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Wayfair "Income" Tax Impact - Watch Out for Philadelphia Income Taxes. Yes, "Income"

Many businesses have heard about the June 2018 Supreme Court decision in Wayfair which allows states to require out-of-state businesses to collect sales tax.

As I expected, some taxing authorities, would try to use Wayfair to impose income taxes on businesses with no physical presence. Philadelphia announced that due to Wayfair, it is imposing its business tax on businesses outside of Philly.

Philadelphia’s recently enacted regulation (retroactive to Jan 1, 2019) generally provides that a taxpayer is subject to the city’s Business Income and Receipts Tax (BIRT) if it has generated at least $100,000 in Philadelphia gross receipts during any 12-month period ending in the current year even if it has no physical presence in Philadelphia.

The BIRT has 2 components - a tax paid on gross receipts and a tax based on income that requires 2 tax returns. (Yes, nothing is easy)

For a consultation on how state and local taxes may impact your business, contact me today.

Richard Pon CPA, CFP