Engaging in Activities Subject to Transaction Privilege (SALES)/Use Tax
If you plan to sell a product or engage in a service subject to state and/or local transaction privilege (sales) or use tax,* you will generally need to obtain the state transaction privilege tax (TPT) license (commonly referred to as a sales tax, resale, wholesale, vendor or tax license). This includes service-based businesses that involve parts and/or materials, such as an auto repair business.
For questions about whether your business activity is subject to state or local transaction privilege (sales) or use tax, contact the Arizona Department of Revenue, Tax Research and Analysis. (23)
Arizona Department of Revenue: Applying for a TPT License
Contact: Arizona Department of Revenue, 602.255.3381 or toll-free from within AZ 800.352.4090
When you sell an item to a customer who plans to rent or resell it in the normal course of business, you may not owe tax on that sale. Even though sales for resale (wholesale sales) may be exempt from transaction privilege (sales) tax (TPT), they are not necessarily exempt from state and city licenses. The burden of proving that a sale was for resale is on the seller. However, if the seller has valid documentation on file that was completed by the purchaser, such as an Arizona Department of Revenue Form 5000 - TPT Exemption Certificate - General or a Form 5000A - Arizona Resale Certificate, the burden of proof shall shift to the purchaser.
Charges for installation labor on items that are not to be attached to real property are exempt from tax. Charges for retail labor must be clearly listed separately on invoices and records. Otherwise, you will owe tax on the total invoice where parts and labor are not separately stated.
The Arizona Department of Revenue publishes informational brochures regarding selected activities subject to state and county tax. For certain situations, businesses are not subject to transaction privilege tax. See the Arizona Department of Revenue's TPT Exemptions page.
Check with individual city/town offices for their informational tax brochures.
The Arizona Department of Revenue offers a free Business Tax Workshop in person or via WebEx. This is a course on transaction privilege tax (TPT) basics for businesses. The topics include: Licensing and Reporting, Location Based Reporting, Tax Rates, Exemption Certificates, Exemptions and Deduction Codes, Added Tax versus Tax Factoring and Calculating and Reporting Tax. (23)
*Types of business activities subject to the transaction privilege (sales)/use tax include, but are not limited to: 911 Telecommunications; Advertising; Amusement; Commercial Lease, Rental & Licensing for Use; Communications; Construction Contracting (Owner Builder, Prime, Speculative Builder); E911 Prepaid Wireless; Feed at Wholesale; Hotel/Motel (Transient Lodging); Jet Fuel Tax; Job Printing; Manufactured Buildings; Mining-Nonmetal; Municipal Water; Online Lodging Marketplace; Personal Property Rental; Pipeline; Private (Rail) Car; Publication; Rental, Leasing, & Licensing for Use of Tangible Personal Property; Residential Rental, Leasing, & Licensing for Use; Restaurants and Bars; Retail; Retail Sales Food for Home Consumption; Severance-Metalliferous Mining; Telecommunications Devices; Timbering and Other Extraction; Transporting; Use Tax (Direct Payments, Jet Fuel, Purchases, Utilities, from Inventory); and Utilities.