What Is Use Tax in Pennsylvania?

Use tax is a tax imposed on the use, consumption, or storage of tangible personal property and certain services in Pennsylvania. It is similar to a sales tax, but it is imposed on purchases made outside of Pennsylvania for use within the state. The use tax is levied to ensure that Pennsylvania residents pay a fair share of taxes on items purchased from outside the state that would otherwise be subject to sales tax if purchased within Pennsylvania.

The use tax rate in Pennsylvania is the same as the state sales tax rate, which is currently 6 percent. Additionally, some local jurisdictions may impose an additional local use tax. The use tax is administered by the Pennsylvania Department of Revenue and must be reported and paid by individuals and businesses on a periodic basis.

FAQs about Use Tax in Pennsylvania:

1. Who is responsible for paying use tax?
Any individual or business that purchases taxable items outside of Pennsylvania for use, storage, or consumption within the state is responsible for paying use tax.

2. When do I owe use tax?
You owe use tax if you make purchases from out-of-state sellers that do not collect Pennsylvania sales tax. This includes online purchases, mail-order purchases, and purchases made while traveling out of state.

3. How do I calculate my use tax liability?
To calculate your use tax liability, you should keep a record of your out-of-state purchases and use the total cost (including shipping and handling) to determine the taxable amount. Multiply the taxable amount by the use tax rate of 6 percent to calculate the amount owed.

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4. Can I claim an exemption from use tax?
Yes, certain purchases may be exempt from use tax, such as items purchased for resale or items purchased for use in a manufacturing or production process. To claim an exemption, you must provide appropriate documentation and follow the guidelines provided by the Pennsylvania Department of Revenue.

5. How do I report and pay use tax?
Use tax is reported and paid on the Pennsylvania personal income tax return (PA-40) or the Pennsylvania corporate tax return (PA-20S/PA-65). If you do not have a personal or corporate income tax return filing requirement, you can report and pay use tax using Form REV-1116.

6. What are the consequences of not paying use tax?
Failure to pay use tax when due may result in penalties and interest being assessed by the Pennsylvania Department of Revenue. The department has the authority to audit taxpayers and assess additional taxes, penalties, and interest for non-compliance.

7. How does Pennsylvania enforce the collection of use tax?
Pennsylvania has partnered with several out-of-state retailers and online marketplaces to collect and remit use tax on behalf of Pennsylvania residents. Additionally, the Department of Revenue conducts audits and utilizes data matching techniques to identify potential use tax liabilities.

8. Can I get a refund for use tax if I later pay sales tax on the same item?
Yes, if you initially paid use tax on an item and later pay sales tax on the same item when bringing it into Pennsylvania, you may be eligible for a refund of the use tax previously paid. You should contact the Pennsylvania Department of Revenue for instructions on how to request a refund.

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In conclusion, use tax in Pennsylvania is a tax imposed on the use, consumption, or storage of tangible personal property and certain services purchased from outside the state. It is important for individuals and businesses to understand their use tax obligations and to report and pay any use tax due to avoid penalties and interest. The Pennsylvania Department of Revenue provides guidance and resources to assist taxpayers in fulfilling their use tax obligations.

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