PENNSYLVANIA ENACTS AFFILIATE TAX VIA PRESS RELEASE
This story comes not from The Onion but from the Pennsylvania Department of Revenue, who expressed their holiday cheer by issuing a press release announcing a new Tax Bulletin to “to explain existing sales tax nexus law for remote sellers, clarifying the law and the department’s authority to require e-commerce and other out-of-state sellers with physical presence in Pennsylvania to collect sales tax.”
As a result, the Department of Revenue mandates that companies whose business activities establish nexus [as redefined by the Tax Bulletin] in Pennsylvania must become licensed to collect sales tax as soon as possible, but no later than by Feb. 1, 2012. Naturally, the Commonwealth would ignore “existing law” for over a decade of e-commerce before implementing it for the first time in 2012.
In a warning to Amazon and others,
In cases where companies with nexus blatantly disregard the Tax Bulletin and their obligations to begin collecting sales tax, the department has the statutory authority to look back at least three years for audit and assessment purposes.
The Tax Bulletin provides the following new examples of doing business in the Commonwealth of Pennsylvania:
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) A remote seller’s employee(s) regularly travel(s) to Pennsylvania for any purpose related to the remote seller’s business activity.
(6) 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.
(7) 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.
While many states have debated the merits of the so-called Amazon tax and some have decided to enact it, Pennsylvania is the first state to dispense with that all together and instead simply decree it by fiat or press release of the Department of Revenue. This decision was made without any input from the 9,000 affiliate marketers in Pennsylvania, who earned over $700 million in 2010, and paid an estimated $22 million in income tax to the state where this nation announced it independence from Great Britain in part over the question of taxation without representation.
We suggest that Department of Revenue Commissioner Dan Meuser also consider reinterpreting Pennsylvania history textbooks and have provided some examples below to highlight the extent to which this decision has to be the most embarrassing thing to come out of Pennsylvania since the 1972-73 Philadelphia 76ers who posted an NBA worst 9-73 record.