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Pa. to enforce sales tax collection by online retailers

The state Department of Revenue today posted a regulatory bulletin on its website saying it will enforce the collection of sales taxes by any remote retailer, including catalog and online retailers with a physical presence in Pennsylvania.

Remote retailers have a 60-day grace period to determine if they have nexus in Pennsylvania, by which time they’ll be required to obtain a retail license and begin collecting sales taxes by Feb. 1, Revenue Secretary Dan Meuser said.

“We feel we’ve taken a reasonable approach here,” he said.

Gov. Tom Corbett wanted to move forward with the initiative to treat all businesses fairly, Meuser said. He also was not interested in creating new tax law to resolve such issues, he said. The General Assembly had been looking at its options to enforce tax collection.

The state also will treat associates and affiliated websites that promote online retail sales in Pennsylvania as equal to a physical nexus, according to the bulletin. The bulletin, called the Sales and Use Tax Bulletin 2011-01, can be found by clicking here.

This means companies such as Seattle-based retail and technology giant would be required to collect and remit sales tax to Pennsylvania. Amazon operates two warehouses in Cumberland County and a third in York County.

Amazon has said it supports federal tax policies that are fairly applied. It recently backed a bill in Congress that would address the issue. In September, it cut a deal with California to begin collecting sales taxes if a resolution wasn’t reached at the federal level.

Pennsylvania estimates it will lose $380 million this year due to non-collection of taxes on e-commerce, Meuser said. More could be collected through use taxes voluntarily remitted by consumers, he said. State tax return forms will include a line this year for residents to remit taxes.

The decision will remove unfair advantages that remote retailers have over bricks-and-mortar stores, said Dan Hayward, the Pennsylvania spokesman with the Alliance for Main Street Fairness, a group advocating equal tax policies around the country.

Gov. Tom Corbett’s administration had signaled in September it would soon force remote retailers to collect sales taxes.

Pennsylvania’s law has required any business with a subsidiary, representative or agent and physical property to collect sales taxes since 1971, according to the bulletin. At least since 1992, many remote retailers hadn’t collected sale taxes due to a U.S. Supreme Court ruling that required nexus, or physical presence.

The laws should have been enforced, but today it’s a larger issue, Meuser said.

“Things have changed greatly in the e-commerce world over the last 10 years and certainly the last 15 years,” he said.

Editor’s note: This item was modified from its previous version to add comments from state Revenue Secretary Dan Meuser and background.

Jim T. Ryan

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