Arizona transaction privilege tax (TPT), commonly referred to as a sales tax, is a tax on vendors 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, that business will likely need a license from the Arizona Department of Revenue (ADOR) and a TPT, or business/occupational license, from the city or cities in which the business has a base or operation.
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. If the ownership is the same, the locations can be consolidated under one license number to allow the taxpayer to file a single return.
Even vendors who only do business for special events in Arizona are required to have a license. The state license fee remains $12 no matter how many special events a vendor attends. However, a separate city license fee is required for each city unless a vendor is currently licensed for the city in which an event will be held.
Additionally, a vendor who runs a business out of a home must obtain a license and use the home address as the business address on the application. Please note that it is the responsibility of the business owner to research the legality of operating a business in a home and to comply with county and city zoning requirements.
ADOR uses a number of research methods to ensure businesses in Arizona are properly licensed for state TPT and use tax and registered as an employer for withholding taxes. This research includes matching names of businesses from various directories or sources against our database.
If a taxpayer is being audited or has trouble making payments, ADOR has highly trained representatives available to assist. ADOR representatives are prohibited from disclosing any tax information except to the taxpayer. However, the taxpayer may select to authorize the disclosure of confidential tax information to an individual or multiple individuals before contacting ADOR for assistance by completing the proper disclosure authorization form.
ADOR views an audit as a cooperative and educational process that promotes voluntary compliance with tax obligations by ensuring taxpayers pay the correct amount of tax. Our trained auditors fairly determine whether the correct amount of tax has been reported and are responsible for performing audits in a professional and courteous manner with minimum disruption to a business.
A voluntary disclosure program is also available if a taxpayer has not fulfilled the transaction privilege tax, use tax, corporate income tax, and individual income tax or withholding tax obligations in Arizona and wants to come into compliance with the filing requirement(s).