PRINTER'S NO. 1174
No. 892 Session of 2005
INTRODUCED BY PICCOLA, ORIE, WENGER, BRIGHTBILL, PIPPY AND
RAFFERTY, SEPTEMBER 29, 2005
REFERRED TO FINANCE, SEPTEMBER 29, 2005
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," further providing for the imposition and rate of
11 the sales and use tax.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 201(k)(4), (m) and (o)(4) and (8) of the
15 act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
16 of 1971, amended May 7, 1997 (P.L.85, No.7), April 23, 1998
17 (P.L.239, No.45) and May 24, 2000 (P.L.106, No.23), are amended
18 and subsection (k) is amended by adding a clause to read:
19 Section 201. Definitions.--The following words, terms and
20 phrases when used in this Article II shall have the meaning
21 ascribed to them in this section, except where the context
22 clearly indicates a different meaning:
1 * * *
2 (k) "Sale at retail."
3 * * *
4 (4) The rendition for a consideration of the service of
5 repairing, altering, mending, pressing, fitting, dyeing,
6 laundering, drycleaning or cleaning tangible personal property
7 [other than] including, but not limited to, wearing apparel or
8 shoes, or applying or installing tangible personal property as a
9 repair or replacement part of other tangible personal property
10 [except] including, but not limited to, wearing apparel or shoes
11 for a consideration, whether or not the services are performed
12 directly or by any means other than by coin-operated self-
13 service laundry equipment for wearing apparel or household goods
14 and whether or not any tangible personal property is transferred
15 in conjunction therewith.[, except such services as are rendered
16 in the construction, reconstruction, remodeling, repair or
17 maintenance of real estate: Provided, however, That this
18 subclause shall not be deemed to impose tax upon such services
19 in the preparation for sale of new items which are excluded from
20 the tax under clause (26) of section 204, or upon diaper
21 service.]
22 * * *
23 (20) (i) The rendition for a consideration of any service,
24 other than a medical service, when the primary objective of the
25 purchaser is the receipt of any benefit of the service
26 performed, as distinguished from the receipt of property. In
27 determining what is a service, the intended use or stated
28 objective of the contracting parties shall not necessarily be
29 controlling. "Medical service" means any service obtained at or
30 through a health care facility as defined in section 103 of the
20050S0892B1174 - 2 -
1 act of July 19, 1979 (P.L.130, No.48), known as the "Health Care
2 Facilities Act."
3 (ii) Any service performed in this Commonwealth shall be
4 subject to the tax imposed under this article unless
5 specifically exempted in this article. With respect to services,
6 other than telecommunication services, such services shall be
7 considered to be performed in this Commonwealth if:
8 (A) performed completely in this Commonwealth;
9 (B) performed partially in this Commonwealth and partially
10 outside of this Commonwealth when the recipient or user of the
11 service is located in this Commonwealth and no sales or use tax
12 equal in rate to that imposed under this article has been paid
13 to another state for the service performed partially in that
14 state; or
15 (C) the place of performance cannot be determined if the
16 recipient or user of the service is located in this
17 Commonwealth.
18 (iii) With respect to services, other than telecommunication
19 services, such services performed partially in this Commonwealth
20 and partially outside of this Commonwealth shall be presumed to
21 have been performed completely in this Commonwealth unless the
22 taxpayer can show the place of performance by clear and
23 convincing evidence. With respect to interstate
24 telecommunication services, only those charges for interstate
25 telecommunications which originate or are received in this
26 Commonwealth and which are billed and charged to a service
27 address in this Commonwealth shall be subject to tax.
28 * * *
29 (m) "Tangible personal property." Corporeal personal
30 property including, but not limited to, goods, wares,
20050S0892B1174 - 3 -
1 merchandise, steam and natural and manufactured and bottled gas
2 [for non-residential use], electricity [for non-residential
3 use], prepaid telecommunications, premium cable or premium video
4 programming service, spirituous or vinous liquor and malt or
5 brewed beverages and soft drinks, interstate telecommunications
6 service originating or terminating in the Commonwealth and
7 charged to a service address in this Commonwealth, [intrastate
8 telecommunications service with the exception of (i) subscriber
9 line charges and basic local telephone service for residential
10 use and (ii) charges for telephone calls paid for by inserting
11 money into a telephone accepting direct deposits of money to
12 operate,] provided further, the service address of any
13 intrastate telecommunications service is deemed to be within
14 this Commonwealth or within a political subdivision, regardless
15 of how or where billed or paid. In the case of any such
16 interstate or intrastate telecommunications service, any charge
17 paid through a credit or payment mechanism which does not relate
18 to a service address, such as a bank, travel, credit or debit
19 card, but not including prepaid telecommunications, is deemed
20 attributable to the address of origination of the
21 telecommunications service.
22 * * *
23 (o) "Use."
