The Department of Revenue has started contacting remote sellers that have not registered with the Department to collect and remit Pennsylvania sales tax. If your business is contacted, it is important to carefully consider the particular facts of your business before responding.
In 2011, the Department issued a Tax Bulletin to "remind" remote sellers that their activities could create sales tax nexus with Pennsylvania. The bulletin was not prompted by any change in Pennsylvania law.1 The Department set September 1, 2012 as the deadline for remote sellers to register with the Department and begin collecting and remitting Pennsylvania sales tax.2 In the first four months after that deadline, remote sellers collected and remitted more than $23 million of Pennsylvania sales tax.
Now, the Department is contacting remote sellers who haven’t registered. The Department has said that "noncompliant" remote sellers "will face a variety of escalating enforcement options over time, including assessment, audit, lien or referral to a collection agency of the Office of Attorney General." According to the Department, it is even considering auditing and assessing "noncompliant" remote sellers for periods prior to the September 2012 deadline.3 However, just because the Department is aggressively enforcing its policy doesn’t mean its policy is consistent with the law in all cases.
Takeaway: Remote sellers that do not own property or engage in nexus-creating activities in Pennsylvania—either directly, or through a subsidiary, representative or agent—still have no obligation to collect and remit Pennsylvania sales tax under existing Pennsylvania law, which has not been superseded by the Department’s Tax Bulletin. These sellers should not concede nexus when contacted by the Department.
Meanwhile, sales tax click-through and affiliate nexus legislation was recently re-introduced in the Pennsylvania General Assembly.4 This same legislation was introduced last year and did not gain a lot of support. However, as more and more states adopt similar legislation, there is a possibility that this legislation will attract more support in Pennsylvania in the current legislative session.5 We are tracking this legislation and will provide updates if it appears to be gaining momentum.