BUSINESS PRIVILEGE and/or MERCANTILE TAX
RULES and REGULATIONS
These regulations are enacted for the purpose of the administration of the Business Privilege
and/or Mercantile Tax. Where Taxing District is indicated, that refers to the political subdivision
enacting the tax.
1. DEFINITIONS
(See appropriate section of ordinance.)
2. BUSINESS
a. Carrying on or exercising for gain or profit, in the Taxing District, any trade, business,
profession, vocation or commercial activity, or making sales in the Taxing District. A profession
or vocation or any rendering of personal services in the Taxing District in any capacity, except as
an employee of another is Business.
3. WHAT CONSTITUTES "DOING BUSINESS IN THE TAXING DISTRICT"?
a. Whether or not a person carries on a taxable activity within the meaning of the Business
Privilege and/or Mercantile Tax Act is essentially a question of fact. In general, taxable activity
includes any trade, business, profession, vocation or commercial activity that is carried on in the
Taxing District. The tax is imposed on any person who exercises the privilege of carrying on
certain activities in the Taxing District and on any wholesale or retail vendor in goods, wares or
merchandise, and is measured by receipts received or allocable to the Taxing District.
1) Interstate and Intrastate Business. Doing business includes any trade, business,
profession, vocation or commercial activity of an intrastate or interstate character.
2) Residence or Domicile. A person who engages in a taxable activity in the Taxing District
is subject to this tax whether or not he is a resident and whether or not he has a permanent
place of business in the Taxing District.
3) Foreign Corporation. A foreign corporation is subject to this tax if it carries on a taxable
activity in the Taxing District whether or not it is licensed to do business in Pennsylvania.
4. ALLOCATION OF BUSINESS DONE AND GROSS VOLUME OF BUSINESS
a. General. Generally, receipts will be considered allocable to the place of business in the Taxing
District if any significant aspect of the transaction occurs at the place of business located within
the Taxing District.
b. Lessors of Tangible Personal Property. Persons doing business within the Taxing District who
own and hold title to tangible personal property which is leased to others are required to report
the gross receipts from the rental of or license to use according to the following:
1) Where the lessor maintains an office or place of business within the Taxing District, said
receipts are wholly taxable regardless of the fact that the property is situate outside the
Taxing District and/or regardless of where the lease agreement is executed.
2) Where the lessor maintains a regular and permanent office or place of business outside
the Taxing District, those receipts which are attributable to said office located outside the
Taxing District are non-taxable.
c. Lessors of Real Property. Persons doing business within the Taxing District who own and hold
title to real property are required to report the gross receipts from the rental of all such property.
Where the lessor has deliberately acquired rental property, receipts from same are subject to tax.
d. Situs of Sales. The gross receipts from the sales of goods which are affected by a vendor or
dealer within the Taxing District are subject to taxation.
1) A sales of goods is effected where a representative or a place of business of the vendor
located within the Taxing District receives and/or accepts a customer's order and instructs
shipment of said goods to the customer.
2) The mere solicitation of a customer or potential customer within the Taxing District is
insufficient to constitute the effecting of a sales of goods within the Taxing District and
is, therefore, not subject to taxation.
3) The place of shipment of the goods and/or the location of the vendee is insufficient to
determine the situs of the sale of goods.
5. INTERSTATE COMMERCE
a. General. A direct tax upon the privilege of conducting interstate commerce is invalid; however,
the fact that a transaction involves interstate commerce does not prohibit local taxation.
b. Defined. Interstate commerce is defined as the traffic, intercourse, commercial trading, or
transportation of persons or property between or among the several states of the United States, or
from or between points in one state and points in another state, commerce between two states, or
between places lying in different states.
c. Shipment From Vendor to Point Out of State. Where a transaction for the sale of goods is
consummated or effected within the Taxing District and the vendor thereafter delivers or ships
said goods to the vendee to a point outside of Pennsylvania, said sale will not be deemed to
involve interstate commerce.
d. Shipment From Vendor to Point Outside of Taxing District. Where a transaction for the sale of
goods is consummated or effected within the Taxing District and the vendor thereafter delivers or
ships said goods to the vendee to a point outside the Taxing District but within Pennsylvania, said
sale will not be deemed to involve interstate commerce.
e. Interstate Commerce - Local Nexus. Although a transaction for the sale of goods viewed as a
whole may be one deemed to involve interstate commerce, if there exist sufficient "intrastate
events" or "local activities" in connection therewith, the gross receipts from same shall be subject
to local taxation.
