Dealers and distributors of sweetened beverages in Philadelphia help each other remain tax compliant by acknowledging, and keeping records, of their business transactions.
A dealer sends a notification to their sweetened beverage distributor. In turn, the distributor sends a confirmation to the dealer. The distributor pays Philadelphia Beverage Tax (PBT) and remits it to the City electronically. When a PBT investigator makes a field visit, a dealer proves compliance by providing:
- Their Pennsylvania Sales Tax exemption form (to confirm location)
- A Dealer notification
- A Distributor confirmation
Dealers gather the documents by following the steps described below.
Dealer notifies their distributor
Dealers must notify distributors they are in Philadelphia and that the sweetened beverages distributed to them are covered by the Philadelphia Beverage Tax. To complete this requirement, a dealer must send distributors:
- Their PA Sale for Resale Sales Tax Exemption form with a Philadelphia address, or
- A Dealer notification form, provided by the Department of Revenue.
This should be done whenever a new business relationship starts, and at least annually after that.
Dealers with multiple locations in Philadelphia are not required to send separate notices to their distributors for each location –one is enough. However, if some of their locations are outside the City, they should alert the distributor as to which beverages are to be sold in the City and which are not. This way, the distributor avoids taxes on products meant for retail sale outside Philadelphia.
Distributors who receive a notification from a dealer of sweetened beverages in Philadelphia, must in turn confirm they are registered to file and pay PBT. Distributors provide this confirmation using the Distributor confirmation form provided by the Department of Revenue.
A PA Sales Tax Exemption Certificate can serve as the required notification. If a distributor has an Exemption Certificate on file for a dealer with a Philadelphia address, the distributor should:
- Send confirmation to the dealer that they are a registered distributor, and
- File and pay the tax online.
Send and collect invoices
Distributors must record each transaction of sweetened beverages on their own invoices, or an Invoice Supplement provided by the Department of Revenue. Distributors must record:
- The volume of taxable beverage distributed; and
- The amount of tax due.
The information can be presented as a grand total, or by item.
Some dealers have locations both in and outside Philadelphia, but PBT covers only beverages intended for sale in the city. A distributor should ask dealers with multiple locations to clarify how much of their order will be held for retail sale in Philadelphia.
If the dealer fails to clarify, a distributor should assume 100% of the product is taxable. If the distributor receives updated order information after the return is filed, the distributor can file an amended return.
Dealers should keep invoices on file for at least six years.
What if I don’t comply with the notification-confirmation process?
A dealer who cannot provide required documents during an inspection, or present invalid documents, risks legal action. Legal action could include a $1,000 non-compliance fine and suspension of their Commercial Activity License.
Dealers who sell sweetened beverages at retail in Philadelphia and fail to notify their distributors are liable for payment, as well as and any fees and penalties for non-compliance.
Note that a dealer may decide to be a “Registered dealer” or a “Special dealer.” A Registered dealer agrees to assume all the obligations of a distributor, including filing and paying PBT. A Special dealer is a dealer who is granted a special waiver by the Department of Revenue to purchase a specific sweetened beverage from someone other than a Registered distributor. As a result, the Special dealer assumes responsibility for filing and paying PBT on that specific beverage.
Dealers who disagree with a PBT audit assessment can file an appeal with Tax Review Board.