State of Arizona Flag

Arizona Sales Tax Guide for Businesses

Sales Tax Rate
5.6%
Local Taxes
Yes
Website
Department of Revenue
Tax Line
602-255-3381

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 In some cases, 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.

Note for Amazon FBA sellers: In our understanding, you’d collect transaction privilege tax (TPT) from your Arizona buyers. Read a detailed explanation of why Amazon sellers should collect Arizona TPT here.


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:

  1. Login to Amazon Seller Central and pull your inventory report
  2. Sign up for a 30-day free trial of TaxJar and find out from where your Amazon inventory ships using our Amazon badge feature

You may find that your inventory is stored in one or all of Arizona’s Amazon fulfillment centers in this list:

Read here for more about Amazon FBA and sales tax nexus. Here’s a list of all Amazon Fulfillment Centers in the country.

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.

Important note on Arizona sales tax permits (AKA TPT tax permits): Under the Arizona Model Cities Tax Code, online sellers are required to register for a sales tax permit in each city into which they make a sale. And this registration can cost anywhere from free to up to $50 per city. Here’s how much it costs to register for a TPT permit in each Arizona city.

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.

You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator or by going to TaxJar.com/mobile on your mobile device.

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 gets tricky. Read our detailed guide on how to collect sales tax in Arizona here.

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 Arizona X X X X N/A No No
Seller living outside of Arizona X X X X N/A No No
Rank City Population County Total SalesTax
1 Phoenix 1,563,025 Maricopa 8.600%
2 Tucson 531,641 Pima 8.100%
3 Mesa 471,825 Pima 8.100%
4 Chandler 260,828 Maricopa 7.800%
5 Gilbert 247,542 Maricopa 7.800%
6 Glendale 240,126 Maricopa 9.200%
7 Scottsdale 236,839 Maricopa 7.950%
8 Tempe 175,826 Maricopa 8.100%
9 Peoria 171,237 Yavapai 8.150%
10 Surprise 128,422 Maricopa 8.500%
11 Yuma 94,139 Yuma 8.412%
12 San Tan Valley 87,923 Pinal 8.950%
13 Avondale 80,684 Maricopa 8.800%
14 Goodyear 79,003 Maricopa 8.800%
15 Flagstaff 70,320 Coconino 8.951%
16 Casas Adobes 68,862 Oro 8.600%
17 Buckeye 62,138 Maricopa 9.300%
18 Lake Havasu City 53,553 Mohave 7.850%
19 Casa Grande 51,460 Pinal 8.700%
20 Catalina Foothills 50,940 Pima 8.100%

Top 20 Most Populous Cities in Arizona and their Sales Tax Rates (June 2017)

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?

When you file and pay Arizona sales tax depends on two things: your assigned filing frequency and your state’s due dates.

How often will you file sales tax returns in Arizona?

States assign you a filing frequency when you register for your sales tax permit (or, in the case of Arizona, your TPT permit). In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Arizona, you will be required to file and remit sales tax either monthly, quarterly or annually.

How often you are required to file sales tax in Arizona follows this general rule:

Average Monthly Tax Liability Filing Frequency
$666.67 and up Monthly
$166.67 to $666.66 Quarterly
$0 to $166.66 Annually

Arizona electronic sales tax returns are always due the final day of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.

2017 Arizona Monthly Sales Tax Filing Due Dates

Taxable Period Due Date
January February 28, 2017
February March 31, 2017
*March May 1, 2017*
April May 31, 2017
May June 30, 2017
June July 31, 2017
July August 31, 2017
*August October 2, 2017*
September October 31, 2017
October November 30, 2017
*November January 2, 2018*
December January 31, 2018

*indicates a due date pushed back due to a weekend or holiday

2017 Arizona Quarterly Sales Tax Filing Due Dates

Taxable Period Due Date
*Q1 (Jan-March) May 1, 2017*
Q2 (April-June) July 31, 2017
Q3 (July-Sept) October 31, 2017
Q4 (Oct-Dec) January 31, 2018

*indicates a due date pushed back due to a weekend or holiday

2017 Arizona Annual Sales Tax Filing Due Dates

Taxable Period Due Date
Year 2017 January 31, 2018

How to file sales tax in Arizona

When it comes time to file sales tax in Arizona you must do three things:

  1. Calculate how much sales tax you owe
  2. File a sales tax return
  3. 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:

Penalties:

  • 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.

“Zero returns”:

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.

Discounts:

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.

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