Amazon PA

Why Amazon Doesn’t Collect Local Sales Tax Rates in PA

by Mark Faggiano

Pennsylvania sales tax
We’ve heard repeatedly from Amazon sellers about how frustrated they are with the way Amazon collects sales tax in Pennsylvania. Some sellers have gone as far to say that Amazon is not collecting sales tax correctly in the Keystone State.

We here at TaxJar interpret Amazon’s reporting differently. Based on taking a hard look at the information on the PA DOR website and discussions we had with a customer who recently spoke with the Pennsylvania DOR, we believe Amazon is handing sales tax correctly in PA.

Furthermore, we believe if you’re an out-of-state seller you should be simply collecting the Pennsylvania state sales tax rate across-the-board to all of your customers in Pennsylvania. (For anyone interested, here is a list of Pennsylvania sales tax rates.)

Why? Because PA is an origin-based sales tax state. That means sales tax should be collected based on where the seller is located, as opposed to destination-based taxation which means you should charge based on where the buyer is located. The origin, in the case of Amazon sellers for example, is Amazon’s warehouse or fulfillment center. None of Amazon’s facilities in PA are located in either Allegheny County or in Philadelphia. That tells me you don’t need to worry about the extra local sales tax that so many sellers find confusing.

Here’s a little info to back-up my point:

  1. The Pennsylvania sales tax is 6%. We all know that.
  2. We also know there are additional local taxes having to do with Allegheny County and Philadelphia. These are the ones that have proven to be so confusing to out-of-state sellers. Here’s exactly how the PA state website describes these local taxes:

    By law, a 1 percent local tax is added to purchases made in Allegheny County, and 2 percent local tax is added to purchases made in Philadelphia.

  3. PA amazon sales taxBut check out what Pennsylvania’s Department of Revenue says on page 5 of their Retailer’s Information Guide, also know as rev-717 (right). It says,

    On taxable sales originating in a city or county that has imposed a local tax, a separate 1 or 2 percent local Sales and Use Tax is imposed.

    This means that a sale has to happen within Allegheny County or Philadelphia for it to include the local sales tax. If you’re an Amazon seller, the sale is happening outside those two locations. That’s why you never see that extra local sales tax collected in your Amazon reporting.

  4. Just to be sure, let’s look at where Amazon’s fulfillment and warehousing operations are located: Carlisle is in Cumberland County, Hazleton is in Luzerne County, Breinigsville is in Lehigh County, and Lewisberry is in York County.
pa e-tides sales tax

Checking these 2 boxes are a thing of the past.

eFiling is Less Confusing
The great news for sellers is this means filing returns is a whole lot easier.

The next time you go to file your PA sales tax return online through e-TIDES, don’t check the boxes next to Allegheny and Philadelphia. You don’t owe that local tax.

Summary
What’s is all mean? If you look at the information provided by PA combined with the way Amazon reports sales in PA, then things should make sense. Sales are not taking place in either Allegheny or Philly, so Amazon doesn’t collect either local tax. That means that filing your return should be less confusing.

Have any thoughts or reactions? Let’s discuss in the comment section below.

  • Cynthia Stine

    Thank you so much! I will sleep better tonight! I posted this on my fan page as well.

    • taxjar

      You’re welcome! We know this one has been painful for a lot of folks.

  • Cynthia Stine

    Any chance you can figure out Arizona for us? It is another case where Amazon does not seem to be collecting properly. The warehouses are in Goodyear and Phoenix. Both are in Maricopa County. My understanding is I’m supposed to pay extra in Maricopa County and Phoenix and Goodyear specifically (city rates). But Amazon isn’t collecting extra for sales to those cities/county. You’ve got my Q1 sales tax report from when I submitted for November. Could you guys check and see if I’m wrong about collection like I was for Pennsylvania?

    • Cynthia Stine

      Oops. I meant “Nevada,” not “November.”

    • taxjar

      Will do.

  • Thomas

    I second Cynthia’s question! Is Amazon collecting correctly in this state? And more importantly, what do we do about remitting taxes collected in the so-called Non-Program Cities in Arizona. There are some 18 cities that administer their own city sales (TPT) and use tax. Do we need to remit those city taxes directly to each of those 18 cities? I sure hope not! They each charge at least $50 annually in license fees (= $900 total!), and almost none of them require the use of paper forms. Please advise!

    • taxjar

      Thanks for posting. We’ll look into AZ.

  • Ok, we’ll look into it!

  • Sir Matthew

    I read the statute in question and as a CPA, I agree with Mark 100%.

