FAQs

Enforcement

The Department of Revenue is adding Investigators and Auditors to visit Dealers and Distributors, to examine their records and identify under-reporting and non-compliance. In addition to fines and penalties, businesses that fail to pay may be closed or have judgments entered.

Filing a Return

Monthly, on the 20th of the month for the prior month's activity. For example, beverages supplied in January 2017 have to be reported on a return due on February 20, 2017.

Returns will be filed online on the 20th of the month for activity in the prior month. Filing and payment portal

You will need 4 things: the volume of taxable ounces of non-caloric beverages supplied, the volume of taxable ounces of caloric beverages supplied, the volume of taxable finished non-caloric beverages produced from syrups or other concentrates, and the volume of taxable, finished -caloric beverages produced from syrups or other concentrates supplied. The online return will automatically calculate the amount of tax due (and any late fees if necessary).

First, ask the Dealer to clarify. If you are unable to get a response, assume 100% of the product is taxable. If you get updated information after the return is filed, you may file an amended return.

If the Dealer has notified you of the error and you have allowed the Dealer to recharacterize the sale as a Philadelphia sale (including any potential price changes), you must file an amended return and make the additional tax payments, or make the necessary adjustments on your next return. If the Dealer does not notify you of the error or you are unable to reconfigure the sale to accommodate any price differential, you have no obligation. The Dealer will have to register as a Special Dealer and pay the tax directly.

Beverages with both caloric and non-caloric sweeteners should be reported as caloric.

Taxpayers who can demonstrate a unique hardship can obtain permission from the Department of Revenue to report all sweetened beverages as caloric.

Invoices

Either the volume of taxable beverages distributed in ounces or the amount of tax due on the transaction. This may be presented as a grand total or by item.

Distributors may choose whether to present the amount of tax or volume of beverage by item or for the entire order. If you cannot fit this on the invoice, you may use the Invoice Supplement form provided by the Department of Revenue .

Making a Payment

The Philly Bev Tax is imposed upon the distribution of the sweetend beverages to Dealers who intend to sell the product at retail in Philadelphia. It is generally paid by Distributors. A Dealer can choose to take on the obligations of a Distributor, including payment of the tax, if that makes more sense for their business. Distributors (and Dealers who opt to act like Distributors) need to register for the Philly Bev Tax.

The tax is calculated based on the amount of finished beverage produced, using the manufacturer's instructions. If the manufacturer says to dilute 1 tablespoon of powdered drink mix with 20 ounces of water then each tablespoon should be treated as 20 ounces of taxable product. The tax would be 20 ounces times 1.5 cents for a total of 30 cents.

1.5 cents per ounce of sweetened beverages. For syrups and other concentrates, the tax is calculated based on the amount of finished beverage produced, using the manufacturer's instructions. If the manufacturer says to dilute 1 tablespoon of powdered drink mix with 20 ounces of water then each tablespoon should be treated as 20 ounces for purposes of calculating the tax on the distribution. The tax would be 20 ounces times 1.5 cents for a total of 30 cents.

Contact the Department of Revenue to arrange a payment agreement in order to avoid additional charges. Email us at revenue@phila.gov or call 215-686-6600.

Only electronic payments are accepted. ACH Credit & Debit and eCheck have no transaction fees. There are extra fees for payment by debit or credit card.

Tax on products with two types of sweetened concentrates should only be based on the total ounces of finished product, either by taxing just one of the sweeteners or prorating between the two.

Notification & Confirmation

Dealers should provide the Distributor with either their PA Sale for Resale Sales Tax Exemption Form with a Philadelphia address or use the alternate form provided by the Department of Revenue .

Distributors provide confirmation using the Distributor Confirmation Form provided by the Department of Revenue .

First, reach out to the Dealer. It is possible that they have registered to pay the tax directly or do not intend to hold the products out for retail sale in Philadelphia. You can access materials here to help make the Dealer aware of the Philly Bev Tax. However, if you have a PA Sales Exemption Certificate on file with a dealer that has a Philadelphia address, that is sufficient notice to collect and remit the tax. Dealers that sell sweetened beverages at retail in Philadelphia and fail to notify their Distributors are liable for payment and any fees and penalties for non-compliance.

No, but if you have some locations inside Philadelphia and some outside, you should communicate to your Registered Distributors which are Philadelphia so that they know when to pay the tax.

A PA Sales Tax Exemption certificate is sufficient notification from a dealer that the Philadelphia Beverage Tax is due on transactions to them, so provide confirmation to them that you are a Registered Distributor and begin reporting and paying on your supply of product to them.

Other Taxes

The consumer is not responsible for payment of the Philly Bev Tax. The Philly Bev Tax is on the distribution of sweetened beverages intended for retail sale in Philadelphia, based on the volume sold. The Philly Bev Tax is typically paid by the Distributor. The Dealer collects the Pennsylvania Sales Tax based on the price charged to the end customer. The two are not related. Accordingly, Dealers do not collect the Philly Bev Tax from consumers.

Record Keeping

Keep the Confirmation from your Distributor and all invoices for Sweetened Beverages for six years.

Keep the Notification from your customer and copies of all invoices for Sweetened Beverages for six years.

Refunds & Overpayments

Registration

Dealers purchasing all sweetened beverages from a registered distributor do not need to register for the Philly Bev Tax. Dealers who do not want to (or cannot) purchase all sweetened beverage from a registered distributor, should register either as a Registered Dealers or a Special Dealer through our online registration process . Learn more about Registered Dealers and Special Dealers.

You will need the EIN or SSN for your business, contact information, and will have to determine if you are filing as a Registered Distributor, Registered Dealer, or Special Dealer.

