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CITY OF PHILADELPHIA BUSINESS PRIVILEGE TAX REGULATIONS - page 8 / 59

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A taxpayer is subject to the Gross Receipts portion of the BPT when it has sufficient contact with the City to be taxed without violating the United States Constitution. A taxpayer is subject to the Net Income portion of the BPT when it has sufficient contact with the City to be taxed without violating the United States Constitution and Public Law 86-272. Only the sale of tangible personal property is afforded immunity under Public Law 86-272. The provision of services for a fee, the sale of other than tangible personal property, the leasing, renting, licensing or other disposition of tangible, intangible or any other type of property is not immune from taxation by reason of Public Law 86-272.

Carrying on or engaging in business contemplates activities such as but not limited to:

  • 1.

    Making sales in the City or performing activities in the City which affect sales; and/or

  • 2.

    Providing services or performing activities in the City which affect the rendition of services in

3.

the City; and/or Performing acts regularly and continuously in the City for the purpose of making a profit.

B

.

NEXUS STANDARDS

Effective July 1, 1998, for the purpose of this tax, no more than an “active presence” is required to constitute “doing business” in Philadelphia. Following is a list of business activities that will subject an out-of-Philadelphia business to the Philadelphia Business Privilege Tax when it engages in any one of such activities. The description of activities in these examples shall not be construed as limiting the meaning of the term “doing business” to those specifically enumerated. Also, the determination of whether or not certain of such activities exceeds “solicitation” depends on the nature of the activity and the facts of each case and has to be made on a case by case basis.

Examples:

  • 1.

    An out-of-Philadelphia business will be deemed to have created “nexus” if it regularly and systematically conducts business activity in Philadelphia through employees, agents, representatives, independent contractors, brokers or others acting on its behalf, whether or not these individuals or organizations reside in Philadelphia;

    • a.

      Regular and systematic business activity exists if 10 or more days of business activity occurs in Philadelphia on an annual (“annual” meaning a 12 month taxable year) basis;

    • b.

      Regular and systematic business activity may exist, depending on the facts and circumstances of the taxpayer, if less than 10 days of business activity occur in Philadelphia on an annual (“annual” meaning a 12 month taxable year) basis;

      • (1)

        When examining the facts and circumstances of the business activity in Philadelphia, conducting any of the following activities in Philadelphia for between 3 and 10 days on an annual basis will be rebuttably presumed to constitute regular and systematic business activity:

        • (a)

          Soliciting sales;

        • (b)

          Making repairs or providing maintenance or service to property sold or to be sold;

        • (c)

          Collecting current or delinquent accounts related to sales of tangible personal property through assignment or otherwise;

6

(Rev. 08/01)

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