Pennsylvania Sales/Use Tax

1998/99

TRANSACTIONS	6% SALES/USE TAX 1% Allegheny County and Philadelphia Sales & Use Tax (1)
Demonstrator Vehicles and Free Service Loaners Less than one year of usage	6% Use tax charged monthly on the fair rental value of the vehicle (the amount charged for the rental of a vehicle in the market for a similar period of time and place. If the fair rental value is unknown, 3% of the fair market purchase price at the time of acquisition is acceptable as a monthly fair market rental value.
Exceeding 1 year of usage	6% Sales tax is due on the prevailing market price of the vehicle at the time of acquisition less use tax paid throughout the year.
Courtesy Cars, Parts Trucks, Delivery Trucks, Wreckers	6% Sales tax based on the acquisition cost of the vehicle when that vehicle is first placed into use.
Extended Warranties Sale of extended warranty contract	6% Sales tax based on cost of contract. (2)
Repair under full warranty	Not subject to Sales tax.
Repair under partial warranty	6% Sales tax on the amount owed by the customer.
Repair under warranty with deductible	6% Sales tax on the deductible.
Rebates & Manufacturer Credit Card Rebates If reduces overall purchase price of vehicle	Not subject to sales tax.
If used as "cash down" and does not reduce overall purchase price	6% Sales tax.
Life, Accident, and Sickness Insurance Coverages	Exempt from PA sales tax if separately itemized.
Trade-In (3) Total trade-in applied to purchase price at the time of sale	Trade-in reduces purchase price subject to 6% sales tax.
Sale of vehicle to someone other than dealer and proceeds applied to sales price	Not considered a trade-in. Does not reduce purchase price for application of sales tax.
Trade-in with portion applied to purchase and portion provided as cash back to the customer	Trade-in reduces the purchase price subject to 6% Sales tax by the amount applied to purchase.  The cash back portion does not reduce the sales price subject to 6% sales tax.
Leased Vehicles The tax is computed on the full amount of the purchase price of the leased vehicle less any trade-in deduction. Total lease price charged includes money down, capitalized cost payments and any other payments made to reduce monthly payments. Note: customer must offer title to the vehicle being traded-in to count toward trade-in exemption.	6% Sales tax to be collected with the monthly lease payment regardless of the length of the lease.
Option to buy for Residual Value	6% Sales tax on amounts paid buy customer, the residual value, as well as outstanding lease payments satisfied by the dealer on behalf of the customer.
Reassignment of Lease	Exempt from both PA sales tax and PTA tax on payments remitted by the dealer after reassignment as well as the residual value.
Repair parts services, repair parts, replacement parts or lubricants purchased for vehicles which are used for leasing	Exempt from PA sales tax.
Towing Service	Exempt from PA sales tax. Must list separately on service invoice. Regardless of towing supplied by third party or by dealerships.
Gas Guzzler Tax	When the federal gas guzzler tax is passed on to the consumer, it is considered by Revenue to be a part of the taxable purchase price subject to the 6% sales tax, regardless of whether it is separately stated.
Sales for Resale	Exempt from PA sales tax. The purchaser must establish that the specific property purchased is to be resold, rented or leased in the regular course of business.
Trade-in with portion applied to purchase and portion provided as cash back to the customer	Trade-in reduces the purchase price subject to 6% Sales tax by the amount applied to purchase. The cash back portion does not reduce the sales price subject to 6% sales tax.

(1) Both Allegheny County and Philadelphia assess a 1% sales and use tax in addition to the 6% Commonwealth of PA sales and use tax. The 1% local sales and use tax applies to all of the same transactions as the 6% sales and use tax. The sale and use of vehicles are deemed to occur at the address of the consumer. For goods and service which are not required to be licensed, the seller’s place of business is where the sale is deemed to occur. Dealers are required to maintain proof of outside residency document used by the consumer that resides outside Allegheny county or the City of Philadelphia when claiming an exemption from the 1% tax on the sale of a vehicle.