The issue

The Pennsylvania Department of Revenue (DOR) released its regulatory agenda for 2026.

Sales Factor Sourcing Sales of Services

The Pennsylvania Department of Revenue (DOR) has proposed regulations updating the corporate net income tax (CNIT) sales factor sourcing rules. The proposal revises the existing regulation governing the sourcing of sales of tangible personal property and establishes a new regulation providing long-awaited guidance on sourcing receipts from the sale of services.

Sales factor sourcing is a key component of Pennsylvania's corporate apportionment formula and directly affects how multistate businesses determine their Pennsylvania CNIT liability. The proposed regulations are intended to provide greater clarity and consistency in assigning service revenue to Pennsylvania, reflecting the state's shift toward a more service-based economy.

Act 52 of 2013 changed Pennsylvania's methodology for sourcing receipts from sales of services. Since then, taxpayers have relied primarily on DOR Information Notice Corporation Taxes 2014-01 for administrative guidance. The proposed regulations would formally incorporate and expand upon that guidance through the regulatory process.

The DOR has published the proposed regulations for public comment. The PICPA is reviewing the proposal and plans to submit comments to the department.

• PICPA Comment Letter to DOR on Corporate Tax Bulletin - Sourcing of Sales of Intangibles - June 30, 2023

Business Income and Nonbusiness Income

Under Section 6 of the Fiscal Code and Section 401 of the Tax Reform Code (72 P.S. Section 7401(3)), the DOR is amending CNIT regulations by adding Section 153.24a on business and nonbusiness income. It reflects legislative changes and evolving case law on states’ taxation of corporations under the Unitary Business Principle.

• PICPA Comments on Proposed Reg #15-462, Business and Nonbusiness Income - June 20, 2024

Payment Methods for Obligations Due the Commonwealth

Under Section 9 of the Fiscal Code, the DOR and Treasury propose a full revision of Chapter 5 on payment methods for obligations due the Commonwealth. The rule updates allowable payment methods - including cash, check, and various electronic funds transfer (EFT) options - specifies which obligations must be paid by EFT, and outlines penalties for noncompliance.

• PICPA Comments on Proposed IRRC Reg. #15-463, Payment Methods for Obligations Due - June 17, 2024
• PICPA Comments: Final-Form Reg. #15-463 Payment Methods for Obligations Due the Commonwealth - May 26, 2026

Reviewed June 2026