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FAQ - Remote Sellers and Marketplace Facilitators

  • Overview
  • Marketplace Seller
  • Remote Seller
  • Marketplace Facilitator
  • Arizona Retailer
  • Nexus
  • Threshold
  • TPT License
  • Penalties
  • General

 

Overview

 

What was the U.S. Supreme Court Wayfair decision?

South Dakota v. Wayfair is a 2018 U.S. Supreme Court ruling that allows states to require out-of-state businesses without a physical presence to collect and remit tax on sales from transactions in their state based on certain economic and transactional thresholds.

 

What is the decision in Arizona?

On May 31, 2019, Arizona Governor Doug Ducey signed H.B. 2757 into law. This legislation requires retailers that are remote sellers and marketplace facilitators with no physical presence in Arizona but make sales into Arizona over certain threshold amounts to begin filing and paying transaction privilege tax (TPT) in Arizona starting with taxable periods from and after October 1, 2019.

 

Is the law retroactive?

No, remote sellers and marketplace facilitators will begin to pay transaction privilege tax (TPT) on retail sales to Arizona customers starting October 1, 2019.

 

Who is impacted?

Because of Arizona’s new laws, retailers that currently have no physical presence in Arizona are required to collect and remit transaction privilege tax (TPT) based on the volume of sales of tangible personal property into Arizona. Click HERE to view thresholds.

 

What is a marketplace?

A marketplace is any physical or electronic place, platform or forum, including a store, booth, internet website, catalog, or dedicated sales software application, where products, including tangible personal property, are offered for sale. See Arizona Revised Statutes (A.R.S.) § 42-5001(8).

 

What is transaction privilege tax (TPT)?

Arizona’s transaction privilege tax differs from the sales tax imposed by most states. It is a tax on the privilege of conducting business in the State of Arizona. Differing from an actual sales tax, the TPT is levied on income derived by the seller, that is legally allowed to pass the economic expense of the tax on the purchaser. However, the seller is ultimately liable to Arizona and its local jurisdictions for the tax.

 

What types of sellers are covered by this new law?

The new law covers remote sellers and marketplace facilitators that do not have a location or other physical presence in Arizona and includes out-of-state wholesalers and manufacturers. Depending on their tax liability, wholesalers and manufacturers may be able to report on an annual basis. Please see the TPT filing frequency page for more information.

 

 

Marketplace Seller

 

Who is a marketplace seller?

A marketplace seller is a person or business that does not sell on its website, storefront, etc. but sells only through one or more marketplaces operated by marketplace facilitators.

 

Am I required to register and file if I am a marketplace seller?

No, you are not required to obtain a transaction privilege tax (TPT) license if you only sell through a marketplace facilitator. Your marketplace facilitator(s) should provide you with documentation that it will be collecting and remitting the TPT on your behalf.  Such documentation may include an email or other specific communication directed to the sellers on the marketplace that specifies the marketplace facilitator will collect and remit TPT on sales to Arizona customers. 

For the convenience of marketplace facilitators, the department has created an exemption certificate that may be pre-filled and provided to sellers.  While this certificate is provided as a convenience to marketplace facilitators, a marketplace facilitator may choose to provide its documentation.  Marketplace sellers should retain this documentation for their files. Click HERE for the Arizona marketplace exemption certificate

Although marketplace sellers are not required to obtain a TPT license if they only sell through a marketplace facilitator, they may choose to do so.  If the marketplace seller obtains or retains their TPT license, they will be required to file TPT returns but may deduct the gross receipts collected by the marketplace facilitator by using deduction code 804.

 

What happens if I create my website (marketplace) to sell direct into Arizona?

If your direct sales to Arizona customers exceed the economic threshold, you are required to file and report as a remote seller. You must obtain a TPT license at AZTaxes.gov. See the thresholds matrix HERE.

 

I’m already licensed and filing as a marketplace seller. What do I need to do after October 1, 2019?

If you are a marketplace seller and only sell through a marketplace facilitator, you may cancel your license after receiving an exemption certificate, or other proper documentation, from your marketplace facilitator.

