New Sales Tax Updates and Old Rules Being Ignored by Pennsylvania Residents

Tax Professionals' Resource
November 6, 2012 — 1,056 views  
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New Sales Tax Updates and Old Rules Being Ignored by Pennsylvania Residents

It is good to warn taxpayers of certain pitfalls when it comes to taxes, especially sales tax. Pennsylvania has a 6 percent general sales tax. It uses a complex system of what items are taxed and what is not taxed. Food is not taxed in Pennsylvania, but prepared food is. That pound of salami from the deli will not be taxed, but a sandwich made by it for sale would be. Residents rely on the electronic cash register systems getting it right. However, residents can make a mistake with items bought out of state and on Native American reservations.

A popular thing among cigarette smokers is to try and avoid the extra taxes Pennsylvania adds to cigarettes by purchasing them online. A sweep was done a few years ago where many smokers received a bill from the state for hundreds of dollars in taxes due when sales records were acquired from the companies selling cigarettes online. Some residents of Pennsylvania are not far from tribal lands. A popular thing is for individuals to buy large quantities of cigarettes on reservations and not pay the additional tax. Many reservations are allowed to buy cigarettes for their own use, but anyone else buying them to take off the reservation is required to pay the taxes.

Pennsylvania recently shut down a whole new retail industry that arose to serve the desires of smokers looking to save on cartons of cigarettes. Shops started popping up across the state in retail locations where smokers could buy bulk tobacco and roll their own cigarettes on site using a machine. A whole carton could be rolled in a few minutes and the extra taxes could be avoided. The retail establishments shut down on July 6, 2012. Ironically, this was two days after Independence Day. The tax rulings do not affect those who roll their own cigarettes at home.

Allegheny and Philadelphia counties in Pennsylvania add their own additional percentages to the state's 6 percent sales tax. Anyone buying in those counties pays a little more for all taxable items. That is automatic and figured up by the cash registers or clerk ringing up the sales. However, one big mistake residents across the state make is to assume that buying things online and not paying a tax absolves them of responsibility. That is not true.

The only real reason residents are not receiving letters from the state's department of revenue is because of the lack of personnel and data to prove the purchases were made. The smart thing is to pay what is due and keep detailed records. Otherwise, at any time, a resident could get a big tax bill in the mail for all of those online purchases made over the years.

 

Tax Professionals' Resource