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What does Pennsylvania State’s Marketplace Fairness law mean for my business?

Overview

You want to know what Pennsylvania State's Marketplace Fairness law (effective April 1, 2018) means for your business.

Environment

AvaTax

Resolution

Pennsylvania State requires sales tax collection and remittance for online marketplaces that include marketplace facilitators, remote sellers, and referrers (such as Amazon or Etsy). See the Department of Revenue site for more information. If your company does not use any marketplace facilitators, no action is needed.

NOTE: Currently, Amazon, Etsy and Walmart remit sales tax directly to Pennsylvania. By using these location codes,  Avalara will not remit taxes for you because we know your taxes are being remitted by these particular marketplace vendors.

If your business uses an online marketplace, see the steps below for guidance on how to identify and report impacted transactions:

  • Create a location code for each marketplace facilitator, allowing you to identify and report the related transactions for this entity. 
  • Assign the new location codes to transactions to report correctly. 
  • Tips:
    • Use your Marketplace Facilitator Name for the Location Code. Note that location codes are case sensitive. For example:
      • Etsy
      • Amazon
      • Walmart
    • Use Marketplace for the Location Description 
    • Use Location for the type of Location 
    • Use Other for the Category 
    • Enter your business address in the Address Information fields

Avalara will decrease the tax liability on your Pennsylvania return by the total amount associated with these new marketplace locations as this tax liability will be collected, remitted, and reported by the marketplace facilitator. Please note, per Avalara’s Terms and Conditions, your Liability Worksheet will continue to reflect your total “Tax Liability.” However, the “Tax Funds” will not include amounts to be paid by your marketplace facilitator on your behalf. Avalara is in the process of enhancing our user interface to better display this tax liability information to you. In the meantime, please run the Sales and Sellers Use Tax Jurisdiction Detail Report making sure to select the “include location” box to reconcile the tax liability.