SALT Report 2296 – The Pennsylvania House of Representatives introduced sales and use tax legislation that includes click-through and affiliate nexus provisions and notice requirements for remote sellers.
The definition of “maintaining a place of business in this Commonwealth” will include a person that solicits orders through an independent contractor or representative if that person enters into an agreement with a Pennsylvania resident to refer potential customers, whether by a website link or otherwise, to the person, if the person’s cumulative gross receipts are greater than $10,000 during the preceding 12 months. This presumption can be rebutted by providing evidence that the resident with whom the person has an agreement did not engage in any activity in the state that was significantly associated with the person’s ability to establish or maintain a market in the state during those 12 months.
A person that is part of a group of persons conducting an integrated business enterprise would be deemed to be “maintaining a place of business in this Commonwealth” if any member of the group, either through an agent or representative, maintains or uses an office, distribution house, sales house, warehouse, service enterprise, or other place of business in Pennsylvania as part of the integrated enterprise. Or, if any member of the group, directly or through an agent or representative, regularly or substantially solicits orders in the state in connection with the sales by the integrated business enterprise for taxable use.
Additionally, a person would be presumed to be “maintaining a place of business in this Commonwealth” if the person and the affiliated person has nexus and:
- Sell a similar line of products under a similar business name
- Uses in-state employees or facilities to advertise, promote or facilitate sales by the person
- Maintains an office, distribution facility, warehouse, storage place, or similar place of business to facilitate the delivery of products or services sold by the person
- Use trademarks, service marks, or trade names in Pennsylvania that are the same or substantially similar, or
- Delivers, installs, assembles, or performs maintenance services for the person’s purchasers in the state
Affiliated person is defined as a person that is a member of the same controlled group of corporations as the retailer or any entity that bears the same ownership relationship to the retailer as a corporation that is a member of the same controlled group of corporations.
Any seller that makes sales in the state but is not required to collect tax would be required to notify customers on its website, catalog, telemarketing script, and on receipts or invoices provided to customers, that tax must be paid by the purchaser unless the sale is exempt. These sellers would also be required to send an annual notice that includes the dates and amounts of each purchase to all Pennsylvania customers that made more than $500 in purchases in the previous calendar year.
For Further Information