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Pennsylvania considers use tax notification requirement


 Pennsylvania wants retailers to remind consumers that use tax may be owed if sales tax wasn't collected at the point-of-sale.

Update: The Pennsylvania House has passed an amended version of HB 542

In Pennsylvania, as in all states with sales tax, consumers are supposed to pay use tax when retailers don’t collect sales tax. Since in-state retailers are required by law to collect and remit sales tax, consumers generally owe use tax on purchases made from out-of-state retailers selling over the internet, through catalogs, or by phone.

As the Pennsylvania Department of Revenue notes, use tax is “a matter of fairness” — fairness to businesses owned and operated by Pennsylvanians, which are required to collect and remit sales tax, as well as fairness to citizens that benefit from the many services funded by sales and use tax revenue. The department also says that it “will assess the purchaser for not only the tax, but also penalty and interest for late payment” if it receives information about purchases “where use tax is owed but was not paid.”

Use tax notification requirements for noncollecting out-of-state sellers

Yet it is difficult for state departments of revenue to enforce use tax compliance, especially for individuals. A growing number of states are therefore adopting use tax notification requirements, whereby noncollecting out-of-state sellers must notify consumers that they owe use tax if sales tax wasn’t collected by the retailer. States that have adopted or are considering adopting use tax notification requirements include Arkansas, Colorado, Hawaii, Louisiana, and Vermont.

The Pennsylvania Legislature is now considering such a measure. House Bill 542 would require sellers in the Commonwealth as well as out-of-state remote sellers to “conspicuously” provide a notice to Pennsylvania purchasers reading: “Unless you paid Pennsylvania sales tax on this purchase, you may owe a Pennsylvania use tax on this purchase based on the total sales price of the purchase.”

Such notice shall accompany “each separate sale at retail of tangible personal property or services via an Internet website operated by the seller or remote seller.” Consumers are also instructed to report and remit use tax on their Pennsylvania income tax forms.

Retailers that fail to comply with the use tax notification requirement, should it be enacted, would be fined at least $5.00 “for each sale in which the seller or remote seller is in violation.”

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.