by: Barry L Weller, EA
If you use services like iTunes downloads, eBooks, and Netflix, your purchases are now subject to a 6 percent sales tax. Starting August 1, 2016, PA sales and use tax was extended to include items delivered to a customer electronically or digitally or by streaming unless the transfer is otherwise exempt. This includes music or any other audio, video such as movies and streaming services, e-books and any otherwise taxable printed matter, apps and in-app purchases, ringtones, online games, and canned software, as well as any updates, maintenance or support of these items. The tax increase is supposed to generate $47 million and is part of Act 84 of 2016 which Governor Wolf signed into law in July.
Another increase in the Revenue Tax Act is on cigarettes. Also effective on 8/1/16, this tax is increased from $1.60 per pack cigarette tax to $2.60 a pack. The city of Philadelphia also has a separate $2.00 per pack tax, which has been in place since 2014 and was instituted to help fund the city’s public schools. The Pennsylvania Department of Revenue estimates this additional $1.00 per pack cigarette tax increase to bring in $425 million.
Lastly, for business' and other enterprises with Pennsylvania Sales Licenses, the tax vendor discount is being limited for all returns with periods ending after August 1, 2016. For entities who collect the sales tax for the state and are required to file monthly returns, the sales tax vendor discount is capped at the lesser of one percent of the amount of sales tax collected or $25. For those required to file quarterly returns, the discount is capped at the lesser of one percent of sales tax collected or $75. On semi-annual returns the cap is the lesser of one percent of sales tax collected or $150.
Barry L Weller, EA is the president of Barry Weller & Associates with offices at 216 E Philadelphia Ave, Boyertown, PA 19512 Phone (610) 367-8280 He is an enrolled agent, licensed to represent taxpayers before the IRS. 8/10/2016