6. CONTRACTORS PERFORMING BUILDING OR CONSTRUCTION WORK OUTSIDE
THE TAXING DISTRICT
a. General. Where a contractor or subcontractor is located or maintains a place of business within
the Taxing District but is engaged in the performance of building and construction contracts at a
point outside the territorial limits of the Taxing District, the receipts derived therefrom are subject
to the tax.
b. Contractors With Field Offices
1) Where a contractor or subcontractor is located or maintains a place of business within the
Taxing District but is engaged in the performance of building and construction contracts
at a point outside the territorial limits of the taxing district, and said contractor or
subcontractor has established an office or place of business at the situs of the construction
job or project by maintaining a field office thereat with machinery and equipment
necessary for the fulfillment of the contract, and performed such other acts as to
constitute "doing business" at the situs of the construction job or project, then said
receipts derived there from shall be excluded from taxation.
2) Where a contractor or subcontractor is located or maintains a place of business outside
the Taxing District but is engaged in the performance of building and construction
contracts within the Taxing District and has established an office or place of business at
the situs of the construction job or project by maintaining a field office thereat with
machinery and equipment necessary for the fulfillment of the contract, and performed
such other acts as to constitute "doing business" within the Taxing District, then said
receipts derived therefrom are subject to the tax.
7. BROKERS AND AGENTS WITH OUT-OF-TAXING-DISTRICTS OFFICES
a. Where a general agent or broker of an insurance, real estate, or other firm maintains a branch
office outside of the Taxing District, the commissions attributable to such branch office may be
excluded from gross receipts. If any significant aspect of the transaction occurs in the Taxing
District as a result from the efforts of brokers, sub-agents or employees who work in, or from, or
are attached to the Taxing District, such commissions shall be included in gross receipts.
8. TAX RATE AND COMPUTATION OF TAX
(See appropriate section of ordinance.)
9. PERSONS, BUSINESS AND RECEIPTS EXEMPTED
a. Non-profit Corporations or Associations, Religious, Charitable and Educational Institutions,
Persons, Entities, Transactions and Other Matter Exempted by the Provisions of the Act or Other
Applicable Law. Business Income Not Excluded. The exclusion from taxation of receipts from
the business of nonprofit religious, charitable or educational organizations is limited to those
receipts derived from activities which are connected with the non-commercial operations of the
organization. Commercial activities carried on by such an organization are taxable. All business
income of non-profit religious, charitable and educational organizations is taxable.
b. Receipts From Sales to Governmental Agencies and Non-profit Organizations. Sales to
institutions, receipts from sales made or services rendered to governmental bodies, and to
religious, charitable and educational corporations and associations shall not be excluded from the
tax base. The statute does not grant any exemption to taxpayers transacting business with such
agencies or institutions.
10. STATE TAX OR LICENSE
a. Nominal or Registration Fees. The fact that a taxpayer receives a certificate or other document
which is designated a "license" from the Commonwealth of Pennsylvania for which the taxpayer
pays a sum of money does not exempt the taxpayer from the Business Privilege and/or Mercantile
Tax. Flat annual fees, fees which are not related to gross income or amount of production, or fees
that are nominal in nature are not considered true license fees; and, hence, payment of such fees
will not exempt the taxpayer from the Business Privilege and/or Mercantile Tax.
b. Payment to the Taxing District for housing permits, building and plumbing permits, etc., will
not exempt the taxpayer from the Business Privilege and/or Mercantile Tax.
c. Non-licensed Functions Taxable. The receipts of any person who falls within the state tax or
license fee exemption, which are derived from any activity which if conducted separate and apart
from other business activities would be subject to the state tax or license fee shall not be excluded
from the tax base.
d. Local Tax Under State Authority. Local taxes by counties, municipalities or other public
bodies though authorized by state legislation are not considered state taxes or license fees.
e. Monies Returned to Municipalities by the State. Any tax which is collected by the state but
which, with the exception of administrative costs, is returned to the municipalities, is not
considered a state tax or license fee. Such taxes include, but are not limited to:
1) gross receipts taxes of non-Pennsylvania Fire and Casualty Insurance Companies;
2) license fees for hotel, restaurant and club liquor licenses.
f. State license fees which exempt receipts earned thereunder include but are not limited to those
fees levied under the following acts:
1) The Pennsylvania Securities Act of June 24, 1939, P.L. 748, as re-enacted and amended
(70 P.S. Sec. 31, et seq.)
