Q&A with the Pennsylvania Department of Revenue

Scenarios for Corporate Taxes (CNI Tax and CS/FF Tax)

Sep 30, 2013
Corporate Taxes (CNI Tax and CS/FF Tax)

a. Please explain whether sales of the following items would constitute sales of tangible personal property, a service or intangible personal property under H.B. 465:  (1) the licensing of canned software that is delivered (a) on tangible media and (b) delivered electronically; (2) electricity; and (3) natural gas.

The changes made with H.B. 465 makes this a moot point since the sales of all three would be sourced to the state where the product or service is delivered.

b. Please explain how receipts would be sourced under the following scenarios.

i. ABC Corp is hired to perform a marketing study for DEF Corp. The deliverable is a report. The study entails visiting retailers in multiple states, including Pennsylvania. Periodically, ABC Corp. employees will provide DEF Corp. employees located in PA with progress reports. The final report will be delivered to DEF Corp. marketing executives in NJ.

ii. GHI Corp., which only operates in CT, outsources the corporation’s customer service function to JKL Corp. Through a call center located in PA, JKL Corp. handles calls and e-mails from GHI Corp. customers located throughout the U.S. JKL Corp. has nexus with PA and NJ. Please explain whether the sales of the services are delivered to where (1) GHI Corp. is located (CT), or (2) GHI Corp.’s customers are located.   If JKL Corp. is not know where GHI’s customers are located, please explain how the receipts should be sourced.

The changes referred to in Questions b (i) and b (ii) do not go into effect until tax years beginning on or after January 1, 2014. The Department is currently looking at the different scenarios which could occur and how these changes will be applied for each scenario. 
 

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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.