2011-07-14 / Local & State

Hess Acts To Repeal Semimonthly Sales Tax Reporting

A measure inserted into a key budget bill at the request of Rep. Dick Hess ( R- Bedford/ Fulton/Huntingdon) revises the sales tax collection method to enable businesses to submit sales tax reports to the state once a month, rather than twice a month, which will save them administrative time and accounting fees.

A law enacted in 2009 changed the Sales and Use Tax collection method to require sales taxes to be reported semimonthly. It just took effect on June 1 this year. A Hess amendment to a Fiscal Code bill contained language similar to a measure Hess authored to restore the once-a-month standard for sales tax reports.

“In many cases, when a business collects a sales tax they are actually advancing the money to the state,” said Hess, chairman of the House Commerce Committee. “For example, when a consumer is paying for big ticket items on installment or 90 days same as cash, the business does not collect the entire purchase price or sales tax in the first month, yet the business is still required to send the entire sales tax to the state, even if they technically haven’t received it yet.”

The new law eliminates semimonthly payments and instead requires an advance payment of 50 percent of the preceding calendar year’s sales tax liability. This estimate payment is due on the 20th of the month. A full accounting of the sales tax collected each month will be submitted at the end of the month.

“The twice-a-month sales tax reporting procedure was not business friendly, it’s much simpler from an accounting standpoint to file one report at the end of the month” said Hess. “Removing this requirement will eliminate an unnecessary new burden on small and large businesses alike.”

Currently, businesses receive a 1 percent discount for timely filing of sales tax collections. The bill was signed into law as Act 26 of 2011 and will take effect immediately.

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