The Pennsylvania Department of Revenue issued a bulletin announcing its view that the US Supreme Court’s sales and use tax decision in Wayfair v. South Dakota applies equally to corporate net income tax and authorizes the department to administratively impose a bright-line economic nexus standard of $500,000 in sales to customers in Pennsylvania.
In a corporate tax bulletin (Bulletin) issued on September 30, the Pennsylvania Department of Revenue (Department) announced that for tax periods beginning on or after January 1, 2020, it will impose a bright-line economic nexus standard for Pennsylvania’s corporate net income tax (CNIT). The Bulletin says that “the Department will deem there to be a rebuttable presumption that corporations without physical presence in the state, but having $500,000 or more [in sales]” to customers in Pennsylvania are subject to CNIT. The Department notes that protection under Public Law 86-272 still exists for some taxpayers, notwithstanding that they may otherwise have $500,000 in sales to customers in Pennsylvania.
While the Department’s administrative guidance does not carry the force of law, this new policy raises several questions and concerns, including these three significant questions:
We will continue to monitor this issue and update our clients and readers as new information becomes available.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
 Pennsylvania Corporation Tax Bulletin No. 2019-04 (Sept. 30, 2019).
 Pa. Const., Art. VIII, § 1.
 Commonwealth v. Molycorp, 392 A.2d 321 (1978).
 Wayfair v. South Dakota, 138 S. Ct. 2080, 201 L. Ed. 2d 403 (2018).
 See, e.g., Capital One Bank v. Comm’r of Revenue, 899 N.E.2d 76 (Mass. 2009), cert. denied, 2009 WL 733877 (2009) (No. 08-1169); Tax Comm’r of State v. MBNA Am. Bank, N.A., 640 S.E.2d 226 (W. Va. 2006), cert. denied, 127 S. Ct. 2997 (2007) (No. 06-1228); J.C. Penney Nat’l Bank v. Johnson, 19 S.W.3d 831 (Tenn. Ct. App. 1999), cert. denied, 531 U.S. 927 (2000) (No. 00-205).
 See Pennsylvania Sales and Use Tax Bulletin No. 2019-01 (Jan. 11, 2019).