Extras on Excise: Pennsylvania Fireworks Retailers Are Seeing Red and It’s Not Due to Pyrotechnics

red fireworks

Pennsylvania retailers with permanent facilities for selling fireworks are unhappy with the recent legal changes that allow sales of fireworks from temporary stands. As a result, several of these retailers and companies have filed a lawsuit in hopes of declaring Act 43 of 2017 unconstitutional.

The Pennsylvania legislature passed Act 43 on Oct. 30, 2017, to help fund the state’s budget. In addition to making a myriad of changes, the bill added existing fireworks laws to the tax code and expanded rules allowing the sale of consumer fireworks from temporary structures.

Under the expanded rules, temporary structures are those licensed to sell consumer fireworks and related items for a period of 20 consecutive calendar days maximum. Owners of these structures must acquire a license, which is valid for one year. Applications must be submitted at least 60 days prior to the first day of sale, along with a nonrefundable application fee of $1,000. Additionally, there is an annual $3,000 annual license fee.

Fireworks sellers are also subject to the consumer fireworks tax which is imposed as 12 percent of the purchase price per item sold, in addition to sales and use taxes. The tax is charged to the consumer and collected by the sellers at the time of sale.

The platform argument of the case is that Act 43 is unconstitutional because it violates the Constitution of Pennsylvania, Article III § 3’s single-subject/clear expression of title rule; the legislation encompassed several other unrelated proposals, including the fireworks provisions, in addition to its tax code amendments.

The fireworks sellers challenging Act 43 also highlight several other concerns over the changes to the fireworks tax provisions incorporated into the act, such as the new appointment of safety regulations to a private organization, the national fire protection association (NFPA). Another concern includes the disparate treatment in safety regulations for fireworks retailers with permanent facilities and those with temporary structures.

There is skepticism about the petitioners’ chance of success in this case, as discussed in a recent Daily Tax Report: State article. However, the Pennsylvania Commonwealth Court will decide if Act 43 is constitutional or if petitioners’ argument will go up in smoke.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Should fireworks rules be the same regardless of the structure they’re being sold from?

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