Feb 14, 2020

Pennsylvania Opens Door to Taxing Membership Fees

By Peter N. Calcara, PICPA vice president – government relations

As baseball season gets underway, it seems the Pennsylvania Department of Revenue (DOR) has decided to throw a curveball to the PICPA and other membership organizations. Or maybe it’s just an old-fashioned beanball. On Jan. 31, 2020, the DOR issued Sales and Use Tax Letter Ruling No. SUT-20-001, in which the DOR states that the “taxability of a membership fee depends upon what a member receives in exchange for the membership. If a member does not receive any taxable tangible personal property or taxable services in exchange for the fee, then the fee is not taxable. However, if a member receives taxable tangible personal property or taxable services in exchange for the membership fee, then the fee is taxable.”

Rules and Regulations stampsWhile SUT-20-001 acknowledges that a membership fee in and of itself is not taxable, it states unequivocally that “[i]f the membership fee includes the transfer of taxable tangible personal property, in addition to nontaxable services, the entire charge for the membership is subject to tax.”

This presents a host of issues, both internally and externally. Does this indicate a new focus on 501(c)(6) organizations by the department? Will the PICPA and other professional membership organizations now be subject to this tax for past years? The PICPA is assessing the ruling from many perspectives, including the expansion of the definition of tangible personal property to include digital items (Act 84 of 2016), and evaluating the different paths we could pursue, which includes a legislative solution.

The PICPA is very concerned about this ruling. As you can imagine, it has generated a lot of discussion and angst among the professional membership organizations throughout the state to whom we’ve spoken, and they share in our strong concern. Keep in mind that there was no public vetting on the letter ruling or notice as to its publication, but that’s not unusual. Unlike bulletins or regulations that typically have a public review process, letter rulings are unique because of their confidentiality.

As we work with the DOR, allies in the legislature, and other stakeholders, the PICPA will keep members informed of developments so you can advise your clients with the best, most up-to-date information possible.

Letter Ruling No. SUT-20-001 has been temporarily pulled off of DOR's website pending PICPA's meeting with department representatives later in February. We'll share more information on how the DOR intends to interpret this as it becomes available to us.


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  • Peter Calcara | Feb 28, 2020

    My apologies for not responding sooner to your comments. As a result of our Feb. 21 meeting with the Department of Revenue some matters as they relate to the letter ruling are clearer to PICPA. If you haven't I would encourage you to read that update which can be found at https://www.picpa.org/articles/cpa-now-blog/cpa-now/2020/02/26/dues-tax-meeting-with-dor-provides-clarity. With regard to your specific questions, the simple answer is yes this could apply to 501(c)(6) organizations with a presence in PA. That said, I think the safe bet is to pose these questions to the DOR, which we will be happy to do as part of our submission later next month. In the interim, please do not hesitate to email me (pcalcara@picpa.org) directly with additional questions. 


  • Michele | Feb 24, 2020

    I am curious to see where this goes.  Since my organization is physically located in PA and because we are a c4 does this ruling apply to all non-profits and membership fees?  How does one even consider digital media/services tangible? Also, as Kim mentions above, if an organization is incorporated in a different state but physically resides in PA does this still apply?

    Thank you!


  • Kimball Mohn | Feb 21, 2020
    A second question also occurred to me. Would this tax just apply to the association members who reside in Pennsylvania or would it apply to all members, most of whom reside outside Pennsylvania? Thanks again.
  • Kimball Mohn | Feb 20, 2020

    Thanks for calling this issue to our attention and for letting us know the outcome of your meeting. Would this ruling apply to a 501(c)(6) organization incorporated in another state but operating with an office in Pennsylvania?

    Thanks again,


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