P-Card Manual - VIII. Pennsylvania State Sales and Use Tax Exemption Guidance

VIII. Pennsylvania State Sales and Use Tax Exemption Guidance    

1. Most purchases made by Messiah College are exempt from Pennsylvania State Sales Taxes, and it is the cardholder’s responsibility to minimize expenses by ensuring tax is not charged. To that end, cardholders are provided a copy of the college’s sales tax exemption number in the upper left corner of the P-Card  and the PA Sales Tax Exemption form. There are cases where strict adherence to that policy is not practical. Ultimately each cardholder is responsible for exercising prudent judgment when using his or her purchasing card. Therefore if a non-routine transaction is insignificant from a dollar value perspective (under $400.00/<$24.00 applied tax) and it is inconvenient to prove the sales tax-free status of the transaction, then the cardholder can exercise common sense and discretion. However if the purchase is of a large dollar amount (over $400.00/>$24.00 applied tax ) and/or is being made through a supplier that the college frequently does business with, then cardholders must take all necessary steps to ensure that the purchase is free of sales tax. The following provides guidance for specific circumstances.

1.1. Business Lunches – In most cases, it would be inconvenient and ultimately not worth the extra effort to ask cardholders to make sure that the purchase of business lunches be made free of sales tax. Therefore, if the nature of an employee’s work dictates that occasionally they pick up the tab for a few individuals within the context of a business meeting, it is permissible to purchase the meal with sales tax charged. However, if an employee is planning a large function and is making reservations for meeting space and meals, then it is expected that they will provide the organization with an exemption certificate in advance of the meeting.

1.2. Lodging Expenses – Hotels in Pennsylvania will assess residents an occupancy tax that is different from sales taxes. Messiah College is not exempt from Pennsylvania occupancy taxes, and therefore cardholders do not need to seek exemption from any taxes paid on a hotel stay in the State of Pennsylvania. Tax laws vary by state and it is possible to obtain exemption in New York and other states including: New Jersey, Illinois and Florida.

1.3. Web Orders –Cardholders are expected to ensure that all of their qualifying tax-exempt purchases made via the Internet are executed free of Pennsylvania sales tax. Most Web-based suppliers have links to pages that provide instructions on making a sales-tax exempt purchase. Please note that other charges, such as shipping and handling, still apply.

2. Facilities Purchases: Exceptions to Sales Tax Exemption

The primary exceptions to our exemption of Pennsylvania State Sales Tax pertain to items typically purchased by the Facilities department, especially items that are used to construct or replace significant infrastructure of buildings and equipment used to maintain buildings. The intended use of an item is critical to determining taxability. For example, a hammer or saw purchased to maintain real estate would be taxable while a hammer or saw purchased by the art department for educational purposes would be nontaxable. Below are examples for guidance on some of the intricacies of this section of the Pennsylvania tax code.

2.1. Materials and Supplies of a Permanent Nature

2.1.1. A furnace to be installed in an existing building Taxable/Non-Exempt
2.1.2. Building blocks to construct a new building Taxable/Non-Exempt
2.1.3. Light fixtures to replace existing light fixtures in a building Taxable/Non-Exempt
2.1.4. Wall-to-wall carpeting to be installed in a building Taxable/Non-Exempt

2.2. Materials and Supplies for Routine Maintenance and Repair

2.2.1. Paint, paint brushes Nontaxable/Exempt
2.2.2. Light bulbs Nontaxable/Exempt
2.2.3. Floor wax Nontaxable/Exempt
2.2.4. Carpet shampoos Nontaxable/Exempt
2.2.5. Replacement window panes Nontaxable/Exempt
2.2.6. Cement to repoint bricks Nontaxable/Exempt
2.2.7. Roofing tar Nontaxable/Exempt

2.3. Equipment Used for Repair and Maintenance (routine or otherwise)

2.3.1. Purchase or repair of a lawn mower or snow blower Taxable/Non-Exempt
2.3.2. Purchase of a hammer or saw Taxable/Non-Exempt
2.3.3. Purchase or repair of a floor polisher Taxable/Non-Exempt

3. PA Sales Tax charged to a Messiah College P-Card requires the cardholder to submit a request for refund to their P-Card account from the vendor. Any tax amount applied to a P-Card transaction over $24.00 will trigger an automatic audit of the transaction. It is every cardholder’s responsibility to attempt to have PA State sales tax removed from the transaction amount prior to completing the purchase.