Pennsylvania Sales Tax Guide for Modular Housing
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- This article examines the sales tax treatment of modular homes in the State of Pennsylvania and is available for use solely as a resource.
While every effort has been made to ensure the accuracy of this article, use of the information contained on this page constitutes agreement and understanding that the Modular Building Systems Association (MBSA)] is in no way responsible for any incorrect or inaccurate information contained herein and that the MBSA is not responsible for any situations that arise from reliance on the within information. This includes errors, omissions or changes to any law or regulation that are not reflected in this document.
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Contents |
Pennsylvania Sales Tax Law
Sales Tax Rate
6%
Local/County Tax Rate
Allegheny and Philadelphia counties add 1% to the sales tax rate; therefore, in those counties a 7% sales tax rate is applicable.
Tax Formula
The law establishes a definition of “prebuilt housing sale” which expressly states that the tax on prebuilt housing is computed without regard to whether the manufacturer installs the home.
When the manufacturer precollects and remit the tax, the manufacturer has the option of remitting tax on 60% of the manufacturer’s selling price or 100% of the actual cost of building supplies and materials used in the manufacture of the house.
Manufacturer is no longer responsible to perform the installation of contract with the installer in order to pay tax on materials only.
If builder/purchaser pays tax it is computed at 6% of 60% of manufacturers invoice.
- (Sales Tax Rate (.06) + Local Tax If Applicable (.01) ) x 60% of Selling Price = Amount of Tax Due
If manufacturer pays it can be 6% of 60% of invoice or 6% of actual cost of materials.
Same as above formula
or
- (Sales Tax Rate (.06) + Local Tax If Applicable (.01) ) x 100% of Actual Cost of Supplies & Materials = Amount of Tax Due
Note: A prebuilt housing manufacturer is not permitted to alternate between these two methods of calculation without authorization from the Secretary (see Sales Tax Bulletin 2003-01).
Additional Taxable Costs
Installation cost and delivery charges are not taxable.
A purchaser of prefabricated housing which has been installed in the performance of a construction activity may file a petition for refund of sales tax with the Board of Appeals within 3 years of the actual payment of the tax if the tax was paid by the purchaser. The Department will refund 80% of the sales tax paid.
Statutory “Selling Cost”, or Equivalent, Definition
“Prebuilt Housing Manufacturer’s Selling Price” – the total value of anything paid or delivered or promised to be paid or delivered, whether it be money or otherwise, by a prebuilt housing builder to a prebuilt housing manufacturer, for prebuilt housing, add-ons, insurance, seals, deposits, dues, optional equipment, and similar charges whether or not such charges are separately stated on one or more purchase agreements. The prebuilt housing manufacturer’s selling price does not include amounts representing delivery charges, erection charges or set-up fees.
Note: This definition was drawn from Sales Tax Bulletin 2003-01, not a statute.
Tax Law Status
Recently revised, effective July 2000.
Party Responsible for Tax Payment
The tax on prebuilt housing may be precollected by the manufacturer or be paid by the prebuilt housing builder or the purchaser.
Builder first responsibility unless the manufacturer, at his discretion elects to remit the tax
Appendix
Pennsylvania Code
61 PA Code § 54.1 – Delivery charges.'
(a) Effective March 4, 1971, separately stated delivery charges billed by the vendor made in conjunction with a taxable transaction are subject to tax. For example, delivery charges for transit-mixed concrete are subject to tax even if such charges are stated separately from the charge made for the concrete. Similarly, if a vendor affects delivery of a taxable item to a Pennsylvania vendee through the mails, charges by the vendor for the cost of the taxable item and the postage fee are subject to tax, even if these charges are stated separately on the invoice.
(b) Delivery charges made in conjunction with nontaxable transactions are not subject to tax. Therefore, delivery charges of items purchased for resale or items excluded from the tax are not subject to tax.
(c) Charges for delivery made by someone other than the vendor and billed by someone other than the vendor are not subject to tax. 61 PA ADC § 54.1
61 Pa Code § 60.18 – Sale and installation of prefabricated housing
(a) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise:
Construction activity—An activity resulting from an agreement or contract under which a person attaches or affixes property to real estate so as to become a permanent part thereof. The term includes the placing of prefabricated housing on a prepared foundation as well as anchoring or attaching the prefabricated housing to the foundation in any manner, including joining halves together with interior or exterior frames; connecting electrical, water and gas utilities; and connecting sanitary sewer facilities.
