Utilities – PA DOR Continues Assault on Home Office Deduction
PA Dept. of Revenue’s Revised Onerous Requirement
for Reporting Sales Tax on Utilities
In our March 17, 2015 posting, we discussed that taxpayers who claim a home office deduction would be required to pay sales tax to the Pennsylvania (PA) Department of Revenue (DOR). We pointed out that personal residential use of electric, gas and oil are not subject to PA sales tax. When a taxpayer uses a portion of their personal residence for business purposes (i.e., the home office), the residential usage is transformed to commercial usage. Since commercial usage is subject to PA sales tax, taxpayers claiming the home office would have a PA sales tax liability.
For pre-2018 tax years, to pay the sales tax to PA, taxpayers would simply report the sales tax on line 25 on page two of the PA-40 individual income tax return. The PA DOR recently announced that only residential use tax can be reported on that line.
Initially, the DOR announced that taxpayers claiming a home office would need to register with the DOR for a sales/use tax account to remit the tax and make separate periodic filings with the DOR using the E-Tides system. After an outcry by tax practitioners about this onerous approach, the DOR listened, but unfortunately, decided upon another onerous approach.
Under current guidelines, taxpayers will be asked [Read more…] about Utilities – PA DOR Continues Assault on Home Office Deduction