EDWARD C. SARNO, CPA/ABV, CBA 1240 West Chester Pike, Falcon Building, Suite 210, West Chester, PA 19382 Voice # 610-429-3322 ♦ Fax 610-429-3340 ♦ e mail # email@example.com MEMORANDUM : DATED: Friday, August 04, 2006 RE: PENNSYLVANIA SALES and USE TAX - 2 pages The Commonwealth of PA imposes Sales and Use Tax on certain services and on certain purchases of personal property. If you or your business buys items that are subject to Sales Tax, and the seller does not charge and collect the Sales Tax, you are personally liable for paying the tax to PA – and it now becomes a Use Tax. The tax is due on the full purchase price. Most items purchased from out- of-state vendors are subject to Use Tax. Use tax is also due when an in-state vendor fails to charge Sales Tax on a taxable item. The tax rate for Sales and Use Tax is six percent. An additional one percent is due in Allegheny and Philadelphia counties. Businesses that incur Use Tax on a regular basis need to register for a Use Tax account number. A taxable purchase made via toll-free phone numbers, mail order catalogues, and over the Internet are subject to Use Tax is the vendor does not charge the Sales Tax. Below is a list provided by the PA Department of Revenue of examples of taxable personal property purchases and services that are subject to the tax: Computers: Desktops Laptops Printers Canned software Maintenance agreements Peripherals Office equipment: Copiers Cabinets Telephones Printed materials: Desk calendars Posters Business cards Furniture: Desks Chairs TVs Supplies: Check stock Folders Envelopes Paper Mops Cleansers Services: Building cleaning and maintenance Lawn care Pest control Secretarial Editing services Premium cable services Employment agencies Collection services Self storage Credit reporting Like the Sales Tax rules, items and services that are used in an exempt business activity are not subject to the tax. Charitable, religious, volunteer and nonprofit organizations are exempt from Sales and Use Tax. A Sales Tax license can be revoked if the business is not current with its other taxes. In the first year of business, remit your sales taxes to PA on a quarterly basis. New businesses must register with PA to obtain Sales Tax and other business account numbers. After that, PA will advise as to how often to pay Sales and Use Tax and you will be on a monthly, quarterly or semi-annual filing basis. If the purchase or the service is subject to Sales Tax, then the associated labor is also subject to Sales Tax, such as labor on a vehicle repair. Labor charges to repair or install items that become part of real estate are not taxable. A complete list of the products and services that are subject to Sales Tax is beyond the scope of this memo. Please contact us at 877-ed-sarno if you have any questions.
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