Pennsylvania Offers 90-Day Voluntary Compliance Program for Retailers with Inventory in the State

The Pennsylvania Department of Revenue has opened a 90-day voluntary compliance program with a shortened lookback period for any business that has inventory or stores property in Pennsylvania, but is not registered to collect and pay Pennsylvania taxes. The compliance program is open until May 8, 2021.

Taxpayers that choose to participate in the compliance program will not be liable for taxes owed before January 1, 2019 and will be given penalty relief for any non-compliance for past due tax returns that were not filed and taxes that were not paid.

To participate in the program, a business must complete the Physical Presence Business Activity Questionnaire (either online or in hard copy), after which the Department of Revenue will contact the business on how to become compliant. Once the business is registered, files any tax returns that were due and remits payment of taxes, all penalties resulting from non-compliance will be abated.

Insights

  • This 90-day voluntary compliance program appears to be targeted at marketplace sellers that may have had inventory stored in marketplace facilitators’ warehouses in Pennsylvania for pre-Wayfair periods.
  • Some states are asserting nexus on businesses that have inventory in the state (i.e., physical presence) for pre-Wayfair periods. It would not be surprising if Pennsylvania launched an audit campaign at the conclusion of this 90-day compliance program to assert nexus and assess tax liabilities on businesses that had inventory in the state but failed to participate in the program.
  • The lookback period under the voluntary compliance program is to January 1, 2019, which is more favorable than the three and five years (for sales tax and income tax, respectively) under Pennsylvania's normal voluntary compliance program.

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