Compliance: Business Basics
Sales & Use Tax, Employee Withholding and Income Tax

Department of Revenue

Businesses must register with the Pa. Department of Revenue by completing the Online Business Resource Interview (OBRI), the online form PA-100 or by submitting a paper form.

Sales Tax

The sales and use tax is imposed on the retail sale, consumption, rental or use of tangible personal property in Pennsylvania . The tax is also imposed on certain services relating to such property and on the charge for specific business services. Major items exempt from the tax include food (not ready-to-eat); candy and gum; most clothing; textbooks; computer services; pharmaceutical drugs; sales for resale; and residential heating fuels such as oil, electricity, gas, coal and firewood.

The Pennsylvania sales tax rate is 6 percent. By law, a 1 percent local tax is added to purchases made in AlleghenyCounty, and 2 percent local tax is added to purchases made in Philadelphia.

See the Retailers' Information Guide (REV-717) for a list of taxable items. This publication applies to landscape contractors, nurseries selling at retail and garden centers.

For wholelsale nurseries, see the publicaton Tax Information For Farmers (REV-1729) for the special rules pertaining to sales and use tax for farmers.

Also, note that lawn care services are subject to sales tax. Landscape maintenance and lawn care companies performing lawn care services must collect and remit sales tax on these services. See the Pennsylvania Code for more detailed information on what is and isn’t taxable when it comes to lawn care services.

Use Tax

A use tax, at the same rate as sales tax, is due on taxable purchases of tangible personal property or specified services used or consumed in Pennsylvania where no sales tax is paid to a vendor. For example, the purchase may have been made out-of-state, Internet or catalogue sales are the most common form of transactions that are subject to use tax.

Employee Withholding

Pennsylvania law requires employers to withhold Pennsylvania personal income tax from employees’ compensation in two common cases:When resident employees perform services within or outside Pennsylvania ; andWhen nonresident employees perform services within Pennsylvania.

An employer is any individual, partnership, association, corporation, government body or other entity that employs one or more persons, which is required under the Internal Revenue Code to withhold federal income tax from wages paid to an employee.

You must register with the Department of Revenue to withhold and remit employee taxes. You can use the OBRI, the online form PA-100 or by submitting a paper form.

Income Taxes

Depending upon your business type, you are required to pay income taxes according to rules specific to your business type. Go to the Department of Revenue’s Tax e-Services page for more information.