When and How Do I Get a Seller/Reseller Permit in Pennsylvania?
- Sales Tax
- March 19, 2016 | Stephanie Faris
The Internet has complicated selling products, especially when it comes to collecting sales tax. When a business sells a product and ships it to an out-of-state customer, that business is responsible for determining whether or not to add that state’s sales tax onto those purchases.
Pennsylvania has a base sales tax rate of 6 percent, with an additional 2 percent local tax added in Philadelphia. Allegheny County residents have a 1 percent local tax added to their purchases. Many out-of-state businesses can sell in the state without collecting any sales tax at all. However, businesses that have a physical presence in the state (called nexus) or visit the state to sell at events will be required to get a seller or reseller permit to collect sales tax on all items they sell to Pennsylvania customers.
Any out-of-state business defined as having a physical presence, known as nexus, will need to register for a seller permit so that they can charge tax on every sale. In Pennsylvania, nexus means having an office, distribution house, sales house, warehouse, service enterprise, or other place of business. Nexus applies whether these locations are permanent or temporary and apply whether the business directly operates there or has a subsidiary operating on its behalf there. If a business solicits orders in the state using a representative or by placing newspaper, radio, or television ads, that business will be seen as having nexus.
Trade Shows and Conferences
Any business that sells at a trade show, conference, fair, or other event in Pennsylvania is required to collect sales tax. If a business plans to only sell items in the state once or on an infrequent basis, the Department of Revenue offers a transient vendor’s license that is renewable every year. Businesses that plan regular or long-term sales in the state should apply for a sales tax license, which is good for five years. State law requires businesses to display their permits prominently at all events. Failure to pay sales tax on sales in Pennsylvania can result in fines of between $300 and $1,500 for each violation, as well as imprisonment of up to 30 days.
Sellers of exempt items won’t have to worry about collecting sales tax in the state. Clothing purchases are tax-exempt, but there are exceptions. Qualifying businesses will need to collect tax on any formal wear, bathing suits, fur coats, jewelry, purses, or wallets they sell to Pennsylvania residents. Candy and gum, unprepared food, and most medicines are exempt, but there are exceptions. Contact lens rewetting solution is tax-exempt in Pennsylvania, for example, but contact lens cleaning solution requires sales tax. Textbooks are only tax-exempt when sold by schools, colleges, or universities, as defined by the state’s Department of Education.
Whether out-of-state businesses are selling online or appearing locally in Pennsylvania, it’s important to know when sales tax is required to avoid paying penalties and possibly serving jail time. If a business has nexus or is selling locally, that business likely will be required to pay sales tax unless the items being sold are tax-exempt.