Receipts of a taxpayer whose only office in the Township is an administrative or executive office may or may not be taxable depending on the activity performed in the office. If the activity at such an office relates only to internal bookkeeping functions of the taxpayer, then those activities are not part of the service which is being rendered to customers. However, administrative matters which do relate to the service rendered, e.g., processing of orders, arranging shipments, making telephone calls to customers or clients, or overseeing or controlling employees engaged in performing such services, are generally part of the service for which payment is received. Accordingly, if any of these kinds of services are performed at the place of business in the Township, then the entire receipt for that service is a taxable receipt unless an allocation pursuant to §§ A170-17 and A170-18 is appropriate.
A.
Return by lessor. Where a person leases a department
of their business to another, such person shall include in their return
the gross receipts from business done and sales made by the lessee.
A schedule must be attached to the return containing the name of the
lessee, a description of the department operated, and a statement
verifying that the lessor assumes liability for reporting the gross
receipts and paying the tax accruing against the lessee of such department.
The lessee, however, is not relieved from liability for the tax if
the lessor fails to make a proper return or fails to pay the tax due.
Should a change occur in the ownership or status of any leased department,
the lessor shall notify the business tax receiver within 15 days.
B.
Return by lessee. If the lessee wishes to file returns
independently, such lessee is required to include in their return
the entire gross receipts of said lessee, whether collected by the
lessor or the lessee, without deducting any expenses or commissions
charged to him by the lessor. To expedite the examination of returns
filed by such lessee, the Tax Administrator may require the lessor
to furnish a statement of the entire gross receipts on behalf of the
lessee.
A.
General. A person who is engaged in a profession or
vocation or in rendering personal services in the Township in any
capacity, except as an employee. of another, is subject to tax under
this ordinance. All compensation, however characterized, received
in such capacity must be included in the tax base.
B.
Fiduciaries. Commissions and fees received for acting
in a fiduciary or other representative capacity, whether appointed
by a Court or otherwise, are to be reported as taxable receipts if
the person acts in that capacity in the normal course of his business.
C.
Attorneys. An attorney may exclude that portion of the receipts from legal services which are distributed directly to or on behalf of a client such as a distribution of a sum of money recovered in a lawsuit, the sale of real estate, or a collection matter. An attorney may exclude any fee or portion of a fee paid to another attorney where a matter has been forwarded either from or to the first attorney to or by the second attorney except where either is an employee of the other. (See generally § A170-25.)
D.
Accountants. An accountant may exclude services rendered
to clients outside of the Township only if all activity connected
with the rendering of such services, including the audit, summary
and completion of the financial statement, takes place at the client's
business situs outside the Township.
E.
Physicians and surgeons.
(1)
A physician with offices in the Township must
include in gross receipts all revenues derived from such office, i.e.,
place of business.
(2)
A physician with offices located outside the
Township may exclude from gross receipts revenues derived from such
offices, i.e., place of business.
(3)
A physician with hospital affiliations within
the Township must include in gross receipts all revenue derived or
generated by his connection with such hospitals.
(4)
A physician with hospital affiliations outside
the Township may deduct from gross receipts all revenues derived or
generated by his connection with such hospitals.
A.
General. Receipts from sales made, or services rendered,
by an agent for the account of such agent's principal are to be reported
by the principal. It is immaterial in such cases whether the customer
or client remits directly to the principal, or to the agent for transmittal
to the principal. The agent is required to report as gross receipts
only the commissions withheld as compensation for services before
remitting to such agent's principal and any commission paid after
remitting to the principal. No deduction from gross receipts may be
taken by the principal for commission paid to, or withheld by, the
agent.
B.
Manufacturer's representative. Gross commissions received by a manufacturer's representative are taxable unless the relationship to such representative's principal is that of employer and employee. This relationship of employer and employee exists if the principal pays social security and unemployment compensation taxes on behalf of the person claiming exemption and if, in the event of an accident in the course of employment, the manufacturer's representative might become entitled to workmen's compensation. (See also § A170-23.)
C.
Undisclosed principal. A person selling property,
including real property, or rendering services, for an unknown or
undisclosed principal, is subject to tax as a principal, unless there
is disclosed in the agent's return the identity of the principal and
the amount of the sale made on the principal's behalf.
