What is the Pennsylvania Business Privilege Tax and how does it impact organizations that do even occasional business in the state.

1. Understanding
Pennsylvania
Business Privilege Tax

2. Understanding Pa. Business Privilege Tax
About the PICPA
• The Pennsylvania Institute of Certified Public
Accountants is a professional association of more
than 22,000 members working together to improve
the profession and serve the public interest.

3. Pennsylvania’s Business Privilege Tax
What is Business Privilege Tax
• Pennsylvania Business and Mercantile Taxes (BPT)
– One of the many state and local tax
considerations for small businesses
– Small business owners need to take BPT and
other taxes into consideration when developing
a business plan

4. Pennsylvania’s Business Privilege Tax
2014 Updates to BPT
• Clarified uncertainty about who needs to file in Pa.
– Businesses who conduct business in Pa. for 15 or more days
– Business’ permanent base of operations is in Pa. jurisdiction
• Businesses may have to register and file in multiple Pa.
jurisdictions
• Considerations also put in place to avoid double taxation
• Amends Pa. jurisdictions, excluding Philadelphia

5. Pennsylvania’s Business Privilege Tax
Act 511 vs BPT
• Act 511 is also known as Local Tax Enabling Act
– Establishes authority to assess business and mercantile
taxes, as well as additional local taxes
• Most Pa. BPTs are based on taxable gross receipts or
revenues, with no new implementation after 1988
– Result: only about 10% of local Pa. jurisdictions have a BPT
• Businesses in jurisdictions with a BPT encounter challenges
dealing with local taxes

6. Pennsylvania’s Business Privilege Tax
The Sterling Act
• Established an entirely different local tax guideline
for Philadelphia’s BPT
– Two-part tax: taxes gross receipts/revenues and
net income
• Nexus is more strict for Philadelphia
– Any taxable activity by a business that takes
place in Philadelphia

7. Pennsylvania’s Business Privilege Tax
2014 Update to Sterling Act
• Ensures no double taxation of receipts that are
taxed by Philadelphia’s Business Privilege Tax and
local tax jurisdictions.

8. Pennsylvania’s Business Privilege Tax
Dealing with BPT
• Businesses who meet or exceed the 15 day nexus
will be responsible for filing
• Businesses in multiple jurisdictions can be subject to
the different jurisdictions’ business privilege and
mercantile taxes.
• Extensive business review and possibly an
accounting system overview is recommended

9. Pennsylvania’s Business Privilege Tax
Resources
• Finding a local CPA
– www.ineedacpa.org
• Collecting Earned Income Tax
– www.picpa.org/act32
• Resources for small businesses
– www.picpa.org/moneyandlife