 

How do I source the sales?

The address a marketplace facilitator should look up will vary depending on whether the marketplace facilitator is located in or outside Arizona. 

  • For marketplace facilitators located in Arizona, sales should be reported using: (a) the tax rates and codes of the marketplace facilitator’s location in Arizona, if the order information is received in Arizona, and (b) the tax rates and codes of the customer’s address, if the order information is received outside Arizona. 
  • Sales made through a marketplace facilitator outside Arizona are sourced to the shipping address of the consumer.  If there is no shipping address, the sale is sourced to the customer’s billing address (A.R.S. § 42-5040). 

 

Use the physical address, or if the shipping address is unknown, the billing address, the Map Locator link can be used to find the location. Select the appropriate business description and the state/county and city TPT rates along with the business codes needed to report gross receipts, which will be displayed.

Internet Explorer, Chrome and Firefox currently support this feature.

Arizona Transaction Privilege & Use Tax Rate Look Up Tool

 

 

 

Remote Seller

 

Who is a remote seller?

A remote seller is any person or business making direct sales to Arizona customers and shipping products into Arizona but does not have a physical presence or other legal requirements to obtain a TPT license. Physical presence includes having a storefront, people or equipment in Arizona. If you meet these physical presence requirements, you are not a remote seller, and you must be licensed as an Arizona retailer.

 

I am a remote seller. Do I have filing requirements?

The threshold matrix is used to assist you in determining if you meet the economic nexus threshold and are required to file and pay TPT. Click HERE for the threshold matrix.

 

How are remote sellers already registered to collect TPT affected by the economic nexus legislation?

If you believe your business has economic nexus and not a physical presence in Arizona, and you are already licensed, you should contact the E-Commerce Compliance and Outreach (ECCO) team for further guidance.

 

I am an Arizona business that sells online to customers in other states. Am I an Arizona remote seller subject to this new Arizona law?

Remote sellers are sellers that do not have a business location or other physical presence in Arizona. Therefore, if you are an Arizona business with a business location in Arizona and you sell online, you are not a remote seller. There is no change in law regarding Arizona retail businesses. Such businesses may continue to collect and report the TPT as they always have. Please see below for information on Arizona marketplace facilitators.

 

I am an Arizona business that sells online to customers in other states. Do I need to register for a sales tax license in those states?

Arizona businesses that sell online to customers in other states are considered Arizona retailers and must collect and remit the tax to the department for sales to Arizona customers. Regarding sales to out-of-state customers, many states have adopted provisions similar to Arizona. Those provisions may differ somewhat from those enacted by Arizona, and they may have different effective dates and threshold requirements. Please contact the E-Commerce Compliance and Outreach (ECCO) team for further information.

 

I am a remote seller and only sell through a marketplace facilitator. Do I need to collect, file and pay transaction privilege tax (TPT)?

No. You are considered a marketplace seller, and no TPT license is required. The marketplace facilitator will collect and remit TPT on your behalf. However, you should obtain an exemption certificate, or other proper documentation, indicating the marketplace facilitator will collect and remit the tax on your behalf. Click HERE to download the exemption certificate.

 

How do I source the sales?

Remote sellers should report taxes on sales to Arizona customers to the customer’s shipping address.  If there is no shipping address, the taxes should be reported to the customer’s billing address (A.R.S. § 42-5040). 

Use the physical address, or if the shipping address is unknown, the billing address, the Map Locator link can be used to find the location. Select the appropriate business description and the state/county and city TPT rates along with the business codes needed to report gross receipts, which will be displayed.

Internet Explorer, Chrome and Firefox currently support this feature.

Arizona Transaction Privilege & Use Tax Rate Look Up Tool

 

I am a remote seller with economic nexus and sell through a marketplace facilitator, my website, and through other sources. Do I need to collect, file and pay TPT?

If you make direct sales to Arizona customers on your own, and you do not have any physical presence in Arizona, you will have to obtain a TPT license if you meet the economic nexus thresholds based on your direct sales into Arizona. For your sales, you will license and report as a remote seller. For sales you make through a marketplace facilitator, the marketplace facilitator is responsible for those sales and should provide you with an exemption certificate or other proper documentation.

