Whether you have thoughts on setting up your business in Pennsylvania or have already set foot there, one thing you must know is about its sales tax charges. Since its inauguration in 1953, Pennsylvania has been levying statewide and local sales taxes at a fixed rate. As a businessman to prosper in PA, you, therefore, need to be well versed with the rates, rules and tax exemption measures of here. This guide will navigate you through the exact ways.
Sales Tax Rate in Pennsylvania
The Pennsylvania state has a fixed 6% statewide sales tax rate on its taxable goods and services. Moreover, the state also applies a 2% local sales tax in Philadelphia and a 1% tax in Allegheny County.
Therefore, the combined sales tax rate in Pennsylvania can range anywhere between 6 to 8%, depending on your area of operation. As a business owner operating overseas with taxable goods, you become a direct agent for the state to collect sales tax on behalf of them.
The Pennsylvania Department of Revenue or DOR monitor the proper filing of Sales and Use Tax here. Upon failing to file the correct numbers of sales tax annually, you will, therefore, be directly under the penalties and interest charges of the state.
If you have a sales tax nexus in Pennsylvania you will need to register your name for a Pennsylvania seller’s permit. You will have to register in DOR by providing information including;
- Your business’s name, location and contact details
- Your Federal EIN
- The monthly sales
- The date of starting your business
- Products you are going to sell
- The monthly taxable sales
Registering here is entirely free and upon getting approval you are all set to run your business. However, there are rules for collecting and filing sales tax here.
Rules For Collecting Sales Tax in PA
Once you get your registrations, you are eligible to collect sales tax by applying its rates. You can remit sales tax and file timely returns with the DOR of Pennsylvania. But for this, you will need to know the correct rates for all the taxable goods you sell.
Your PA sales tax rate will depend on how you sell your goods or services here. Here are the essentials you need to know while collecting sales tax in PA, depending on diverse industries;
-
Hosted Store
In the case of hosted stores like Shopify and Squarespace, you will get an integrated tax determination and collection mechanism. These hosted places offer dashboards where you can easily monitor and place your sales tax collections on each product purchase.
-
Physical Store
In the case of having a brick-and-mortar store in Pennsylvania, you will levy sales tax according to the local tax rules. You can create groups of products with the same tax rates for ease of tax filing.
-
Mobile point of sale
Using this system, you can use the GPS to determine your sale location and, thereafter, the sales tax. Based on the order location, you will be able to enforce the sales tax rate. You can even infuse specific tax rules in the system to levy tax automatically on the type of product.
-
Marketplace
E-commerce marketplaces like Etsy and Amazon offer in-app sales tax compilation facilities at a fee. Here, you can set the sales tax from the dashboard. However, in some places, you may directly have to collect and remit taxes from the market.
What are the Sales Tax Exemptions in Pennsylvania
Certain goods are totally away from the sales tax obligations in the state of Pennsylvania. According to Pennsylvania law prescription drugs, and non-prepared food fall under the tax-free category. Besides, products with food stamps and most of the apparel are also sales tax-free here.
To get a clearer understanding of whether your products or services are taxable or not, go through the PA taxation rules and regulations. Follow the regulations of the Department of Revenue (DOR) to take a comprehensive approach while filing sales tax.
Besides goods, some customers too have exemption facilities from sales tax in PA. The sales tax-free bodies of Pennsylvania are
- Government agencies
- Non-profit organizations
- Traders purchasing goods for reselling
Therefore, the sales tax exemption certificate is quite worthy of saving up your capital from extracting as sales tax. These certificates and other legal documentation came to your rescue upon falling liable to an audit.
Failing to show proper paperwork, the Pennsylvania Department of Revenue can directly charge you liable for uncontrolled sales tax collection. This can result in social humiliation, financial penalties, and legal complications.
Conclusion
To summarize, Pennsylvania state imposes a 6% statewide sales tax upon purchasing its taxable goods and products. However, there are exemption facilities available for specific products. Dealing with those products can make you run your business at a low rate. Whatever it is, timely filing of sales tax is essential to rule out legal, economic, and social harassment. Therefore, take time to compile your taxes in a timely manner from now on.
Also, Read – Moving To a State With No Sales Tax: Pros, Cons, and Hidden Costs
FAQs
1. When to file sales tax in Pennsylvania?
In Pennsylvania, you will have to file the sales taxes either monthly, quarterly or annually. The frequency of your sales tax filing will depend on the amount of sales and revenue you are securing.
2. How to File PA sales taxes?
To file sales tax in PA, you must calculate the amount of sales tax you collected throughout the month or year. Then, you must file your sales tax return and, lastly, make the payment.
4. When is the sales tax due date in Pennsylvania?
Pennsylvania sales tax dues are paid on the 20th day of each month after filing the taxes. If the due date happens to be a holiday or weekend, then the filing occurs on the next working day.
5. How do you collect PA sales tax from outside?
If you are not living in Pennsylvania but have your nexus there, you can charge a 6% use tax. The use tax is for remote sellers who sell their products here from outside.