24 * * *
25 (4) The obtaining by a purchaser of the service of
26 repairing, altering, mending, pressing, fitting, dyeing,
27 laundering, drycleaning or cleaning tangible personal property
28 [other than] including, but not limited to, wearing apparel or
29 shoes or applying or installing tangible personal property as a
30 repair or replacement part of other tangible personal property
20050S0892B1174 - 4 -
1 [other than] including, but not limited to, wearing apparel or
2 shoes, whether or not the services are performed directly or by
3 any means other than by means of coin-operated self-service
4 laundry equipment for wearing apparel or household goods, and
5 whether or not any tangible personal property is transferred to
6 the purchaser in conjunction therewith[, except such services as
7 are obtained in the construction, reconstruction, remodeling,
8 repair or maintenance of real estate: Provided, however, That
9 this subclause shall not be deemed to impose tax upon such
10 services in the preparation for sale of new items which are
11 excluded from the tax under clause (26) of section 204, or upon
12 diaper service: And provided further, That the]. The term "use"
13 shall not include--
14 (A) Any tangible personal property acquired and kept,
15 retained or over which power is exercised within this
16 Commonwealth on which the taxing of the storage, use or other
17 consumption thereof is expressly prohibited by the Constitution
18 of the United States or which is excluded from tax under other
19 provisions of this article.
20 (B) The use or consumption of tangible personal property,
21 including but not limited to machinery and equipment and parts
22 therefor, and supplies or the obtaining of the services
23 described in subclauses (2), (3) and (4) of this clause directly
24 in the operations of--
25 (i) The manufacture of tangible personal property.
26 (ii) Farming, dairying, agriculture, horticulture or
27 floriculture when engaged in as a business enterprise. The term
28 "farming" shall include the propagation and raising of ranch-
29 raised furbearing animals and the propagation of game birds for
30 commercial purposes by holders of propagation permits issued
20050S0892B1174 - 5 -
1 under 34 Pa.C.S. (relating to game) and the propagation and
2 raising of horses to be used exclusively for commercial racing
3 activities.
4 (iii) The producing, delivering or rendering of a public
5 utility service, or in constructing, reconstructing, remodeling,
6 repairing or maintaining the facilities which are directly used
7 in producing, delivering or rendering such service.
8 (iv) Processing as defined in subclause (d) of this section.
9 The exclusions provided in subparagraphs (i), (ii), (iii) and
10 (iv) shall not apply to any vehicle required to be registered
11 under The Vehicle Code except those vehicles directly used by a
12 public utility engaged in the business as a common carrier; to
13 maintenance facilities; or to materials, supplies or equipment
14 to be used or consumed in the construction, reconstruction,
15 remodeling, repair or maintenance of real estate other than
16 directly used machinery, equipment, parts or foundations
17 therefor that may be affixed to such real estate. The exclusions
18 provided in subparagraphs (i), (ii), (iii) and (iv) shall not
19 apply to tangible personal property or services to be used or
20 consumed in managerial sales or other nonoperational activities,
21 nor to the purchase or use of tangible personal property or
22 services by any person other than the person directly using the
23 same in the operations described in subparagraphs (i), (ii),
24 (iii) and (iv).
25 The exclusion provided in subparagraph (iii) shall not apply
26 to (A) construction materials, supplies or equipment used to
27 construct, reconstruct, remodel, repair or maintain facilities
28 not used directly by the purchaser in the production, delivering
29 or rendition of public utility service or (B) tools and
30 equipment used but not installed in the maintenance of
20050S0892B1174 - 6 -
1 facilities used directly in the production, delivering or
2 rendition of a public utility service.
3 The exclusion provided in subparagraphs (i), (ii), (iii) and
4 (iv) shall not apply to the services enumerated in clauses
5 (o)(9) through (16) and (w) through (kk), except that the
6 exclusion provided in subparagraph (ii) for farming, dairying
7 and agriculture shall apply to the service enumerated in clause
8 (z).
9 * * *
10 [(8) The term "use" shall not include the providing of a
11 motor vehicle to a nonprofit private or public school to be used
12 by such a school for the sole purpose of driver education.]
13 * * *
14 Section 2. Section 202 of the act, amended or added
15 September 9, 1971 (P.L.437, No.105), October 4, 1978 (P.L.987,
16 No.201), April 23, 1998 (P.L.239, No.45), May 24, 2000 (P.L.106,
17 No.23) and June 29, 2002 (P.L.559, No.89), is amended to read:
18 Section 202. Imposition of Tax.--(a) There is hereby
19 imposed upon each separate sale at retail of tangible personal
20 property or services, as defined herein, within this
21 Commonwealth a tax of [six] five and seven tenths per cent of
22 the purchase price, which tax shall be collected by the vendor
23 from the purchaser, and shall be paid over to the Commonwealth
24 as herein provided.
25 (b) There is hereby imposed upon the use[, on and after the
26 effective date of this article,] within this Commonwealth of
27 tangible personal property purchased at retail [on or after the
28 effective date of this article,] and on those services described
29 herein purchased at retail on and after the effective date of
30 this article, a tax of [six] five and seven tenths per cent of
20050S0892B1174 - 7 -
1 the purchase price, which tax shall be paid to the Commonwealth
2 by the person who makes such use as herein provided, except that
3 such tax shall not be paid to the Commonwealth by such person
4 where he has paid the tax imposed by subsection (a) of this
5 section or has paid the tax imposed by this subsection (b) to
6 the vendor with respect to such use. [The tax at the rate of six
7 per cent imposed by this subsection shall not be deemed
8 applicable where the tax has been incurred under the provisions
9 of the "Tax Act of 1963 for Education."]