2) Small Loan Companies Act of June 17, 1915, P.L. 1012, as amended (7 P.S. Sec. 6151, et
seq.)
3) Consumer Discount Companies Act of April 8, 1937, P.L. 262 as amended (7 P.S. Sec.
6201, et seq.)
11. UTILITIES
a. Non-utility Functions Taxable. The receipts of any public utility, operating under the rules and
regulations of the Pennsylvania Public Utility Commission, derived from supplying services at
rates specified in its tariffs shall be excluded from the tax base. Public utilities shall not exclude
from their tax base receipts derived from sales of appliances, equipment, advertising, etc. A
contract carrier is not a public utility.
12. DETERMINATION OF GROSS OR WHOLE VOLUME OF BUSINESS
a. This section refers to specific deductions from gross receipts as set forth elsewhere herein. (See
appropriate section of ordinance.)
13. GENERALLY
a. Gross receipts means gross consideration received in, or by reason of, any sale made, or
services rendered or commercial or business transaction occurring in or attributable to the Taxing
District including cash, credits, and property of any kind or of any nature without deduction on
account of the cost of materials, labor, services, or other costs, interest or discount paid, or any
other expenses whatsoever.
b. In general, the word "sale" is used in the definition of the term "gross receipts" includes, but is
not limited to any transfer of title for a consideration. It includes exchange, barter, and bailments.
c. Products Manufactured or Grown in the Taxing District.
(1) Gross volume of business derived from the above mentioned is not subject to the tax.
14. REAL ESTATE BROKERS
a. Generally, real estate brokers and agents are required to report as taxable receipts, the
commissions and fees received for services rendered as agent in promoting the purchase and sale
of real property for others. Brokers and agents not having an office in the Taxing District shall
report as taxable receipts commissions
received on the sale of properties within the Taxing District. Such amount does not include the
gross selling price of property, except as set forth in sub-paragraph c.
b. Deductions of Shared Fee. A real estate broker or agent may exclude from his tax base any
commissions paid by him to another broker or agent on account of a contract or purchase or sale
initiated, executed, or cleared in conjunction with the broker, salesman or agent to whom the
commission or part of the commission is paid. Commissions paid to a salesman by a broker or
agent when the salesman is affiliated with the broker or agent are not excludable from the
broker's or agent's tax base.
c. Brokers Sale of Owned Property. If a person is in the business of taking title to real property
and selling the property, he is required to include the gross selling price of the property taxable
receipts. The same person may be taxed both as a broker and as a seller, depending on the nature
of the transactions. If he acts as a broker, salesman or agent, his tax is based on commissions.
d. If he buys and sells real estate whether in his own name or in the name of a straw party, he is
taxed on the gross selling price of the real estate.
15. TRAVELING EXPENSES
a. Reimbursement of traveling expenses excluded from gross receipts only if the taxpayer
incurred such traveling expenses as agent for another from whom the taxpayer receives
reimbursement for such expenses.
16. TRADE DISCOUNTS
a. Deductions Allowed. Trade discounts allowed to customers may be deducted from the gross
amount charged in ascertaining the amount to be reported as receipts from sales. Trade discounts
include:
(1) discounts deducted from the face amount of the bill as a method of adjusting the list price;
(2) discounts unconditionally deducted by customers at settlement of their bills and allowed as a
matter of established custom of the trade without regard to the due date of such bills or the form
or terms in which such discounts are described or stated on bills.
17. OTHER DISCOUNTS
a. Deductions Allowed. Discounts allowed to customers as cash discounts for prompt payment of
their bills may be deducted from gross receipts.
18. FREIGHT, DELIVERY, OR OTHER TRANSPORTATION CHARGES
a. If Seller Contracts to Deliver. If the seller contracts to deliver the property sold to some
designated place, or is obligated under the terms of the contract to pay transportation charges to
some designated place, the transportation services are rendered to the seller and the freight,
delivery or other transportation charges so incurred by the seller may not be deducted from gross
receipts.
b. If Buyer Deducts Cost of Delivery From Payment. If property is sold on terms requiring the
seller to deliver such property to a designated place but the purchaser pays the amount of freight,
delivery or other transportation charged in the first instance, and deducts such charges from the
invoice price in making remittance to the seller, no deduction from gross receipts may be taken
therefor by the seller.
c. If Seller Advances Charges. Where the seller advances the freight, delivery or other
transportation charges for the account of the purchaser in accordance with the terms of the
contract of sale, such charges may be excluded from the gross receipts of the seller provided:
(1) that such charges are the actual charges incurred and are billed as such to the purchaser, and
(2) that the books and records of the taxpayer clearly indicate such facts.
