Arizona to Overhaul Sales Tax System for Retailers
- Jun 26, 2013 | Will Frei
Retailers with sales tax obligations in Arizona will be able to complete sales tax returns, reports, and remittance via one online portal controlled by the Arizona Department of Revenue, effective January 1, 2015. According to Governor Jan Brewer, who signed the law today (HB 2111), Arizona's reporting system has been in desperate need of an overhaul for at least 30 years.
The new system
Currently, businesses collecting sales tax in Arizona--technically called transaction privilege tax--have to contend with multiple systems for filing and remitting tax and dealing with sales tax audits, since many Arizona localities administer their taxes independently from the state.
The new law won't do away with local tax rules and rates, however, it will create a single system for handling Arizona sales tax requirements. In addition, under HB 2111, all sales tax audits must include every jurisdiction where a business has a tax obligation, so the business does not have to deal with multiple audit entities for the tax period.
Online sales tax legislation
This new law also helps Arizona meet some of the simplification requirements outlined in the Marketplace Fairness Act of 2013 (MFA). If passed, MFA will give states power to require online retailers to collect sales tax even when the retailers aren't physically located within state borders. In exchange, however, states must meet certain tax code simplification requirements, including a single filing and auditing system.