Helpful Links:

Exemption Certificate Procedure TPP 17-1

Filing Examples

 

I am an out-of-state remote seller that does not meet the economic nexus threshold and I do not have physical nexus with Arizona and would like to collect and remit tax voluntarily. What should I do? 

You may obtain a TPT license, but you should identify as a remote seller when applying for your license. Once appropriately licensed as a remote seller, you may use the 600 series business codes to report sales. Please refer to the current tax rate tables for out-of-state marketplace facilitators and remote sellers for the rates and codes you should use.

 

I am an out-of-state seller that obtained a TPT license before October 1, 2019, but have not reached the economic threshold. What are my filing responsibilities? 

If you do not have physical nexus and do not anticipate meeting the economic threshold within the calendar year, you may cancel your TPT license. If you would like to retain your license, you may collect voluntarily and you must report and remit any taxes collected. Please see voluntary collection and remittance FAQ above. Please remember retaining your license also requires you submit a TPT return even if no taxes are due.

 

If the marketplace facilitator is collecting and remitting the tax, do I need to report income received through them?

You will only have to report the income received through the marketplace facilitator if you also make direct sales into Arizona on your own. In that case, you will deduct sales obtained through the marketplace facilitator using deduction code 804.

 

What happens if the marketplace facilitator has not provided me with an exemption certificate or other proper documentation?

If the marketplace facilitator did not provide you with an exemption certificate, and your sales into Arizona otherwise meets the threshold, the income received through the marketplace facilitator will be included in your gross receipts and is taxable. A deduction may only be taken if you have the proper exemption certificate or other appropriate documentation. You must then remit TPT on those sales made through the marketplace facilitator in that instance.

 

Is a non-US company that makes direct sales into Arizona required to collect TPT?

Yes, if the company meets the economic nexus threshold. Click HERE for the threshold matrix.

 

I am a remote seller with employee(s) in Arizona. Do I need to register for a TPT license as a remote seller?

You should be registered for a TPT license as a retailer (not remote sellers) because you have a physical presence by having employees in Arizona. You will be subject to the ordinary rules as an Arizona retailer. The economic nexus thresholds will not apply.

 

I meet the definition of a remote seller and I already have a TPT license. Do I need a new license?

You will need to update your current license to indicate that you are a remote seller. Please contact the Department of Revenue’s E-Commerce Compliance and Outreach (ECCO) team for assistance by phone: 833-293-7253 (833-AZeSale).

 

 

Marketplace Facilitator

 

Who is a marketplace facilitator?

A marketplace facilitator is any business operating a marketplace (see definition above) by listing or advertising for sale, on behalf of others, items of tangible personal property and accepts payment on behalf of the retailer/wholesaler and then remits the sales proceeds to the retailer/wholesaler. A marketplace facilitator may additionally sell its products on its marketplace.

 

Can a marketplace facilitator have physical presence in Arizona?

Yes, a marketplace facilitator may have a physical presence in Arizona. In that case, the marketplace facilitator must obtain a TPT license regardless of its sales volume. A marketplace facilitator may also be located out-of-state with no physical presence in Arizona. In that case, the marketplace facilitator will only be required to obtain a TPT license if it meets the threshold requirements for sales to Arizona customers.

 

I am a marketplace facilitator, but I do not have a transaction privilege tax (TPT) license. Do I have filing requirements?

A marketplace facilitator that does not have a physical presence in Arizona but meets the economic threshold must register and remit the TPT on sales into Arizona. The threshold matrix is used to assist you in determining if you meet the economic threshold and are required to file and pay TPT. Click HERE for threshold matrix.

 

I meet the definition of a marketplace facilitator and I already have a TPT license. Do I need a new license?

You will need to update your current license to indicate that you are a marketplace facilitator. Please contact the Department of Revenue’s E-Commerce Compliance and Outreach (ECCO) team for assistance by phone: 833-293-7253 (833-AZeSale).