19. PRINCIPAL AND AGENT
a. General. Receipts from sales made, or services rendered, by an agent for the account of his
principal are to be reported by the principal. It is immaterial in such cases whether the customer
or client remits directly to the principal, or to the agent for transmittal to the principal. The agent
is required to report as gross receipts only the commission withheld by him as compensation for
his services before remitting to his principal and any commission paid to him after remitting to
his principal. No deduction from gross receipts may be taken by the principal for commission
paid to, or withheld by the agent. A manufacturer's representative is taxable on his gross
commissions unless his relationship to his principal is that of employer and employee. This
relationship of employer and employee exists if the principal pays social security and
unemployment compensation taxes on behalf of the person claiming exemption and if, in the
event of an accident in the course of employment, the manufacturer's representative might
become entitled to workmen's compensation.
b. Undisclosed Principal. A person selling property, including real property or rendering services
for an unknown or disclosed principal, is subject to tax as a principal unless there is disclosed in
the agent's return the identity of the principal and the amount of the sale made on his behalf.
c. Condition as to Recognition of Agency. A person will be regarded as acting as agent or broker
in promoting or soliciting sales or rendering services for the account of a principal when it
appears:
(1) that the contract or agreement between such persons clearly establishes the relationship of
principal and agent;
(2) that the books and records of the agent or broker show the name of the actual owner of the
property on whose behalf the sale is made;
(3) that the books and records of the agent or broker show the amount of gross sales and the
amounts of commission due thereon.
d. Collection by Agent. Money or property received by a taxpayer, as agent, for transmittal to a
third party is not to be reported by such taxpayers as gross receipts; but any commission received
by him for his services as agent must be included in gross receipts.
e. This section shall apply to advertising agencies, public relations, and any other service business
which meets the agency criteria.
20. CONDITIONAL AND INSTALLMENT SALES
a. Reported as Cash Sales. A person making conditional sales or other installment sales of
property is required to report the total selling price of such sales as gross receipts for the tax year
in which the contracts of sale are entered into, without regard to the fact that the seller may
arrange to receive payment from the purchaser on an installment basis or that such contracts may
be discounted or pledged with, or sold to, a finance company.
b. Property Repossessed. Where tangible personal property, sold under a conditional or other
installment sales contract, is repossessed by the seller, and the repossessed property is
subsequently sold, the receipts from such sales are to be included in the measure of the tax only to
the extent that the amount of the sale exceeds the balance due on the original sale at the time of
repossession. No deduction from gross receipts may be taken for any unpaid balance due at the
time of repossession. Such deduction shall be allowed upon resale if the resale price is less than
the unpaid balance.
21. EXCHANGES BETWEEN DEALERS IN SIMILAR LINES
a. Where dealers engaged in similar lines of business exchange articles of tangible personal
property and one of them makes payment to the other in addition to the property exchanged by
him, the transactions constitute sales to each other. The receipt of each dealer is measured by the
gross value of the consideration received by him. Where a dealer transfers property, such as an
automobile, to another dealer with the understanding that property of identical description will be
returned at a subsequent date, such transaction does not constitute a sale, and the value of the
property exchanged need not be included in the gross receipts of either dealer. Receipts by dealers
from sales to other dealers in the same line where the dealer transfers title or possession at the
same price for which he acquired the merchandise may be excluded from gross receipts.
22. LEASED DEPARTMENTS
a. Return by Lessor. Where a person leases a department of his business to another, such person
may include in his return the gross receipts from business done and sales made by lessee. When
the business of such leased department is included in the return made by the lessor, a schedule
must be attached to the return containing the name of the lessee, a description of the department
operated, and a statement to the effect that the lessor assumes liability for reporting the gross
receipts and paying the tax accruing against the lessee of such department. The lessee, however,
is not relieved from his liability for business privilege taxes if the lessor fails to make a proper
return or fails to pay the tax due. Should a change occur in the ownership or status of any leased
department, the lessor shall notify the collector of taxes promptly.
b. Return by Lessee. If the lessee wishes to file returns independently, such lessee is required to
include in his return the entire gross receipts of said lessee whether collected by the lessor, or the
lessee without deducting any expense or commissions charged to him by the lessor. To expedite
the examination and audit of returns filed by such lessee, the Collector of Taxes may require the
lessor to furnish a statement of the entire gross receipts collected on behalf of the lessee.