D.
Conditions as to recognition of agency. A person will
be regarded as acting as agent or broker in promoting or soliciting
sales or rendering services for the account of a principal when it
appears:
(1)
That the contract or agreement between such
persons clearly establishes the relationship of principal and agent;
(2)
That the books and records of the agent or broker
show the name of the actual owner of the property on whose behalf
the sale is made; and
(3)
That the books and records of the agent or broker
show the amount of gross sales or service charges and the amount of
commission due thereon.
E.
Collections by agent. Money or property received by
a taxpayer as agent, for transmittal to a third party, is not to be
reported by such taxpayer as gross receipts, but any commission received
for services as agent must be included in gross receipts.
F.
This section shall apply to advertising agencies,
public relations, and any other service business which meets the agency
criteria set forth herein.
A.
General agents. General agents for insurance companies
are required to report as gross receipts the entire commissions received
as compensation for their own efforts on policies sold by them directly,
and the overriding commissions received by them upon business produced
by brokers or subagents.
B.
Brokers or subagents. Brokers or subagents are required
to report as gross receipts the commissions received as compensation
for their services.
C.
Offices outside Township. Where a general agent or
an insurance broker maintains a branch office outside the Township,
the commissions attributable to such branch office may be excluded
from gross receipts. Commissions will be deemed attributable to the
Township office, and hence subject to inclusion in the measure of
the tax, if they result from the efforts of brokers, subagents or
employees who work in, or from, or are attached to the Township.
D.
Employee of single company. An employee of a single
company is not subject to the business privilege tax on such employee's
earnings from that company, but must file a return showing any additional
gross commissions received for services rendered on behalf of other
companies. Factors indicating employee relationship are as follows:
(1)
The agent devotes his or her entire time to
a particular company except for writing an occasional policy with
another company because his or her prime company does not carry the
requested coverage or has rejected such coverage.
(2)
The agent is considered to be an employee by
his or her prime company. He or she receives pension benefits, makes
social security payments through them, is subject to all fringe benefits,
and is otherwise treated as an employee of the company.
(3)
The agent does not employ solicitors, subagents
or others other than clerical help, to whom he or she pays salaries,
commissions or other compensation.
(4)
The agent is housed by his or her prime company.
(5)
The agent is not a general agent of his or her
prime company.
Persons operating theaters or motion-picture
houses and other places of amusement where admission is charged in
the Township, whether owner or lessee, are subject to the business
privilege tax on the gross receipts from house or film. rentals and
from commissions received on vending machine sales, public telephone
booths and other sources of revenue.
A.
General. A contractor or subcontractor, resident or
nonresident, engaged in the Township in the business of erecting buildings,
or otherwise altering, repairing or improving real property, or other
major construction work, is required to report as gross receipts all
receipts derived from the performance of such contracts. Except as
otherwise determined by the business tax receiver, contractors must
include in gross receipts the amounts of subcontracts let as part
of the general contract. The amount of receipts to be included in
the tax base shall be the full contract price, that is, the total
amount received or receivable by way of a fixed or determinable amount
under the terms of the contract. The contract price will be considered
to include all charges made by a contractor, or subcontractor, for
materials, labor, supervision, overhead costs, profit, and other obligations
for which the contractor becomes liable in the performance of the
contract. In the case of the general contractor, prime contractor
or subcontractor' employing lower-tier subcontractors, no deduction
may be made with respect to amounts paid to subcontractors and materialmen,
unless it can be shown that the subcontractor has paid the business
privilege tax to the Township on the same gross receipts stemming
from the same contract.
B.
Cost-plus contracts. A general contractor performing
contracts on the basis of a cost-plus-a-fixed fee or cost-plus-a-percentage
is required to report as gross receipts the full contract price as
explained above, unless such contractor has no connection whatsoever
with the purchase of materials and/or the hiring of labor. In cases
where the owner of the property buys the materials and hires all labor
in his own name and pays the general contractor a fixed fee, or a
percentage of the total cost to supervise and direct the construction
project, the general contractor will be required to report only the
gross amount of the fee or percentage received. Where the owner authorizes
the general contractor to make such purchases of tangible personal
property, or hire such labor or engage such subcontractors as are
necessary for the performance of the contract and pledges such owner's
credit and is liable in the first instance to the materialmen, suppliers,
laborers or subcontractors, as distinguished from merely guaranteeing
payment to them or undertaking to reimburse the general contractor
for the cost of such materials, services or subcontracts, and agrees
to make payment directly to the materialmen, suppliers, laborers and
subcontractors, such sales or services will be regarded as made directly
to the owner, and the general contractor will not be required to include
such items in his gross receipts.
