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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: January 6, 2017 12:13 PM
From: Representative W. Curtis Thomas
To: All House members
Subject: Notice Requirements for online sales vendors
In 2011, the Pennsylvania Department of Revenue clarified its law dealing with sales tax collection for online sales and in January 2012 began an effort to collect sales tax for all e-commerce and out-of-state sellers with a physical presence in Pennsylvania. That effort has resulted in the collection of more than $68.2 million in formerly uncollected sales tax obligations through December 2012.

According to Revenue, the Tax Reform Code nexus language that allowed this was in place for many years. With the 2011 clarification, the department explained that not only was this a simple matter of fairness under existing law, but it also fostered fair competition among e-commerce and brick-and-mortar businesses.

Pennsylvania is one of more than 30 states that collect sales tax on online sales either through an Affiliate Nexus or “Amazon Law,” or as member states of the national Streamlined Sales Tax and Use Agreement, through which remote sellers voluntarily collect and remit sales tax on remote sales in member states.

Even with Pennsylvania’s nexus state status, a University of Tennessee study of all 45 states in the United States that collect sales tax, indicated that in 2012, Pennsylvania should have collected an estimated $706.2 million in sales and use tax. In the near future, I plan to introduce legislation that would aid in the collection of sales tax by requiring remote vendors to provide information about Pennsylvania’s sales and use tax to buyers.

My proposed legislation would not interfere with Pennsylvania’s nexus status by requiring the vendor to collect the tax, but instead would remind consumers that they are responsible for remitting it. As of January 2014, five other states already have enacted similar notice laws. The notice simply would state that the consumer may owe Pennsylvania sales tax on their purchase. While empirical data is hard to collect on the value of providing notice, anecdotal evidence based on collection in other states indicates that the states that notify consumers of payment and that make it easy for them to remit use taxes, have a much higher participation rate than other states.

Please join me in co-sponsoring this legislation.

(Formerly HB 631 of the 2015-16 Legislative Session)

Introduced as HB542