10 (c) Notwithstanding any other provisions of this article,
11 the tax with respect to telecommunications service within the
12 meaning of clause (m) of section 201 of this article shall[,
13 except for telegrams paid for in cash at telegraph offices,] be
14 computed at the rate of [six] five and seven tenths per cent
15 upon the total amount charged to customers for such services,
16 irrespective of whether such charge is based upon a flat rate or
17 upon a message unit charge[, but in no event shall charges for
18 telephone calls paid for by inserting money into a telephone
19 accepting direct deposits of money to operate be subject to this
20 tax]. A telecommunications service provider shall have no
21 responsibility or liability to the Commonwealth for billing,
22 collecting or remitting taxes that apply to services, products
23 or other commerce sold over telecommunications lines by third-
24 party vendors. To prevent actual multistate taxation of
25 interstate telecommunications service, any taxpayer, upon proof
26 that the taxpayer has paid a similar tax to another state on the
27 same interstate telecommunications service, shall be allowed a
28 credit against the tax imposed by this section on the same
29 interstate telecommunications service to the extent of the
30 amount of such tax properly due and paid to such other state.
20050S0892B1174 - 8 -
1 (d) Notwithstanding any other provisions of this article,
2 the sale or use of food and beverages dispensed by means of coin
3 operated vending machines shall be taxed at the rate of [six]
4 five and seven tenths per cent of the receipts collected from
5 any such machine which dispenses food and beverages heretofore
6 taxable.
7 (e) (1) Notwithstanding any provisions of this article, the
8 sale or use of prepaid telecommunications evidenced by the
9 transfer of tangible personal property shall be subject to the
10 tax imposed by subsections (a) and (b).
11 (2) The sale or use of prepaid telecommunications not
12 evidenced by the transfer of tangible personal property shall be
13 subject to the tax imposed by subsections (a) and (b) and shall
14 be deemed to occur at the purchaser's billing address.
15 (3) Notwithstanding clause (2), the sale or use of prepaid
16 telecommunications service not evidenced by the transfer of
17 tangible personal property shall be taxed at the rate of [six]
18 five and seven tenths per cent of the receipts collected on each
19 sale if the service provider elects to collect the tax imposed
20 by this article on receipts of each sale. The service provider
21 shall notify the department of its election and shall collect
22 the tax on receipts of each sale until the service provider
23 notifies the department otherwise.
24 (e.1) (1) Notwithstanding any other provision of this
25 article, the sale or use of prepaid mobile telecommunications
26 service evidenced by the transfer of tangible personal property
27 shall be subject to the tax imposed by subsections (a) and (b).
28 (2) The sale or use of prepaid mobile telecommunications
29 service not evidenced by the transfer of tangible personal
30 property shall be subject to the tax imposed by subsections (a)
20050S0892B1174 - 9 -
1 and (b) and shall be deemed to occur at the purchaser's billing
2 address or the location associated with the mobile telephone
3 number or the point of sale, whichever is applicable.
4 (3) Notwithstanding clause (2), the sale or use of prepaid
5 mobile telecommunications service not evidenced by the transfer
6 of tangible personal property shall be taxed at the rate of
7 [six] five and seven tenths per cent of the receipts collected
8 on each sale if the service provider elects to collect the tax
9 imposed by this article on receipts of each sale. The service
10 provider shall notify the department of its election and shall
11 collect the tax on receipts of each sale until the service
12 provider notifies the department otherwise.
13 (f) Notwithstanding any other provision of this article, tax
14 with respect to sales of prebuilt housing shall be imposed on
15 the prebuilt housing builder at the time of the prebuilt housing
16 sale within this Commonwealth and shall be paid and reported by
17 the prebuilt housing builder to the department in the time and
18 manner provided in this article: Provided, however, That a
19 manufacturer of prebuilt housing may, at its option, precollect
20 the tax from the prebuilt housing builder at the time of sale to
21 the prebuilt housing builder. In any case where prebuilt housing
22 is purchased and the tax is not paid by the prebuilt housing
23 builder or precollected by the manufacturer, the prebuilt
24 housing purchaser shall remit tax directly to the department if
25 the prebuilt housing is used in this Commonwealth without regard
26 to whether the prebuilt housing becomes a real estate structure.
27 (g) Notwithstanding any other provisions of this article and
28 in accordance with the Mobile Telecommunications Sourcing Act (4
29 U.S.C. § 116), the sale or use of mobile telecommunications
30 services which are deemed to be provided to a customer by a home
20050S0892B1174 - 10 -
1 service provider under section 117(a) and (b) of the Mobile
2 Telecommunications Sourcing Act shall be subject to the tax of
3 [six] five and seven tenths per cent of the purchase price,
4 which tax shall be collected by the home service provider from
5 the customer, and shall be paid over to the Commonwealth as
6 herein provided if the customer's place of primary use is
7 located within this Commonwealth, regardless of where the mobile
8 telecommunications services originate, terminate or pass
9 through. For purposes of this subsection, words and phrases used
10 in this subsection shall have the same meanings given to them in
11 the Mobile Telecommunications Sourcing Act.
12 Section 3. Section 203 of the act is amended to read:
13 Section 203. Computation of Tax.--[The amount of tax imposed
14 by section 202 of this article shall be computed as follows:
15 (a) If the purchase price is ten cents (10¢) or less, no tax
16 shall be collected.
17 (b) If the purchase price is eleven cents (11¢) or more but
18 less than eighteen cents (18¢), one cent (1¢) shall be
19 collected.