C.
Contractors or subcontractors permanently or temporarily
doing business in the township shall register and file a tax return.
D.
Contractors or subcontractors with an office in the Township who are engaged in the performance of building, construction or engineering contracts at a point outside the territorial limits of the Township, may exclude from the measure of the tax the gross receipts derived therefrom, provided that a bona fide field office was maintained on the premises of the project during the performance of the contract wherein all control over such project was exercised to the extent that it constituted the doing of local business at the situs of the job. Receipts for services performed outside the Township may also be excluded if it can be shown that no part of the service was performed in the Township in accordance with §§ A170-17 and A170-22 of these regulations.
Persons engaged in business in the Township
as contractors who repair, alter and improve tangible personal property
for the account of others are subject to tax under the provisions
of this ordinance. When contractors perform labor or services on articles
of tangible personal property furnished by the other party to the
contract, such contractors are required to report only the amount
due them for labor or services rendered.
A.
Real estate brokers and agents are required to report
as taxable receipts the commissions and fees received for the services
rendered as agent in promoting the purchase and sale, the rental of
the lease and/or management of real property for others. Brokers and
agents not having an office in Upper Merion Township shall report
as taxable receipts commissions received on the sale of properties
within the Township. Such amount does not include the gross selling
price of the property, except as set forth below.
B.
Real estate brokers or agents may exclude from their
tax base any commissions paid to another broker or agent on account
of a contract of purchase or sale initiated, executed or cleared in
conjunction with the broker to whom the commission or part of the
commission is paid. Commissions paid to a salesperson by a broker
or agent are not excludable from the broker's or agent's tax base.
C.
Real estate brokers taking title to real property
in their own or a straw name and selling the property are required
to include the gross selling price of the property as taxable receipts,
reduced by the purchase price of the real property. Closing, transfer
and any other expenses or purchase cost may not be deducted. The same
person may be taxed both as a broker and as a seller, depending on
the nature of the transaction. If any person acts as a broker, salesperson
or agent, the tax is based on commissions received. If any person
buys and sells real estate, either in his or her own name or in the
name of a straw party, such person is taxed on the gross selling price
of the real estate.
D.
Multilist dealers or brokers, resident or nonresident,
are subject to the tax on commissions on sales of real property located
in the Township.
E.
Listing fees received by dealers, brokers or agents
in the township are taxable gross receipts, even if the sale is made
by an office outside the Township.
F.
Expenses. Reimbursement of expenses may be excluded
from gross receipts only if the taxpayer actually incurred such expenses
as agent for another from whom the taxpayer receives reimbursement
in the exact amount he or she expended.
A.
Persons operating hotels, apartment houses, boardinghouses,
nursing homes, rooming houses and all other such establishments are
taxable on receipts from renting of rooms, furnishing of meals and
any other services rendered.
B.
Any person carrying on the business of renting buildings,
offices, space, stores, dwelling houses, etc., shall include gross
rentals received in the tax base. No deductions may be made for depreciation,
cost of maintenance, repairs, etc.
(1)
Natural persons who have obtained real property
with no affirmative action on their parts, that is, fortuitously through
inheritance, gift, reverter, or other legal processes, and who furnish
only those elementary services and maintenance which are required
by law, are not subject to the tax unless the property was received
from a person who engaged in the business of renting the property
and that business is continued by the recipient.
(2)
Business corporations which hold rental property
as a source of income in addition to their regular business, which
may or may not be real estate, are subject to the tax whether or not
services are rendered.
(3)
Persons, corporations or partnerships holding
rental property in the Township, who employ rental agents or other
such assistance in administering such property, are doing business
within the meaning of this ordinance and are subject to the tax whether
or not they provide services.
