All Arizona cities and towns collect transaction privilege taxes (TPT), commonly called sales tax. TPT differs from true sales tax in that it is a tax on the privilege of doing business and not a tax on individual products or their sale. This is why it is generally included in the overall sales price and passed to the customer at time of purchase. TPT is levied on all retail sales, construction, residential and commercial rentals, utilities, communications, and amusements. A few items are not subject to TPT, such as prescription medicine, casual sales between individuals, and items purchased for resale.
If your company has nexus in Arizona, you must register to collect and remit TPT. Nexus is defined as having a physical presence in the state, including but not limited to an office, storefront, warehouse, or other place of business. The Department of Revenue’s TPT division manages the TPT registration and collection process.
Arizona Sales Tax is 5.6 percent, and county rates vary. For a full breakdown of the current rates, visit the TPT webpage. The state also has a lookup tool for businesses to help determine which combined Arizona city and state sales tax rate to charge customers. Use this to avoid over or under-charging your clients.
Arizona Online Retailers TPT
Online retailers who meet the sales threshold in the state of Arizona must register to pay TPT and begin collecting and remitting sales tax on their taxable sales. These online sellers must identify where they are located in the state, and their inventory must be stored in a TPT-collecting jurisdiction to meet the registration requirement. In addition, sellers who use a third-party fulfillment service to maintain their inventory in Arizona (such as Fulfilled by Amazon or FBA) must also meet the registration requirements.
Similarly, online lodging marketplaces that have nexus in Arizona must collect and remit TPT on their sales. This includes online platforms that facilitate the renting or lodging of a place to stay in the state, such as Airbnb or HomeAway. Generally, only tangible products are taxable in Arizona; however, if a business is selling a service that is deemed to be the same as or similar to the sale of a product, it may also be subject to sales tax.
How to Pay Arizona TPT tax?
In order to be required to pay TPT in the state of Arizona, a business must have what is known as nexus in the state. Nexus is a concept that determines whether a person or company must register with the state, collect and remit TPT, file returns, and provide reports to the state.
When a person or business has nexus in the state of Arizona, they are required to obtain and maintain a license with the State of Arizona and collect and remit TPT on all taxable sales made within the state. This includes both online and brick-and-mortar stores. It is also important to note that if an out-of-state seller uses a third-party fulfillment service like Fulfilled by Amazon (FBA) or Etsy, that they may be required to obtain a license with the State of Arizona and collect and remit TPT on their sales made through those platforms.
The filing deadline for Arizona sales tax returns is the last day of the month following the close of the reporting period. There is no penalty if a return is filed late, but the state does impose interest and penalties for late payments.