AZ States

Changes to Arizona Sales Tax for 2016

by Jennifer Dunn

Arizona transaction privilege tax

Last year we wrote about how – gloriously – Arizona announced they were simplifying sales tax registration and compliance in the state. Then we wrote about how – just kidding – Arizona was putting off that welcome change until 2016. (Note: while we’re calling it “sales tax” here for simplicity’s sake, Arizona actually calls their version of sales tax “transaction privilege tax” or TPT.)

Well, 2016 is almost here, and with it, yet another update from the Arizona Department of Revenue.

Here’s the lowdown:

Arizona Not Yet Simplifying Sales Tax Registration

Anybody who has sales tax nexus in Arizona knows what a pain registering for a Arizona sales tax (i.e. transaction privilege tax) permit can be. Not only must you register for a permit with the state of Arizona, you must also register for a permit with any “non-program” cities. Amazon FBA sellers who store goods in the Phoenix warehouse generally find themselves in need of both an Arizona sales tax permit and a city of Phoenix sales tax permit. This is twice the paperwork, not to mention the fact that these permits must be renewed annually.

Unfortunately, this process isn’t getting any easier in January 2016.

Here’s exactly what the Arizona Department of Revenue had to say:

“The State of Arizona and its 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). We want to ensure that there is a smooth transition in reporting and paying all TPT transactions. Working toward this end, the Arizona Department of Revenue is requiring all State TPT taxpayers to renew their licenses with the Department and continue to renew their licenses with the appropriate City.”

This is essentially the same news as last year. While they don’t blame technical difficulties this time, the Arizona Department of Revenue is still saying that they will not be streamlining sales tax registration in the state. At least not in January 2016.

Unlike their bulletin last year, they also don’t give us a firm deadline on when we can expect a streamlined sales tax process in Arizona. Their only mention of continuing to streamline is this:

“Both the State and the Cities are committed to making this transition as easy as possible. We are confident these changes will make it easier for Arizona businesses to report their State, County and City TPT taxes. In the coming months you will continue to receive information, forms and instructions, from both the State and the Cities until the smooth transition is completed.

It sounds like we need to continue to be patient and take a wait and see approach.

Arizona Sales Tax Permit Renewals

Your Arizona state license will renew on January 1, 2016. There is no fee for this renewal and no action required unless you’ve made a change to your business. The state will mail you your new license after Jan 1.

That said, if you have made a major change to your business, you need to renew your state and city permits. These changes include:

  1. Change to Business or DBA name
  2. Change to the business location address
  3. The addition of a new reporting jurisdiction (City)
  4. The addition of a new business or rental location

Your state renewal in this case is $12, and your city renewal is dependent on the rate each city has set. You should contact the city should you need to make a change.

If you need to make changes to your business:

1.)  Go to AZDor.gov

2.) Click on “Forms” on the menu bar

3.) Select “Transaction Privilege Tax”

Speaking of Arizona city sales tax permit renewals…

City of Phoenix Requires Renewal

If you have a city of Phoenix sales tax permit (i.e. transaction privilege tax permit) then you are required to renew it on January 1, 2016.

Tiffany Rodi from Windward Tax called the city to confirm and was told that yes, even if you apply for and pay your $50 for your first City of Phoenix TPT permit on 12/31/2015 you’ll be required to pay a $50 renewal fee on 1/1/2016.

This is good info to keep in mind should you need to apply for a new transaction privilege tax permit from the city of Phoenix.

Conclusion

While we had hoped Arizona would simplify their sales tax requirements this year, that hasn’t been the case so far. Stay tuned here for more updates as we follow this sales tax saga closely.

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