Pennsylvania recently codified the state’s corporate income tax economic nexus threshold, making corporations with no physical presence in Pennsylvania responsible for corporate income tax if they have sales of $500,000 or more per year sourced to Pennsylvania for tax years beginning after December 31, 2022. The legislation also includes a non-exhaustive list of other nexus
Pennsylvania
Legal Alert: Stricken by the Pennsylvania Supreme Court, the NOL deduction nevertheless is allowed
In General Motors Corporation v. Commonwealth, the Pennsylvania Supreme Court held that the state’s prior flat $2 million cap on a corporate taxpayer’s net operating loss (NOL) deduction violated the state constitution’s Uniformity Clause and, therefore, the state’s NOL deduction statute must be stricken in its entirety.1 Nevertheless, the Court determined that the…
Pennsylvania Commonwealth Court Upholds DOR’s “benefits-received” Standard for Sourcing of Service Receipts
The Pennsylvania Commonwealth Court issued its much-anticipated decision on July 24 in Synthes USA HQ Inc. v. Commonwealth of Pennsylvania.
- The Court upheld the Department of Revenue’s position that under the State’s pre-2014 costs-of-performance (COP) statute, service providers were required to apportion their receipts based on where customers received the benefit of the services, rather
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Pennsylvania Supreme Court Throws a Wild Card for Worker Classification
On April 22, 2020, the Pennsylvania Supreme Court issued an opinion that could have a material impact on the unemployment insurance obligations of businesses that engage independent contractors in the state. In A Special Touch v. Pennsylvania Dep’t of Labor & Indust., involving a nail salon, the state supreme court construed the second prong of…
Pennsylvania Attorney General Criticized For Not Representing Department of Revenue
Oral argument was held June 11 in the highly unusual case of Synthes USA HQ Inc. v. Commonwealth of Pennsylvania.
- The Attorney General faced skeptical questioning from the Commonwealth Court, with one judge suggesting that the Attorney General was “defeating,” rather than representing, the interests of the Department of Revenue.
- Synthes involves the question of
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Commonwealth Court of Pennsylvania Holds that Receipts Sufficiently Describe Coupon’s Application to Taxable Items
The Commonwealth Court of Pennsylvania reversed the Board of Finance and Revenue’s (Board) order, in part, and determined that when a retailer’s receipt separately states the coupon presented and sufficiently identifies the item to which the coupon applies, a taxpayer is only liable for sales tax based on the price as reduced by the coupon…
Regulation De-construction: Pennsylvania Court Holds Statutory Amendment Superseded Regulation
On October 16, 2019, the Pennsylvania Commonwealth Court held that a bank was required to pay sales tax on its purchases of computer hardware, canned computer software, and related services because a statutory amendment superseded the bank’s relied-upon exemption regulation. The court held that the bank complied with the regulation, which exempted from sales tax…
Pennsylvania Freight Broker May Deduct Passed-Through Delivery Fees from Local Gross Receipts
The court held that the taxpayer, a freight broker, could deduct freight and delivery charges, which it received from its customers and remitted to third-party delivery providers, from gross receipts before calculating a city’s business privilege tax. A local regulation provides an exemption for freight delivery or transportation charges “paid by the seller for the…
Pennsylvania Rules Satellite Television Provider Must Source Receipts, Property Based on Subscriber Location
The Pennsylvania Board of Finance and Revenue recently published a decision regarding the sourcing of receipts and property of a satellite television provider. The Board held that the taxpayer’s receipts from sales of satellite television services were properly included in the taxpayer’s Pennsylvania numerator based on the location of subscribers in the state. The Board…
Pennsylvania Court Finds Wholesaler of Electricity Subject to Gross Receipts Tax
The Commonwealth Court of Pennsylvania affirmed a decision by the Board of Finance and Revenue that found American Electric Power Service Corporation (“Taxpayer”) was subject to Pennsylvania’s gross receipts tax as a wholesale seller of electricity. The Taxpayer presented two substantive arguments, both of which the Court found unconvincing. Taxpayer asserted that it was not…