Out-of-State Planes, Boats, and Automobiles
Phoenix, AZ—As the weather heats up, taxpayers may be interested in buying recreational vehicles. The Arizona Department of Revenue (ADOR) reminds purchasers and sellers of their licensing and tax liability.
Businesses or individuals who purchase a plane, boat, or automobile from an out-of-state vendor may be subject to use tax, which is a tax on purchases made out-of-state for taxable items stored, used, or consumed in Arizona when the sale was not subject to transaction privilege tax (TPT).
Aircraft must be registered with the Arizona Department of Transportation (ADOT); the agency will then send the information to ADOR which will conduct research to determine if the out-of-state seller charged tax. If more information is needed, ADOR will notify the purchaser via a questionnaire, and the business or individual will need to provide all necessary supporting documentation. If a use tax is due, ADOR will notify the purchaser of an amount due. While the state use tax rate is equal across all counties, the cities/towns may impose an additional use tax.
For more information on aircrafts, see the Aircraft Use Tax page.
Watercraft and trailers that are purchased from an out-of-state seller must email the sales agreement to ADOR to calculate all tax due. Once taxes are paid, the purchasers will need to register the watercraft with Game and Fish and trailer with ADOT.
For assistance, check out this instructional video on watercraft.
When registering a vehicle purchased from out-of-state with ADOT, both state and city taxes are calculated and paid. ADOT will collect all city and state taxes, however, if they cannot, the information is referred to ADOR for review and to collect the proper taxes. The vehicle use tax calculator is available to taxpayers to determine the amount of tax they will be required to pay based on the vehicle’s registered address.
To assist Arizona motor vehicle sellers making sales to nonresident purchasers from states that have lower state tax rates than Arizona’s 5.6% state transaction privilege tax rate, ADOR has two versions of a tax computation worksheet that helps determine the reduced amount of state TPT and county excise tax that will apply to the sale and also compute the correct deduction amounts to be taken on the Transaction Privilege, Use and Severance Tax Return (Form TPT-2).
Worksheet A/B is a blank worksheet taxpayers can print and complete manually. Worksheet C is an automatic computational worksheet available for print (must download and open with Acrobat through the computer folder, not internet browser).
For information on exemptions, documentation, and guidance, refer to the Motor Vehicle Sales page.
Friday, July 29, 2022