State laws on economic nexus vary and it’s hard to keep up if you’re doing business in multiple states. We’ve done the research for you and here’s all the information you need to know about economic nexus in Pennsylvania.
What is economic nexus in Pennsylvania?
With the recent South Dakota v. Wayfair Supreme Court ruling in favor of South Dakota, states are now free to pursue sales tax from eCommerce businesses who have a “significant presence” in their state.
Significant presence or “nexus” was previously defined as having a physical presence (ex: brick & mortar store, employee or inventory in a fulfillment center like FBA). But with this recent ruling, this definition has been expanded to include economic activity in a state as well. This concept of triggering sales tax responsibility because of your economic activity in a state is now referred to as economic nexus.
Most importantly, what this means is that if you pass a state’s economic threshold for total revenue in that state and/or number of transactions in that state, you’re now legally required to register, collect and remit sales tax for that state.
How are economic nexus laws different from notice and report laws?
“Notice and report” laws are state laws that require online sellers with no physical presence in a state to either collect sales tax or provide a significant amount of reporting to states and their buyers if they meet a certain revenue or transaction threshold. While these sound similar to economic nexus laws, they are slightly different.
The biggest difference between economic nexus laws and notice and report laws are that notice and report laws have been legally in effect starting July 1, 2017, starting with the state of Colorado’s notice and report law. Economic nexus laws were not declared Constitutional until June 21, 2018 when SCOTUS handed down their decision in South Dakota v. Wayfair.
As a seller, this could make a big difference to you if have not been sales tax compliant. For example, as of right now, no states have attempted to apply economic nexus sales tax laws to online sellers retroactively. So if you are just now learning about economic nexus, you do have time to become compliant. But if you have not been compliant in states with notice and report laws, you may want to consult a sales tax expert on how to mitigate any damage since these laws have been in effect for a while at this point.
What’s the threshold for notice & report laws in Pennsylvania?
- State: Pennsylvania
- Threshold: Sales into Pennsylvania that exceeded $100,000 in the previous 12-month period are considered to have economic nexus. The notice and report is still in effect for those with taxable sales greater than $10,000 but less than $100,000 in a calendar year.
- Summary: According to Pennsylvania, sellers who meet the nexus threshold are required to register for a Pennsylvania sales tax permit, collect sales tax on sales that ship into Pennsylvania, and remit sales tax to the state. Those who do not meet the economic threshold should make an election by March 1 of every year and do one of two things:
- Register for a Pennsylvania sales tax permit, collect sales tax on sales that ship into Pennsylvania, and remit sales tax to the state.
- Comply with the state’s rigorous “notice and reporting requirements.
- Full text: You can read more about Pennsylvania’s economic nexus law (and notice and reporting requirements) here.
When did this Pennsylvania law go into effect or is it planned?
7/1/2019 for economic nexus threshold
Here’s a quick checklist of what to do next:
- Decided whether you want to comply with the sales tax collection requirements or the notice and report requirements
- If you opt to collect sales tax, register for a sales tax permit in Pennsylvania (info below)
- Choose a technology like TaxJar to help you manage multi-state compliance. Sign up for a free 30-day trial to see how we can help you save time!
- Connect TaxJar once to all of the places you sell
- Ensure all your eCommerce channels are setup correctly to collect sales tax
- Enroll in AutoFile and tell us how often you need to file
- Relax, you now handled your sales tax exposure. We’ll handle the rest for you.
Can you help me register for a sales tax permit?
Certainly! TaxJar offers these two options:
- Read our do it yourself instructions for every state
- Visit TaxJar.com/register to have one of our expert partners do it for you (~$100 each state not including state’s fees)
Who can handle my Pennsylvania sales tax filings for me?
At TaxJar, we help more than 10,000 sellers manage their sales tax needs every month. We help your business save on submitting your returns with our automated filing service called AutoFile. Read more about how AutoFile can handle all of your returns in as many states as you’d like.
I’ve met this threshold in Pennsylvania, now where can I ask questions?
We recommend speaking with a vetted sales tax expert to answer specific questions for your business.
And finally…I’m close to meeting this threshold for Pennsylvania. Will TaxJar notify me when I reach it?
Coming soon. We are working on a solution to provide notices for TaxJar customers when you meet a specific state’s economic nexus threshold, but it’s not ready just yet.
How you can prepare: make sure we’re able to get in touch with you
- Ensure your TaxJar account email is valid and can receive messages
- Confirm you receive TaxJar’s emails and are avoiding any spam filters
Do you have more questions on how economic nexus works after this ruling? Join the discussion and drop us a comment.