--- oa_review_kit: v1 guide_slug: pennsylvania-sales-tax guide_version: pennsylvania-sales-tax@2026-04-13T18:57:17.435Z archetype: vat_gst --- # Review kit: Pennsylvania Sales Tax Thank you for reviewing this Guide. This kit is one file with three parts: how to use it, an interview prompt for your AI, and the Guide itself. ## How to use this kit (3 steps, about 15 minutes) 1. Open the AI you already use (ChatGPT, Claude, Gemini, anything that reads markdown) and paste in everything from "INTERVIEW PROMPT" below, including the Guide at the end. 2. Your AI interviews you like a colleague, one question at a time. Just talk: war stories, walk-throughs, the mistakes you catch. No writing required. 3. Your AI writes your answers up as a single markdown file. Hand it back at openaccountants.com/skills/pennsylvania-sales-tax/handback (also linked from the Guide page: "Hand back your file"). What you added is published under your name and credential. If your AI cannot produce the exact output format, hand back whatever you have: a revised Guide file, a worksheet, or plain notes. We take those too, and a person reviews them by hand. The format below is the one we can apply straight away. --- # INTERVIEW PROMPT (paste from here down into your AI) You are interviewing a practising accountant about how they actually do the work covered by the attached Guide ("Pennsylvania Sales Tax", slug `pennsylvania-sales-tax`). Interview them like a colleague doing a handover. Do not lecture. Ask ONE question at a time and wait for the answer. Chase war stories and specifics: what kind of client, which portal step, how big the penalty was. The rates, thresholds, and citations are our job; we refresh those from primary sources. Capture ONLY what is NOT derivable from law: - order of operations, and what a wrong order corrupts - what to ask a client before computing anything - what to assume when a fact is unknown, and how it gets flagged - the most-missed traps, with penalty size and who falls in - how the portal or filing channel actually behaves - what has to reconcile before anyone signs - when to refuse the work and hand it to a human specialist If the accountant corrects a rate, threshold, or deadline in the Guide along the way, record it in the FACT CORRECTIONS table, but do not steer the interview toward numbers. ## Questions to work through Ask these in order, one at a time. Skip any the accountant has already covered; follow up where a story has specifics worth pinning down. Each question is tagged with the method slot(s) it feeds. 1. [sequence] Walk me through the last VAT return you prepared, start to finish. What did you open first, and why that order? 2. [intake_questions] [evidence] A new client hands you nothing but a bank statement. What do you do before you'll classify a single line? 3. [pattern_library] Which bank-statement line gets misclassified most often in your experience? What does it look like and where should it actually go? 4. [scope_gate] Tell me about a client you refused or referred out. What about their VAT situation made you stop? 5. [trap] When you review a return someone else drafted, what mistake do you catch most often? 6. [conservative_default] When you can't tell if a sale is domestic or cross-border, what do you assume, and how do you mark it? 7. [cross_check] Before you sign, what has to reconcile with what, and how close is close enough? 8. [filing_mechanics] Walk me through filing on the actual portal. What surprises first-timers: the order of forms, what locks, what you can't undo? 9. [judgment_rule] Ever had a client on a simplified scheme where the "simplification" made things worse? How do you decide who belongs on it? 10. [trap] What's the real penalty story you tell clients, the one that actually happened? 11. [evidence] Which claims will you draft from a bank statement but never file without the underlying paper? 12. [unsettled_law] Anything in VAT right now you deliberately won't finalise because the rules are moving? ## Method slots (for tagging the write-up) - `scope_gate` (Scope gate and refusals): when to stop and send the client to a human - `sequence` (Order of operations): what order to do things in, and what a wrong order corrupts - `intake_questions` (Client intake questions): what to ask a client before computing - `evidence` (Documents and evidence): which documents to insist on, and what is draft-grade vs file-grade - `judgment_rule` (Judgment rules): how a practitioner actually picks when the law allows two routes - `conservative_default` (Conservative defaults): what to assume when a fact is unknowable at draft time - `trap` (Traps and most-missed items): the mistakes everyone makes, what they cost, and who falls in - `filing_mechanics` (Portal and filing mechanics): how submission actually works: channel, order, what locks - `cross_check` (Cross-checks before signing): what has to reconcile with what before delivery, and how close is close enough - `pattern_library` (Pattern library): how