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In response to the U.S. Supreme Court's June 21, 2018 ruling in South Dakota v. Wayfair,¹ the Pennsylvania Department of Revenue (Department) issued Sales and Use Tax Bulletin 2019-01 (revised January 11, 2019), to "clarify when marketplace and remote sellers, marketplace facilitators, and all other vendors maintain a place of business in the Commonwealth." The Department announced that, effective July 1, 2019, the state's economic nexus provisions will apply only to those persons who, in the previous 12 months, made more than $100,000 of gross sales² into the Commonwealth.

Marketplace facilitators with no physical presence in Pennsylvania must include both facilitated and direct sales in determining whether they have exceeded the economic nexus threshold. Marketplace sellers that lack any physical presence in Pennsylvania must include both their direct sales and those sales made through a marketplace facilitator that does not collect sales tax on its behalf in determining whether they have exceeded the economic nexus threshold.

The Department noted that it will certify service providers that will offer software and perform services that, when relied upon by a vendor to determine whether or not the sale of a particular product or provision of a particular service is subject to sales tax, will relieve the vendor of liability upon audit. The certified service providers also will aid in the registration, collection, reporting and remittance of sales tax.

Marketplace facilitators that establish economic nexus in Pennsylvania will be required to collect the sales tax on all sales into the Commonwealth, even if the sale is on behalf of a marketplace seller that does not individually have nexus.

Implications

The Department noted that these new provisions are not intended, and do not replace or provide an alternative, to the provisions of Act 43 (the 2017 Marketplace Sales Act), which requires remote sellers with $10,000 in Pennsylvania-sourced sales in the immediately preceding 12-month period to elect either to collect and remit sales and use tax or comply with notice and reporting requirements. Marketplace facilitators and remote sellers that are subject to the election under the 2017 Marketplace Sales Act, but that will have economic nexus under the new provisions, will no longer be allowed to make the election and, instead, must register and collect.

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ENDNOTES

¹ South Dakota V. Wayfair, Inc., Dkt. No. 17-494 (U.S. S. Ct. June 21, 2018).

² In the original version of Bulletin 2019-01 published January 8, 2019, the threshold was $100,000 of taxable sales. In the revised version of Bulletin 2019-01 published January 11, 2019, this has been changed to $100,000 of gross sales.