 

I am a marketplace facilitator with no physical presence in Arizona and I have not met the economic nexus threshold. Do I still need to provide exemption certificates to businesses selling on my marketplace?

No. You are not required to provide exemption certificates until you have met your economic threshold.

 

I am an out-of-state marketplace facilitator that has met the applicable threshold and have neither registered for a new license nor contacted ADOR to modify my existing license. What should I do? 

If you have an existing license that has not been identified as a marketplace facilitator, please contact the Arizona Department of Revenue’s E-Commerce Compliance and Outreach (ECCO) team for assistance by phone: 833-293-7253 (833-AZeSale) to modify your existing license. If you do not have an existing license, you must apply for a new license and identify as a marketplace facilitator. You will then be able to accurately report all sales made on your marketplace, whether by a marketplace seller through your marketplace or your sales. Once appropriately licensed as a marketplace facilitator, you must use the 600 series business codes to report sales.

 

I am an Arizona-based marketplace facilitator and have neither registered for a new license nor contacted ADOR to modify my existing license. What should I do? 

If you apply for a new license and identify as a marketplace facilitator, then you will able to accurately report all sales made on your marketplace, whether by a third-party (marketplace seller) through your marketplace (using the 600-series business codes) or your sales (using the 017 business code). If you have an existing license that has not been identified as a marketplace facilitator, please contact the Department of Revenue’s E-Commerce Compliance and Outreach (ECCO) team for assistance by phone: 833-293-7253 (833-AZeSale) to modify your existing license. Once changed, you will then be able to report all sales made on your marketplace correctly, whether by a third-party (marketplace seller) through your marketplace (using the 600-series business codes) or your sales (using the 017 business code). Please see Licensing and Renewal Requirements page for additional information.

 

I am an out-of-state marketplace facilitator but also rent tangible personal property to Arizona customers. How should I license and file? 

You are not an out-of-state marketplace facilitator under these circumstances. You are considered an Arizona-based marketplace facilitator because your rental activity creates physical nexus with Arizona. When licensing, please contact the Department of Revenue’s E-Commerce Compliance and Outreach (ECCO) team for assistance by phone: 833-293-7253 (833-AZeSale) to ensure you register correctly and given the correct business codes to reflect all your business activities accurately. Your rental activity should be reported under the 014 (personal property rental) business code. Your business’ sales should be reported under the 017 (retail) business code because your business has physical nexus with Arizona. For third-party sales made through your marketplace, you should report using a 600-series business code, NOT the 029 (use tax) business code, even if your marketplace sellers are located outside of the state. Please see Licensing and Renewal Requirements page for additional information.

 

I am an out-of-state marketplace facilitator that does not meet the economic nexus threshold and I do not have physical nexus with Arizona but would like to collect and remit tax voluntarily. What should I do?

You may obtain a TPT license, but you should identify as a marketplace facilitator when applying for your license. Once appropriately licensed as a marketplace facilitator, you may use the 600 series business codes to report sales. Please refer to the current tax rate tables for out-of-state marketplace facilitators and remote sellers for the rates and codes you should use.

 

 

Arizona Retailer 

 

I have a storefront in Arizona, but my online sales are received and sent from a location outside of Arizona. How would I report an online sale into Arizona? 

An online seller with physical nexus (storefront) in Arizona is considered an Arizona retailer even if the inventory is stored and sent from a facility outside of Arizona. The remote seller thresholds do not apply to Arizona retailers and the gross income on all sales into Arizona is subject to TPT. When filing, Arizona retailers should use business code 017, NOT a business code in the 600 series.

 

I am an Arizona retailer that sells through my website and a marketplace facilitator. How do I report my sales through the marketplace facilitator? 

As an Arizona retailer making your sales in addition to sales through a marketplace facilitator, you should include your gross proceeds of sales or gross income (sales through the storefront and marketplace facilitator) under business code 017. However, all of your sales made through the marketplace facilitator should be deducted from gross income using deduction code 804.


