Reed Smith Client Alerts

The Pennsylvania Department of Revenue issued Corporation Tax Bulletin 2019-04 announcing its new "economic nexus" policy for corporate net income tax purposes, effective for tax periods beginning on or after January 1, 2020. This reverses the Department's longstanding policy of not asserting economic nexus for income tax purposes." Businesses evaluating the impact of this change should pay close attention to Pennsylvania's sales-factor sourcing rules - and consider the potential impact of pending sales-factor litigation - to determine whether they have any Pennsylvania-source sales and thus, an income tax liability.

On September 30, 2019, the Pennsylvania Department of Revenue issued Corporation Tax Bulletin 2019-041, announcing that "Wayfair has confirmed that out of state corporations are considered to be doing business in this Commonwealth ... to the extent they are taking advantage of the economic marketplace of the Commonwealth regardless of whether they are physically present in Pennsylvania." According to the Bulletin, although all corporations with economic nexus under that standard should file corporate tax returns in Pennsylvania, there will be a rebuttable presumption of corporate net income tax nexus for any corporation with at least $500,000 of sales "sourced to Pennsylvania per year pursuant to the sales factor rules contained in 72 P.S. § 7401."