pa-56-30-1044: Sales factor sourcing sales of tangible personal property and sales factor sourcing sales of services

Summary

The Department of Revenue (Department), under the authority of sections 6 and 201 of The Fiscal Code (72 P.S. §§ 6 and 201) and sections 401(3) and 408 of the Tax Reform Code of 1971 (72 P.S. §§ 7401(3) and 7408), proposes to amend the heading of § 153.26 (relating to sales factor) to limit its scope to tangible personal property and add § 153.26a (relating to sales factor sourcing sales of services) to read as set forth in Annex A. Background and Purpose of Proposed Rulemaking The sales factor is the ratio of a corporation's Pennsylvania sales to its total sales everywhere. It is used to determine what portion of a corporation's income is taxable in this Commonwealth. The act of July 9, 2013 (P.L. 270, No. 52) (Act 52 of 2013) enacted a revised methodology for sourcing revenue from the sales of services in the computation of corporate net income tax. See section 401(3)2(a)(16.1)(C) of the Tax Reform Code of 1971. Furthermore, beginning January 1, 2014, sales of services are no longer subject to the income producing activity and cost of performance rules found in section 401(3)2(a)(17) of the Tax Reform Code of 1971. The purpose of this proposed rulemaking is to establish the processes for sourcing service income and the apportionment of taxpayers' business income to this Commonwealth. This proposed rulemaking also ensures that all taxpayers implement uniform methods for sourcing their sales of services to this Commonwealth. For the past several years, the regulated...

The agency’s own summary, as published.