does not include ground or handheld sparkling devices, novelties or toy caps.
Fees are also being imposed on carsharing purchases. Carsharing is defined as "a membership-based service that provides an alternative to personal car ownership." Fees are $0.25 for rentals under two hours, $0.50 for rentals lasting two to three hours, $1.25 for rentals between three and four hours, and $2 for rentals over four hours.
Exemptions from sales taxes
Other businesses are exempt from sales and use tax under HB 542. Kegs used to contain malt or brewed beverages became exempt as of the bill's passage.
The law also specified, as of its passage, that taxable canned software includes support services "except separately invoiced help desk or call center support." Since August 21, 2016, Pennsylvania has taxed the transfer of certain digital products, including apps, books, canned software, games, music and video.
If you are starting a business in these industries in 2018, an accounting professional can explain how taxes do or do not affect the product you sell and adjust pricing accordingly for your customers. As you are working on the business formation, you can discuss legal needs with an experienced business law attorney who understands how to be successful in Pennsylvania enterprise.