House trailer—Every trailer, designed and used for residential or commercial purposes, which does not exceed the maximum size and weights prescribed under the laws of the Commonwealth for highway use as a licensed vehicle.
Industrialized housing—A structure designed and used for residential or commercial purposes which is wholly or in substantial part made, fabricated, formed or assembled in manufacturing facilities for installation, or assembly and installation, on a building site. The term does not include mobile homes.
Manufactured housing—A structure, including single and double wide mobile homes, which is transportable in one or more sections and which is built on a permanent chassis and designed for residential or commercial use when connected to the required utilities regardless of whether the structure is placed on a permanent foundation. The term includes the plumbing, heating, air conditioning and electrical systems contained in the structure.
Prefabricated housing—Pre-constructed, sectional or modular housing, including house trailers which are not licensed for highway use, industrialized housing and manufactured housing'''''
(b) General provisions.
(1) General. This section is promulgated to provide guidelines and to announce a change in policy with respect to § § 31.30 and 46.8 (relating to house trailers and mobile homes; and industrialized housing).
(2) Refund. A purchaser of prefabricated housing which has been installed in the performance of a construction activity may file a petition for refund of sales tax with the Board of Appeals within 3 years of the actual payment of the tax if the tax was paid by the purchaser. The Department will refund 80% of the sales tax paid.
(3) Rental or lease. The rental or lease of prefabricated housing which has been installed in the performance of a construction activity is not subject to sales tax.
(c) Scope.
(1) General. Contracts for the sale and installation of prefabricated housing are considered contracts for the performance of a construction activity regardless of who owns the land on which the prefabricated housing is installed. A contractor shall pay sales or use tax on the purchase price, including delivery charges, of both the prefabricated housing and the materials which the contractor furnishes and transfers in connection with installation of the prefabricated housing. This section does not apply to house trailers licensed for highway use which are subject to tax when the purchaser files an application for a certificate of title with the Department of Transportation under 75 Pa.C.S. § 1103.1 (relating to application for certificate of title).
(2) Examples. The following are examples of contracts for the sale or installation, or both, of prefabricated housing:
(i) ‘‘D,’’ a dealer of mobile homes, sells a mobile home to ‘‘O’’ for installation on land which ‘‘O’’ is renting. ‘‘D’’ installs the mobile home by setting it in place and connecting the utilities. ‘‘D’’ is performing a construction activity and must pay tax on ‘‘D’s’’ purchase price of the mobile home including delivery charges. ‘‘D’’ must also pay tax on ‘‘D’s’’ purchase of the materials which ‘‘D’’ furnishes and transfers in conjunction with installation of the mobile home.
(ii) ‘‘Z,’’ a developer, sells a manufactured home to ‘‘O’’ to be installed by ‘‘Z’’ on property leased by ‘‘O’’ from ‘‘Z.’’ ‘‘Z’’ engages ‘‘C,’’ a subcontractor, to install the home. ‘‘Z’’ must pay tax on ‘‘Z’s’’ purchase price of the home including delivery charges. ‘‘C’’ must pay tax on ‘‘C’s’’ purchase price of the materials which ‘‘C’’ furnishes and transfers in conjunction with installation of the home.
(iii) ‘‘M,’’ a manufacturer of prefabricated buildings, sells a building to ‘‘O.’’ ‘‘M’’ installs the building on property leased by ‘‘O.’’ ‘‘M’’ must pay tax on ‘‘M’s’’ purchase price of the materials incorporated into the prefabricated building and the materials which ‘‘M’’ furnishes and transfers in conjunction with installation of the building.
(iv) ‘‘O’’ purchases a modular home consisting of four units from ‘‘M,’’ a manufacturer. ‘‘O’’ then installs the four units. ‘‘O’’ must pay tax on ‘‘O’s’’ purchase price of the units including delivery charges. ‘‘O’’ must also pay tax on ‘‘O’s’’ purchase price of the materials which ‘‘O’’ consumes in conjunction with installation of the units.
(v) ‘‘O’’ purchases a prefabricated house consisting of four units from ‘‘M,’’ a manufacturer, under an agreement whereby ‘‘M’’ is responsible for installation of the house. ‘‘M’’ subcontracts with ‘‘S’’ to install the house. ‘‘M’’ must pay tax on ‘‘M’s’’ purchase price of the materials incorporated into the prefabricated house and the materials which ‘‘M’’ furnishes and transfers in conjunction with installation of the house. ‘‘S’’ must pay tax on ‘‘S’s’’ purchase price of the materials which ‘‘S’’ furnishes and transfers in conjunction with installation of the house.