20 (c) If the purchase price is eighteen cents (18¢) or more
21 but less than thirty-five cents (35¢), two cents (2¢) shall be
22 collected.
23 (d) If the purchase price is thirty-five cents (35¢) or more
24 but less than fifty-one cents (51¢), three cents (3¢) shall be
25 collected.
26 (e) If the purchase price is fifty-one cents (51¢) or more
27 but less than sixty-eight cents (68¢), four cents (4¢) shall be
28 collected.
29 (f) If the purchase price is sixty-eight cents (68¢) or more
30 but less than eighty-five cents (85¢), five cents (5¢) shall be
20050S0892B1174 - 11 -
1 collected.
2 (g) If the purchase price is eighty-five cents (85¢) or more
3 but less than one dollar and one cent ($1.01), six cents (6¢)
4 shall be collected.
5 (h) If the purchase price is more than one dollar ($1.00),
6 six per centum of each dollar of purchase price plus the above
7 bracket charges upon any fractional part of a dollar in excess
8 of even dollars shall be collected.]
9 Within 60 days of the effective date of this section, the
10 Department of Revenue shall prepare and publish as a notice in
11 the Pennsylvania Bulletin a table setting forth the amount of
12 tax imposed under section 202 for purchase prices that result in
13 a tax containing a fraction of less than a cent.
14 Section 4. Section 204 of the act, amended, added or
15 repealed August 31, 1971 (P.L.362, No.93), July 20, 1974
16 (P.L.535, No.183), October 17, 1974 (P.L.756, No.255), December
17 14, 1977 (P.L.322, No.93), October 27, 1979 (P.L.242, No.79),
18 December 8, 1980 (P.L.1117, No.195), December 16, 1980
19 (P.L.1240, No.223), October 22, 1981 (P.L.314, No.109), June 23,
20 1982 (P.L.610, No.172), December 9, 1982 (P.L.1047, No.246),
21 July 21, 1983 (P.L.63, No.29), December 19, 1985 (P.L.354,
22 No.100), July 13, 1987 (P.L.317, No.58), August 4, 1991 (P.L.97,
23 No.22), December 13, 1991 (P.L.373, No.40), June 16, 1994
24 (P.L.279, No.48), June 30, 1995 (P.L.139, No.21), May 7, 1997
25 (P.L.85, No.7), April 23, 1998 (P.L.239, No.45), May 12, 1999
26 (P.L.26, No.4), May 24, 2000 (P.L.106, No.23), December 20, 2000
27 (P.L.841, No.119), June 22, 2001 (P.L.353, No.23), June 29, 2002
28 (P.L.559, No.89) and December 23, 2003 (P.L.250, No.46), is
29 amended to read:
30 Section 204. Exclusions from Tax.--The tax imposed by
20050S0892B1174 - 12 -
1 section 202 shall not be imposed upon any of the following:
2 (1) The sale at retail or use of tangible personal property
3 (other than motor vehicles, trailers, semi-trailers, motor
4 boats, aircraft or other similar tangible personal property
5 required under either Federal law or laws of this Commonwealth
6 to be registered or licensed) or services sold by or purchased
7 from a person not a vendor in an isolated transaction or sold by
8 or purchased from a person who is a vendor but is not a vendor
9 with respect to the tangible personal property or services sold
10 or purchased in such transaction: Provided, That inventory and
11 stock in trade so sold or purchased, shall not be excluded from
12 the tax by the provisions of this subsection.
13 (2) The use of tangible personal property purchased by a
14 nonresident person outside of, and brought into this
15 Commonwealth for use therein for a period not to exceed seven
16 days, or for any period of time when such nonresident is a
17 tourist or vacationer and, in either case not consumed within
18 the Commonwealth.
19 (3) The use of tangible personal property purchased outside
20 this Commonwealth for use outside this Commonwealth by a then
21 nonresident natural person or a business entity not actually
22 doing business within this Commonwealth, who later brings such
23 tangible personal property into this Commonwealth in connection
24 with his establishment of a permanent business or residence in
25 this Commonwealth: Provided, That such property was purchased
26 more than six months prior to the date it was first brought into
27 this Commonwealth or prior to the establishment of such business
28 or residence, whichever first occurs. This exclusion shall not
29 apply to tangible personal property temporarily brought into
30 Pennsylvania for the performance of contracts for the
20050S0892B1174 - 13 -
1 construction, reconstruction, remodeling, repairing and
2 maintenance of real estate.
3 [(4) The sale at retail or use of disposable diapers; pre-
4 moistened wipes; incontinence products; colostomy deodorants;
5 toilet paper; sanitary napkins, tampons or similar items used
6 for feminine hygiene; or toothpaste, toothbrushes or dental
7 floss.
8 (5) The sale at retail or use of steam, natural and
9 manufactured and bottled gas, fuel oil, electricity or
10 intrastate subscriber line charges, basic local telephone
11 service or telegraph service when purchased directly by the user
12 thereof solely for his own residential use and charges for
13 telephone calls paid for by inserting money into a telephone
14 accepting direct deposits of money to operate.]
