Q&A with the Pennsylvania Department of Revenue

How does the DOR distinguish non-taxable consulting services that are billed on an hourly basis from taxable help supply services that are billed on an hourly basis?

Jun 30, 2011
Q:

How does the DOR distinguish non-taxable consulting services that are billed on an hourly basis from taxable help supply services that are billed on an hourly basis, and what are the distinguishing aspects of non-taxable computer programming services that are billed on an hourly basis?

A:

If a service provider is contracted to provide an employee capable of performing a task and there is no specified deliverable or finished product, the transaction is considered to be a taxable help supply service. However, if the provider warrants more than the mere fitness of the employee provided and guarantees that the employee will deliver a specified finished product, the transaction is an exempt consulting and/or computer programming service.

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These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.