The Pennsylvania Department of Revenue (PA DOR) is reminding remote sellers that they should have registered as of September 1, 2012, if they have nexus as outlined in the PA DOR Sales and Use Tax Bulletin 2011-01. One of the nexus creating activities mentioned is commonly referred to as “click-through nexus.” Rather than pass a new “Amazon Law” as some of the other states have done, Pennsylvania opted to issue a bulletin outlining what the Tax Reform Code of 1971 (TRC) defines as “maintaining a place of business in this Commonwealth.” The DOR went on to give seven examples of what it considers are nexus creating activities under the TRC.
The seven examples in the bulletin cast a wide net on a number of activities in addition to click-through relationships. We have listed the seven examples below and suggest strongly that you review your activities in light of these examples. For those of you who drop ship into Pennsylvania from an in-state location, we suggest you look at example six. It looks as though the state is asserting that using a dropshipper located in Pennsylvania is a nexus-creating activity. While we believe the state is pushing the envelope of physical presence on a number of issues, until someone challenges them in court, you need to be aware of your exposure. As they have just reminded everyone of the September first deadline, it stands to reason that they will be stepping up enforcement.
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- A remote seller storing its property or the property of a representative at a distribution or fulfillment center located within the Commonwealth, regardless if the center also stores property of third parties that is distributed from the same location.
- A remote seller who has a contractual relationship with an entity or individual physically located in Pennsylvania whose website has a link that encourages purchasers to place orders with the remote sellers. The in-state entity or individual receives consideration for the contractual relationship with the remote seller.
- A remote seller utilizing affiliates, agents and/or independent contractors located in Pennsylvania who will provide repair, delivery or other service relating to tangible personal property sold by the remote seller to Pennsylvania customers.
- A remote seller’s affiliates, agents and/or independent contractors provide service(s) within the Commonwealth (including, but not limited to storage, delivery, marketing or soliciting sales) that benefit, support and/or complement the remote seller’s business activity.
- A remote seller’s employee(s) regularly travel(s) to Pennsylvania for any purpose related to the remote seller’s business activity.
- A remote seller who accepts orders that are directly shipped to Pennsylvania customers from a Pennsylvania facility which is operated by a remote seller’s affiliate, agent or independent contractor.
- A remote seller who regularly solicits orders from Pennsylvania customers via the website of an entity or individual physically located in Pennsylvania, such as via click-through technology.