15 (10) The sale at retail to, or use by (i) any charitable
16 organization, volunteer firemen's organization or nonprofit
17 educational institution, or (ii) a religious organization for
18 religious purposes of tangible personal property or services
19 other than pursuant to a construction contract: Provided,
20 however, That the exclusion of this clause shall not apply with
21 respect to any tangible personal property or services used in
22 any unrelated trade or business carried on by such organization
23 or institution or with respect to any materials, supplies and
24 equipment used and transferred to such organization or
25 institution in the construction, reconstruction, remodeling,
26 renovation, repairs and maintenance of any real estate
27 structure, other than building machinery and equipment, except
28 materials and supplies when purchased by such organizations or
29 institutions for routine maintenance and repairs.
30 (11) The sale at retail, or use of gasoline and other motor
20050S0892B1174 - 14 -
1 fuels, the sales of which are otherwise subject to excise taxes
2 under [the act of May 21, 1931 (P.L.194), known as the "Liquid
3 Fuels Tax Act," and the act of January 14, 1952 (P.L.1965),
4 known as the "Fuel Use Tax Act."] 75 Pa.C.S. Ch. 90 (relating to
5 liquid fuels and fuels tax).
6 (12) The sale at retail to, or use by the United States,
7 this Commonwealth or its instrumentalities or political
8 subdivisions of tangible personal property or services.
9 [(13) The sale at retail, or use of wrapping paper, wrapping
10 twine, bags, cartons, tape, rope, labels, nonreturnable
11 containers and all other wrapping supplies, when such use is
12 incidental to the delivery of any personal property, except that
13 any charge for wrapping or packaging shall be subject to tax at
14 the rate imposed by section 202.
15 (14) Sale at retail or use of vessels designed for
16 commercial use of registered tonnage of fifty tons or more when
17 produced by the builders thereof upon special order of the
18 purchaser.
19 (15) Sale at retail of tangible personal property or
20 services used or consumed in building, rebuilding, repairing and
21 making additions to or replacements in and upon vessels designed
22 for commercial use of registered tonnage of fifty tons or more
23 upon special order of the purchaser, or when rebuilt, repaired
24 or enlarged, or when replacements are made upon order of or for
25 the account of the owner.
26 (16) The sale at retail or use of tangible personal property
27 or services to be used or consumed for ship cleaning or
28 maintenance or as fuel, supplies, ships' equipment, ships'
29 stores or sea stores on vessels designed for commercial use of
30 registered tonnage of fifty tons or more to be operated
20050S0892B1174 - 15 -
1 principally outside the limits of the Commonwealth.]
2 (17) The sale at retail or use of prescription [or non-
3 prescription] medicines[,] or drugs or prescription or
4 nonprescription medical supplies, crutches and wheelchairs for
5 the use of cripples and invalids, artificial limbs, artificial
6 eyes and artificial hearing devices when designed to be worn on
7 the person of the purchaser or user, false teeth and materials
8 used by a dentist in dental treatment, eyeglasses when
9 especially designed or prescribed by an ophthalmologist, oculist
10 or optometrist for the personal use of the owner or purchaser
11 and artificial braces and supports designed solely for the use
12 of crippled persons or any other therapeutic, prosthetic or
13 artificial device designed for the use of a particular
14 individual to correct or alleviate a physical incapacity,
15 including but not limited to hospital beds, iron lungs, and
16 kidney machines.
17 [(18) The sale at retail or use of coal.]
18 (24) The sale at retail or use of motor vehicles, trailers
19 and semi-trailers, or bodies attached to the chassis thereof,
20 sold to a nonresident of Pennsylvania to be used outside of
21 Pennsylvania and which are registered in a state other than
22 Pennsylvania within twenty days after delivery to the vendee.
23 [(25) The sale at retail or use of water.
24 (26) The sale at retail or use of all vesture, wearing
25 apparel, raiments, garments, footwear and other articles of
26 clothing, including clothing patterns and items that are to be a
27 component part of clothing, worn or carried on or about the
28 human body but all accessories, ornamental wear, formal day or
29 evening apparel, and articles made of fur on the hide or pelt or
30 any material imitative of fur and articles of which such fur,
20050S0892B1174 - 16 -
1 real, imitation or synthetic, is the component material of chief
2 value, but only if such value is more than three times the value
3 of the next most valuable component material, and sporting goods
4 and clothing not normally used or worn when not engaged in
5 sports shall not be excluded from the tax.
6 (28) The sale at retail or use of religious publications
7 sold by religious groups and Bibles and religious articles.
8 (29) The sale at retail or use of food and beverages for
9 human consumption, except that this exclusion shall not apply
10 with respect to--
11 (i) Soft drinks;
12 (ii) Malt and brewed beverages and spirituous and vinous
13 liquors;
14 (iii) Food or beverages, whether sold for consumption on or
15 off the premises or on a "take-out" or "to go" basis or
16 delivered to the purchaser or consumer, when purchased (A) from
17 persons engaged in the business of catering; or (B) from persons
18 engaged in the business of operating establishments from which
19 ready-to-eat food and beverages are sold, including, but not
20 limited to, restaurants, cafes, lunch counters, private and
21 social clubs, taverns, dining cars, hotels, night clubs, fast
22 food operations, pizzerias, fairs, carnivals, lunch carts, ice
23 cream stands, snack bars, cafeterias, employe cafeterias,
24 theaters, stadiums, arenas, amusement parks, carryout shops,
25 coffee shops and other establishments whether mobile or
26 immobile. For purposes of this clause, a bakery, a pastry shop,
27 a donut shop, a delicatessen, a grocery store, a supermarket, a
28 farmer's market, a convenience store or a vending machine shall
29 not be considered an establishment from which food or beverages
30 ready to eat are sold except for the sale of meals, sandwiches,
20050S0892B1174 - 17 -
1 food from salad bars, hand-dipped or hand-served iced based
2 products including ice cream and yogurt, hot soup, hot pizza and
3 other hot food items, brewed coffee and hot beverages. For
4 purposes of this subclause, beverages shall not include malt and
5 brewed beverages and spirituous and vinous liquors but shall
6 include soft drinks. The sale at retail of food and beverages at
7 or from a school or church in the ordinary course of the
8 activities of such organization is not subject to tax.
