Pennsylvania Sales Tax Absorption

Last Updated on December 6, 2019

The Pennsylvania DOR has issued guidance, effective December 3, 2019, to inform persons responsible for charging, collecting and remitting sales tax of the requirements relating to sales tax absorption. Persons who sell tangible personal property or services subject to sales tax are allowed to “advertise or hold out or state to the public or to any purchaser or user, directly or indirectly, that the tax or any part thereof imposed by this article will be absorbed and paid by such person….”

The ability to absorb sales tax is subject to four conditions:

• the person shall expressly state on any receipt, invoice, sales slip, or other similar document evidencing such sale and given to the purchaser that such person will pay the tax on behalf of such purchaser and shall not indicate or imply that the transaction is exempt or excluded from any tax;
• any receipt, invoice, sales slip, or other similar document evidencing a sale given to the purchaser shall separately state the amount of tax;
• the person, when recording the sale in the person’s books and records, shall separately state the purchase price and the tax; and
• the amount of tax shall be calculated by multiplying the total purchase price by the proper rate of tax.

Any person who advertises or holds out to the public that it will absorb the sales tax is solely responsible for remitting that tax to the DOR. Any person who advertises or holds out to the public that it will absorb the sales tax is also prohibited from requesting a refund of the absorbed tax. This prohibition applies even if the person absorbing the tax later discovers that the tax was incorrectly paid or the sale is canceled and the purchase price is refunded. The bulletin also provides an example of sales tax absorption.