In the latest Tax Update from the Pennsylvania Department of Revenue, the Department announced that its auditors will enforce compliance among contractors installing financial institution security equipment. Contractors under audit who are not in compliance with the Department’s regulation on the proper method to bill purchasers can expect an assessment.
The sale of installed financial institution security equipment is not taxable to the purchaser as provided by Pennsylvania regulation. It is the contractor’s responsibility to pay tax on the equipment and any associated materials used in the installation. The Department has stated that contractors incorrectly charging sales tax on the sale and installation of financial institution security equipment will not be relieved of their tax liability on the cost of materials and equipment.
The regulation lists many examples of financial institution security equipment. Some of the more common examples include: cash terminals, access control systems, alarm systems, surveillance and security systems and vaults. If your business sells and installs security equipment to financial institutions, care should be taken to review your invoicing records to assure compliance with Pennsylvania’s regulation and avoid future assessments.
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