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Pennsylvania Sales Tax 2022 for Businesses: A Complete Guide

“The sales tax for businesses in Pennsylvania is 6%”

What Does the Pennsylvania Sales Tax for Businesses Mean?

A sales tax is a tax on the sale of certain products and services that a governing body charges (state or local). Pennsylvania enacted its first general state sales tax in 1953, and the rate has subsequently climbed to 6%. In addition to the state sales tax, Allegheny County has a 1% municipal sales tax and Philadelphia has a 2% local sales tax. Combined sales tax rates in Pennsylvania currently range from 6% to 8%, depending on the location of the sale.

When you offer taxable goods or services, you are acting as an agent for the Commonwealth of Pennsylvania, collecting tax from customers and remitting it to the appropriate tax authorities. The Pennsylvania Department of Revenue is in charge of collecting sales and use taxes (DOR).

Any sales tax received from clients goes to Pennsylvania’s commonwealth, not to you. To comply with state and municipal regulations, you must keep track of the taxes you collect. You may be subject to penalties and interest charges if you fail to do so.

How Much Is The Pennsylvania Sales Tax for Businesses?

Pennsylvania has a 6% state sales tax and permits local governments to levy a local choice sales tax of up to 2%. There are 68 local tax jurisdictions in the state, collecting an average of 0.166 percent in local taxes.

Pennsylvania Sales Tax for Businesses Threshold Limit
6% $100,000 economic sales threshold

Do You Need to Collect Pennsylvania Sales Tax for Your Ecommerce Store?

If you sell tangible goods or certain services, you may need to collect and remit sales tax to the Pennsylvania Department of Revenue. The department collects the sales tax at the moment of sale and varies by area, county, and city in which you are working.

Food, pharmaceuticals, clothing, and gas are not taxed in most states because they are necessities. Therefore, if you are selling any of the mentioned items, then you need to collect Pennsylvania sales tax in 2022. Check out the below section for details:

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What Types of Goods & Services Are Taxable Under Pennsylvania Sales Tax?

Goods

Physical items, such as furniture, home appliances, and automobiles, are all subject to sales tax in Pennsylvania. Medications, both prescription and non-prescription, groceries, gasoline, and apparel are all tax-free. The below table shows what types of goods are taxable and what types of goods are exempt from sales tax in Pennsylvania.

Types of Goods Taxability Status
Clothing Exempt
Groceries Exempt
Prepared Food 6%
Prescription Drugs Exempt
OTC Drugs Exempt

Services

In Pennsylvania, there are various services that are subject to sales tax. As a result, the following services are subject to Pennsylvania sales tax:

  • Printing or imprinting of another’s tangible personal property.
  • Vehicle washing, cleaning, waxing, polishing, or lubrication.
  • Inspection of motor vehicles in accordance with the law.
  • Other than clothing and shoes, repairing, altering, mending, pressing, fitting, dyeing, laundering, dry-cleaning, or cleaning tangible personal property.
  • Applying or installing tangible personal property to other tangible personal property as a repair or replacement part.
  • Services related to lobbying.
  • Adjustment, collection, and credit reporting services are all available.
  • Services such as secretarial or editing.
  • Services such as disinfection and pest control are available.
  • Cleaning and maintenance services for buildings.
  • Services by an employment agency or by an assistance supply company.
  • Lawn maintenance services are available.
  • Services for self-storage.
  • Telecommunications services for mobile phones.
  • Premium cable and video programming services, as well as video streaming.
  • Electric, steam, and gas services for non-residential buildings.

However, it is clear what types of goods and services are taxable. So if you are dealing in any of these goods and services, you need to pay the sales tax in Pennsylvania. Now, let’s look at the tax collection and tax filing procedure for Pennsylvania sales tax for businesses.

Read More:  Washington Sales Tax For Businesses: A Complete Guide

Tax Collection

You must apply the correct rate to all taxable sales, remit sales tax, file timely returns with the Pennsylvania Department of Revenue, and keep great records once you’ve successfully registered to collect Pennsylvania sales tax. Here’s what you need to know to organize and be on top of things. How you sell goods influences the tax collecting procedure for Pennsylvania sales tax.

  • Store with a physical location

Do you have a physical location? Users can select the sales tax rate linked with the store location in brick-and-mortar point-of-sale solutions. As a result, we can develop new tax groups to include product-specific tax rules.

  • A hosted store

Online store platforms like Shopify and Squarespace integrate sales tax rate determination and collection. Hosted storefronts provide sellers with a dashboard where they may handle sales tax collection in Pennsylvania.

  • Marketplace

For a price, marketplaces such as Amazon and Etsy offer integrated sales tax rate determination and collection. You can set things up from your seller dashboard, just as with hosted stores, and let your marketplace provider handle the majority of the heavy lifting. In Pennsylvania, however, many marketplaces must collect and remit sales tax on behalf of their marketplace merchants.

  • Point of sale on the go

Square and other mobile point-of-sale systems use GPS to establish sale locations. After that, the relevant tax rate is calculated and applied to the order. It is possible to create specific tax rules within the system to enable specific product taxes.

Tax Filing

You must remit sales tax to the Pennsylvania Department of Revenue by a specific date after collecting it. The Department of the Interior will subsequently send it to the appropriate state and local entities.

The process of filing a Pennsylvania sales tax return consists of submitting the appropriate sales data (filing a return) and remitting the collected tax dollars (if any) to the Department of Revenue. Businesses must identify total sales in the state, the amount of sales tax collected, and the location of each transaction as part of the filing process.

You can file a Pennsylvania sales tax return in two ways:

  • Online filing
  • File via telephone

How often do you need to file the Pennsylvania sales tax?

You will get the filling frequency from the Pennsylvania Department of Revenue. This is usually defined by the amount or volume of your company’s sales. Larger enterprises are typically required to file more regularly by state governments.

What If You Fail To File The Tax Return Before The Due Date?

Due Date

To comply with DOR rules, you need to complete sales tax filings by the 20th day of the month following the filing period. During their first year in existence, all new enterprises need to file quarterly returns. Businesses who remit $100,000 or more for the previous year’s third calendar quarter must also remit 50% of the tax liability due for the same month the previous year.

Late Filing

Late filing of a Pennsylvania sales tax return can result in a penalty as well as interest on any unpaid tax.

The DOR may give you an extension if you missed a Pennsylvania sales tax filing deadline due to circumstances beyond your control (e.g., weather, accident). You may, however, need to present evidence to back up your allegation.

Penalties & Interest

Hopefully, you won’t have to worry about this section because you’re already filing and remitting Pennsylvania sales tax correctly and on time. However, mistakes do occur in the actual world.

If you miss a deadline for filing your sales tax return, remember that “better late than never” and file your return as soon as possible. Failure to submit returns and remit collected tax on time may result in penalties and interest charges; the longer you delay filing, the higher the penalty and interest will be.

If you’re thinking about buying a firm, it’s a good idea to contact the DOR and ask about the current status of the deal. You’ll be responsible for any outstanding Pennsylvania sales and use tax liability once you’ve purchased the business.

Need Assistance With Pennsylvania Sales Tax?

Freecashflow.io is here to assist internet entrepreneurs with tax and accounting concerns. Among the multibillion-dollar corporations for whom our team has worked are Warner Brothers, EY, and Paramount Pictures. For tax and accounting assistance, you can rely on us. We are available to assist you right away.

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