(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.