  • Chuck

    PA uses destination-based sourcing except “origin sourcing applies to local sales taxes imposed in Philadelphia and Allegheny County unless the property is delivered to a location outside Pennsylvania” 61 pa. Code 32.5, 52 p.s. 12720.504, 16 p.s. 6153-b, Policy statement 60.16. If I am reading this correctly, Amazon sellers would need to apply the sales tax rate at the destination of the sale, including the extra 2% for Philly and the 1% for Allegheny County.

  • taxjar

    Hi Chuck, Check out point #3 above and more info on the PA Department of Revenue website.

    • Chuck

      Thanks taxjar – I did read that incorrectly. The tax would be 6%. I would like to make one minor correction though – PA is destination based and only origin based on sales originating from Allegheny County or Philadelphia (which I agree the Amazon warehouse is NOT located.) I admit however that this is a silly point to push because every single destination in PA (including Allegheny County and Philly) would have the flat state-wide rate. It does leave the door open for some locations to potentially change their rates in the future.

  • simplelifemom

    I sell on etsy. So, I need to file that I am a business within pa, form pa100? And then collect a 6% sales tax from anyone buying in PA. Then at the end of the year send that money in with a reporting form? If I didn’t, would it just be up to the buyer to report use tax? But then pa may come looking for me because I didn’t report my business, correct? Thanks for your help. I’m new to this and trying to wrap my brain around it all….

    • If what you’re selling is taxable, then yes you’re required to register your business and collect sales tax on orders sent to customers in PA. How often you pay what you collected is determined by the state. Not collecting is not really an option. The state says it’s your responsibility as the business owner, not the customers.

  • Patricia

    I live in PA. Recently purchased some clothes online, (not taxed in PA) and had them shipped to Michigan. I was charged sales tax. I was told by the store that I was charged the sales tax because they were shipped to Michigan. But I purchased them in PA, where there is no sales tax. This doesn’t make sense to me. Charging tax based on where the product is being shipped to . Is that correct?

  • Yes. That is the way the tax is supposed to be charged – based on where the item is shipped.

  • Justin Trainor

    This is off topic but you peeked my curiosity with this discussion. Why can you buy a car in Allegheny or Philidelphia county and only pay the local tax for the county you reside in?

  • AC

    No clothing and shoe tax in PA state. Can Amazon charge sales tax on clothing in PA, simply saying that PA revenue deptt bullettin from 2011 does not specify the same and simply ask to collect sales tax?

  • Do you mean when you are buying from Amazon.com? Or when you are selling on Amazon.com? As for buying, we can’t really comment on Amazon.com’s practices. But as a seller, you can set up your tax codes to collect sales tax (or not collect sales tax) on specific items. Here’s a guide to exactly how to set up your sales tax collection through seller central: http://www.fbasalestax.com

    • AC

      Buying. But seller UGG Australia told me that amazon is forcing and making rules for them to charge tax (doesnt matter if sold item is non-taxable or not), if they have physical presence.

      At the same time, same seller doesnt charge tax on same item on their own website.

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  • Wikipedia says there s a warehouse in Pittsburgh which is in Allegheny County.
    1) When registering for sales permit in PA, should we chose ALL counties to be safe or JUST where Az has warehouses for this section 8 question: List each county in Pennsylvania where this establishment is conducting taxable sales activity(ies).
    2) I do not have nexus in Pittsburgh yet, but should it happen, will Amazon then calculate the local sales tax automatically. Thanks!

    • Hi Kali,

      Our sales tax CPA advisors advise that when registering in a state you don’t live in that you use your home address, not the Amazon warehouses. Sometimes states won’t let you do this on the online registration and you need to give them a call. They’ll either override the online form or ask you to file by paper.

      Also, in our understanding, the Pittsburgh facility is a a sort center, not a fulfillment center, so it – thankfully! – doesn’t create nexus. I hope this helps!

  • Neg Sani

    It seems like you are suggesting a seller in say, New Jersey, has an obligation to collect sales tax for ALL states and remit them individually to each state. Am I misunderstanding? Doesn’t Use Tax cover a buyer’s obligation to remit their own tax to their respective state?

    In the case of FBA, Amazon has the business presence in multiple states with its warehouses, not the FBA seller. Greatly complicating matters is that Amazon transfers FBA inventory across state lines to different warehouses as needed. To me, an FBA seller only has an obligation to collect sales tax in the state they have based their business in and only with customers that purchase from that same state. How Amazon manages their business and taxation is not an FBA seller’s worry.

    • Hi Neg,

      Unfortunately, according to Amazon’s terms, an FBA seller is the seller of record, not Amazon. They don’t collect sales tax on your behalf – you choose whether to do that or not. You can read a whole lot more about Amazon and sales tax all over our blog or in our FBA sales tax guide: http://www.fbasalestax.com. I hope this helps!

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