61 Pa. Code § 9.2 - Sales and use tax changes

The act of August 4, 1991 (P. L. 97, No. 22) (act) contains numerous changes to Sales and Use Tax law found in Article II of the TRC (72 P. S. §§ 7201-7282). The changes are effective October 1, 1991. These changes also apply to Philadelphia Local Sales Tax. The major changes are:

(1) Services.

(i) The following services are taxable:

(A) Lobbying services.

(B) Adjustment services, collection services or credit reporting services.

(C) Secretarial or editing services.

(D) Disinfecting or pest control services, building maintenance or cleaning services.

(E) Employment agency services, help supply services or other personnel supply services.

(F) Computer programming or other computer related services, including the provision of:

(I) Computer integrated systems design.

(II) Computer processing.

(III) Data preparation or processing services.

(IV) Information retrievable services or computer facilities management services.

(G) Lawn care services.

(H) Storage services.

(ii) Vendors of the services listed in subparagraph (i) are required to collect tax on the purchase price charged for the services. The users of the services are required to pay use tax upon the use of the services if the sales tax had not been paid to the vendor. A person rendering these services in this Commonwealth is considered to "maintain a place of business" in this Commonwealth and shall collect the tax and remit it directly to the Department.

(2) Pay television. Pay television except for "minimum pay television" is taxable. This includes anything charged to a customer for a service other than minimum pay television service. For example, if a cable television customer purchases basic service and in addition purchases a "pay" channel, tax is owed on the price charged for the "pay" channel. Installation and repair service for pay television with the exception of minimum pay television also is subject to tax.

(3) Telephone service. Sales tax is imposed on interstate and intrastate telephone services with the exception of residential subscriber line charges and basic local residential telephone service. Interstate service is taxable if the interstate call either originates or terminates in this Commonwealth and is billed to a service address in this Commonwealth.

(4) Household paper goods and soaps. Household supplies purchased for residential consumption, including soaps, detergents, cleaning and polishing preparations, paper goods, household wrapping supplies and items of a similar nature are taxable with the exception of disposable diapers, incontinence products, toilet paper, sanitary napkins, tampons or similar items used for feminine hygiene.

(5) Food sales. The list of facilities which are considered eating places has been expanded to include facilities which were not specifically listed previously. Purchases of food or beverages from these facilities are subject to tax. For example, the purchase of a pizza from a pizzeria now is subject to tax regardless of whether the pizza is picked up at the pizzeria or delivered to the purchaser.

(6) Tangible personal property. To make the TRC internally consistent "tangible" was added to the clause "personal property." The most important aspect of this change is that only those producing "tangible personal property" are eligible for the manufacturing exemption.

(7) Remanufacturing. The act provides that the term "manufacturing" includes the remanufacturing for wholesale distribution by a remanufacturer of motor vehicle parts from used parts acquired in bulk by the remanufacturer using an assembly line process.

(8) Baking and food processing. The definition of manufacturing has been amended by excluding the cooking, freezing or baking of food products. The definition of "processing" has been amended to include the baking of food products when the products are packaged in sealed containers for wholesale distribution. Therefore, those engaged in the preparation of food for retail sales are not eligible for the manufacturing or processing exemption. Only those engaged in the business of processing food and packaging the food in sealed containers for wholesale distribution are eligible for the processing exemption. For example, a pizzeria engaged in the retail sale of pizzas and other similar baked items for retail sale is no longer granted the manufacturing or processing exemption and is required to pay tax upon property and services used in the operation.

(9) Ship supplies. The exemption for the purchase of property or services to be used in ship cleaning and maintenance, or ships' fuels, supplies, equipment or stores now only applies to vessels "designed for commercial use of registered tonnage of 50 tons or more."

(10) Refunds. The payment of sales tax refunds issued in conjunction with a contract with a charitable, volunteer firemens, nonprofit educational, religious or governmental organization shall be paid to that organization.

(11) Licenses. An applicant for a sales tax license shall have filed all State tax reports and paid all State taxes not subject to an appeal or an authorized deferred payment plan. A licensee will be required to file for a renewal of the sales tax license on or before January 31, 1992. Thereafter, a sales tax license shall be valid for not more than 5 years, and the Department will establish a staggered renewal system. If a licensee fails to file State tax reports or pay any State taxes, the Department may revoke the licensee's sales tax license. The fine for making taxable sales without a license has been increased from not more than $300 to not more than $1,000.

(12) Crimes. The wilfill failure to remit returns timely or timely pay tax is a criminal offense.

Notes

61 Pa. Code § 9.2

The provisions of this § 9.2 adopted September 20, 1991, effective 9/21/1991, 21 Pa.B. 4288.