(vi) ‘‘R,’’ a resident of a mobile home community, sells his mobile home to ‘‘B.’’ At the time of the sale, the mobile home is affixed to real property. After the sale, the mobile home remains in the same location and continues to be used for residential purposes. The transaction involves the sale of real property and is therefore not subject to sales tax.
Source The provisions of this § 60.18 adopted April 14, 1995, effective April 15, 1995, 25 Pa.B. 1434.
Pennsylvania Statutes
72 P.S. § 7201
g) "Purchase price."
- The total value of anything paid or delivered, or promised to be paid or delivered, whether it be money or otherwise, in complete performance of a sale at retail or purchase at retail, as herein defined, without any deduction on account of the cost or value of the property sold, cost or value of transportation, cost or value of labor or service, interest or discount paid or allowed after the sale is consummated, any other taxes imposed by the Commonwealth of Pennsylvania or any other expense except that there shall be excluded any gratuity or separately stated deposit charge for returnable containers. * Amended by 2003 PA H.B. 1255 (SN) to exclude the term “delivered” in the first sentence.
- There shall be deducted from the purchase price the value of any tangible personal property actually taken in trade or exchange in lieu of the whole or any part of the purchase price. For the purpose of this clause, the amount allowed by reason of tangible personal property actually taken in trade or exchange shall be considered the value of such property.
- In determining the purchase price on the sale or use of taxable tangible personal property or a service where, because of affiliation of interests between the vendor and purchaser, or irrespective of any such affiliation, if for any other reason the purchase price declared by the vendor or taxpayer on the taxable sale or use of such tangible personal property or service is, in the opinion of the department, not indicative of the true value of the article or service or the fair price thereof, the department shall, pursuant to uniform and equitable rules, determine the amount of constructive purchase price upon the basis of which the tax shall be computed and levied. Such rules shall provide for a constructive amount of purchase price for each such sale or use which would naturally and fairly be charged in an arms-length transaction in which the element of common interest between the vendor or purchaser is absent or if no common interest exists, any other element causing a distortion of the price or value is likewise absent. For the purpose of this clause where a taxable sale or purchase at retail transaction occurs between a parent and a subsidiary, affiliate or controlled corporation of such parent corporation, there shall be a rebuttable presumption, that because of such common interest such transaction was not at arms-length.
- Where there is a transfer or retention of possession or custody, whether it be termed a rental, lease, service or otherwise, of tangible personal property including, but not limited to linens, aprons, motor vehicles, trailers, tires, industrial office and construction equipment, and business machines the full consideration paid or delivered to the vendor or lessor shall be considered the purchase price, even though such consideration be separately stated and be designated as payment for processing, laundering, service, maintenance, insurance, repairs, depreciation or otherwise. Where the vendor or lessor supplies or provides an employe to operate such tangible personal property, the value of the labor thus supplied may be excluded and shall not be considered as part of the purchase price if separately stated. There shall also be included as part of the purchase price the value of anything paid or delivered, or promised to be paid or delivered by a lessee, whether it be money or otherwise, to any person other than the vendor or lessor by reason of the maintenance, insurance or repair of the tangible personal property which a lessee has the possession or custody of under a rental contract or lease arrangement.
- With respect to the tax imposed by subsection (b) of section 202 upon any tangible personal property originally purchased by the user of such property six months or longer prior to the first taxable use of such property within the Commonwealth, such user may elect to pay tax on a substituted base determined by considering the purchase price of such property for tax purposes to be equal to the prevailing market price of similar tangible personal property at the time and place of such first use within the Commonwealth. Such election must be made at the time of filing a tax return with the department and reporting such tax liability and paying the proper tax due plus all accrued penalties and interest, if there be any, within six months of the due date of such report and payment, as provided for by subsections (a) and (c) of section 217 of this article.
- The purchase price of prebuilt housing shall be sixty per cent of the manufacturer's selling price: Provided, however, That a manufacturer of prebuilt housing who precollects tax from a prebuilt housing builder at the time of the sale to the prebuilt housing builder shall have the option to collect tax on sixty per cent of the selling price or on one hundred per cent of the actual cost of the supplies and materials used in the manufacture of the prebuilt housing.