9 (30) The sale at retail or use of newspapers. For purposes
10 of this section, the term "newspaper" shall mean a "legal
11 newspaper" or a publication containing matters of general
12 interest and reports of current events which qualifies as a
13 "newspaper of general circulation" qualified to carry a "legal
14 advertisement" as those terms are defined in 45 Pa.C.S. § 101
15 (relating to definitions), not including magazines. This
16 exclusion shall also include any printed advertising materials
17 circulated with such newspaper regardless of where or by whom
18 such printed advertising material was produced.
19 (31) The sale at retail or use of caskets and burial vaults
20 for human remains and markers and tombstones for human graves.]
21 (32) The sale at retail or use of flags of the United States
22 of America and the Commonwealth of Pennsylvania.
23 [(33) The sale at retail or use of textbooks for use in
24 schools, colleges and universities, either public or private
25 when purchased in behalf of or through such schools, colleges or
26 universities provided such institutions of learning are
27 recognized by the Department of Education.
28 (34) The sale at retail, or use of motion picture film
29 rented or licensed from a distributor for the purpose of
30 commercial exhibition.
20050S0892B1174 - 18 -
1 (35) The sale at retail or use of mail order catalogs and
2 direct mail advertising literature or materials, including
3 electoral literature or materials, such as envelopes, address
4 labels and a one-time license to use a list of names and mailing
5 addresses for each delivery of direct mail advertising
6 literature or materials, including electoral literature or
7 materials, through the United States Postal Service.
8 (36) The sale at retail or use of rail transportation
9 equipment used in the movement of personalty.
10 (37) The sale at retail of buses to be used under contract
11 with school districts that are replacements for buses destroyed
12 or lost in the flood of 1977 for a period ending December 31,
13 1977 in the counties of Armstrong, Bedford, Cambria, Indiana,
14 Jefferson, Somerset and Westmoreland, or the use of such buses.
15 (38) The sale at retail of horses, if at the time of
16 purchase, the seller is directed to ship or deliver the horse to
17 an out-of-State location, whether or not the charges for
18 shipment are paid for by the seller or the purchaser; the seller
19 shall obtain a bill of lading, either from the carrier or from
20 the purchaser, who, in turn has obtained the bill of lading from
21 the carrier, reflecting delivery to the out-of-State address to
22 which the horse has been shipped. The seller shall execute a
23 "Certificate of Delivery to Destination Outside of the
24 Commonwealth" for each bill of lading reflecting out-of-State
25 delivery. The seller shall be required to retain the certificate
26 of delivery form to justify the noncollection of sales tax with
27 respect to the transaction to which the form relates.
28 In transactions where a horse is sold by the seller and
29 delivered to a domiciled person, agent or corporation prior to
30 its being delivered to an out-of-State location, the
20050S0892B1174 - 19 -
1 "Certificate of Delivery to Destination Outside of the
2 Commonwealth" form must have attached to it bills of lading both
3 for the transfer to the domiciled person, agent or corporation
4 and from the aforementioned to the out-of-State location.
5 (39) The sale at retail or use of fish feed purchased by or
6 on behalf of sportsmen's clubs, fish cooperatives or nurseries
7 approved by the Pennsylvania Fish Commission.
8 (40) The sale at retail of supplies and materials to tourist
9 promotion agencies, which receive grants from the Commonwealth,
10 for distribution to the public as promotional material or the
11 use of such supplies and materials by said agencies for said
12 purposes.
13 (41) The sale at retail of supplies and materials to tourist
14 promotion agencies, which receive grants from the Commonwealth,
15 for distribution to the public as promotional material or the
16 use of such supplies and materials by said agencies for said
17 purposes.
18 (42) The sale or use of brook trout (salvelinus fontinalis),
19 brown trout (Salmo trutta) or rainbow trout (Salmo gairdneri).
20 (43) The sale at retail or use of buses to be used
21 exclusively for the transportation of children for school
22 purposes.
23 (44) The sale at retail or use of firewood. For the purpose
24 of this clause, firewood shall mean the product of trees when
25 severed from the land and cut into proper lengths for burning
26 and pellets made from pure wood sawdust if used for fuel for
27 cooking, hot water production or to heat residential dwellings.
28 (45) The sale at retail or use of materials used in the
29 construction and erection of objects purchased by not-for-profit
30 organizations for purposes of commemoration and memorialization
20050S0892B1174 - 20 -
1 of historical events, provided that the object is erected upon
2 publicly owned property or property to be conveyed to a public
3 entity upon the commemoration or memorialization of the
4 historical event.]
