(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 the property
include sales invoices, receipts, contracts, estimate sheets, confirmations or
other similar items.
Employe-A person who performs work for
an employer and is paid for the performance of work or services, including
persons on the payroll or independent contractors.
Employer-A person who hires an
individual for the performance of duties as an employe.
Employment agency-A vendor engaged in
the business of providing employment agency services.
Employment agency services-The service
of attempting to procure or procuring temporary or permanent employment for
prospective employes or employers. Examples of employment agency services
include executive placing services or labor contractor employment
agencies.
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.
Gross fee-Total amount charged by the
seller excluding sales tax.
Service fee-Gross fees less separately
stated employe costs.
(b)
Scope. Effective October
1, 1991, the sale at retail or use of employment agency services is subject to
tax.
(1) An employe reporting to work at a
location in this Commonwealth is subject to tax.
(2) An employe reporting to work at a
location outside of this Commonwealth is not subject to tax, unless the employe
is assigned to work in this Commonwealth.
(3) If the employe is located in this
Commonwealth, it is presumed that the employment agency service is subject to
tax unless documentation supports the reporting to a location outside of this
Commonwealth.
(c)
Examples of taxable services. The following are examples of
taxable employment agency services:
(1) A
Pennsylvania resident contacts a Pennsylvania vendor and is placed with an
employer at a location in this Commonwealth.
(2) A Pennsylvania resident contacts an Ohio
vendor and is placed with an employer at a location in this
Commonwealth.
(3) A Pennsylvania
employer contacts a vendor outside this Commonwealth and accepts an employe for
its location in this Commonwealth.
(4) A New York resident contacts a New York
vendor and is placed with an employer at a location in this
Commonwealth.
(5) A Pennsylvania
vendor paid on an hourly rate interviews and recommends a potential employe to
an employer.
(d)
Examples of services which are not employment agency services.
The following are examples of services which are not employment agency
services:
(1) A Pennsylvania resident contacts
a Pennsylvania vendor and is placed with an employer at a location outside of
this Commonwealth.
(2) A
Pennsylvania resident contacts a New York vendor and is placed with an employer
in New Jersey.
(3) A New York
resident contacts a Pennsylvania vendor and is placed with an employer at a
location in New York.
(4) A
Pennsylvania employer contacts a vendor outside of this Commonwealth and
accepts an employe for its out-of-State location.
(e)
Purchase price.
(1) Effective October 1, 1991, through
December 31, 1991, the purchase price of employment agency services subject to
tax is the gross fee.
(2) Effective
January 1, 1992, the purchase price of employment agency services subject to
tax is the service fee if the employe costs are separately stated; otherwise,
the gross fee is subject to tax.
(3) If the purchase price is canceled or
renegotiated, tax is due on the adjusted purchase price. If an adjustment to
the tax occurs, the vendor is permitted to offset the adjustment against
current tax liabilities.
(4) If the
purchase price is paid on an installment basis, the tax is due on the full
purchase price and is payable at the time the purchaser accepts the contract or
within 30 days of acceptance of the contract.
(f)
Exclusions.
(1) Employment agency 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) Employment services provided by
theatrical employment agencies or motion picture casting bureaus.
(3) Farm labor.
(4) A vendor of employment agency 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 employment agency services. The vendor may also purchase employment agency
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 another taxable service which it may use in the
performance of its employment agency services.