23. PERSONS ERECTING BUILDINGS OR OTHERWISE ALTERING, REPAIRING, OR
IMPROVING REAL PROPERTY
a. General. A contractor or subcontractor, resident or non-resident, engaged in the business of
erecting buildings, or otherwise altering, repairing or improving real property, or other major
construction work, is required to report as gross receipts all receipts derived from the
performance of such contract. The amount of receipts to be included in the tax base shall be the
full contract price, that is the total amount received or receivable by way of a fixed or
determinable amount under the terms of the contract. The contract price will be considered to
include all charges made by a contractor, or subcontractor, for materials, labor, supervision,
overhead costs, and profit. In the case of the general contractor, prime contractor or subcontractor
employing lower-tier subcontractors, no deduction may be made with respect to amounts paid to
subcontractors and materialmen, unless it can be shown that the subcontractor has paid the
Business Privilege Tax to the Taxing District on the same gross receipts stemming from the same
contract.
b. Cost-plus Contracts. A general contractor performing contracts on the basis of a "cost-plus-a-
fixed-fee" or "cost-plus-a-percentage" is required to report as gross receipts the full contract price
as explained above, unless he has no connection whatsoever with the purchase of materials and/or
the hiring of labor. In cases where the owner of the property buys the materials and hires all labor
in his own name and pays the general contractor a fixed fee, or a percentage of the total cost to
supervise and direct the construction project, the general contractor will be required to report only
the gross amount of the fee or percentage received. Where the owner authorizes the general
contractor to make for him such purchases of tangible personal property, or hire such labor or
engage such subcontractors as are necessary for the performance of the contract and (1) pledges
his credit and is liable in the first instance to the materialmen, suppliers, laborers or
subcontractors, as distinguished from merely guaranteeing payment of them or undertaking to
reimburse the general contractor for the cost of such materials, services or subcontracts and (2)
agrees to make payment directly to the materialmen, suppliers, laborers and subcontractors, such
sales or services will be regarded as made directly to the owner, and the general contractor will
not be required to include such items in his gross receipts.
c. Contractors or subcontractors permanently or temporarily doing business in the Taxing District
shall register and file a tax return. (General contractors are required to withhold final payment to
subcontractors, temporarily doing business in the Taxing District, until proof of payment of the
tax is furnished to them by such contractors.)
d. Contractors or subcontractors with an office in the Taxing District who are engaged in the
performance of building, construction or engineering contracts at a point outside the territorial
limits of the Taxing District may exclude from the measure of the tax the gross receipts derived
there from, provided that a bona fide field office was maintained on the premises of the project
during the performance of the contract wherein all control over such project was exercised to the
extent that it constituted the doing of local business at the situs of the job. Receipts for services
performed outside the Taxing District may also be excluded if it can be shown that no part of the
service was performed in the Taxing District.
24. CONTRACTORS WHO REPAIR, ALTER, AND IMPROVE TANGIBLE PERSONAL
PROPERTY
a. Persons engaged in business in the Taxing District as contractors who repair, alter, and improve
tangible personal property for the account of others are subject to tax under the provisions of this
ordinance. When contractors perform labor or services on articles of tangible personal property
furnished by the other party to the contract, such contractors are required to report only the
amount due them for labor or services rendered.
25. BUILDINGS, HOTELS, MOTELS, APARTMENT HOUSES, BOARDING HOUSES,
NURSING HOMES, ETC.
a. Persons operating hotels, apartment houses, boarding houses, nursing homes, rooming houses
and all other such establishments are taxable on receipts from renting of rooms, furnishing of
meals, and any other services rendered.
b. Any person carrying on the business of renting buildings, offices, space, stores, dwelling
houses, etc., shall include gross rentals received in the tax base. No deductions may be made for
depreciation, cost of maintenance, repairs, etc.
(1) Persons who have obtained real property with no affirmative action on their parts, that is,
fortuitously through inheritance, gift, reverter, or other legal processes, and who furnish only
those elementary services and maintenance which are required by law, are not subject to the tax
unless the property was received from a person who engaged in the business of renting the
property and that business is continued by the recipient.
(2) Business corporations which hold rental property as a source of income in addition to their
regular business, which may or may not be real estate, are subject to the tax whether or not
services are rendered.