(4)
Agencies or entities which manage and/or operate
cooperatives and/or condominiums must pay the tax based on all receipts
received for maintenance, cleaning, and other service provided, including
insurance. Receipts received from owner-tenants for taxes, interest,
and principal payments may be excluded from the taxable gross receipts.
For the purpose of determining the gross receipts
from the sale of stocks, bonds and/or other securities for a person
engaged in a financial business, the cost thereof shall be deducted
from the amount realized on the sale. Such cost shall consist of the
purchase price of the property plus any brokerage paid on acquisition.
The amount realized on the sale shall consist of the gross receipts
therefrom without deducting stamp or transfer taxes or any brokerage
paid.
A.
Under state law the Township may not tax membership
in or membership dues, fees, or assessments of charitable, religious,
beneficial or nonprofit organizations including but not limited to
sportsmen's, recreational, golf and tennis clubs, girl and boy scout
troops and councils. Accordingly, receipts from such sources are not
subject to the business privilege tax.
B.
Many such organizations, however, sell food, beverages and recreational equipment to, or perform noncharitable services (such as catering services) for, members as a regular part of their activities. Although such items may be exempt from federal income tax; they are not exempt from the Township taxes. Accordingly, any such organization which does offer its members such goods or services must register under the ordinance and pay the tax as appropriate. (This rule does not apply to religious, charitable or educational organizations which are entirely exempt from tax under § A170-15 hereof.)
Persons who act as agents or officials of the
United States, Commonwealth of Pennsylvania or any political subdivision
thereof are not subject to this ordinance with respect to their activities
as such agents or officials. For this purpose, notaries public are
considered agents of the Commonwealth.
The Township may not tax the gross receipts
of a public utility subject to the Pennsylvania Public Utility Commission
which are derived from supplying services at rates specified in tariffs
authorized or approved by the PUC. Receipts derived from advertising
and rentals or charges levied for services not subject to PUC regulation
are subject to tax.
A.
Contractors with field offices. Upper Merion Township
contractors or subcontractors engaged in the performance of building
and construction contracts at a point outside the territorial limits
of Upper Merion Township may exclude from the measure of the tax the
receipts derived therefrom, but only if a field office was maintained
on the premises of the project during the performance of the contract
to such an extent as to constitute doing local business at the situs
of the job.
B.
Alterations and repairs. The provisions of this section
apply only to contractors engaged either in the erection of new buildings
or in the complete alteration and remodeling of old buildings. They
do not apply to contractors who engage in alteration and repair jobs
of a limited scope, such as a roofer repairing a damaged roof of a
building situated outside Upper Merion Township or a painter renovating
an apartment in an apartment house located outside Upper Merion Township.
C.
Engineers and technicians. The exemption provisions
of this section do not apply to engineers and other technicians rendering
personal services outside Upper Merion Township.
D.
Qualifications for exemptions. In order to qualify
for the exclusion above, it must be shown that the taxpayer has established
a place of business at the situs of the job by maintaining a bona
fide field office outside Upper Merion Township with machinery and
equipment for use in the fulfillment of the contract together with
the performance of such other acts or functions so as to constitute
doing local business at the situs of the job.
A.
Brokers and agents with out-of-Township branch offices.
(1)
Where an Upper Merion Township general agent
or broker of an insurance, real estate or other firm establishes and
maintains a bona fide branch office out the Township, the commissions
attributable to such branch office may be excluded from gross receipts.
Commissions will be deemed attributable to the Township and hence
subject to inclusion in the measure of the tax, if they result from
the efforts of brokers, subagents or employees who work in, from or
are attached to the Upper Merion office.
(2)
In order to qualify for exclusion hereunder,
the agent or broker must show that it has established and maintained
a bona fide place of business outside the Township by owning or leasing
realty thereat together with the performance of such other functions
so as to clearly constitute doing local business at such location.
B.
Businesses with out-of-Township branch offices, stores,
etc.
(1)
Where an Upper Merion Township business establishes
and maintains a bona fide branch office, store or other place of business
outside the Township, the receipts attributable to such branch offices
or stores may be excluded from the gross volume of business. Receipts
will be deemed attributable to the Township, and hence subject to
inclusion in the measure of the tax, if they result from the efforts
of persons who work in, from or are attached to Upper Merion Township
place of business.
