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In a recent Legal Letter Ruling, the Pennsylvania Department of Revenue has clarified the three “times/seven days” restriction of the isolated sales exemption from sales tax. The Department defines “isolated sale” as the infrequent sale of a nonrecurring nature made by a person not engaged in the business of selling tangible personal property. Sales are considered infrequent if such sales occur no more than three times nor last longer than seven days in any calendar year, January 1 through December 31. The “three times” rule refers to three independent sales activities which may include multiple items on a single invoice. The restriction applies to sales by the seller, not to the customer to whom sales are made. (Legal Letter Ruling No. SUT-08-013, Pennsylvania Department of Revenue, July 16, 2008)

(08/26/2008)

On November 20, 2006, Pennsylvania Governor, Edward Rendell, signed S.B. 854 which enacts numerous exemptions, abatements, and credits. Among the list of tax incentives, a sales and use tax exemption is granted for retails sales of services or tangible personal property, other than motor vehicles, for use at a facility located in a strategic development area (SDA). Furthermore, the exemption applies to the sale or use of building machinery and equipment to a qualified business or a contractor with a construction contract with a qualified business for items to be used only by the qualified business at its facility in the SDA. For a business to be eligible for the incentives, they must own or lease real property in an SDA on which the business actively conducts a trade, profession, or business involved in energy, bioscience or manufacturing, or a related activity. Moreover, the business must meet one of the following criteria: 1) create or maintain a minimum of 500 jobs within the first three years of operations within the SDA, and 2) invest a minimum of $45 million in capital investment in the property located in the SDA within the first three years of operation. Additional incentives, rules, and regulations apply. (Act 151, S.B. 854, Laws 2006)

(02/15/2007)

Pennsylvania exempts defibrillators and related accessories from sales and use tax on the grounds that they alleviate physical incapacities. Therapeutic devices are “devices designed for the use of a particular individual to correct or alleviate a physical incapacity, and a medical supply is tangible personal property used in the alleviation or treatment of injury, illness, disease or incapacity and is consumed during its use.” Since an AED (automatic external defibrillators) is used to correct abnormalities in the heart's electrical system, an AED and its hard paddles are therapeutic devices and are exempt from tax. The disposable electrodes are also exempt because they are consumed during use. Additionally, adaptors and cables are exempt if designed exclusively for use on the exempt AED, along with batteries being exempt if purchased from a medical supply house. (Legal Letter Ruling No. SUT-05-011, Pennsylvania Department of Revenue, May 10, 2005)

(02/13/2007)

The Pennsylvania sales and use tax is applied primarily to those activities enumerated in Article II of the Tax Reform Code. The web-based service of providing exemption certificates for customer completion and other sales tax compliance services are not specifically listed as taxable. The material exchanged between the taxpayer and the client in such a web-based service is not considered tangible personal property. (LR SUT-05-033)

(10/17/2006)

Pennsylvania restaurants that provide free meals to employees or patrons are not subject to sales and use tax. In addition, no use tax is due on restaurant purchases as long as the food is obtained from wholesalers, distributors, grocery stores or other non-eating organizations. However, the restaurant is liable for use tax on soft drinks provided free to employees or patrons. (Legal Letter Ruling No. SUT-05-004, Pennsylvania Department of Revenue)

(08/18/2006)

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