Are any business activities excluded from the business privilege and mercantile tax?

Yes.

  • The manufacturing of goods is expressly excluded from the business privilege and/or mercantile tax. Manufacturing is defined as “the creation of a new product from some raw material.” Special skill and labor must be used in the creation of the new products.
  • Nonprofits  that operate as purely public charities (such as many hospitals) are excluded from the tax. Receipts connected with non-commercial operations of nonprofit organizations are exempt.
  • Receipts attributable to interstate commerce are exempt.
  • Receipts attributable to the extraction or production of mineral, timber, natural resources or farm products is exempt.
  • Public Utilities whose rates are set and regulated by the Pennsylvania Public Utility Commission (PUC).

If all of your gross receipts are for the manufacturing of goods, submit one of the following to Keystone Collections Group, PO Box 489, Irwin, PA 15642

  • Letter on company letterhead with nature of business description or
  • Documentation that supports the business is a manufacturer

If you received a business privilege or mercantile tax return for your nonprofit, and are claiming exemption from the tax, mail us a letter on company letterhead to Keystone Collections Group, PO Box 489, Irwin, PA 15642. Include proof of nonprofit status filing, such as:

  • A copy of a currently valid IRS tax exemption certificate or
  • A statement from a State taxing body, State Attorney General, or other appropriate State Official certifying that the applicant organization has a nonprofit status and that none of the net earnings accrue to any private shareholders or individuals

Click here for more exclusions.