(2)
In order to qualify for exclusion hereunder,
the taxpayer must show that it established and maintained a bona fide
place of business outside the Township by owning or leasing realty
thereat together with the performance of such other functions so as
to clearly constitute doing local business at such location.
A.
Reported as cash sales. A person making conditional
sales or other installment sales of property is required to report
the total selling price of such sales as gross receipts for the tax
year in which the contracts of sale are entered into, without regard
to the fact that the seller may arrange to receive payment from the
purchaser on an installment basis or that such contracts may be discounted,
pledged with, or sold to, a finance company.
B.
Property repossessed. Where tangible personal property,
sold under a conditional or other installment sales contract, is repossessed
by the seller, and the repossessed property is subsequently sold,
the receipts from such sales are to be included in the measure of
the tax only to the extent that the amount of the sale exceeds the
balance due on the original sale at the time of repossession. No deduction
from gross receipts may be taken for any unpaid balance due at the
time of repossession. Such a deduction shall be allowed upon resale,
if the resale price is less than the unpaid balance.
|
[Example: "A" sells personal property to "B"
for $10,000.00 under a conditional agreement of sale. "B" makes several
installment payments to "A" totaling $6,000.00. "B" subsequently defaults
and the property is repossessed by "A." "A" is required to report
gross receipts of $10,000.00. He may not deduct from gross receipts
the unpaid balance of $4,000.00 due from "B" at the time of repossession.
If the property repossessed by "A" is subsequently sold, the receipts
from the sale thereof are to be reported only to the extent which
the amount of the sale exceeds the unpaid balance of $4,000.00. Thus,
if the repossessed property is sold for $5,000.00, "A" is required
to report only $1,000.00 as additional receipts; if the property is
sold for $3,000.00, "A" is not required to report any portion of such
receipts and is entitled to $1,000.00 deduction from his current year's
gross receipts.)
|
Where dealers engaged in similar lines of business
exchange articles of tangible personal property and one of them makes
payment to the other in addition to the property exchanged, the transactions
constitute sales to each other. The receipt of each dealer is measured
by the gross value of the consideration received by him. Where a dealer
transfers property, such as an automobile, to another dealer with
the understanding that property of identical description will be returned
at a subsequent date, such transaction does not constitute a sale
and the value of the property exchanged need not be included in the
gross receipts of either dealer. Receipts by dealers from sales to
other dealers in the same line where the dealer transfers title or
possession at the same price for which the dealer acquired the merchandise
may be excluded from gross receipts.
The tax status of a person accounting for receipts
from consignment transactions will depend on the terms and conditions
expressly set forth in the contract between the consignor and the
consignee. In all cases, the substance rather than the form of the
relationship between the parties shall be the determining factor.
Where the contract does not clearly set forth the status of the parties
thereto, the following principles shall apply:
A.
Upper Merion Township consignor. If a person located in Upper Merion Township ships goods on consignment to a person located outside the Township for subsequent sale by such consignee, the consignor is not deemed to be doing business at the location of the consignee, nor will such location be recognized as a branch of the consignor. When the consignee makes a sale of the consignor's goods, the consignee will be deemed to have purchased the goods from the consignor at such time for resale to his (the consignee's) customer. Such transactions are deemed to result in either wholly taxable or wholly excludable receipts to the consignor at the time the consignee consummates the sale with the consignee's customer. If the consignee is located within Pennsylvania, the receipts will be considered wholly taxable receipts. If the consignee is located outside Pennsylvania, the receipts will be considered either wholly taxable or excludable, according to Article VI of these regulations, as if the consignee is considered the buyer.
B.
Out-of-Upper Merion Township consignor. If a person
located outside the Township ships goods on consignment to a person
located in the Township for subsequent sale by such consignee, the
consignor will be deemed to have sold the goods to the consignee at
the time the consignee sells the goods to the consignee's customer.
Such transactions are deemed to result in either wholly taxable or
wholly excludable receipts to the consignor, depending upon the location
of such consignor. If the consignor is located within Pennsylvania,
the receipts will be considered wholly taxable receipts; if the consignor
is located outside of Pennsylvania, the receipts will be considered
wholly excludable receipts.
