It is our understanding that with the recent legislation passed in Arizona regarding economic nexus that some prepared food delivery (PFD) companies believe their business activity falls within the definition of a “marketplace facilitator.”
The Arizona statutes define a marketplace facilitator as a person or business operating a marketplace and facilitating retail sales. Third-party prepared food delivery companies are not “marketplace facilitators.”
The main difference is that these companies do not facilitate retail sales. Third-party food delivery companies facilitate restaurant sales and transport food between the restaurant and consumer. As such, these companies are not a marketplace facilitator by definition. The restaurant’s sales are taxable under the restaurant classification.
The restaurant must report and remit the TPT on the full price of the prepared food (even if a portion is retained by PFD) because they are engaged in a taxable activity.
Please contact the Tax Research and Analysis for additional information on this issue.