Arizona Sales Tax Guide for Businesses
- Sales Tax Rate
- Local Taxes
- Department of Revenue
- Tax Line
We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Arizona, and if so, how best to tackle the sales tax situation in the Grand Canyon State.
After reading this, you’ll know:
- Do you or don’t you need to collect Arizona sales tax?
- Which customers do you collect from?
- How much do you collect?
- What do you do with all the sales tax you’ve collected?
- Way more than you probably ever wanted to know about Arizona sales tax
Worth noting: “Sales tax” in Arizona is a little different than other states. They refer to the taxes you, as a merchant, should collect and remit as “transaction privilege tax” and “use tax.”
- Transaction privilege tax (TPT) a tax on the privilege of doing business in Arizona. Much like sales tax in the rest of the country, TPT is collected by merchants and remitted back to the state based on a percentage of a sale.
- Use tax Out-of-state vendors who have sales tax nexus in Arizona are required to collect and remit use tax from buyers in Arizona. If Arizona buyers do not pay sales tax to the merchant for an out-of-state sale, they are required by Arizona law to remit the use tax to the state.
For the purposes of this article, we’ll refer to Arizona’s TPT and use tax as “sales tax.”
Do you have sales tax nexus in Arizona?
Good news! You only have to begin thinking about Arizona sales tax if you have sales tax nexus in Arizona.
“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.
Arizona considers a seller to have sales tax nexus in the state if you have any of the following in the state:
- An office or place of business
- An employee present in the state for more than 2 days per year
- Goods in a warehouse
- Ownership of real or personal property
- Delivery of merchandise in Arizona in vehicles owned by the taxpayer
- Independent contractors or other representatives in Arizona for more than 2 days per year
You can click here to read exactly what the Arizona Department of Revenue (Arizona’s taxing authority) has to say about what constitutes sales tax nexus in Arizona.
Do you have sales tax nexus in Arizona if you sell on FBA?
If you sell on Amazon FBA, you may have sales tax nexus in Arizona. Storing physical products in a state can create sales tax nexus, and Arizona is home to five Amazon Fulfillment Centers.
To determine whether or not you have items stored in an FBA warehouse in Arizona, you can do one of two things:
You may find that your inventory is stored in one or all of Arizona’s Amazon fulfillment centers in this list:
|Warehouse Code||Address||County||Tax Rate|
|PHX3||6835 W. Buckeye Rd. Phoenix, AZ, 85043||Maricopa||8.3%|
|PHX5||16920 W. Commerce Dr. Goodyear, AZ, 85338||Maricopa||8.8%|
|PHX6||4750 W. Mohave St. Phoenix, AZ, 85043||Maricopa||8.3%|
|PHX7||800 N. 75th Ave. Phoenix, AZ, 85043||Maricopa||8.3%|
|TFC1||5050 W. Mohave St. Phoenix, AZ 85043||Maricopa||8.3%|
Is what you’re selling even taxable?
You’ve probably read this far because you realized you have sales tax nexus in Arizona. Your next step is to determine if what you’re selling is even taxable.
Services in Arizona are generally not taxable. So if you’re a freelance writer or a plumber, you’re in luck and you don’t have to worry about sales tax. But watch out – if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products.
Tangible products are taxable in Arizona , with a few exceptions. These exceptions include certain groceries, prescription medicine and medical devices, and machinery and chemicals used in research and development.
So if you sell toys, then charge sales tax to your Arizona customers.
But if you’re a graphic designer, don’t charge sales tax to your Arizona customers.
If you have sales tax nexus in Arizona and your products are taxable, your next step is to register for a sales tax permit.
How to register for a sales tax permit in Arizona
Sellers with sales tax nexus in Arizona must apply for an Arizona sales tax permit.
Don’t skip this step! Arizona considers it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Arizona.
How to collect sales tax in Arizona
So you’ve determined that you have sales tax nexus in Arizona and what you’re selling is taxable. And you’re all set and registered for your Arizona sales tax permit(s).
The next step is to determine how much sales tax to collect.
The sales tax rate you collect in Arizona depends on whether you are based in Arizona or out-of-state.
How to collect sales tax in Arizona if you are based in Arizona
Arizona is an origin-based sales tax state. So if you live in Arizona, collecting sales tax is fairly easy. Collect sales tax at the tax rate where your business is located.
Example: You live and run your business in Sedona, AZ, in the 86336 zip code. The sales tax rate in Sedona is made up of the 5.6% Arizona sales tax rate, the 1.3% Coconino County rate and the 3% Sedona rate, for a total of 9.9%. You would charge all of your Arizona customers, no matter where in the state they live, that 9.9% sales tax rate.
