The fun ride continues. The next puzzle is I’ve encountered is figuring out what needs to be done to collect the newly-required sales tax on online purchases. For me, this required two steps.
First, I had to complete paperwork needed to collect the tax by applying for a sales tax license. My accountant told me to complete the PA-100 Enterprise Registration form. If you’ve already completed a PA-100 form when you incorporated your business and/or hired employees, you’ll need to do it again Be sure you have all of your business formation paperwork handy including your EIN, date of initial business operation, and all ownership information (including the social security numbers and dates of birth for all partners or those with a financial investment in the company).
Once this paperwork is complete and processed successfully, the state will issue you the license in approximately seven to 10 days.
The second task was figuring out how to collect the tax with a purchase. I had a few initial questions: Can I collect the tax through PayPal? Does it apply to those purchasing the product out-of-state? We researched PayPal and found that you can collect the tax through the merchant system. There are premium merchant services that allow for automatic tax calculation based on the zip code of the buyer, but we weren’t sure if the new state law applies only to PA residents buying a product online from a PA merchant or if PA merchants selling online to anyone must collect the tax.
I found another document from the Revenue Department that read, “any remote seller operating a ‘place of business’ in Pennsylvania must collect the tax.” It clarified that a “place of business” includes offices, distribution houses or warehouses (think Amazon). To me, that means a buyer will need to pay the tax regardless of where they live, as it’s the seller’s responsibility to collect even if their place of business is their home.
Next, I will need to find out how to remit the taxes once collected. I have about seven weeks from product launch until the end of the tax year, so I’m hoping I can file them with my yearly taxes.
Have you gone through this process to collect taxes for an online product in PA? What advice can you share?
"Developing a Product" Blog Archive:
September 26: Marketing & the Affiliate System
September 19: Lessons Learned from My First Self-Hosted Webinar
September 12: Brain Drain is in Content
September 5: Marketing & List Building
August 29: Marketing & Content
August 22: A Fun Ride