MRRA v Modification Summary

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Modification vs. MRRA Summary Chart

 

  Modification MRRA
Prime Contractor
  • To purchase tax exempt materials, present properly completed Form 5000 to vendor.
  • Report revenue under business class 015 at the job location (jurisdiction).
  • Prime contracting statutory deductions are allowed per A.R.S.§ 42-5075.
  • Tax base is 65% of the gross proceeds after statutory deductions taken.
Invoices may include a separate line item for TPT (or TPT may be factored and included in the final price).
  • To purchase tax exempt materials, licensed contractors present properly completed Form 5000 to vendor.
  • Retail equivalent TPT paid on cost of materials and reported under business code 315, not business code 015
  • Income from all sources is reportable as gross income for a licensed prime contractor.
  • All revenue including MRRA revenue is included within the contracting business code 015, a deduction is allowed for the full amount of the MRRA revenue received in that tax period (deduction code 500).
  • If retail TPT was not paid on materials at the point of purchase, report the retail equivalent TPT based on the price of materials under business class 315 to the jurisdiction of the job location unless a statutory deduction applies.
  • Retail statutory deductions allowed per A.R.S. § 42-5061 when reporting the retail equivalent TPT. 
  • If a Form 5005 certificate (or similar agreement) was issued to a subcontractor, obtain purchase receipts for materials from subcontractors to facilitate accurate reporting of retail equivalent TPT.
  • No line item for TPT on MRRA invoice (purchase of materials and associated tax is considered a cost of doing business).
  Modification MRRA
SubContractor
  • To purchase tax exempt materials unlicensed subcontractors must have a Departmental approved Form 5009L; licensed subcontractors may purchase materials exempt by presenting properly completed Form 5000 to the vendor.
  • Prime contracting TPT must be reported by the contractor that applied for the Form 5009L and provided the subcontractor with a Form 5005 (ie. must be reported by the prime contractor).
  • Revenue is reported under business class 015 at the job location and deduction code 550 is used for 100% of the contract.
  • MRRA only contractors need not be licensed.
  • To purchase tax exempt materials, unlicensed subcontractors may present completed Form 5000M together with a copy of completed Form 5005 to the vendor or alternatively unlicensed contractors may present a Department approved Form 5009L to the vendor; licensed subcontractors may present properly completed Form 5000 to the vendor.
  • Unlicensed contractors conducting MRRA only activities do not have a reporting requirement and are not able to purchase materials exempt unless they have a completed Form 5000M or 5009L.
  • Licensed contractors conducting MRRA activities must file timely even if there is a zero tax liability.
  • Retail TPT must either be paid at point of purchase of all materials or reported and remitted by the contractor when the materials are used in the MRRA project and reported to the location of the project.
  • For licensed subcontractors, if tax was paid on all materials at the point of purchase, income from all sources is reportable and 550 deduction on the TPT return is needed.
  • If provided with a Form 5005 or other documentation, subcontractors must provide the prime contractor with receipts from purchase of materials to facilitate accurate reporting of retail equivalent TPT.
  • Invoices to the prime contractor should not include line item for TPT on invoice (purchase of materials is considered a cost of doing business)