IN THE COMMONWEALTH COURT OF PENNSYLVANIA Online Merchants Guild, : Petitioner : : v. : No. 179 M.D. 2021 : C. Daniel Hassell, in his official : capacity as Secretary of Revenue, : Department of Revenue, : Respondent : Argued: June 22, 2022 BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE CHRISTINE FIZZANO CANNON, Judge HONORABLE ELLEN CEISLER, Judge HONORABLE LORI A. DUMAS, Judge OPINION BY JUDGE CEISLER FILED: September 9, 2022 Before this Court are cross-applications for summary relief filed by C. Daniel Hassell, the Secretary of Revenue (Revenue), and the Online Merchants Guild (Guild), a trade association comprised of online businesses that sell merchandise through Amazon’s Fulfillment by Amazon (FBA) Program.1 The key issue before this Court is whether non-Pennsylvania businesses that sell merchandise through Amazon’s FBA Program must collect and remit Pennsylvania sales tax pursuant to 1 As described on Amazon’s website, the FBA Program is an Amazon service through which “businesses outsource order fulfillment to Amazon. Businesses send products to Amazon fulfillment centers and[,] when a customer makes a purchase, [Amazon will] pick, pack, and ship the order. [Amazon] can also provide customer service and process returns for those orders.” See https://sell.amazon.com/fulfillment-by-amazon?ld=seussoagoog-sitelink-fba2-D (last visited September 8, 2022). Section 237(b)(1) of the Tax Reform Code of 1971 (Tax Code),2 which provides that “[e]very person maintaining a place of business” in the Commonwealth of Pennsylvania (Commonwealth) must collect and remit Pennsylvania sales tax, or pay personal income tax (PIT) pursuant to Section 302(b) of the Tax Code,3 which imposes PIT at a rate of 3.75 % upon nonresidents for income derived “from sources within this Commonwealth.” After careful review, we hold that Revenue has failed to provide sufficient evidence that non-Pennsylvania businesses selling merchandise through the FBA Program (FBA Merchants), and whose connections to the Commonwealth were only shown to be limited to the storage of merchandise by Amazon in one of Amazon’s Pennsylvania warehouses, have sufficient contacts with the Commonwealth such that Revenue can mandate they collect and remit sales tax or pay PIT pursuant to Sections 237(b)(1) and 302(b) of the Tax Code. Accordingly, we grant the Guild’s cross-application for summary relief and deny the cross-application for summary relief filed by Revenue. I. Background Before engaging in a recitation of the relevant facts in this matter, it is helpful to first review the legal precedent governing when a state may exercise jurisdiction over a nonresident business, as well as the pertinent provisions of the Tax Code. A. Case Law Whether a person or entity may be liable for taxes revolves around the well established notion that the potentially liable party must have “minimum contacts” with the forum jurisdiction. Wirth v. Commonwealth, 95 A.3d 822 (Pa. 2014). In 2 Act of March 4, 1971, P.L. 6, as amended, 72 P.S. § 7237(b)(1). 3 Added by the Act of August 4, 1991, P.L. 97, 72 P.S. § 7302(b). 2 Quill Corporation, Inc. v. …
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