61 Pa. Code § 60.4

Current through Register Vol. 54, No. 45, November 9, 2024

Section 60.4 - Help supply services

(a)Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise:

Administrative supplies-

(i) Tangible personal property which is consumed in one of the following manners:

(A) Used but not transferred by a vendor in the performance of this service.

(B) Transferred by a vendor to another party in connection with the performance of the vendor's services when the property is not a critical element of the service.

(ii) Examples of this property include sales invoices, receipts, contracts, estimate sheets, confirmations or other similar items.

Employe-A person who is paid for his work or services by a vendor, including persons on the payroll or independent contractors.

Employe costs-Payments made or withheld by a vendor to an employe, including wages, salaries, bonuses, commissions, employment benefits, expense reimbursements, payroll, withholding taxes, employer paid social security tax or Federal and Pennsylvania unemployment taxes. The term does not include employe recruiting, training, liability insurance, bonding expenses and other costs.

Employment benefits-Paid leave such as vacation; sick leave; health care such as hospitalization, medical, dental or eyeglasses; retirement benefits; or worker's compensation.

Expense reimbursement-Meals, lodging, transportation or another expense incurred by the employe on behalf of the vendor for which the employe is reimbursed.

Gross fee-The total amount charged by the vendor excluding sales tax.

Help supply service-The providing of an individual by a vendor to a purchaser whereby the individual is an employe of the vendor and the work performed by the individual is under the supervision of the purchaser.

(i) The term includes the type of service provided by labor and manpower pools, employe leasing services, office help supply services, temporary help services, usher services, modeling services or fashion show model supply services.

(ii) The term does not include farm labor, home health care, human health-related services, including nursing and personal care. Personal care includes providing at least one of the following types of assistance to persons with limited ability for self-care:

(A) Dressing, bathing or feeding.

(B) Supervising self-administered medication.

(C) Transferring a person to or from a bed or wheelchair.

(D) Routine housekeeping chores when provided in conjunction with and supplied by the provider in clause (A), (B) or (C).

Service fee-Gross fees less separately stated employe costs.

Supervision-Directing the work activities of the vendor's employe either directly or through a supervisor provided by the vendor.

(b)Scope. Effective October 1, 1991, the sale at retail or use of help supply service is subject to tax. If the delivery or use of the service occurs in this Commonwealth, it is subject to tax. For purposes of this section, delivery means an employe reporting for work at a location in this Commonwealth and use means an employe performing work at a location in this Commonwealth. If the purchaser is located in this Commonwealth, it is presumed that delivery occurred at a location in this Commonwealth unless otherwise documented. These principles may be illustrated as follows:

(1) A Pennsylvania purchaser requests a vendor's employe to report to the purchaser's location in this Commonwealth. This is a taxable transaction.

(2) A Pennsylvania purchaser requests a vendor's employe to report to its out-of-State location. No tax is due. However, if the employe does enter this Commonwealth for work purposes, that portion of the transaction is taxable. For example, if the billing period is weekly and the purchaser is billed $100 a day and the employe works 1 day in this Commonwealth, $100 is the gross fee that is reportable in this Commonwealth.

(3) A non-Pennsylvania purchaser requests a vendor's employe to report to a location in this Commonwealth. This is a taxable transaction.

(4) A non-Pennsylvania purchaser requests a Pennsylvania vendor's employe to report to its out-of-State location. No tax is due. If the employe subsequently reports to a location in this Commonwealth, that portion of the transaction is taxable. If the employe is merely passing through this Commonwealth, for example a truck driver traveling from New York to Ohio via Pennsylvania, no tax would be due.

(c)Purchase price.

(1) The purchase price for help supply services subject to tax for the period October 1, 1991, to December 31, 1991, is the gross fee charged.

(2) Effective January 1, 1992, there are three methods to compute the purchase price subject to tax:

(i)Gross fee method. To the extent that employe costs are not itemized or stated on the invoice as in subparagraph (ii), the service fee shall be the gross fee.

(ii)Service fee method. The service fee charged by the vendor is subject to tax.

(iii)Average employe cost or average service fee method. A vendor may, at its own risk, compute its service fee by utilizing an average employe cost or average service fee applicable to its total Pennsylvania business. If it is determined that the average employe cost reported was higher than the actual costs or if the average service fee reported was less than the actual amount, the vendor will be assessed a tax deficiency plus interest and penalties.

(3) If the service fee, average employe cost or average service fee methods are used, at a minimum, the invoice provided to the purchaser shall contain the following information:

Gross Fee	$xxxxx	$xxxxx
Less: Employe Costs	-xxxxx
Taxable Service Fee	xxxxx
PA Sales Tax Rate	xxxxx
PA Sales Tax Due	$xxxxx	xxxxx
Total Invoice Amount	$xxxxx

(d)Examples. The following are examples of taxable help supply services:

(1) A contractor needs immediate help and obtains the services of employes of another contractor.

(2) Transactions between affiliated groups including common paymasters. If the gross fees and employe costs are identical, no service fee exists and no tax is due.

(3) Transactions identified as management fees which include taxable help supply services are taxable upon the total charge unless the taxable help supply services are separately stated.

(4) A law firm needs a secretary for a day and obtains the secretary from a vendor.

(5) A law firm requires the services of a specialized attorney and obtains the attorney from a vendor.

(6) A construction company requires the services of an engineer for 2 years and obtains the engineer from a vendor.

(7) An accounting firm acquires the contract for an assignment that requires more personnel than they have available. The firm contracts with another accounting firm to provide the additional personnel required. The contract for the additional personnel is a taxable transaction. If the two firms had bid the assignment contract as a joint venture, no tax would be due.

(8) A business with one computer operator requires another operator for 2 days a week and obtains an operator from a vendor. If the company had hired the second operator as an employe, no tax would be due.

(9) Exempt equipment rental with an operator. When equipment is exempt and the fee for the operator is separately stated, the operator fee is taxable. If the operator fee is not separately stated, the total charge is taxable.

(e)Examples. The following are examples of services which are not help supply services:

(1) A nursing home requires the services of a doctor once a month and acquires the doctor through a vendor.

(2) A law firm requires the services of a specialized attorney and engages the services of an attorney who is an independent contractor.

(3) A Pennsylvania trucking company requests a Pennsylvania vendor to furnish truck drivers that are to report to the purchaser's out-of-State location.

(f)Exclusions.

(1) Help supply services are exempt if purchased by qualified charitable organizations, volunteer fire companies, religious organizations, and nonprofit educational institutions, except if used in an unrelated trade or business. The services are also exempt if purchased by the Federal government or its instrumentalities; or the Commonwealth, its instrumentalities or subdivisions including public school districts. The manufacturing, mining, processing, public utility, farming, dairying, agriculture, horticulture or floriculture exclusion does not apply.

(2) The vendor of help supply services may claim the resale exemption upon its purchase of tangible personal property which is transferred to its purchaser or a third party in the performance of its help supply services. The vendor may also purchase help supply services from another provider which the vendor resells to its customer. The vendor may not claim the resale exemption upon its purchase of administrative supplies or the purchase of other taxable services which it may use in the performance of its help supply services.

61 Pa. Code § 60.4

The provisions of this §60.4 adopted January 8, 1993, effective 1/9/1993, 23 Pa.B. 180.

This section cited in 61 Pa. Code § 60.8 (relating to secretarial and editing services).