(3) Persons, corporations, or partnerships holding rental property in the Taxing District, who
employ rental agents or other such assistance in administering such property are doing business
and are subject to the tax whether or not they provide services.
(4) Agencies or entities which manage and/or operate cooperatives and/or condominiums must
pay the tax based on all receipts received for maintenance, cleaning, and other service provided,
including insurance. Receipts received from owner-tenants for taxes, interest and principal
payments may be excluded from the taxable gross receipts.
26. INSURANCE AGENTS, BROKERS, AND UNDERWRITERS
a. General agents. General agents for insurance companies are required to report as gross receipts
the entire commissions received as compensation for their own efforts on policies sold by them
directly and the overriding commissions received by them upon business produced by brokers or
sub-agents.
b. Brokers or Sub-agents. Brokers or sub-agents are required to report as gross receipts the
commissions received as compensation for their service.
c. Employee of Single Company. A person who represents a single insurance company is subject
to tax hereunder unless he:
(1) devotes his entire time to the company;
(2) is considered by the company to be its employee, and the company pays social security and
unemployment compensation taxes on behalf of the person claiming the exemption; and, in the
event of an accident in the course of employment, said person is entitled to workmen's
compensation; and
(3) does not employ solicitors, sub-agents, or other persons to whom he pays salaries,
commissions, or other compensation in connection with insurance business solicited.
27. PARTICULAR BUSINESS OR TRANSACTIONS
a. Administrative or Executive Offices. Receipts of a taxpayer whose only office in the Taxing
District is an administrative or executive office may or may not be taxable depending on the
activity performed in the office. The general rule is that receipts for services will not be taxable in
the Taxing District if no part of the service is performed in the Taxing District. If the activity at
such an office relates only to internal bookkeeping functions of the taxpayer, then those activities
are not part of the "service" which is being rendered to customers. However, administrative
matters which do relate to the service rendered (e.g. processing of orders, arranging shipments,
making telephone calls to customers or clients, or overseeing or controlling employees engaged in
performing such services) are generally part of the service for which payment is received.
Accordingly, if any of these kinds of services are performed at the place of business in the Taxing
District, then the entire receipt for that service is a taxable receipt unless an allocation is
appropriate.
28. PERSONS ENGAGED IN PROFESSIONS, OR VOCATIONS, OR IN RENDERING
PERSONAL SERVICES
a. General. A person who is engaged in a profession or vocation or in rendering personal services
in the Taxing District in any capacity, except as an employee of another, is subject to the tax. All
compensation, however characterized, received in such capacity must be included in the tax base.
b Attorneys. An attorney may exclude that portion of the receipts from legal services which are
distributed directly to or on behalf of a client such as a distribution of a sum of money recovered
in a lawsuit, the sale of real estate, or a collection matter. An attorney may exclude any fee or
portion of a fee paid to another attorney where a matter has been forwarded either from or to the
first attorney to or by the second attorney except where either is an employee of the other.
c. Accountants. An accountant may exclude services rendered to clients outside of the Taxing
District only if all activity connected with the rendering of such services, including the audit,
summary and completion of the financial statement, takes place at the client's business situs
outside the Taxing District.
d. Physicians and Surgeons.
(1) A physician with offices in the Taxing District must include in his gross receipts all revenues
derived from such offices, i.e., place of business.
(2) A physician with offices located outside the Taxing District may exclude from gross receipts
revenues derived from such offices, i.e., place of business.
(3) A physician with hospital affiliations within the Taxing District must include in his gross
receipts all revenue derived or generated by his connection with such hospitals.
(4) A physician with hospital affiliations outside the Taxing District may deduct from gross
receipts all revenues derived or generated by his connection with such hospitals.
29. THEATERS AND MOTION PICTURE HOUSES
a. Persons operating theaters or motion picture houses and other places of amusement where
admission is charged in the Taxing District, whether owner or lessee, are subject to the Business
Privilege Tax on the gross receipts from house or film rentals and from commissions received on
vending machine sales, public telephone booths and sources of revenue other than sale of tickets
of admission (which are exempt from tax by state law).
30. SOCIAL AND RECREATIONAL CLUBS
a. Under state law the Taxing District may not tax "membership in or membership dues, fees, or
assessments of charitable, religious, beneficial or non-profit organizations including but not
limited to sportsmen's, recreational, golf, and tennis clubs, girl and boy scout troops and
councils." Accordingly, receipts from such sources are not subject to the tax.
b. Many such organizations, however, sell food, beverages and recreational equipment to, or
perform non-charitable services (such as catering services) for, members as a regular part of their
activities. Although such items may be exempt from federal income tax, they are not exempt from
the Taxing District taxes. Accordingly, any such organization which does offer its members such
goods or services must register and pay the tax. (This rule does not apply to "religious, charitable
or educational" organizations which are entirely exempt from tax.)