messy real-world data (bank lines, payout platforms) maps to tax categories - `edge_case` (Edge-case playbook): the client situations that change the method, not just the numbers - `unsettled_law` (Unsettled-law flags): what not to finalise right now, and why - `handback_protocol` (Hand-back protocol): what the finished working paper contains and who reviews it ## Output format: oa-handback v1 When the interview is done, write the answers up as ONE markdown file in exactly this shape. Fill in the reviewer's real name, credential, and email (ask for them at the end if they have not come up). Every method block gets a `### [method:]` heading where `` is one of the 13 slot ids above. Keep `guide_slug` and `guide_version` exactly as given. Omit any section the interview produced nothing for, but keep the headings that remain exactly as shown. The `fact_key` column may be left blank when unknown. ```markdown --- oa_handback: v1 guide_slug: pennsylvania-sales-tax guide_version: pennsylvania-sales-tax@2026-04-13T18:57:17.435Z reviewer_name: reviewer_credential: # free text: CPA, EA, ACCA, Steuerberater... reviewer_email: verdict: --- ## METHOD ### [method:filing_mechanics] ### [method:intake_questions] - - ... ## FACT CORRECTIONS | fact_key | current | correct | source | |---|---|---|---| | | | | | ## FLAGS - [unsettled] - [refer] ## NOTES ``` If for any reason you cannot produce this exact format, output the accountant's corrections and methods as clear plain notes instead. The hand-back page accepts plain notes and revised Guide files too; this format is an optimization, never a gate. --- # THE GUIDE UNDER REVIEW --- name: pennsylvania-sales-tax description: Use this skill whenever asked about Pennsylvania sales and use tax, PA DOR filings, Pennsylvania clothing exemption, Philadelphia sales tax, Allegheny County tax, or any request involving Pennsylvania state sales and use tax compliance. Trigger on phrases like "Pennsylvania sales tax", "PA sales tax", "PA DOR", "PA-3", "Philadelphia tax", "Pennsylvania clothing exemption", or any request involving Pennsylvania sales tax. ALWAYS read this skill before touching any Pennsylvania sales tax work. jurisdiction: US-PA domain: vat-gst tax_year: 2025 --- # pennsylvania-sales-tax ## Section 1 -- Quick Reference **Quick Reference** | Field | Value | | --- | --- | | State | Pennsylvania | | Tax | Sales and Use Tax (state + local) | | State rate | 6.00% | | Local rates | Philadelphia 2.00%; Allegheny County 1.00% | | Maximum combined rate | 8.00% (Philadelphia) | | Sourcing | Destination-based | | Primary legislation | Tax Reform Code of 1971, Article II (72 P.S. 7201 et seq.) | | Tax authority | Pennsylvania Department of Revenue (PA DOR) | | Filing portal | https://www.revenue.pa.gov | | Return form | PA-3 | | SST member | No | | Economic nexus | $100,000 in gross sales (effective July 1, 2019) | | Contributor | Open Accountants Community | | Validated by | Pending -- requires PA CPA or EA sign-off | | Skill version | 2.0 | ### Taxability Quick Matrix **Taxability Quick Matrix** | Item | Taxable? | Notes | | --- | --- | --- | | Tangible personal property | YES | Default taxable | | SaaS / cloud software | YES | Taxable as canned software; custom software exempt | | Grocery food | NO | Most food for home consumption exempt | | Clothing | NO | Most clothing exempt (key PA distinction) | | General services | NO | Most services exempt unless specifically enumerated | | Repair/maintenance of TPP | YES | Taxable | | Cleaning services (commercial) | YES | Taxable | | Digital products | YES | Taxable (digital downloads) | | Manufacturing equipment | NO | Exempt (directly used in manufacturing) | ### Conservative Defaults **Conservative Defaults** | Ambiguity | Default | | --- | --- | | Product taxability unknown | Taxable | | Clothing item unclear | Exempt (most clothing is exempt in PA) | | Custom vs canned software unknown | Taxable (canned) | | Philadelphia or Allegheny unclear | State rate only (6%) | ## Section 2 -- Required Inputs and Refusal Catalogue ### Required Inputs - **Minimum viable inputs** — Nexus confirmation, PA sales tax license, filing frequency, products/services sold, whether selling into Philadelphia or Allegheny County. - **Recommended inputs** — Sales by jurisdiction, exemption certificates, prior PA-3 returns. - **Ideal inputs** — Complete transaction log, exemption certificate register. ### Refusal Catalogue - **R-PA-1 -- Audit defense** — Escalate. - **R-PA-2 -- Complex use tax on construction** — Construction use tax exemptions require specialist analysis. Escalate. ## Section 3 -- Transaction Pattern Library ### 3.1 Taxable Sales **Taxable Sales** | Pattern | Treatment | Notes | | --- | --- | --- | | Electronics / hardware | Taxable at combined rate | TPP | | SaaS subscription (canned) | Taxable | Canned software | | Repair services for TPP | Taxable | Enumerated service | | Cleaning services | Taxable | Enumerated | | Digital downloads | Taxable | | ### 3.2 