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Pennsylvania provides guidance on sourcing sales of services for corporate taxes

The Pennsylvania Department of Revenue has released an information notice to clarify the new statutory market-based sourcing rules for the sale of services that went into effect for tax years beginning on and after Jan. 1, 2014. Under the statutory change, applicable to Corporate Net Income Tax and Capital Stock/Franchise Tax, the sale of services is no longer subject to the income-producing activity and preponderance cost of performance (COP) rules. The change applies to corporate taxes, but not to pass-through entities to the extent that they are owned by individuals. In addition to providing guidance for sourcing sales from services, the notice addresses apportionment issues involving the sale of intangible property, which continues to be sourced via COP principles.

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