Out-of-State Sellers
Remote Sales Into Arizona
On May 31, 2019, Arizona Governor Doug Ducey signed House Bill (H.B.) 2757 into law. This legislation requires remote sellers and marketplace facilitators—to begin filing and paying transaction privilege tax (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 businesses without a physical presence to collect and remit tax on sales from transactions in their state.
Because of Arizona’s new laws, retailers selling items of tangible personal property into Arizona should carefully review the following materials to determine whether they must pay Arizona TPT.
The Arizona Department of Revenue created the E-Commerce Compliance and Outreach (ECCO) team as part of its implementation of Arizona’s remote seller/marketplace facilitator laws to answer any questions about the legislation, licensing, filing, and registration process. Additionally, these specialists are available for Arizona-based retailers that have general questions about other states remote seller/marketplace facilitator laws. The ECCO team can be reached Monday to Friday from 8 a.m. to 5 p.m. (MST) by email [email protected], or by phone 833-293-7253 (833-AZeSale).
The following material has been created to assist out-of-state retailers/wholesalers in complying with the remote seller/marketplace facilitator laws.
Tax Filing Requirements (Economic Nexus Thresholds)
Marketplace sellers are people who only make sales into Arizona through a marketplace facilitator. For example, you make sales into Arizona on a website you do not own or operate, and that website collects payment on the sales and remits the tax to Arizona on your behalf. Marketplace sellers are not required to be licensed with Arizona or file and remit tax on these sales.
H.B. 2757 introduces a new economic (dollar-based) nexus standard for businesses that have no physical presence in the state.
Economic nexus is established if the following thresholds either were met in the previous calendar year or are met in the current year:
- A marketplace facilitator has economic nexus if it facilitates, for remote seller(s) or also on its own behalf, a gross amount of more than $100,000 in sales.
- A remote seller has economic nexus if in the previous or current year, the gross sales generated from direct sales into Arizona is more than:
- $200,000 (2019)
- $150,000 (2020)
- $100,000 (2021 and beyond)
Do I need to register and file?
Review the economic thresholds to help you determine whether you need to be registered and file with the Arizona Department of Revenue.
Do I need to renew?
Review the economic thresholds to help you determine whether you need to continue to be registered and file with the Arizona Department of Revenue.
How do I register?
For a step-by-step instructions on how to register your business, click here.
Frequently Asked Questions
FAQs are provided to answer your most common questions. If your questions are not answered through the FAQs, please contact the E-Commerce Compliance and Outreach (ECCO) team.
Filing Requirements
The department has special business codes for marketplace facilitators and remote sellers. Click here for filing examples and rates.
Licensing/Renewal Requirements
Information pertinent to a person who has determined they meet the Arizona economic threshold. Click here for licensing and renewal requirements.
Rate Tables
Click here for rate tables for marketplace facilitators, marketplace sellers and remote sellers.
Marketplace Facilitators and Remote Sellers Deduction Codes
The State of Arizona and its municipalities treat most retail transactions in the same manner. Click here for deduction codes.
Differences between State/County and Municipalities
Other than a few exceptions (see A.R.S. § 42-6017) Arizona municipalities adopted the retail classification as outlined in A.R.S § 42-5061.
Click here for a chart of the exceptions.
Liability Relief
Click here for information on liability relief, requirements and process for marketplace facilitators and remote sellers.
E-Commerce Compliance and Outreach (ECCO) Team Contact Information
Phone: 833-293-7253 (833-AZeSale)
Email: [email protected].
Terms to Know
Transaction Privilege Tax (TPT): A tax on a vendor for the privilege of doing business in the state. It differs from the sales tax imposed by most states. Unlike a true sales tax, the TPT is levied on income derived by the seller that is legally allowed to pass the tax burden on to the purchaser.
Remote Seller: Any person or business selling or shipping products into Arizona but does not have a physical presence. TPT filing is required if in the current year or previous calendar year a remote seller has more than $200,000 (2019), $150,000 (2020) or $100,000 (2021 and beyond) in sales to Arizona customers. Includes sales through any medium (online, catalog, etc.)
Marketplace: Any place (physical, online or electronic) where tangible personal property is sold. This includes a store, booth, website, catalog, etc.
Marketplace Facilitator: Any person or business operating a marketplace (e.g., website), and facilitating transactions between a buyer and retailer/wholesaler, and accepting payment on behalf of the retailer/wholesaler. TPT filing is required if in the current or previous calendar year a marketplace facilitator makes more than $100,000 sales into Arizona.
Marketplace Seller: Any remote seller that makes all sales through a marketplace.
Affiliated Party: Any person who has an interest, direct or indirect, of more than 5% in another.
Nexus: The connection required to exist between a state and a potential taxpayer such that the state has the constitutional right to impose tax. States have a physical nexus (physical presence) requirement before they impose tax collection responsibilities on taxpayers. Following the Wayfair decision, many states have implemented economic (dollar-based) nexus rules that require taxpayers to collect and remit taxes where they have specific threshold sales into the state.
Tangible Personal Property: The personal property which may be seen, weighed, measured, felt or touched or is in any other manner perceptible to the senses. (A.R.S. § 42-5061(17))
Fast Facts
• Marketplace sellers do not need to collect TPT on transactions when a marketplace facilitator is collecting and remitting TPT for them.
• A remote seller or marketplace facilitator that has not met the threshold should inform Arizona customers they are not collecting tax and the customer should remit a use tax.
• Although titled “Online Retailers”, this new law encompasses any person selling into Arizona, whether online or through another medium, and a marketplace can be more than just a website.
• Under the legislation, municipal license fees are waived for both remote sellers and online marketplace facilitators.
• The Department of Revenue notes other online aspects of TPT 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.
You can also subscribe to ADOR’s remote seller bulletins and get updates through email or text alerts. Receive notices regarding filing requirements, tax rate changes, law changes and reminders.