5 (46) The sale at retail or use of tangible personal property
6 purchased in accordance with the Food Stamp Act of 1977, as
7 amended (Public Law 95-113, 7 U.S.C. §§ 2011-2029).
8 [(47) The net purchase price of the sale at retail or use of
9 electric vehicles, hybrid electric vehicles and zero emission
10 vehicles as defined in 75 Pa.C.S. § 102 (relating to
11 definitions). "Net purchase price" shall mean the difference
12 between the purchase price of an electric vehicle, hybrid
13 electric vehicle or zero emission vehicle and the average retail
14 list price of a comparable vehicle. "Comparable vehicle" shall
15 mean, in the case of a passenger car, the overall average list
16 price of a passenger car in the United States; in the case of a
17 passenger truck, the overall average list price of a passenger
18 truck in the United States; and, in the case of a van, the
19 overall average retail list price of a van in the United States.
20 The Department of Revenue shall promulgate rules and regulations
21 to enforce this exemption and determine the average retail list
22 price as defined under "comparable vehicle" on an annual basis.
23 In the event that a qualified motor vehicle is something other
24 than a passenger car, passenger truck or van, the Department of
25 Revenue shall determine the average list price of a comparable
26 vehicle classification. This clause shall expire December 31,
27 1999.
28 (48) The sale at retail or use of power units for vehicles
29 that are exempt under clause (47). This clause shall expire
30 December 31, 1999.]
20050S0892B1174 - 21 -
1 (49) The sale at retail or use of [food and beverages]
2 tangible personal property or services by a nonprofit
3 [associations] association which support [sports programs] the
4 charitable purposes of the nonprofit association. For purposes
5 of this clause, the phrases:
6 (i) "nonprofit association" means an entity which is
7 organized as a nonprofit corporation or nonprofit unincorporated
8 association under the laws of this Commonwealth or the United
9 States or any entity which is authorized to do business in this
10 Commonwealth as a nonprofit corporation or unincorporated
11 association under the laws of this Commonwealth, including, but
12 not limited to, youth or athletic associations, volunteer fire,
13 ambulance, religious, charitable, fraternal, veterans, civic, or
14 any separately chartered auxiliary of the foregoing, if
15 organized and operated on a nonprofit basis; and
16 [(iv) "sports program" means baseball (including softball),
17 football, basketball, soccer and any other competitive sport
18 formally recognized as a sport by the United States Olympic
19 Committee as specified by and under the jurisdiction of the
20 Amateur Sports Act of 1978 (Public Law 95-606, 36 U.S.C. § 371
21 et seq.), the Amateur Athletic Union or the National Collegiate
22 Athletic Association. The term shall be limited to a program or
23 that portion of a program that is organized for recreational
24 purposes and whose activities are substantially for such
25 purposes and which is primarily for participants who are 18
26 years of age or younger or whose 19th birthday occurs during the
27 year of participation or the competitive season, whichever is
28 longer. There shall, however, be no age limitation for programs
29 operated for persons with physical handicaps or persons with
30 mental retardation;
20050S0892B1174 - 22 -
1 (v) "support" means the funds raised from sales are used to
2 pay the expenses of a sports program or the nonprofit
3 association sells the food and beverages at a location where a
4 sports program is being conducted under this act.
5 (50) The sale at retail or use of subscriptions for
6 magazines. The term "magazine" refers to a periodical published
7 at regular intervals not exceeding three months and which are
8 circulated among the general public, containing matters of
9 general interest and reports of current events published for the
10 purpose of disseminating information of a public character or
11 devoted to literature, the sciences, art or some special
12 industry. This exclusion shall also include any printed
13 advertising material circulated with the periodical or
14 publication regardless of where or by whom the printed
15 advertising material was produced.
16 (51) The sale at retail or use of interior office building
17 cleaning services but only as relates to the costs of the
18 supplied employe, which costs are wages, salaries, bonuses and
19 commissions, employment benefits, expense reimbursements, and
20 payroll and withholding taxes, to the extent that these costs
21 are specifically itemized or that these costs in aggregate are
22 stated in billings from the vender or supplying entity.
23 (53) The sale at retail or use of candy or gum regardless of
24 the location from which the candy or gum is sold.
25 (54) The sale at retail to or use by a producer of
26 commercial motion pictures of any tangible personal property
27 directly used in the production of a feature-length commercial
28 motion picture distributed to a national audience: Provided,
29 however, That the production of any motion picture for which the
30 property will be used does not violate any Federal or State law;
20050S0892B1174 - 23 -
1 and Provided further That the purchaser shall furnish to the
2 vendor a certificate substantially in the form as the Department
3 of Community and Economic Development may, by regulation,
4 prescribe, stating that the sale is exempt from tax pursuant to
5 this clause.
6 (55) The sale at retail or use of horses to be used
7 exclusively for commercial racing activities and the sale at
8 retail and use of feed, bedding, grooming supplies, riding tack,
9 farrier services, portable stalls and sulkies for horses used
10 exclusively for commercial racing activities.]
11 (56) The sale at retail or use of tangible personal property
12 or services used, transferred or consumed in installing or
13 repairing equipment or devices designed to assist persons in
14 ascending or descending a stairway when:
15 (i) The equipment or devices are used by a person who, by
16 virtue of a physical disability, is unable to ascend or descend
17 stairs without the aid of such equipment or device.