Arizona-Based Sellers without Storefront

 

I am an Arizona retailer that sells through my website and does not have a storefront. Does this mean I am a remote seller?

No, you are not a remote seller in Arizona.  By Arizona’s definition, a remote seller does not have physical presence (A.R.S. 42-5001(16)).  However, you may be considered a remote seller in other states. See Arizona-Based Sellers without Storefront for more information.

 

I am an Arizona retailer without a storefront. Does this mean I am a remote seller?

No, you are not a remote seller in Arizona.  By Arizona’s definition, a remote seller does not have physical presence (A.R.S. 42-5001(16)).  However, you may be considered a remote seller in other states. For more details, see Arizona-Based Sellers without Storefront.

 

Nexus

 

What is physical nexus?

Physical nexus means a business’ presence in Arizona. This includes, but is not limited to, storefront, people or equipment located in Arizona.

 

What is economic nexus?

Economic nexus means a business’ gross proceeds of sales or income derived from sales into Arizona exceeds the required economic thresholds. Click HERE for threshold matrix.

 

What if I have physical nexus, do I qualify as a remote seller?

No. Once physical nexus is established, the remote seller thresholds do not apply and the gross income on direct sales into Arizona is subject to TPT. In that case, you are considered an Arizona retailer.

 

What considerations are made in determining physical nexus?

  1. If the assets or property are in Arizona and you have control over where and how it is stored, you likely have physical nexus.
  2. If your business comes to Arizona to conduct taxable business activity, regardless of the duration, you likely have physical nexus.
  3. If your business conducts other business-related activities in Arizona that are of an ongoing nature, you likely have physical nexus.

 

I’m temporarily storing property with a third-party fulfillment center over which I have no control. Do I have physical nexus?

Not likely. Temporarily storing property with a third-party fulfillment center over which you have no control likely does not rise to the level of physical nexus. Click HERE for nexus determination.

 

How would a retailer establish physical nexus in Arizona?

A retailer establishes physical nexus (presence) within Arizona by activities performed in the state or on its behalf that are significantly associated with their ability to establish and maintain a market in this state for its sales. Activities and factors that, by themselves or in conjunction with others, establish a retailer’s physical presence within Arizona include the following:

  1. The retailer maintains an office or another place of business within the state of Arizona, regardless of whether such location performs a sales-related or other business function.
  2. The retailer owns or leases real or personal property in Arizona.
  3. The retailer maintains an inventory of products in Arizona at its direction and control.
  4. The retailer’s merchandise or goods are delivered into Arizona on vehicles owned or leased by the retailer and the retailer makes such deliveries into Arizona on an ongoing basis.
  5. Other local activities performed by the retailer’s employees, agents, representatives, contractors, or affiliated persons in Arizona that enable the retailer to maintain and improve its name recognition, market share or sales volume, goodwill, and individual customer relations may establish physical presence if the activities are not transitory. Such activities may include: soliciting sales through an ongoing local marketing contract; delivering, installing or repairing property sold to customers through an ongoing contract with either the customer or a local partner; or conducting training or similar support services for customers or employees or representatives of the retailer on an ongoing basis.

 

A retailer having a physical presence within Arizona, as described above, shall be considered liable for transaction privilege tax as a taxpayer located within Arizona.

 

Do transitory business activities within Arizona create physical nexus?

No, transitory (short-term) activities performed in Arizona do not create physical nexus. Note: A retailer’s activities in Arizona are not transitory if such activities generate gross receipts, are ongoing and are regularly conducted within Arizona. Additionally, a retailer’s activities in Arizona are not transitory if such activities generate gross receipts and the retailer regularly conducts the same business outside Arizona.

 

If I travel to Arizona for a business meeting or conference, or something similar, is that enough to establish physical nexus?

If you are not otherwise engaged in taxable business activity, i.e., you are not generating gross receipts for your business while attending the business meeting or conference, you would not establish physical nexus, regardless of the duration of the stay.

 

I remotely sold an Arizona customer a product and they are having trouble installing or using it. I provide one-time remote assistance. Does this remote assistance establish physical nexus?

