Arizona Sales Tax Guide: Compliance, Rates, and Regulations for Businesses

A comprehensive overview of Arizona's sales tax landscape, covering compliance, rates, and regulations for businesses.

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Arizona Sales tax at a glance

Arizona sales tax rates & calculations

The Arizona sales tax rate is between 5.6% and 11.2%. This comprises a base rate of 5.6% plus a mandatory local rate of up to 5.6%. Depending on the local sales tax jurisdiction, the total tax rate can be as high as 11.2%.

List of local sales tax rates in Arizona

You can look up the current sales tax rates in each city and county in Arizona. Here’s a snippet of the same.

Arizona Sales Tax FAQs

How do you calculate Arizona sales tax?

To calculate Arizona sales tax, you can use the following formula:

Sales tax = (base rate + local rate) * purchase price

For instance, with a base rate of 5.6%, a local rate of 3%, and a purchase price of $100, the sales tax would be 8.6% or $8.60.

What are the penalties for not paying Arizona sales tax?

Penalties for late filing or non-payment of Arizona sales tax include:

• 4.5% of the tax amount for failure to pay
• 0.5% of the tax due on the return per month
• Interest charges on unpaid tax

What’s the difference between destination-based and origin-based sales tax states?

The customer's location determines the tax rate in destination-based sales tax states. In origin-based states, the rate is determined by the seller's location.

Is the Arizona sales tax destination-based or origin-based?

Arizona is an origin-based sales tax state. Sellers collect tax based on where their business is located, not where the customer is.

Is Arizona a streamlined sales tax state?

Arizona is not a Streamlined Sales Tax State. The Streamlined Sales Tax Project (SSTP) aims to simplify sales tax collection across states that adopt its Streamlined Sales and Use Tax Agreement (SSUTA), and Arizona has not joined the SSTP or implemented the SSUTA.

Sales tax nexus table in Arizona

What's taxable and what's exempt in Arizona

Exemptions from sales tax in Arizona

Some exemptions from Arizona sales tax include:

• Food for home consumption
• Prescription drugs and medical equipment
• Textbooks (for use by a public or private school student)
• Solar energy devices

Excise taxes in Arizona

Arizona has excise taxes on:

• Alcoholic beverages
• Tobacco and vaping products
• Motor vehicle fuel
• Aviation fuel
• Severance (mining)

Remote sellers in Arizona

Many states now require out-of-state online sellers to collect sales tax if they exceed certain sales or transaction thresholds. Out-of-state sellers with no physical presence can still have economic nexus based on the sales threshold. Remote sellers meeting the Arizona economic nexus threshold must register and collect Arizona sales tax.

Filing and paying sales taxes in Arizona

To file and pay Arizona sales tax, you must submit a Transaction Privilege Tax (TPT) return and remit any taxes owed to the Arizona Department of Revenue (AZDOR). This can be done online through the AZTaxes.gov portal or by mail.

Sales tax return filing schedule and due dates in Arizona

The AZDOR assigns a filing frequency to businesses based on their anticipated taxable sales. This schedule is either monthly, quarterly or annually.

Monthly:

Quarterly:

Annual:

Filing penalties in Arizona

Businesses that fail to file their TPT returns on time may be penalized. The penalties are based on the amount of tax due and the number of days late.

When are returns due in Arizona?

The due date for filing TPT returns in Arizona is the last day of the month following the period end date.

FAQs

What are the Arizona sales tax due dates?

Arizona sales tax due dates vary based on filing frequency. For monthly filers, returns are expected by the end of the following month. Quarterly filers have returns due on April 30, July 31, October 31, and January 31. Annual filers must file by February 28 for the previous calendar year.

I didn’t collect any Arizona sales tax during this period. Do I still need to file a return?

You still need to file a $0 TPT return in Arizona, even if you didn't collect any sales tax. Failing to file a return can result in late filing penalties.

Can I get an extension on filing my Arizona sales tax return?

You can request a 60-day extension to file your Arizona TPT return by submitting form TPT-EX before the original due date. However, any taxes owed must still be paid on time to avoid late payment penalties.

Can I amend an Arizona sales tax return?

You can file an amended TPT return in Arizona to correct errors or omissions from a previous return. When amending a return, you may owe additional tax, interest, or penalties.

Audit & appeals process in Arizona

The audit & appeals process is a series of steps a business must go through if audited by the Arizona Department of Revenue (AZDOR). The process begins with the auditor contacting the company to schedule an audit.

The auditor will then review the business's records and tax returns to determine if sales tax was not paid. If the auditor finds any discrepancies, they will report their findings.

Arizona sales tax audit process

1. The AZDOR notifies the taxpayer that their business has been selected for an audit.
2. The auditor requests records, books, and other information from the taxpayer.
3. The auditor reviews the taxpayer's records and identifies any discrepancies.
4. The auditor issues their audit report with any additional tax assessments.
5. The taxpayer can agree or disagree with the audit findings.
6. If the taxpayer disagrees, they can file an administrative appeal.
7. If the appeal is unsuccessful, the taxpayer can further appeal to the Arizona Tax Court.

What to expect during the audit?

During an Arizona sales tax audit, the auditor will review your books, records, bank statements, and tax returns. They will likely want to see sales invoices, purchase records, and exemption certificates. You may also be asked to explain your accounting methods.

After the audit – Appealing the results

If you disagree with the audit findings, you can file an appeal with the AZDOR within 45 days. Contesting audit findings helps you avoid paying inaccurate tax assessments, penalties, and interest.

Sales tax registration in Arizona

Here are the steps for registering for sales tax in Arizona:

How to register for sales tax in Arizona

To register for sales tax in Arizona, you can apply online at the Arizona Department of Revenue (AZDOR) website. You will need to provide:

• Your business name, address, and contact details
• Your EIN or SSN
• Your business start date
• Your business activities
• Your projected monthly sales

Once registered, you must collect and remit Arizona sales tax on taxable sales. You can use sales tax software or file returns manually.

Cost of registration for an Arizona sales tax license

Registering for an Arizona TPT license costs $50 for regular filing and $85 for expedited processing. You may also need to register with local cities.

More Information & Contacts for Arizona Sales Tax

For sales tax filing and appeals in Arizona, contact:

• Arizona Department of Revenue
• Phone number: 602-255-3381
• Website: https://azdor.gov/

There you have it—a comprehensive guide on Arizona's sales tax regime.