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:
- The Pennsylvania sales tax is 6%. We all know that.
- 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.
- But 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.
- 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.
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.
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.