61 Pa. Code § 31.7

Current through Register Vol. 54, No. 50, December 14, 2024

Section 31.7 - Use tax

(a)Imposition. Imposition of use tax shall conform with the following:

(1) A person who purchases taxable tangible personal property or services outside of this Commonwealth incurs a use tax liability at the rate of 6% of the purchase price if the property or services are subsequently used or consumed in this Commonwealth and Commonwealth tax is not paid to the vendor. The use tax is also incurred by a purchaser of taxable tangible personal property or services within this Commonwealth if tax is not paid to the vendor.

(2) Licensees shall report and pay use tax at the time their regular sales tax return is due. Nonlicensees shall report and pay use tax on or before the end of the month following the month during which the tax was incurred.

(3) Purchasers who are licensed by the Bureau of Sales and Use Tax (Bureau) or who reside outside of this Commonwealth shall pay the tax directly to the Bureau. Purchasers who reside in this Commonwealth, except those who reside in Philadelphia County, shall be given the option under the law of paying the tax either directly to the Bureau or to the treasurer of the county in which they reside. The following are illustrations of transactions which give rise to tax liability. It is assumed in each example that the vendor has not collected sales tax from his purchaser:

Example 1. A resident of this Commonwealth purchases a radio from a New York supply house. The purchaser incurs use tax liability whether the purchaser brings it into the Commonwealth himself or has it shipped to him.

Example 2. A resident of this Commonwealth purchases a radio from a Commonwealth vendor who fails to collect tax on the transaction. The purchaser is liable for use tax.

Example 3. A company has offices in New York and this Commonwealth. It sends office equipment purchased in New York to its offices in this Commonwealth. The company incurs use tax liability on the equipment.

Example 4. A New York firm has salespersons soliciting orders in this Commonwealth. It purchases advertising displays in New York which it uses for promotional purposes in this Commonwealth. The company incurs use tax liability on the displays.

Example 5. A furniture manufacturer purchases lumber tax-exempt under a resale exemption certificate. It uses some of the lumber to repair its own office flooring. It incurs use tax liability on the lumber.

Example 6. A resident of this Commonwealth has his truck repaired in New Jersey. The resident incurs use tax liability on the repair charges when he brings his repaired truck into the Commonwealth.

Example 7. A contractor of this Commonwealth purchases plumbing materials from a New York manufacturer to install in houses the contractor is building in this Commonwealth. He incurs use tax liability on the materials.

Example 8. An Ohio contractor brings equipment and materials into this Commonwealth to use or consume in constructing an office building. He incurs use tax liability on the equipment and materials.

(b)Credit against tax. A credit against use tax shall be granted with respect to tangible personal property purchased for use outside of this Commonwealth equal to the tax paid to another state by reason of the imposition, by the other state, of a tax similar to the tax imposed by the TRC, if credit will not be granted unless the other state grants substantially similar tax relief by reason of payment of the tax under the act. A current listing of the states can be obtained upon request from the Bureau.

(c)Alternate imposition. Use tax is generally imposed upon the original purchase price of tangible personal property. Exceptions to this general rule are as follows:

(1)Purchases made 6 months or longer prior to first taxable use-fair market value. For property purchased 6 months or more prior to its first taxable use in this Commonwealth, the taxpayer may elect to pay the tax on the fair market value of the property at the time of its first use in the Commonwealth rather than on its original purchase price. The fair market value is the prevailing market price of similar personal property at the time and place of its first taxable use. The election to use this alternative base shall be made within 1 year from the date the return for the taxable use is due by filing notice with the Bureau on Form PA-3 and by paying tax together with any accrued penalties and interest due.

(2)Vehicle dealer temporarily using inventory vehicle. An election may be made to pay an alternate use tax of 6% of the fair rental value on motor vehicles, trailers or semitrailers, other than wreckers, parts trucks, delivery trucks or courtesy cars, purchased by a dealer for resale and used for a period not exceeding 1 year. See §§ 31.41-31.50 (relating to vehicles).

(d)Exemptions. The provisions of this section are applicable, with the following exceptions:

(1)General exemptions. The resale and isolated sale exemptions and limited exemptions applicable with respect to tangible personal property or services purchased by exempt business entities such as manufacturers, farmers, dairymen or other persons, organizations or institutions entitled to exemption under the TRC are applicable. Reference should be made to individual sections applicable to each particular exemption. Generally, if a purchaser is not subject to tax on the "sale at retail" to him of property or services, he is not subject to tax on their use. This general rule is not applicable to property or services purchased without payment of tax by a nonexempt purchaser from an out-of-State vendor or when an exempt purchaser makes a use inconsistent with his exemption.

(2)Establishment of permanent business or residence in this Commonwealth. When a nonresident natural person or business entity not actually doing business in this Commonwealth brings property into this Commonwealth in connection with the establishment of a permanent business or residence, tax is not due provided the property was purchased more than 6 months prior to the date it was brought into this Commonwealth or more than 6 months prior to the establishment of the business or residence whichever first occurs. This paragraph is not applicable to tangible personal property temporarily brought into this Commonwealth for the performance of contracts for the construction, reconstruction, remodeling, repairing or maintenance of real estate.

(3)Property brought into this Commonwealth by tourists, vacationers for less than 7 days. The use of tangible personal property purchased by a nonresident person outside of this Commonwealth and then brought into this Commonwealth for use herein for a period not to exceed 7 days or for any period of time when the nonresident is a tourist or vacationer is not subject to tax if the property is not consumed within this Commonwealth. This 7-day period is calculated on a cumulative basis within any 12 consecutive months.

61 Pa. Code § 31.7

This section cited in 61 Pa. Code § 31.5 (relating to persons rendering taxable services); 61 Pa. Code § 33.2 (relating to purchase price); and 61 Pa. Code § 60.16 (relating to Local Sales, Use and Hotel Occupancy Tax).