Pennsylvania Extends Sales Tax Prepayment Relief

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The Pennsylvania Department of Revenue (the Department) announced (on its website here) that it will further suspend the requirement for businesses that collect and remit Pennsylvania sales tax to make payments of Accelerated Sales Tax (AST) through June 2020.

Under Pennsylvania law, a business that had sales tax liability of at least $25,000 during the third quarter of the previous calendar year is required to prepay its monthly sales tax obligations. A business that remitted $25,000 or more but less than $100,000 during the third quarter of the previous year can remit: (1) 50 percent of the actual tax liability for the same month of the previous year, or (2) at least 50 percent of the actual tax liability for the current period. A business that remitted $100,000 or more during the third quarter of the previous year must remit 50 percent of the actual tax liability for the same month of the previous year.

The Department announced last month that it would waive the AST payment requirement for sales tax payments due April 20, 2020. Taxpayers were instructed to remit actual sales tax collected in March 2020 but were told that they would not be subject to penalties for the failure to make AST payments.

The recent announcement extends the relief previously applicable to April 20, 2020, payments to AST payments due May 20, 2020, and June 22, 2020, confirming that taxpayers will not be subject to penalties for the failure to make AST prepayments otherwise due on those dates. Therefore, on or before April 20, 2020, a business that made taxable sales during March 2020 is required to remit the sales tax it collected in March to the Department. It is not, however, required to make a prepayment of its April sales tax liability even if it ordinarily would be required to do so.

We will continue to monitor the relief offered by Pennsylvania and other states. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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