PRINTER'S NO. 333
No. 326 Session of 1999
INTRODUCED BY HART, EARLL, WHITE AND O'PAKE, FEBRUARY 4, 1999
REFERRED TO FINANCE, FEBRUARY 4, 1999
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," further defining "purchase price" for purposes of
11 sales and use tax.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 201(g) of the act of March 4, 1971
15 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended
16 December 13, 1991 (P.L.373, No.40), is amended to read:
17 Section 201. Definitions.--The following words, terms and
18 phrases when used in this Article II shall have the meaning
19 ascribed to them in this section, except where the context
20 clearly indicates a different meaning:
21 * * *
22 (g) "Purchase price."
1 (1) The total value of anything paid or delivered, or
2 promised to be paid or delivered, whether it be money or
3 otherwise, in complete performance of a sale at retail or
4 purchase at retail, as herein defined, without any deduction on
5 account of the cost or value of the property sold, cost or value
6 of transportation, cost or value of labor or service, interest
7 or discount paid or allowed after the sale is consummated, any
8 other taxes imposed by the Commonwealth of Pennsylvania or any
9 other expense except that there shall be excluded any gratuity
10 or separately stated deposit charge for returnable containers.
11 (2) There shall be deducted from the purchase price the
12 value of any tangible personal property actually taken in trade
13 or exchange in lieu of the whole or any part of the purchase
14 price. For the purpose of this clause, the amount allowed by
15 reason of tangible personal property actually taken in trade or
16 exchange shall be considered the value of such property.
17 (3) In determining the purchase price on the sale or use of
18 taxable tangible personal property or a service where, because
19 of affiliation of interests between the vendor and purchaser, or
20 irrespective of any such affiliation, if for any other reason
21 the purchase price declared by the vendor or taxpayer on the
22 taxable sale or use of such tangible personal property or
23 service is, in the opinion of the department, not indicative of
24 the true value of the article or service or the fair price
25 thereof, the department shall, pursuant to uniform and equitable
26 rules, determine the amount of constructive purchase price upon
27 the basis of which the tax shall be computed and levied. Such
28 rules shall provide for a constructive amount of purchase price
29 for each such sale or use which would naturally and fairly be
30 charged in an arms-length transaction in which the element of
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1 common interest between the vendor or purchaser is absent or if
2 no common interest exists, any other element causing a
3 distortion of the price or value is likewise absent. For the
4 purpose of this clause where a taxable sale or purchase at
5 retail transaction occurs between a parent and a subsidiary,
6 affiliate or controlled corporation of such parent corporation,
7 there shall be a rebuttable presumption, that because of such
8 common interest such transaction was not at arms-length.
9 (4) Where there is a transfer or retention of possession or
10 custody, whether it be termed a rental, lease, service or
11 otherwise, of tangible personal property including, but not
12 limited to linens, aprons, motor vehicles, trailers, tires,
13 industrial office and construction equipment, and business
14 machines the full consideration paid or delivered to the vendor
15 or lessor shall be considered the purchase price, even though
16 such consideration be separately stated and be designated as
17 payment for processing, laundering, service, maintenance,
18 insurance, repairs, depreciation or otherwise. Where the vendor
19 or lessor supplies or provides an employe to operate such
20 tangible personal property, the value of the labor thus supplied
21 may be excluded and shall not be considered as part of the
22 purchase price if separately stated. There shall also be
23 included as part of the purchase price the value of anything
24 paid or delivered, or promised to be paid or delivered by a
25 lessee, whether it be money or otherwise, to any person other
26 than the vendor or lessor by reason of the maintenance,
27 insurance or repair of the tangible personal property which a
28 lessee has the possession or custody of under a rental contract
29 or lease arrangement.
30 (5) With respect to the tax imposed by subsection (b) of
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1 section 202 upon any tangible personal property originally
2 purchased by the user of such property six months or longer
3 prior to the first taxable use of such property within the
4 Commonwealth, such user may elect to pay tax on a substituted
5 base determined by considering the purchase price of such
6 property for tax purposes to be equal to the prevailing market
7 price of similar tangible personal property at the time and
8 place of such first use within the Commonwealth. Such election
9 must be made at the time of filing a tax return with the
10 department and reporting such tax liability and paying the
11 proper tax due plus all accrued penalties and interest, if there
12 be any, within six months of the due date of such report and
13 payment, as provided for by subsections (a) and (c) of section
14 217 of this article.
15 (6) The purchase price of employment agency services and
16 help supply services shall be [the service fee paid by the
17 purchaser to the vendor or supplying entity. The term "service
18 fee," as used in this subclause, shall be the total charge or
19 fee of the vendor or supplying entity minus the costs of the
20 supplied employe which costs are wages, salaries, bonuses and
21 commissions, employment benefits, expense reimbursements and
22 payroll and withholding taxes, to the extent that these costs
23 are specifically itemized or that these costs in aggregate are
24 stated in billings from the vendor or supplying entity.]
25 adjusted in the manner set forth in this clause to determine the
26 portion thereof subject to tax under subsection (a) of section
27 202. The total charge for the furnishing of employment agency
28 services shall be reduced by seventy-five per cent of the total
29 charge. The tax shall be calculated at the rate of six per cent
30 on the adjusted charge. The invoice provided to the customer
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1 shall show the total charge prior to the reduction, the
2 percentage reduction and the adjusted charge subject to the tax.
3 The invoice shall also contain a calculation showing
4 multiplication by .06 times the adjusted charge to effectuate
5 the imposition of the tax due. No employment agency service may
6 indicate that the effective rate of the tax is a lesser per cent
7 of the total charge. To the extent that these costs are not
8 itemized or stated on the billings, then the service fee shall
9 be the total charge or fee of the vendor or supplying entity.
10 (7) Unless the vendor separately states that portion of the
11 billing which applies to premium cable service as defined in
12 clause (ll) of this section, the total bill for the provision of
13 all cable services shall be the purchase price.
14 Section 2. This act shall be retroactive to January 1, 1999.
15 Section 3. This act shall take effect immediately.
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