We provide here a written summary of answers provided by the Department of Revenue to the committee at periodic question and answer sessions. 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 a specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.

Q&A with the Pennsylvania Department of Revenue

Scenario: A company engages an employment agency vendor to search for and refer potential new employees. The Company ultimately hires some of these referrals, all of whom personally reside outside of Pennsylvania.

Nov 15, 2019
Q:

A company engages an employment agency vendor to search for and refer potential new employees. The Company ultimately hires some of these referrals, all of whom personally reside outside of Pennsylvania. These new employees do not physically work at the employer's PA facility. Instead they are travelling sales staff who work from their homes and, on occasion, may physically visit another of the employer's facilities outside PA.

In terms of their reporting responsibilities, these employees report, on a remote basis, to the VP of Sales who does physically work at the employer’s PA facility. Is the employment agency’s fee subject to PA sales/use tax?

Q:

The controlling factor is the location to which the employee is placed. If the employee’s location of employment is not readily identifiable (i.e. a traveling salesman), the location to which the employee reports is used to determine if employee placement charges are subject to PA sales tax. This would include employees that are located out of state for the convenience of the employee. If the employer requires the employee to be located out of state (per the employment contract), the placement charges are not subject to PA sales tax.
 

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Disclaimer

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.