With only a couple of days to spare before the state unleashed its tax collectors to trample Constitutional and Court protections for interstate commerce, Pennsylvania’s Governor delayed the imposition of sales tax demands on retailers with no presence whatsoever in the state. Had this tax grab not been delayed, it would have threatened the livelihood of reporters and struggling media outlets across the Keystone State.
Back in December, the Pennsylvania Department of Revenue issued a “clarification” that imputes physical presence for any out-of-state retailer who places any paid advertisement with any Pennsylvania media publisher. That includes all local newspapers, magazines, TV, and radio stations, and Internet websites.
Pennsylvania tax collectors claimed that any ad placed with a state media publisher creates a physical presence for the advertiser. The new tax grab didn’t require that the ad be commission-based or that the publisher do any kind of “solicitation.” There was not even a dollar threshold for annual sales, so this rule would have covered even an occasional advertiser who serves Pennsylvania customers.
With this rule, Pennsylvania was set to go further than any other state to expand the meaning of physical presence — which limits how states can impose tax collection burdens on remote businesses.