31. PUBLIC OFFICIALS
a. Persons who act as agents or officials of the United States, Commonwealth of Pennsylvania, or
any political subdivision thereof are not subject to the tax with respect to their activities as such
agents or officials. For this purpose, notaries public are considered agents of the Commonwealth.
32. PUBLIC UTILITIES
a. The Taxing District may not tax the gross receipts of a public utility subject to the
Pennsylvania Public Utility Commission which are derived from supplying services at rates
specified in tariffs authorized or approved by the PUC. Receipts derived from advertising and
rentals or charges levied for services not subject to PUC regulations are subject to tax.
33. GOVERNMENT CONTRACTS
a. Receipts from the performance of contracts entered into with the Taxing District, or the
Commonwealth of Pennsylvania, or the United States of America, or any subdivision of such
governments are to be included in the measure of the tax.
34. UNDERTAKERS, MORTICIANS, AND FUNERAL DIRECTORS
a. Persons engaged in business as undertakers, morticians, or funeral directors are required to
report as gross receipts the total charges made to clients, without deducting therefrom any costs or
expenses whatsoever. Both the sale of tangible personal property and a charge for rendering
service must be included in the tax base.
35. SALE OF CAPITAL ASSETS
a. Generally. The profits (not gross proceeds) resulting from the sale of capital assets, such as
plant machinery and equipment, furniture, fixtures, delivery equipment, etc., are to be included in
the tax base. If a loss is sustained on such sales, it may not be offset against gross receipts from
other sources. In computing the profits to be included in the tax base, the costs of the asset, less
allowable depreciation, is to be deducted from the gross proceeds of the sale.
b. Asset Located Outside the Taxing District. Where the capital asset sold was located at an
established place of business of the taxpayer outside the Taxing District, the profit realized on the
sale thereof may be excluded from the tax base.
c. Bulk Sale or Exchange, Merger. Where a corporation realizes a gain as the result of a sale or
exchange of substantially all of its assets, or as the result of a merger or consolidation with
another corporation, the amount of such gain must be included in the tax base.
36. DEPOSIT ON CONTAINER
a. A person making a sale of products in a container on which there is a deposit to insure the
return of the container is required to report only the gross selling price of the product in the
container.
37. VENDING MACHINES
a. The entire gross receipts of vending machines and other mechanical devices which dispense
goods, wares, and merchandise are to be included in the gross volume of business of the owner or
lessor thereof. No deduction may be made there from for splits, rentals, commissions or other
remuneration to persons in charge of the machines and/or to the lessee of the premises upon
which the machines are located.
38. INTER-COMPANY TRANSACTIONS
a. Receipts from transactions between affiliated companies, other than those of a purely
accommodation nature, are subject to inclusion in "gross volume of business."
39. INTER-DEPARTMENT TRANSACTIONS
a. Where one department, branch or division of a corporation or other business entity, furnishes
goods, wares, and merchandise to another department, branch or division of the same corporation
or business entity, the amounts recorded on the books to reflect such inter-departmental
transactions shall not be included in the "gross volume of business" of the taxpayer.
40. PROPERTY TRADED IN
a. In the case of a trade-in or part payment in goods, wares and merchandise in a transaction in
which goods, wares and merchandise are sold and allowances made, the taxpayer may at his
option deduct the value of the trade-in or part payment from gross receipts so long as done on the
face of the invoice at the time of the original transaction as a medium for adjusting the price of
the goods, wares or merchandise; allowed for the trade-in or part payment in goods, wares or
merchandise must be deducted by the dealer at the time of resale of the trade-in or part payment
so that no tax is levied or collected on the dollar volume of business derived from the resale of
goods, wares and merchandise taken by any dealer as a trade-in or as part payment for other
goods, wares and merchandise, except to the extent that the retail price exceeds the trade-in
allowance.
41. REFUNDS OR CREDITS
a. Refunds or credits will be issued upon appropriate verification of overpayment.
