Our country will be celebrating Independence Day later this week, and so it’s entirely appropriate that we profile the state where independence was born on July 4, 1776. Philadelphia, Pennsylvania is the epicenter of U.S. patriotism and was the U.S. capital city at one time. The Declaration of Independence was written and adopted there. The Liberty Bell is located there and Betsy Ross sewed the first American Flag in Philadelphia.
Pennsylvania's history is deeply rooted in freedom of religion and spiritual expression. These essential freedoms were principles set forth by William Penn and his followers in establishing Penn's Woods and in creating the frame of government. Pennsylvania is one of four states that share the designation “Commonwealth.” The other three are Virginia, Kentucky and Massachusetts. The state’s first constitution (dating back to 1776) referred to Pennsylvania as both State and Commonwealth.
Which both terms are used today, all legal processes follow Commonwealth.
Pennsylvania was the second state admitted to statehood in the U.S. It is the only original colony not bordered by the Atlantic Ocean. Officially nicknamed the Keystone State, the term dates back to references of Pennsylvania as the “the keystone in the federal union” and the “keystone in the democratic arch.” A keystone is an architectural term for the central, wedge-shaped stone in an arch which hold all the other stones in place.
Pennsylvania is the 33rd largest at just over 46,000 square miles; the 6th most populous at more than 12.8 million residents, and the 9th most densely populated of the 50 United States, with a median income of $48,600.
Probably the most notorious resident is Punxsutawney Phil who lives in a hollow tree in Punxsutawney, Pennsylvania and who uses his weather prognosticating skills to predict the early or late arrival of spring each year on Groundhog Day.
Pennsylvania lays claim to many “firsts,” including the first computer, the first daily newspaper, the first baseball stadium (Forbes Field) and the first World Series (1946 in Williamsport), the first presidential mansion, the first American flag (made by Betsy Ross), and the first public zoo (founded by Benjamin Franklin). Another first, the forerunner of what today we call “Sales Tax”, academics have traced the origin of sales tax in the United States back to a mercantile license tax introduced in 1921 in Pennsylvania.
More than 350,000 Pennsylvanians served in the Union Army during the Civil War, and that war’s most deadly battle, and what many view as the major turning point, took place near Gettysburg. The site would later be the location of President Lincoln’s most notorious address, which many insist was scribbled on the back of an envelope while riding a train to the site.
Edwin Drake successfully drilled the first commercial oil well in 1859, near Titusville, Pennsylvania, leading to the first major oil boom in United States history.
Later, Pennsylvania would become home for two of the largest Steel producers in the world; Pittsburgh-based U.S. Steel and Bethlehem-based Bethlehem Steel. The former blast furnace sites have now been destroyed, preserved, or developed into new ventures.
Because Pennsylvania was one of the first settled areas of the United States, it should come as little surprise that it possesses one of the most interesting collections of historic bridges of any state.
While wooden covered bridges are usually the first that come to mind when people talk about historic bridges, the Rockville Bridge in Harrisburg is the longest stone arch bridge in the world. In addition, James Finley, a Fayette County judge, invented America's first suspension bridge in 1796.
About Sales Taxes and this series:
Thanks to Avalara, the 'tax people', this article is one in a 50 part series covering sales tax issues associated with each and every state tax jurisdiction in the United States. We’re publishing "Sales Tax Tuesday" every week through 2015.
Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
Sales Tax Facts1:
- The Pennsylvania Department of Revenue is responsible for Sales and Use tax administration within the state. Businesses in Pennsylvania are required file and remit sales tax electronically. Avalara’s TrustFile is the only third party software approved for filing sales tax in Pennsylvania.
- Pennsylvania’s state sales tax rate is 6% and is one of the few states with a single, statewide sales tax. The two exceptions being Philadelphia, which is allowed to impose an additional 2% local sales tax and Allegheny County, which is allowed an additional 1% sales tax.
- Sales tax is to be collected on the full purchase price of taxable goods without any deduction on account of the cost of labor, shipping, handling, delivery or installation.
- The following sales are not subject to tax: The services of repairing, altering, mending, pressing, fitting, dyeing, laundering, dry cleaning or cleaning wearing apparel including formal wear and shoes; residential use of steam; natural, manufactured and bottled gas; fuel oil; electricity; basic telephone service and subscriber line charges. Drugs or medical supplies. Coal (a major source of heating in the area). Grocery store food and water. And in their patriotic fashion, flags of the United States and Pennsylvania.
- Pennsylvania is one of only 11 origin sourcing states. This means that sales tax is based on the location of the seller, not the buyer. Pennsylvania is not a member of Streamlined Sales Tax (SST)
- Pennsylvania is one of 15 states that requires business that have enacted click-through nexus laws to require out of state sellers to pay sales tax on sales made through website links over a certain threshold.
A little odd:
- Supernatural powers of persuasion. Pennsylvania offers a 25% tax credit to film companies that spend at least 60% of their total production budget in the state. In 2009, filmmaker M. Night Shyamalan, convinced lawmakers to renew the tax credit in place or risk losing the industry’s business. Shyamalan, who grew up in Philadelphia, claimed that without the credit, filmmakers would take their work elsewhere. The state acquiesced, even granting Paramount a special waiver to claim the tax credit on $29 million in visual effects work that was performed outside the state in California.
- Air your grievances. Need to vacuum your car or pump up your tires? You might want to break out the Hoover at home or take a road trip if you live in Pennsylvania. The state imposes sales tax on all coin-operated compressed air and vacuuming machines.
Manual sales and use tax management, no matter what the particulars or persuasions, is prone to error and consumes valuable time in pass-through rather than revenue-generating activities. No matter how many cities, counties or sales tax jurisdictions you collect and remit tax for, Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation of business sales tax, including integration with QuickBooks via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity.
1 - State by State Sales Tax - Pennsylvania, Avalara - June 26, 2015