Pennsylvania adopts nexus standard

Written on Oct 10, 2019

In Corporation Tax Bulletin 2019-04, issued Sept. 30, the Pennsylvania Department of Revenue announced it is adopting an economic nexus standard for corporate net income tax purposes for tax years beginning on or after Jan. 1.

There will be a rebuttable presumption that corporations without a physical presence in Pennsylvania but having $500,000 or more of direct or indirect gross receipts sourced to Pennsylvania annually will have a filing responsibility.

The gross receipts can come from any combination of the following:

  • The sale, rental, lease, or licensing of tangible personal property
  • The sale of services
  • The sale or licensing of intangibles, including franchise agreements

The CNIT Pennsylvania allocation and apportionment rules will be used to determine whether the threshold is met. Corporations with or without a physical presence in Pennsylvania can still claim protection under P.L. 86-272. Corporate taxpayers claiming P.L. 86-272 protection should continue to file a Pennsylvania Corporate Tax Report (RCT-101) and complete the necessary schedules to claim an exemption. For more information, contact the Pennsylvania Department of Revenue.

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  1. Mike Gentile | Oct 11, 2019
    It goes to show that government is inherently evil; motivated by the desire to take what does not rightfully belong to it in anyway it can. Hopefully, other states will adopt the same nexus standard so that Pennsylvania will net zero gain. Regretfully, businesses will pay the cost of compliance, often exceeding the tax.

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