Although commonly referred to as a sales tax, the Arizona transaction privilege tax (TPT) is actually a tax on a vendor for the privilege of doing business in the state. Various business activities are subject to transaction privilege tax and must be licensed.
If a business is selling a product or engaging in a service subject to TPT, a license from the Arizona Department of Revenue (ADOR) would likely be needed as well as a transaction privilege tax or business/occupational license from the city or cities in which the business is based and/or operates.
ADOR collects the tax for the counties and cities; however, tax rates vary depending on the type of business activity, the city and the county.
Please note that businesses with multiple locations or business lines can opt to license and report for each location separately or have a consolidated license (and report aggregate sales). The cost for each license per location is $12.
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What’s New with TPT?
Businesses with an annual transaction privilege tax and use tax liability of $10,000 or more during the prior calendar year are required to file and pay electronically.
Failure to comply with the electronic filing and payment requirements may result in penalties.
||E-File and E-Pay THreshold
||$10,000 annual liability
||$5,000 annual liability
||$500 annual liability
Penalty for not filing and paying electronically:
- Taxpayers required to file an electronic return will be subject to a penalty of 5 percent of the tax amount due for filing a paper return. The minimum penalty is $25, including filings with zero liability.
- Taxpayers required to pay electronically will be subject to a penalty of 5 percent of the amount of payment made by check or cash.
- Taxpayers who file their tax return late will be subject to a late file penalty of 4.5 percent of the tax required to be shown on the return for each month or fraction of a month the return is late. There is a minimum of $25 and a maximum 25 percent of the tax due or $100, per return, whichever is greater.
Businesses needing updated information on transaction privilege tax can access ADOR’s monthly newsletter, TPT Tax Rate Table and Model City Tax Code changes here by clicking on the appropriate month and year. For older information, please visit our archives.
Businesses can also subscribe to ADOR’s TPT newsletter and get updates through email or text alerts. They can receive notices regarding TPT due dates, city tax rate changes, license renewals and new features on AZTaxes.gov.
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TPT and Use Tax:
Individuals are subject to use tax when a retailer does not collect tax for tangible personal property used, stored or consumed.
Those individuals and businesses subject to use tax include the following:
- An out-of-state retailer or utility business making sales of tangible personal property to Arizona purchasers.
- An Arizona resident who purchases goods from an out-of-state vendor who did not collect the use tax.
- Arizona residents who purchase goods using a resale certificate, and the goods are used, stored or consumed in Arizona contrary to the purpose stated on the certificate.
- Arizona residents who purchase goods in which another state’s sale tax or other excise tax was imposed and the rate of that tax is less than Arizona’s use tax rate.
For more information on use tax, including sales of casual goods, vehicles and aircraft and use tax rate and exemptions, please see ADOR Publication 610.
See our Reporting Guide for convenient access to TPT-related guidance and resources.