No, your assistance is not ongoing and is conducted from outside the state. However, you may have economic nexus if you otherwise meet the established thresholds.

 

I remotely sell Arizona customers products that include onboard firmware. The sales include a service contract to allow remote access to the product for regularly scheduled updates, maintain, or troubleshoot the firmware. Does the ongoing remote access establish physical nexus?

No, although the activity is ongoing, the services are conducted from outside the state. However, you may have economic nexus if you otherwise meet the established thresholds.

 

I have a salesperson who is a resident of another state but regularly travels to Arizona to sell our products, or to offer support on previously sold products. Does our traveling salesperson establish physical nexus?

Yes, you likely have physical nexus with Arizona, as your sales activities are ongoing and conducted within Arizona. You should pay TPT on all sales into Arizona as a retailer located in Arizona.

 

One of my employees, who is a resident of another state, will be in Arizona on vacation and may perform various non-sales related business activities (for example, bookkeeping, clerical work, etc.). Do these activities establish physical nexus?

No, the vacationing employee’s activities likely do not alone establish physical presence. The employee’s activities are not significantly associated with your ability to establish and maintain a market in Arizona for its sales.

 

One of my employees lives in Arizona and works there remotely from a home office. They perform accounting functions or other non-sales related business activities (for example, bookkeeping, clerical work, etc.). Do these activities establish physical nexus?

No, these activities do not establish physical nexus since they are not activities related to establishing or maintaining a market in Arizona. However, if your company otherwise meets the economic nexus thresholds it will be required to report TPT on sales to Arizona customers.

 

I am a new retailer who has never made a sale into Arizona. I will be attending a two-day trade show in Arizona and I plan on bringing inventory with me to sell at the show. Do I have physical presence?

If you make any sales at the trade show and you usually make similar sales outside Arizona, your activity is not considered transitory and you will need a seasonal TPT license. Additionally, you will need to pay TPT on all sales made at the trade show. Your physical nexus will end when you leave the state and you may cancel your TPT license after you report all sales from Arizona customers for the month during which you were present at the trade show. If after you return to your home state, you continue to sell to Arizona customers, and you subsequently meet the threshold requirements for economic nexus, you should contact the ECCO team to update your license. The sales at the Arizona trade show do not count towards the threshold.

 

I made sales while at a trade show in Arizona and paid TPT as a seasonal filer. I do not anticipate conducting additional sales physically within Arizona on an ongoing basis. However, I will likely be making remote sales from my website into Arizona. Do I count the sales made at the trade show as part of my gross receipts for the economic nexus threshold?

No, you are considered a temporary retailer and must pay TPT while making sales within Arizona (at a trade show). These sales are not used as a determining factor in calculating your economic threshold.

 

I established physical presence by sending my salesmen to Arizona, but I am no longer sending salesmen into Arizona. When does my physical nexus end and what do I do to cancel my TPT license?

If you terminate your physical presence in Arizona (for example, you were here for a two-day trade show and have returned home), you should report and remit TPT for all transactions occurring on or before the last day of the month in which you have terminated your physical presence. You may be subject to Arizona’s economic nexus rules if your sales meet the thresholds.

 

 

Threshold

 

How is the threshold computed? Is the threshold computed on the previous calendar year’s sales, current calendar year’s sales or both?

The threshold is computed based on the prior and current calendar year sales into Arizona. For further explanation, click HERE for the threshold matrix.

 

How is the threshold computed for affiliated businesses?

All affiliated businesses’ gross proceeds are aggregated for purposes of determining the threshold for each of the affiliated businesses. If the affiliated businesses’ combined gross proceeds of sales into Arizona meet or exceed the threshold, each affiliate must be licensed and report on their sales even if they may not individually meet the threshold. Affiliated businesses may file individual or consolidated returns.

 

What is an affiliated person/business?

An affiliated person/business is when a person or business has a direct, or indirect, ownership, or relationship in another person or business of more than 5%. Please see Arizona Revised Statutes § 42-5043(F).

