The purpose of this policy is to ensure proper collection, reporting and payment of Pennsylvania State and Local Sales Tax and Other States Sales Taxes.
April 2020Responsible Office
VP of Finance
Sales of Goods and Services
Sales of goods and services, unless specifically exempted (e.g. tuition and fees, professional services including legal and accounting) are generally subject to sales tax collection at a rate of 6% for Pennsylvania, 2% for Philadelphia sales, 1% for Philadelphia hotel occupancy and 1% for Allegheny County.
Sales & Use Tax for Other States vary by jurisdiction. A sales tax template for the various sales tax rates is provided on the Comptroller’s website: https://www.finance.upenn.edu/search/site/sales%20tax
Invoices for taxable transactions to the customers must clearly state the sales prices and the associated sales tax amount. The sales tax applies to delivery or shipping charges made in conjunction with a taxable transaction. Delivery or shipping charges made in conjunction with nontaxable transactions are not subject to tax.
If sales tax is not collected, the selling organization must have available for review by a state auditor the following:
Purchases made by the University for tax-exempt mission related activities are exempt from the sales tax provided that it is a University function and it is charged to a University account number supported by a budget for such purpose.
When purchasing an item that is exempt from sales tax, a request should be made to the Purchasing Department for a sales tax exemption certificate to provide to the vendor.
Centers must report their monthly sales activity to the Tax Office using the worksheets provided in Appendix 1 to 4 briefly described below:
The sales tax liability accrual for a month must be posted to the general ledger by the end of that month. For example, April’s liability must be posted by April 30th. If the liability is not posted by the last day of the liability month, then a backdated sales tax liability entry must be posted within the first 5 days of the succeeding month. The Worksheets provided in Appendix 1 to 3 must be forwarded to the Tax Office on or before the 5th day of each month for the prior months reporting. For example, April’s monthly sales and corresponding sales tax collected must be reported to the Tax Office by May 5th.
Taxability Determination Matrix
A taxability determination matrix is provided on the Comptroller’s website; Corporate Tax, Documents/ Forms, PA matrices: https://www.finance.upenn.edu/content/multi-state-sales-tax-matrix
All Centers must use this matrix to evaluate whether sales tax collection is required for any property or goods sold by that Center.
Each Center engaged in sales and service activities has the primary responsibility for collecting state and local sales tax on all applicable sales at the prevailing rate and accurately reporting this information to the Tax Office and in the general ledger on a monthly basis as outlined in the procedures above.
The Tax Office is responsible for filing the respective tax returns on behalf of the respective Centers and collaborating with Center personnel to ensure that the centers are complying with state and local laws and regulations regarding the collection, reporting and payment of sales tax.
Upon audit, each center will be responsible for providing the auditor with supporting documentation such as invoices. Each center will be responsible for audit deficiencies assessed.