|Posted:||December 6, 2018 02:30 PM|
|From:||Representative Tommy Sankey|
|To:||All House members|
|Subject:||LEGISLATION ~ CLARIFY SALES & USE TAX (SUT) REGARDING FINANCIAL INSTITUTIONS|
|Please join me in co-sponsoring legislation (former HB2556) that would clarify the Sales and Use Tax (SUT) regarding canned and customized software, financial institution security equipment and services fees on financial institutions.
The Pa. Dept. of Revenue (DoR) has started to issue audit reports assessing the SUT on financial institutions for the purchase of any computer service or data processing contract that utilizes “canned software.” This is occurring even if the predominant purpose of a contract is to obtain non-taxable services. This assessment is occurring when banks are purchasing core processing services – functions that are essential to the bank - including:
Recently, the DoR has also started to impose the SUT not only on the actual cost of any financial institution security equipment purchased by contractors, but on the total amount paid by financial institutions to contractors for the installation, repair and maintenance of the security equipment. This is a significant change in their interpretation of existing SUT law from 1978 and creates inconsistency and uncertainty.
This legislation would also clarify that fees on financial services provided by financial institutions are not subject to the SUT.
I seek to preserve the long-standing policies that have reasonably applied to the SUT.
Thank you for your consideration.
Introduced as HB19