 

 

TPT License

 

How does a remote seller or marketplace facilitator register for an Arizona TPT license?

Remote sellers and marketplace facilitators may obtain an Arizona TPT license at AZTaxes.gov. The state fee for obtaining the license is $12.

 

Do remote sellers and marketplace facilitators need to renew a TPT license each year?

The TPT license is valid for the calendar year in which it is issued. It must be renewed annually in January if the remote seller or marketplace facilitator meets the threshold requirements in the current or prior calendar year. There is no fee to renew the license.

 

When can I cancel my TPT license?

You may cancel your license if you do not meet the threshold for the current and prior calendar year. Please see the threshold matrix.

 

How do I cancel my TPT license?

Please see TPT Cancellation.

 

I previously canceled my TPT license, and now I am above the threshold to collect taxes again, what is the procedure to reinstate the license?

Please contact the E-Commerce Compliance and Outreach (ECCO) team by phone: 833-293-7253 (833-AZeSale) or by email: [email protected]. 

 

How do I verify my current license type?

To verify how the business is currently registered, click here.

 

 

Penalties

 

Are remote sellers or marketplace facilitators subject to audits by the department?

Yes, once a remote seller or marketplace facilitator makes direct sales into Arizona, they are subject to audits by the department.

 

Are there penalties and interest charges if I cannot timely file and pay my first installments?

Yes, there are late-filing penalties and late-payment penalties and possible interest for any unpaid tax liabilities.

 

Is there any liability relief?

Generally, liability relief may be available to marketplace facilitators for errors, other than sourcing, made by the marketplace seller that result in failure to pay the correct amount of TPT. Remote sellers may receive liability relief as well. Please see Arizona Revised Statutes § 42-5043 or the Liability Relief page.

 

How do I apply for liability relief?

Complete the Penalty Abatement Form and submit to the Penalty Review Unit (PRU). Documentation that supports the basis of your request must be included. Requests without supporting documentation may be denied. See additional information here.

 

 

General

 

How do I source the sales?

The address a marketplace facilitator should look up will vary depending on whether the marketplace facilitator is located in or outside Arizona. 

  • For marketplace facilitators located in Arizona, sales should be reported using: (a) the tax rates and codes of the marketplace facilitator’s location in Arizona, if the order information is received in Arizona, and (b) the tax rates and codes of the customer’s address, if the order information is received outside Arizona. 
  • Sales made through a marketplace facilitator outside Arizona are sourced to the shipping address of the consumer.  If there is no shipping address, the sale is sourced to the customer’s billing address. 

 

Remote sellers should report taxes on sales to Arizona customers to the customer’s shipping address.  If there is no shipping address, the taxes should be reported to the customer’s billing address (A.R.S. § 42-5040). 

Use the physical address, or if the shipping address is unknown, the billing address, the Map Locator link can be used to find the location. Select the appropriate business description and the state/county and city TPT rates along with the business codes needed to report gross receipts, which will be displayed.

Internet Explorer, Chrome and Firefox currently support this feature.

Arizona Transaction Privilege & Use Tax Rate Look Up Tool

 

 

How often are remote sellers or marketplace facilitators required to file TPT returns?

Monthly. TPT filing frequency can be found here.

 

What if I am licensed as a remote seller, but sometime throughout the year I have physical nexus?

Once physical nexus (storefront, people or equipment) is achieved, you are no longer considered a remote seller. Please contact the Department of Revenue’s E-Commerce Compliance and Outreach (ECCO) team to update your license by phone: 833-293-7253 (833-AZeSale) or email [email protected]. You will report and remit TPT without regard to the threshold amounts.

 

What are gross proceeds?

Gross proceeds are sales or gross income derived from the remote seller’s direct sales of tangible personal property into Arizona. Gross proceeds do not include items returned and refunded, or the value of trade-ins when the trade-in value is deducted from the sales price. Please note that gross proceeds may not be reduced by the value of the cost of the property, expenses of any kind or losses.

 

What is a retail sale under transaction privilege tax?