18 (ii) The equipment or device is installed or used in such
19 person's place of residence.
20 (iii) A physician has certified the physical disability of
21 the person in whose residence the equipment or device is
22 installed or used.
23 (57) The sale at retail to or use by a construction
24 contractor of building machinery and equipment and services
25 thereto that are:
26 (i) transferred pursuant to a construction contract for any
27 charitable organization, volunteer firemen's organization,
28 nonprofit educational institution or religious organization for
29 religious purposes, provided that the building machinery and
30 equipment and services thereto are not used in any unrelated
20050S0892B1174 - 24 -
1 trade or business; or
2 (ii) transferred to the United States or the Commonwealth or
3 its instrumentalities or political subdivisions[; or].
4 [(58) The sale at retail or use of a personal computer, a
5 peripheral device or an Internet access device, or a service
6 contract or single-user licensed software purchased in
7 conjunction with a personal computer, peripheral device or
8 Internet access device, during the exclusion period by an
9 individual purchaser for nonbusiness use. The exclusion does not
10 include a sale at retail or use of, leasing, rental or repair of
11 a personal computer, peripheral device or Internet access
12 device; mainframe computers; network servers; local area network
13 hubs; routers and network cabling; network operating systems;
14 multiple-user licensed software; minicomputers; hand-held
15 computers; personal digital assistants without Internet access;
16 hardware word processors; graphical calculators; video game
17 consoles; telephones; digital cameras; pagers; compact discs
18 encoded with music or movies; and digital versatile discs
19 encoded with music or movies. For purposes of this clause, the
20 phrase "exclusion period" means the period of time from August
21 5, 2001, to and including August 12, 2001, and from February 17,
22 2002, to and including February 24, 2002. For purposes of this
23 clause, "purchaser" means an individual who places an order and
24 pays the purchase price by cash or credit during the exclusion
25 period even if delivery takes place after the exclusion period.]
26 (59) The sale at retail or use of molds and related mold
27 equipment used directly and predominantly in the manufacture of
28 products, regardless of whether the person that holds title to
29 the equipment manufactures a product.
30 (60) The sale or use of used prebuilt housing.
20050S0892B1174 - 25 -
1 [(61) The sale at retail to or use of food and nonalcoholic
2 beverages by an airline which will transfer the food or
3 nonalcoholic beverages to passengers in connection with the
4 rendering of the airline service.]
5 (62) The sale at retail or use of tangible personal property
6 or services which are directly used in farming, dairying or
7 agriculture when engaged in as a business enterprise whether or
8 not the sale is made to the person directly engaged in the
9 business enterprise or to a person contracting with the person
10 directly engaged in the business enterprise for the production
11 of food.
12 [(63) The sale at retail or use of separately stated fees
13 paid pursuant to 13 Pa.C.S. § 9525 (relating to fees).]
14 (64) The sale at retail to or use by a construction
15 contractor, employed by a public school district pursuant to a
16 construction contract, of any materials and building supplies
17 which, during construction or reconstruction, are made part of
18 any public school building utilized for instructional classroom
19 education within this Commonwealth, if the construction or
20 reconstruction:
21 (i) is necessitated by a disaster emergency, as defined in
22 35 Pa.C.S. § 7102 (relating to definitions); and
23 (ii) takes place during the period when there is a
24 declaration of disaster emergency under 35 Pa.C.S. § 7301(c)
25 (relating to general authority of Governor).
26 (65) The sale at retail of medical goods or services by a
27 hospital.
28 (66) The sale at retail of medical, dental or hospice
29 services.
30 (67) The sale at retail or use of goods or services
20050S0892B1174 - 26 -
1 involving Medicare Part B transactions.
2 (68) The sale or rental of real property.
3 Section 5. Section 205 of the act, amended June 9, 1978
4 (P.L.463, No.62), August 4, 1991 (P.L.97, No.22) and July 7,
5 2005 (P.L.149, No.40), is amended to read:
6 Section 205. Alternate Imposition of Tax; Credits.--(a) If
7 any person actively and principally engaged in the business of
8 selling new or used motor vehicles, trailers or semi-trailers,
9 and registered with the department in the "dealer's class,"
10 acquires a motor vehicle, trailer or semi-trailer for the
11 purpose of resale, and prior to such resale, uses the motor
12 vehicle, trailer or semi-trailer for a taxable use under this
13 act, such person may pay a tax equal to [six] five and seven
14 tenths per cent of the fair rental value of the motor vehicle,
15 trailer or semi-trailer during such use. This section shall not
16 apply to the use of a vehicle as a wrecker, parts truck,
17 delivery truck or courtesy car.
18 (b) A commercial aircraft operator who acquires an aircraft
19 for the purpose of resale, or lease, or is entitled to claim
20 another valid exemption at the time of purchase, and subsequent
21 to such purchase, periodically uses the same aircraft for a
22 taxable use under this act, may elect to pay a tax equal to
23 [six] five and seven tenths per cent of the fair rental value of
24 the aircraft during such use.
25 Section 6. This act shall apply to sales and uses occurring
26 or commencing 120 days after the effective date of this section.
27 Section 7. This act shall take effect immediately.
I22L72DMS/20050S0892B1174 - 27 -