Persons engaged in business as undertakers,
morticians or funeral directors are required to report, as gross receipts,
the total charges made to clients, without deducting therefrom any
costs or expenses whatsoever. Both the sale of tangible personal property
and charges for rendering service must be included in the tax base.
A.
Generally. The profits (not gross proceeds) resulting
from the sale of capital assets, such as plant machinery and equipment,
furniture, fixtures, delivery equipment, etc., are to be included
in the tax base. If a loss is sustained on such sales, it may not
be offset against gross receipts from other sources. In computing
the profits to be included in the tax base, the costs of the asset,
less allowable depreciation, is to be deducted from the gross proceeds
of the sale.
B.
Asset located outside Upper Merion Township. Where
the capital asset sold was located at an established place of business
of the taxpayer outside Upper Merion Township, the profit realized
on the sale thereof may be excluded from the tax base.
C.
Bulk sale or exchange merger. Where a corporation
realizes a gain as the result of a sale or exchange of substantially
all of its assets, or as the result of a merger or consolidation with
another corporation, the amount of such gain must be included in the
tax base.
A person making sales of products in a container
on which there is a deposit to insure the return of the container
is required to report only the gross selling price of the product
in the container.
The entire gross receipts of vending machines
and other mechanical devices which dispense goods, wares and merchandise
or render a service are to be included in the gross volume of business
of the owner or lessor thereof. No deductions may be made therefrom
for splits, rentals, commissions or other remunerations to persons
in charge of the machines and/or to the lessees of the premises upon
which the machines are located.
Receipts from transactions between affiliated
companies, other than those of a purely accommodational nature, are
subject to inclusion in the gross volume of business.
Where one department, branch or division of
a corporation or other business entity furnishes goods, wares and
merchandise or services to another department, branch or division
of the same corporation or business entity, the amounts recorded on
the books to reflect such interdepartmental transactions shall not
be included in the gross volume of business of the taxpayer.
In the case of trade-in transactions in which
goods, wares and merchandise are sold and allowances made for other
property which is traded in and is accepted by the sender or dealer
in part payment of the property sold, the allowance made for the property
traded in shall not be deducted from the selling price of the property
sold in computing the gross receipts upon which the tax is based.
The vendor or dealer must include in gross volume of business the
full selling price of the property sold without any deduction therefrom
for any allowance made or property traded in. Where the property traded
is subsequently sold by the vendor or dealer, the latter must include
in gross receipts only the amount by which the sale price of the property
exceeds the trade-in allowance.
Refunds, credits or allowances given by the
seller to a purchaser on account of defects in goods, wares or merchandise
sold or on account of goods, wares of merchandise returned may be
excluded from gross receipts in determining the gross volume of business
subject to the tax.
Any broker, agent or salesman who splits or
otherwise divides a commission with another broker, agent or salesman
in the same type of business by reason of the fact that the second
broker initiated, executed, cleared or completed a portion of the
transaction for which the fee is paid shall be permitted to exclude
from his gross receipts that portion of the fee paid to the other
broker, agent or salesman. This section does not exempt so-called
finders fees, kick-backs, commissions or other remuneration paid by
a broker, agent or salesman to another individual not in the same
type of business as the broker, agent or salesman, nor does this Section
exempt from the gross receipts of a broker or agent a commission paid
by said broker or agent to a salesman affiliated with such broker
or agent.
Gross receipts from the sale of beer, wine or
liquor by persons carrying on the business of sales of alcoholic beverages
in the Township are not subject to the business privilege tax. Gross
receipts derived from sales of other goods and services are subject
to such tax absent any other exclusion or exemption. Persons carrying
on the business of sales of alcoholic beverages in the Township shall
allocate all gross receipts between sales of beer, wine or liquor
and sales of other goods and services by deducting from all gross
receipts only the taxpayer's cost of beer, wine or liquor for the
period covered by the tax return. If the business tax receiver, either
on his or her own initiative or upon application by the taxpayer,
determines that the foregoing method of allocation does not properly
reflect gross receipts from the sale of beer, wine or liquor and from
the sale of other goods and services, a different method of allocation
may be used.