If you have more than one location in Arizona, then you would base the sales tax rate you charge on the point of origin of your sale.
How to collect sales tax in Arizona if you are not based in Arizona
This is where things get trickier for online sellers. Arizona wants sellers who made a sale into Arizona from outside the state to charge sales tax based on the location of the buyer.
Example: You live in Colorado, but have sales tax nexus in Arizona due to having products stored in the Amazon fulfillment center in Goodyear, AZ (Maricopa County). If you make a sale to a buyer in Tempe, Arizona (85284 zip code) then you would charge sales tax based on the 8.10% sales tax rate in the buyer’s location, Tempe.
The fact that 15 Arizona cities administer their own sales tax can make this tricky. You may find that Arizona requires you to register for a sales tax permit in several Arizona cities. Find out more about selling into Arizona from out-of-state here.
The good news is that Arizona is revamping their sales tax system in 2016. Stay tuned to the TaxJar blog for the latest news.
What are the Amazon sales tax settings for Arizona?*
If you are an Amazon pro seller and use Amazon to collect sales tax, be sure you have your sales tax settings entered correctly. Find step-by-step instructions for setting up your Amazon sales tax settings here.
|If you are a…||State tax||County tax||City tax||District tax||Custom rate||Is shipping taxable?||Is gift wrapping taxable?|
|Seller living in California||X||X||X||X||N/A||No||Yes|
|Seller living outside of California||X||X||X||X||N/A||No||Yes|
|15||Lake Havasu City||52,527||Mohave||7.85%|
Should you collect sales tax on shipping charges in Arizona?
As long as you separately state the shipping charges on your bill to your customer, you do not have to charge sales tax on shipping.
But if you include shipping in the price of the product you sell the customer, then shipping is considered part of the taxable transaction and Arizona declares that you must collect sales tax on shipping.
Read a full explanation of sales tax on shipping in Arizona here.
When are Arizona sales tax returns due?
Arizona sales tax returns are always due the 20th of the month following the reporting period. You’ll be assigned a sales tax filing frequency when you apply for your Arizona sales tax permit.
2016 Arizona Monthly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|January||February 22, 2016*|
|February||March 21, 2016*|
|March||April 20, 2016|
|April||May 20, 2016|
|May||June 20, 2016|
|June||July 20, 2016|
|July||August 22, 2016*|
|August||September 20, 2016|
|September||October 20, 2016|
|October||November 21, 2016*|
|November||December 20, 2016|
|December||January 20, 2017|
*indicates a due date pushed back due to a weekend or holiday
2016 Arizona Quarterly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Q1 (Jan - Mar)||April 20, 2016|
|Q2 (Apr - Jun)||July 20, 2016|
|Q3 (Jul - Sep)||October 20, 2016|
|Q4 (Oct - Dec)||January 20, 2017|
2016 Arizona Annual Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Year 2016||January 20, 2017|
How to file sales tax in Arizona
When it comes time to file sales tax in Arizona you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
We’ll walk you through these steps.
How to calculate how much sales tax you owe in Arizona
Calculating how much sales tax you should remit to the state of Arizona is easy with TaxJar’s Arizona sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Arizona sales tax return will be waiting for you in TaxJar. All you have to do is login!
How to file and pay sales tax in Arizona
You have two options for filing and paying your Arizona sales tax:
- File online - File online at the Arizona Department of Revenue. You can remit your payment through their online system.
- File by mail - You can use Form TPT-EZ if you live in-state, or TPT-2 if you live out-of-state and file and pay through the mail, though you must file and pay online if your tax liability in the previous year was $1,000,000 or more.
Other facts you should know about Arizona sales tax filing
There are a few more things you should know about sales tax in Arizona:
- Late Filing Penalty 4.5% per month of the tax imposed
- Late Payment Penalty 1% of the unpaid tax bill for each month of delinquency
Other penalties for fraud or serial offenses include higher penalties and even criminal charges.
Arizona requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay.
Many states understand that collecting sales tax is a difficult burden on merchants, and will provide a discount to help alleviate some of this burden. In Arizona, as long as the sales tax is paid on time, a discount is available equal to 1% of sales tax due and is not to exceed $10,000 per calendar year.
And that’s it. You’ve mastered Arizona sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.
Arizona Sales Tax Resources
For more about Arizona sales tax, check out the Arizona section of the TaxJar blog.