We are glad you chose 1StopVAT’s Arizona sales tax guide to learn about this widespread tax. We hope that this article will answer your questions like what is the current sales tax in Arizona, how to get a seller’s permit in the state or how to file the tax. If you need more assistance with registering, collecting, or filing your Arizona tax sales, please contact the 1StopVAT team, and get all the help you need.
Collected and paid in many countries across the globe, the sales tax or its equivalent value added tax (VAT) is a consumption tax. This means it is levied on the final customer and is paid and deducted in the process leading to the final sale. Sales tax in Arizona (AZ) is often called the state transaction privilege tax (TPT) and is charged at the point of purchase, with the seller becoming a de facto collector of the tax.
Both Arizona sales and use tax are administered by the Arizona Department of Revenue (ADOR). This organization issues Arizona sales tax (AZ) or TPT permits and oversees the tax collection. Each registered seller with a nexus for the sales tax Arizona has to comply with the regulation and file the tax at an assigned frequency.
The sales tax rate in Arizona is combined, meaning that the state has a base rate and local rates added to the prices based on the customer’s location. Therefore, to learn how much sales tax in Arizona one should charge, it is best to use a sales tax calculator.
A company must become a sales tax collector after it fulfills the main criteria. In Arizona, the requirements are these:
▶ The business has formed a nexus in the state;
▶ It receives revenue from selling taxable items/services in Arizona.
To become a registered TPT collector and start including the Arizona sales tax rates to prices of items sold, a company must form a strong bond with the state, called a nexus. Typically, the most robust nexus with a state is a physical nexus defined by having or leasing facilities, staff, and other physical representation in the state. However, remote sellers also get the obligation to begin including the Arizona sales tax rate in their sales in some cases. It happens when they:
▶ Form an economic nexus in Arizona by generating over USD 100 000 in gross sales in the past calendar year. This applies to both remote sellers and marketplace facilitators;
▶ Have an employee or a representative/affiliate in the state for more than two days per year;
▶ Deliver merchandise into the state, using their own transport;
▶ Use warehouses for storing items in Arizona. This nexus includes the Fulfilment by Amazon scheme participants, too.
Prior to calculating what’s the sales tax in Arizona that one should charge, it is best to check the status of goods or services in the state and whether their prices must include the sales tax rate Arizona.
Most tangible property is taxable in Arizona, with some exemptions on essential items. Among the tax-exempt goods are some foods, prescription medicine and medicinal equipment, and machinery.
Since 2018, Arizona has adopted a law that bans the taxation of services. It means that only the services previously subject to the TPT tax are taxed, with no new services added to the list.
Some organizations can sell taxable items TPT-free. These include charitable causes or NGOs.
There are three ways to get a TPT certificate issued for your company. These are: registering online, downloading a TPT registration form and sending it to the ADOR, or coming to one of the ADOR’s field offices. Online registration is by far the easiest and can be done by visiting the AZTaxes website. The permit for becoming eligible to include the Arizona state sales tax rate to your prices costs USD 12. The process is simple and requires you to provide information about yourself, the company, and its projected sales. The AZTaxes website is also a great resource to answer questions like how much is the sales tax in Arizona that one should charge.
As mentioned previously, Arizona has implemented combined TPT or sales tax rates. This means that the sales tax rates Arizona -selling companies should charge depend on the location (city/county) of the buyer.
The Arizona sales tax percentage that serves as a base is now 5.6 %. The local rates that should be added on top range from 0 to 5.6 %, making the total possible TPT rate 11,2 %. We know that figuring out the exact TPT rate might be confusing, so we encourage you to use our Sales Tax Calculator to find the correct numbers or contact the 1StopVAT team.
The state of Arizona can assign monthly, quarterly, or annual filing dates depending on the size of a company. In contrast to other states, it has separate filing deadlines for those who do their taxes with paperwork versus the electronic submission. Typically, the paperwork must be submitted sooner than e-reports via the AZTaxes website.