A retail sale under transaction privilege tax is the selling of tangible personal property at retail. Services and sales for resale are not considered a retail sale for purposes of TPT.

 

How do I know what tax rate to pay?

Tax rate tables for marketplace facilitators and remote sellers can be found here.

 

What local taxes do I need to pay?

A remote seller and marketplace facilitator must report and remit state/county and city excise taxes.

 

How is a Special District Code used by a remote seller or out-of-state marketplace facilitator?

Special District Codes: Used on the TPT reporting form instead of the county region code in certain instances for distribution purposes.

Indian Reservation Specific Region Codes: Used on the TPT reporting form when out-of-state sales are shipped (or bill to address if no shipping address available) to an Indian Reservation.

Tucson Special District Code: Used on TPT reporting for out-of-state sales shipped (or bill to address if no shipping address available) within the special district.

Queen Creek Special District Code: Used on municipal TPT reporting for out-of-state sales shipped (or bill to address if no shipping address available) within the boundaries of the special district. Call (480) 358-3000 for additional information.

 

I am an in-state marketplace facilitator. How do I file?

As a marketplace facilitator with a physical presence in Arizona (storefront, people, equipment), you will file by the business location where the orders are received and report your direct sales under business code 017. Your third-party sales (marketplace sellers) will be reported under the 600 series business codes in your first location. See the marketplace facilitator’s rate table for additional guidance. This has been created specifically for marketplace facilitators and remote sellers.

 

Is a payment processor a retailer?

A payment processor is someone appointed to handle the payment between the purchaser and the seller; it is not a retailer for purposes of economic nexus and TPT.

A payment processor is defined as a business that is appointed to handle payment transactions from various channels, such as charge cards, credit cards, and debit cards, and whose sole activity with respect to marketplace sales is to handle transactions between two parties. 

 

What if I am a foreign entity?

If you are a foreign entity (out-of-country), please submit the Marketplace Facilitator/Remote Seller Tax Application.

 

What business classifications does the economic nexus legislation effect?

The Arizona transaction privilege tax (TPT) statutes impose the TPT on sixteen (16) different business classifications. The economic nexus legislation only pertains to the retail classification. Other business classifications are not included in the economic nexus legislation.

 

I am a restaurant and I sell my prepared food through different third-party delivery platforms. Am I responsible for TPT on these sales?

Yes, you are taxable under the restaurant classification. A third-party prepared food delivery platform company is likely not taxable under the restaurant classification.

 

I am a company that sells and delivers restaurant food through my online platform. Am I considered 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.

 

I am an out-of-state wholesaler of products with third-party distributors across the country, including in Arizona. Am I a remote seller or marketplace facilitator? 

Not necessarily. A marketplace facilitator is any person or business operating a marketplace, and facilitating transactions between a buyer and retailer or wholesaler, and accepting payment on behalf of the retailer or wholesaler. By definition, a wholesaler would not be a marketplace facilitator. Your Arizona distributor can create physical nexus for you (the manufacturer) with Arizona if it creates and maintains a market for your product in Arizona. This will require you to obtain a TPT license that is issued to Arizona-based retailers. However, if you do not have physical nexus or your distributors do not create physical nexus on your behalf, you are likely a remote seller if you meet the applicable gross income threshold on your sales into Arizona. If you are a remote seller, you will be responsible for being licensed as a remote seller and paying retail TPT, when applicable, on sales into Arizona. If you have not met the economic threshold, you will not be required to be licensed but may voluntarily license and collect TPT; however, if you choose to be licensed as a remote seller, you must use the 600 series business codes.

 

Where do I go if I have more questions about the remote seller/marketplace facilitator legislation? 

The Arizona Department has a dedicated phone line and email you can access through the E-Commerce Compliance and Outreach (ECCO) team by phone: 833-293-7253 (833-AZeSale) or by email: [email protected].

 

 

If you are an Arizona based seller without a storefront, please visit the Arizona-Based Sellers without Storefront page.

 

Contact us

If you have further questions please contact the E-Commerce Compliance and Outreach (ECCO) Team at [email protected].



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