EYE ON Arizona Sales Tax

By Jeff Meigs on Thu, Jul 30, 2015 @ 12:17 PM

eye_on_arizonaArizona doesn’t have a traditional “sales tax” – instead, Arizona imposes a transactions privilege tax (“TPT”) on the sale of tangible personal property and certain services. However, the TPT is the equivalent of a sales tax in almost all respects.

Similar to my last two blogs on Alabama and Alaska, Arizona is a “home rule” state. However, there is some good news as Arizona is in the process of eliminating the need to file separate returns in each home rule jurisdiction. Following is the formal guidance on this topic from the Arizona Department of Revenue:

The Arizona Department of Revenue (ADOR) and Arizona’s Cities and Towns continue to work together to achieve the goal of simplifying the manner in which taxpayers report and pay their Transaction Privilege Tax (TPT).  Due to the complexity in incorporating the City’s requirements into the Department’s information technology system, ADOR will not be the single point of licensing, filing and payment of all TPT on January 1, 2015, as originally planned. However, taxpayers should be aware that there will be changes to licensing and filing requirements effective January 1, 2015. We are confident these changes will be the first step in making it easier for Arizona businesses to report their State, County and City TPT taxes.

For 2015, taxpayers will continue to file transaction privilege taxes to the state and most municipalities as they do today. Bullhead City, Somerton, and Willcox will become Program Cities as of January 1, 2015 (
Program Cities are the cities for which the ADOR licenses and collects TPT). Taxpayers located in these three cities will report and pay their TPT to the State. The cities of Apache Junction, Avondale, Chandler, Douglas, Flagstaff, Glendale, Mesa, Nogales, Peoria, Phoenix, Prescott, Scottsdale, Sedona, Tempe, and Tucson will continue to administer their own privilege taxes through the 2015 calendar year. Beginning January 1, 2016, ADOR will become the single point of administration and collection of State, county and municipal transaction privilege tax.

Currently, taxpayers are required to comply with both the state laws and home rule jurisdiction laws until January 1, 2016. This means separate registration/licensing efforts with the state and home rule jurisdictions. Another important factor to consider is that the taxability of certain products and services may be different between the state and the home rule jurisdictions (i.e. something exempt from the state TPT, might be subject to a home rule TPT).

Generally, Arizona is a complex state from a TPT/Sales tax perspective – forcing taxpayers to comply with both state laws and different local laws. In most states, the applicability of the sales tax is the same at the state and local levels. While the registration and reporting will soon be consolidated/simplified, taxpayers will continue to have to determine the taxability of their products and services at both the state and local levels.

Stay tuned for more of Jeff's EYE ON series as he blogs about sales and use tax State by State.


Jeff Meigs

Written by Jeff Meigs