42. COMMISSIONS PAID BY BROKERS
a. Any broker, agent or salesman who splits or otherwise divides a commission with another
broker, agent or salesman in the same type of business by reason of the fact that the second
broker initiated, executed, cleared or completed a portion of the transaction for which the fee is
paid shall be permitted to exclude from the gross receipts that portion of the fee paid to the other
broker, agent or salesman. This section does not exempt so-called finders fees, kickbacks,
commissions, or other remuneration paid by the broker, agent or salesman to another individual
not in the same type of business as the broker, agent or salesman. Nor does this section exempt
from the gross receipts of a broker or agent a commission paid by said broker or agent to a
salesman affiliated with him.
43. BAD DEBTS
a. Bad debts may be taken from the gross volume of business where the deduction is also taken in
the same year for IRS purposes.
44. TAXES COLLECTED AS AGENT FOR THE UNITED STATES OF AMERICA,
COMMONWEALTH OFPENNSYLVANIA, OR THE TAXING DISTRICT
a. Taxes collected as agent for the United States of America, Commonwealth of Pennsylvania, or
the Taxing District are excludable from taxable receipts.
45. PARTIAL EXEMPTION
a. Where gross or whole volume of business in its entirety cannot be subjected to the tax imposed
by this ordinance by reason of the provisions of the Constitution of the United States or any other
provision of law, the Collector of Taxes with the approval of the Taxing District shall establish
rules and regulations and methods of allocation and evaluation so that only that part of the gross
or whole volume of business which is properly attributable and allowable to doing business in the
Taxing District shall be taxed hereunder.
46. WHEN SAME TAX IS IMPOSED BY TWO TAXING BODIES
a. If any person is liable for the same tax on the same subject imposed under the Local Tax
Enabling Act of 1965, December 31, P.L. 1257 and its amendments, to the Taxing District and
one or more political subdivisions of the State, then and in that event the tax shall be apportioned
by such percentage as may be agreed upon by such political subdivisions; but, in no event, shall
the combined taxes of both subdivisions exceed a maximum rate of tax as fixed by the said
Enabling Act permitting the imposition of such taxes.
47. RECORDS
a. The taxpayer shall keep books and records of his business so as to show clearly and accurately
the amount of taxable gross receipts minus any allowable deductions pertaining to the Business
Privilege and/or Mercantile Tax.
48. RETURNS
(See appropriate section of ordinance.)
49. FILING RETURNS
(See appropriate section of ordinance.)
50 WHO MUST FILE A RETURN?
(See appropriate section of ordinance.)
51. PARTNERSHIPS
a. A partnership is considered to be a taxable unit. The respective partners are not required to file
separate returns as individuals, but they are jointly and severally liable for payment of the tax.
52. SIGNATURE
a. If the taxpayer is an individual, he shall sign the return. If the taxpayer is a partnership, the
return should be signed by at least one of the general partners. If the taxpayer is a corporation, the
return should be signed by an officer of the corporation.
53. MULTIPLE PLACES OF BUSINESS
a. If a taxpayer maintains more than one place of business in the Taxing District, he is required to
file only one return and may include therein the receipts from transactions occurring in all of his
places of business in the Taxing District.
54. TIME AND PLACE OF FILING
(See appropriate section of ordinance.)
55. PAYMENT OF TAX AND PENALTIES FOR LATE PAYMENT
(See appropriate section of ordinance.)
56. REFUND
a. Any tax payment made under protest which the Taxing District thereafter determines to have
been improperly paid shall be refunded to the taxpayer upon request and with the filing of proper
forms.
57. REGISTRATION
(See appropriate section of ordinance.)
58. TO WHOM ORDINANCE APPLIES
(See appropriate section of ordinance.)
59. POSTING REGISTRATION FORM/MERCANTILE LICENSE
a. Generally. The registration form and/or license must be posted conspicuously at each place of
business of licensee at all times.
b. Vending Machine Owners. A person who sells goods, wares or merchandise by means of
vending machines and who has not otherwise procured a license under this ordinance, shall
procure one license covering all of his vending machines and shall post it at its principal place of
business.
c. Persons With No Place of Business in the Taxing District. Persons conducting business within
the Taxing District but having no "place of business" there shall not be required to post their
registrations. But if such time as such person establishes a place of business within the Taxing
District, he shall notify the Collector of Taxes of the location of such place of business and shall
thereafter post his registration at such place of business.
d. Contractors. Contractors, regardless of the number of field offices maintained within the
Taxing District shall be considered to have one place of business for the purpose of registering.
60. PENALTY
(See appropriate section of ordinance.)