Exempt Sales **Exempt Sales** | Pattern | Treatment | Notes | | --- | --- | --- | | Clothing (most) | Exempt | PA exempts most clothing | | Grocery food (most) | Exempt | Food for home consumption | | Custom software | Exempt | Designed for specific customer | | Prescription medicine | Exempt | | | Resale with certificate | Exempt | REV-1220 | ## Section 4 -- Worked Examples ### Example 1 -- Sale in Philadelphia **Input:** Retailer sells electronics for $1,000 in Philadelphia. Rate: 8.00% (6% + 2%). **Classification:** Tax = $80.00. Total = $1,080.00. ### Example 2 -- Clothing Sale **Input:** Retailer sells $200 jacket in Pittsburgh (Allegheny County). **Reasoning:** Most clothing is exempt in Pennsylvania. **Classification:** Tax = $0. Clothing exempt. ### Example 3 -- SaaS in PA (Non-Philadelphia) **Input:** Business subscribes to canned SaaS product. $500/month. Located outside Philadelphia/Allegheny. **Classification:** Tax = $30.00/month (6% state rate). Canned software is taxable. ### Example 4 -- Custom Software **Input:** Business pays $50,000 for custom-developed software. **Classification:** Tax = $0. Custom software is exempt in PA. ## Section 5 -- Tier 1 Rules (When Data Is Clear) ### 5.1 Rate Structure - **Rate structure** — State: 6.00%. Philadelphia: +2.00% = 8.00%. Allegheny County: +1.00% = 7.00%. All other areas: 6.00%. ### 5.2 Filing Frequency **Filing Frequency** | Frequency | Criteria | Due Date | | --- | --- | --- | | Monthly | Tax liability > $75/month | 20th of following month | | Quarterly | Tax liability $75 or less/month | 20th after quarter end | | Semi-annual | Very low volume | 20th after period end | ### 5.3 Economic Nexus - **Economic nexus threshold** — $100,000 in gross sales into PA USD (Effective July 1, 2019. No transaction count test.) ### 5.4 Marketplace Facilitator - **Marketplace facilitator collection requirement** — Required to collect and remit. Effective April 1, 2020. ### 5.5 Vendor Discount - **Vendor discount** — 1% of tax collected for timely filing. Maximum $25/month for monthly filers. ### 5.6 Penalties **Penalties** | Penalty | Rate | | --- | --- | | Late filing | 5% per month (max 25%) | | Late payment | 3% per month (max 18%) | | Interest | Federal underpayment rate + 3% | ## Section 6 -- Tier 2 Catalogue (Reviewer Judgement Required) ### 6.1 Custom vs Canned Software - **Custom vs canned software** — Custom software (designed for a specific customer) is exempt. Canned/prewritten software is taxable. Mixed situations require analysis. Flag for reviewer. ### 6.2 Construction Exemptions - **Construction exemptions** — Certain building machinery and equipment used in construction may qualify for exemption. Complex rules. Flag for reviewer. ## Section 7 -- Working Paper Template ``` PENNSYLVANIA SALES TAX WORKING PAPER (PA-3) Business: _______________ License: ___________ Period: ___________ A. GROSS SALES ___________ B. EXEMPT SALES (clothing, food, resale) ___________ C. TAXABLE SALES (A - B) ___________ D. STATE TAX (C x 6%) ___________ E. LOCAL TAX (Philadelphia 2% / Allegheny 1%) ___________ F. TOTAL TAX ___________ G. VENDOR DISCOUNT (if timely) ___________ H. NET REMITTANCE ___________ ``` ## Section 8 -- Bank Statement Reading Guide **Bank Statement Reading Guide** | Narration | Classification Hint | | --- | --- | | PA DOR / REVENUE PA | Tax payment -- exclude | | AMAZON / SHOPIFY / STRIPE | Marketplace or processor | ## Section 9 -- Onboarding Fallback ``` ONBOARDING QUESTIONS -- PENNSYLVANIA SALES TAX 1. Do you have a PA sales tax license? 2. Filing frequency (monthly / quarterly / semi-annual)? 3. Do you sell into Philadelphia or Allegheny County? 4. Nexus type? 5. Products or services sold? 6. Do you sell clothing (exempt in PA)? 7. Do you sell software (custom or canned)? 8. Sell to exempt entities? ``` ## Section 10 -- Reference Material ### Key Legislation **Key Legislation** | Topic | Reference | | --- | --- | | Sales tax imposition | 72 P.S. 7202 | | Exemptions | 72 P.S. 7204 | | Clothing exemption | 72 P.S. 7204(26) | | Software taxability | PA DOR guidance | | Economic nexus | Act 13 of 2019 | | Local taxes | Philadelphia Code; Allegheny County | ### Changelog **Changelog** | Version | Date | Change | | --- | --- | --- | | 2.0 | April 2026 | Full rewrite to v2.0; taxability matrix; clothing exemption; custom vs canned software | | 1.0 | 2025 | Initial version | ## PROHIBITIONS - NEVER charge sales tax on most clothing in Pennsylvania -- clothing is generally exempt - NEVER treat custom software as taxable -- only canned/prewritten software is taxable - NEVER forget the Philadelphia (2%) and Allegheny County (1%) local surtaxes - NEVER treat grocery food as taxable -- most food for home consumption is exempt - NEVER present calculations as definitive -- direct client to qualified CPA or EA ## Disclaimer This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional before filing or acting upon. The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com).