After enactment of the Federal Tax Cuts and Jobs Act last year (which allowed taxpayers to claim bonus depreciation for the full cost of eligible property placed in service after September 27, 2017), the Pennsylvania Department of Revenue issued Corporation Tax Bulletin 2017-02. In Bulletin 2017-02, the Department concluded that corporate taxpayers were required to add back the 100% bonus depreciation amount to Pennsylvania taxable income and that no depreciation deductions would be allowed on…

In a widely anticipated decision in the state tax world, the United States Supreme Court, in South Dakota v. Wayfair (June 21, 2018), has struck down the sales tax physical presence standard set forth in Quill Corp. v. North Dakota, 504 U.S. 298 (1992), and National Bellas Hess, Inc. v. Department of Rev. of Ill., 386 U.S. 758 (1967). Under Quill, an out-of-state seller’s liability to collect and remit sales tax to the consumer’s state…

In Green Acres Contracting Company, Inc. v. Commonwealth, 81 F.R. 2013 (6/13/2017), the Commonwealth Court, en banc, reversed a decision issued by a three-judge panel of the court in August 2016 regarding the scope of the term “guardrails” in the statutory definition of exempt “building machinery and equipment” (“BME”).  The panel had determined that nuts, bolts, washers and guardrail blocks used to attach guardrail panels to guardrail posts did not qualify as tax-exempt BME, and that the exemption was…

In Sales & Use Tax Bulletin 2017-01 (April 10, 2017), the Pennsylvania Department of Revenue announced major changes in its procedures for the handling of sales and use tax refund petitions. The Bulletin provides that “large” refund requests may be addressed through the field audit process. This will be accomplished by allowing the Board of Appeals to “dispose of” a refund petition by issuing a decision and order requiring a field audit. The Department will…

As discussed in prior posts, Sales and Use Tax Ruling No. SUT-17-001, issued by the Pennsylvania Department of Revenue in February, raised concerns that the Department’s interpretation of the term “support” in Act 89 of 2016 exceeded the scope of the taxing statute.  In response to complaints that its original ruling was overbroad, the Department retracted its original ruling and issued a revised ruling on April 4, 2017.  The revised ruling (A5700684) defines software support to include “identifying the source of problems affecting…

As discussed in prior blog posts, Ruling No. SUT-17-001 issued by the Pennsylvania Department of Revenue in February raised concerns that the Department’s interpretation of the term “support” in Act 89 of 2016 exceeded the scope of the statute.  Act 89 imposed tax on digital products, and on “maintenance, updates and support” for such products, as of August 1, 2016.  In Ruling No. SUT-17-001, the Department characterized certain “consulting” and “training” services as taxable “support” services.  The Department has since removed…

Reproduced with permission from Daily Report for Executives, 35 DER (Feb. 23, 2017). Copyright 2017 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com. Daily Report for Executives™ February 23, 2017 Sales and Use Taxes Pennsylvania Deems All Software Support Now Taxable BNA Snapshot  Had been tax-exempt since 1997  Applies to all consulting, training, tech support of canned computer software  Practitioners call it ‘significant overreach’ By Leslie A. Pappas All support for canned computer software—even training…