(vv) "Prebuilt housing."
Either of the following:
- Manufactured housing, including mobile homes, which bears a label as required by and referred to in the act of November 17, 1982 (P.L. 676, No. 192), known as the "Manufactured Housing Construction and Safety Standards Authorization Act."
- Industrialized housing as defined in the act of May 11, 1972 (P.L. 286, No. 70), known as the "Industrialized Housing Act."
(ww) "Used prebuilt housing."
Prebuilt housing that was previously subject to a sale to a prebuilt housing purchaser.
(xx) "Prebuilt housing builder."
A person who makes a prebuilt housing sale to a prebuilt housing purchaser.
(yy) "Prebuilt housing sale."
A sale of prebuilt housing to a prebuilt housing purchaser, including a sale to a landlord, without regard to whether the person making the sale is responsible for installing the prebuilt housing or whether the prebuilt housing becomes a real estate structure upon installation. Temporary installation by a prebuilt housing builder for display purposes of a unit held for resale shall not be considered occupancy for residential purposes.
(zz) "Prebuilt housing purchaser."
A person who purchases prebuilt housing in a transaction and who intends to occupy the unit for residential purposes in this Commonwealth.
72 PS § 7202 – Imposition of tax
(a) There is hereby imposed upon each separate sale at retail of tangible personal property or services, as defined herein, within this Commonwealth a tax of six per cent of the purchase price, which tax shall be collected by the vendor from the purchaser, and shall be paid over to the Commonwealth as herein provided.
(b) There is hereby imposed upon the use, on and after the effective date of this article, within this Commonwealth of tangible personal property purchased at retail on or after the effective date of this article, and on those services described herein purchased at retail on and after the effective date of this article, a tax of six per cent of the purchase price, which tax shall be paid to the Commonwealth by the person who makes such use as herein provided, except that such tax shall not be paid to the Commonwealth by such person where he has paid the tax imposed by subsection (a) of this section or has paid the tax imposed by this subsection (b) to the vendor with respect to such use. The tax at the rate of six per cent imposed by this subsection shall not be deemed applicable where the tax has been incurred under the provisions of the "Tax Act of 1963 for Education."
(f) Notwithstanding any other provision of this article, tax with respect to sales of prebuilt housing shall be imposed on the prebuilt housing builder at the time of the prebuilt housing sale within this Commonwealth and shall be paid and reported by the prebuilt housing builder to the department in the time and manner provided in this article: Provided, however, That a manufacturer of prebuilt housing may, at its option, precollect the tax from the prebuilt housing builder at the time of sale to the prebuilt housing builder. In any case where prebuilt housing is purchased and the tax is not paid by the prebuilt housing builder or precollected by the manufacturer, the prebuilt housing purchaser shall remit tax directly to the department if the prebuilt housing is used in this Commonwealth without regard to whether the prebuilt housing becomes a real estate structure.
Note
The purchase price in the case of prebuilt housing is 60% of the manufacturer's selling price, except that the manufacturer may elect to collect tax on 60% of the selling price or on 100% of the actual cost of the supplies and materials used in manufacturing. 72 P.S. § 7201(g)(8), effective July 1, 2000. Prebuilt housing and other pertinent terms are defined at 72 P.S. § 7201(vv), (xx), (yy) and (zz).
35 P.S. § 1651.3 - Definitions
As used in this act:
(3) "Housing component" means any major manufactured subsystem or subassembly, designed for use as an integral component part of a structure designed for residential occupancy.
(4) "Industrialized housing" means any structure designed primarily for residential occupancy which is wholly or in substantial part made, fabricated, formed or assembled in manufacturing facilities for installation, or assembly and installation, on the building site; however, for the purposes of this act, that category of housing units defined as mobile homes is excluded from this definition.
(5) "Installation" means the assembly of industrialized housing on site and the process of affixing industrialized housing or housing components to land, a foundation, footings, utilities or an existing building.
Pennsylvania DOR Sales Tax Bulletins
Pennsylvania Sales Tax Bulletin 2003-01 (REVISED) or Sales Tax Bulletin 2003-01 (REVISED)
Glossary to Pennsylvania Sales Tax Bulletin 2003-01 (REVISED) or Glossary to Pennsylvania Sales Tax Bulletin 2003-01 (REVISED)
Pennsylvania DOR Letter
