Client Alert

Pennsylvania: Economic Nexus Thresholds Established Via Tax Bulletin

14 Jan 2019

In Sales and Use Tax Bulletin 2019-01, the Pennsylvania Department of Revenue asserts that remote sellers with economic nexus must collect and remit Pennsylvania sales tax. The Bulletin is effective July 1, 2019.

Pennsylvania’s statutes provide that persons maintaining a place of business in the Commonwealth selling tangible personal property or rendering taxable services must collect and remit sales tax from the purchasers. The statutory definition of “maintaining a place of business in this Commonwealth” includes “[h]aving any contact within this Commonwealth which would allow the Commonwealth to require a person to collect and remit tax under the Constitution of the United States.”

The Bulletin states that, upon “careful review” of the U.S. Supreme Court’s decision in Wayfair, an economic nexus, such as that prescribed by South Dakota, is sufficient under the U.S. Constitution. The Bulletin states that the U.S. Supreme Court in Wayfair addressed the specific portions of South Dakota’s Act that it found “to satisfactorily prevent discrimination,” including: (1) the safe harbor for those vendors who have limited business within South Dakota (less than $100,000 of sales or 200 transactions per year); (2) no retroactive application; and (3) the uniform rules and administration of the tax afforded by the Streamlined Sales and Use Tax Agreement and corresponding software.

Seemingly attempting to follow these three elements of South Dakota’s Act, the Bulletin: (1) provides an economic nexus threshold; (2) is not retroactive; and (3) states that the Department will certify service providers that will offer software and perform services that when relied upon by a vendor to determine whether or not the sale of a particular product or provision of a particular service is subject to sales tax, will relieve the vendor of liability upon audit.

The Economic Nexus Threshold

As initially released on January 8, 2019, the Bulletin asserted that economic nexus applied to remote sellers with more than $100,000 of taxable sales into the Commonwealth in the previous 12 months. However, on January 11, 2019, the Bulletin was revised so that economic nexus applies to remote sellers with more than $100,000 of gross sales into the Commonwealth in the previous 12 months.

Coordination with the Marketplace Sales Act

On October 30, 2017, the Pennsylvania legislature enacted Act 43, which included a provision requiring certain remote sellers, marketplace facilitators and referrers with aggregate sales at retail of tangible personal property subject to sales and use tax worth at least $10,000 to elect to either collect and remit the sales and use tax or comply with the Commonwealth’s notice and reporting requirements.

The Bulletin states that the Act 43 election is no longer available for those marketplace facilitators and remote sellers that now have an economic nexus in Pennsylvania. Pursuant to the Bulletin, marketplace facilitators and sellers that made over $100,000 in Pennsylvania sales now will be required to register for a license and collect, report and remit sales tax on sales into the Commonwealth.


The Bulletin may be subject to challenge on several fronts. For example, sellers may challenge the establishment of economic nexus thresholds through a Department Bulletin, rather than through a legislative or regulatory process.



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