New TPT law for remote sellers and marketplace facilitators starting October 1, 2019
Legislation has been signed into law by Governor Doug Ducey that will require remote sellers and marketplace facilitators that have not been collecting transaction privilege tax (TPT) under current state law to begin filing and paying TPT in Arizona starting October 1, 2019.
The legislation is the result of a 2018 ruling by the U.S. Supreme Court in the South Dakota v. Wayfair case. The decision allows states to require out-of-state online businesses without a physical presence to collect and remit tax on sales from transactions in their state.
Remote Sellers
Effective October 1, 2019, Arizona law requires out-of-state online retailers doing business in the state, where no connection had previously been established, to file and pay transaction privilege tax to the Arizona Department of Revenue (ADOR).
Under the new Arizona law, a threshold has been established for remote sellers to pay TPT if their annual gross retail sales or income from online sales into Arizona is more than $200,000 in 2019, $150,000 in 2020 and $100,000 in 2021 and thereafter.
Marketplace Facilitators
In addition to remote sellers, the new law covers marketplace facilitators, which facilitate the sale of products through their online platforms.
Starting October 1, 2019, marketplace facilitators will be required to collect and remit TPT on taxable sales in Arizona made through its platform on its behalf or for at least one remote marketplace seller if gross retail proceeds or income for that marketplace facilitator exceeds $100,000 annually.
Remote sellers do not need to collect TPT on transactions when a marketplace facilitator is collecting and remitting TPT for them.
In preparation for the October 1 implementation of the new law, the Department of Revenue is now in the process of modifying the agency’s TPT systems and will be providing guidance to remote sellers and marketplace facilitators on when they should begin the TPT licensing process. Until then, remote sellers and marketplace facilitators can find out more on TPT licensing, filing and paying at https://azdor.gov/transaction-privilege-tax/tpt-license/applying-tpt-license. Please note: As part of the legislation, municipal license fees are waived for both remote sellers and online marketplace facilitators.
The Department of Revenue notes other online aspects of transaction privilege tax have not changed. This includes online retailers based in Arizona and online merchants outside Arizona with an established physical presence in the state and already paying TPT.