Voluntary Compliance Program For Retailers With Inventory in Pennsylvania

How Pennsylvania’s 90-Day Voluntary Compliance Program Can Save Your Business Years’ Worth of Taxes and Penalties

The Pennsylvania Department of Revenue is offering a limited time Voluntary Compliance Program for retailers who have inventory or store property in the state but are not registered to collect and remit Pennsylvania taxes. This program, which runs through May 8, 2021, offers a limited lookback period with tax and penalty relief when the business becomes and remains compliant.

Businesses may choose to participate in the program and become qualified for the relief provided by completing the Physical Presence Activity Questionnaire either online or by mailing a paper copy.  After this submission, the PA Department of Revenue will review the BAQ and contact the business to discuss steps to become compliant. Taxpayers that are then qualified and approved for this program will not be liable for any taxes owed prior to January 1, 2019. Additionally, taxpayers will also be relieved of penalties for any such taxes which were due January 1, 2019 or after.

A business falls under the requirements of registration and remitting due taxes if you have inventory or other business personal property stored in the state, which establishes a sufficient connection for tax purposes with the state known as physical presence nexus. Even the temporary or transient presence of business personal property in the state can create physical presence nexus and the subsequent tax obligations.

Note, the relief is being offered for businesses with nexus specifically due to inventory or property storage in PA. Other forms of nexus are not subject to the relief, and your business should verify that there is no other potential exposure before contacting the state.

Typically, voluntary disclosure programs such as this one only offer penalty relief, while still requiring the remittance of the full, underlying tax obligation, making this a unique opportunity for taxpayers to maximize their savings and minimize their costs through this type of rare tax relief.  

Tips for the Taxpayer

Businesses should review their current and prior asset and inventory lists to determine whether inventory or other property was stored in Pennsylvania. If inventory or other property was stored in the state, even temporarily, the business should evaluate their tax exposure including penalties and interest for the duration of the presence of such inventory and property. Next, the business should consider the tax savings offered by the Voluntary Compliance Program, which may be substantial and weigh that against the cost of ongoing compliance which is usually minimal and nonetheless legally required.

For More Information

If you are interested in learning more about this topic or other tax topics, please visit our Tax Publications under News and Events at www.allynintl.com.

How Can We Help?

Allyn’s tax team is staffed with seasoned tax professionals experienced in all aspects of Federal, multi-state and local tax compliance and consulting for large US and global corporations.

Allyn regularly conducts nexus reviews and evaluates the benefit of voluntary disclosure programs such as this one. We can assess your tax circumstances and help you make the best call for your business. Our significant expertise in this area means you can focus on your core business while we focus on ensuring you are paying your fair share in taxes and not a penny more.

Contact us and we can provide a customized cost-effective solution to meet your company’s needs. For further information on Allyn Tax services, please contact: tax@allynintl.com.

Contributor: Eleene Ismail 

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About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North America, Europe and Asia and Allyn regional headquarters are strategically located in Fort Myers FL USA, Shanghai P.R. CHINA and Prague, CZECH REPUBLIC. For more information, log on to www.allynintl.com.