If you cannot inform your distributor of the volume of taxable products intended for retail sale, a good option is to become a Registered Dealer and take on the responsibility to file and pay the tax directly.

A list of Registered Distributors is available here.

No, but we strongly recommend it. All Philadelphia dealers are required by law to either purchase from a Registered Distributor or to register on their own and file and pay directly. Many dealers have indicated that they would prefer to purchase from a Registered Distributor and they will have to switch if their current distributor does not get registered or register as a Registered or Special Dealer.

No. The Philadelphia Beverage Tax is on the distribution of sweetened beverages intended for retail sale. Supply to other wholesalers is not subject to the tax.

Covered Beverages

No. For the distribution to be taxable, the concentrate has to be intended to be used in the preparation of a beverage by a Dealer for retail sale.

Yes, if they are mixed together in a proportion that is nutritionally equivalent to milk.

Medical foods are foods designed to treat or manage a diagnosed medical condition. The federal Orphan Drug Act defines medical foods. Taxpayers may be asked to provide documentation for any products for which they claim a medical foods exemption. More information is available in Section 102 of the Philly Bev Tax regulations.

No. New products come on the market every day and keeping up would be impractical. The Philly Bev Tax regulations provide guidance about ingredients and categories of products that are subject to the tax. Have a question about a specific product? Email us at revenuetaxadvisors@phila.gov.

No. The taxpayer should make that determination based on information about the product following the guidelines in the Philly Bev Tax regulations. Taxpayers may be required to produce documentation supporting the medical foods exemption for all products they exclude from the tax.

The tax is calculated based on the amount of finished beverage produced, using the manufacturer's instructions. If the manufacturer says to dilute 1 tablespoon of powdered drink mix with 20 ounces of water then each tablespoon should be treated as 20 ounces (even if you mix into 30 ounces or 15 ounces).

Thickened beverages are not taxable when they are medical foods, used for the treatment or management of a diagnosed medical condition, such as those specifically marketed for use by people with dysphagia and/or swallowing dysfunction.

Unless the particular product meets the definition of a medical food or other criteria for exemption, sweetened sweetened meal replacements and weight loss drinks are taxable.

Not if they are sold in concentrate form to the end customer who will mix them to create a beverage. If the dealer mixes them to create a beverage, the finished product is taxable.

Multi-use sweeteners like table sugar, agave, honey, and stevia are not taxable when sold on their own, but beverages, syrups, and concentrates containing these sweeteners as an ingredient may be taxable.

If the Dealer is using a Registered Distributor, the Dealer must notify the Distributor, at the time of purchase, how much of the product is going to be used to make finished beverages (and is thus taxable) and how much of the product is going to be made available to the customer to add (and is thus non-taxable). If the Dealer is a Special or Registered Dealer, the Dealer should make those allocations on its own returns.

Drinkable yogurts are beverages. Drinkable yogurts that are more than 50% milk are exempt from the tax.

Taxable Transactions

If all of the product is held out for retail sale, then the entire volume is taxable.

No, so long as it was never intended for retail sale in Philadelphia.

No. There is no Floor Tax for the Philly Bev Tax. Products distributed to a Dealer on or after January 1, 2017 are taxable.

If you are purchasing from a Registered Distributor you should let it know what percentage you will be selling at retail, so that the Distributor can pay the tax on those beverages. You will need to register as a Distributor to pay the tax on the inventory you sell to resellers (Dealers) in Philadelphia. You can also opt to become a Registered Dealer and pay the tax on everything you sell at retail plus what you sell to Dealers.

If the online retailer is a Registered Distributor, and you have notified them and received confirmation that they will be paying the tax, you do not need to register and pay the Philly Bev Tax. If they are not a Registered Distributor, you should either switch to a Registered Distributor or register as a Registered Dealer to file and pay.

No. The Philly Bev Tax is due when it is distributed to a Dealer who intends to sells the product at retail in Philadelphia.

No. The Philly Bev Tax is due when it is distributed to a Dealer who intends to sell the product at retail in Philadelphia. Distribution from one wholesaler to another is not taxable.

No. The Philadelphia Beverage Tax is on the distribution of products intended for retail sale and must be reported and paid by whomever is filing the return.

No.There is no category of entity (non-profit or otherwise) that is exempted from the tax if it otherwise meets the definition of dealer.

For beverages that are created using sweeteners, such as High Fructose Corn Syrup or a Non-Nutritive Sweetener, mixed with flavor cartridges, the amount of tax due will be based on the national average for ounces of sweetened beverages produced from the volume High Fructose Corn Syrup or Non-Nutritive Sweetener distributed. To calculate the amount of tax on products made from a flavor cartridge that contains a sweetener but which is not mixed with a stand-alone sweetener, prorate using the share representing the national average amount of finished beverages produced using that flavor cartridge but no other sweetener. Average beverage calculations must be updated at least annually, subject to audit.

Sweetened beverages distributed for resale in Philadelphia are subject to the tax. So if you are distributing to a dealer who is reselling at a business outside of Philadelphia, then those products are not subject to the tax.

No. If the beverage distributed is not intended for retail sale, then the transaction is not taxable.

No. The Sweetened Beverage Tax is on the distribution of sweetened beverages for resale to a dealer in Philadelphia. In this case, because no distribution has occurred, no taxable transaction has occurred.

More Info

On December 19, 2016, the Philadelphia Court of Common Pleas dismissed in its entirety the lawsuit against the City challenging the Philly Bev Tax. The Philly Bev Tax will start on January 1, 2017. Do not delay registering your business. We’ll update this website if future legal actions ever impact your obligations under the Philly Bev Tax.