Pennsylvania Issues Bulletin on Remote Seller Nexus Requirements

On December 1, 2011, the Pennsylvania Department of Revenue issued a bulletin outlining remote seller activities that constitute nexus with the Commonwealth of Pennsylvania. Per the bulletin, if a remote seller 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 seller, and the in-state entity or individual receives consideration for the relationship, the remote seller has nexus in Pennsylvania. Regularly soliciting orders from Pennsylvania customers via the website of an entity or individual physically located in Pennsylvania, such as via click-through technology also creates nexus. This is commonly referred to as “click-through” nexus.

The bulletin also states that the following activities create nexus in Pennsylvania for remote sellers:

• Utilizing affiliates, agents and/or independent contractors located in Pennsylvania who provide repair, delivery or other services relating to tangible personal property sold by the remote seller to Pennsylvania customers.
• Utilizing a remote seller’s affiliates, agents and/or independent contractors to provide services in Pennsylvania that benefit, support and/or complement the remote seller’s business activity.
• Storing its property or the property of a representative at a distribution or fulfillment center located within Pennsylvania, regardless if the center also stores property of third parties that is distributed from the same location.

The bulletin states that the activities above constitute maintaining a place of business in Pennsylvania for remote sellers, thus creating nexus for them in the state and requiring them to collect sales tax on sales within Pennsylvania. The Department will enforce the provisions accordingly. (Pennsylvania Sales and Use Tax Bulletin 2011-01, issued December 1, 2011)