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Arizona: TPT Simplification Delayed


 Arizona: It's complicated to simplify.

The Arizona Department of Revenue (ADOR) had planned to implement a new, simplified transaction privilege tax (TPT) administration on January 1, 2015. Now ADOR Executive Director David Raber has informed the League of Arizona Cities and Towns that final implementation will be delayed until January 1, 2016.

Governor Jan Brewer vowed to fix the state’s sales tax system during her 2013 State of the State address. Her administration worked closely with business owners to repair the system the governor called “a business owner’s nightmare.” HB 2111, the result of that collaboration, was signed into law in June 2013.

home rule state, meaning many Arizona localities administer their own taxes. Businesses selling in multiple localities must currently file and remit multiple returns for each period. As the governor observed, this creates a nightmare for business owners.

The new simplification measures will implement a single point of administration for the transaction privilege tax. Once established, retailers will be able to complete sales tax returns, reports and remittance via one online portal controlled by ADOR.

It’s an ambitious project and it turns out that full implementation will require additional time. Eighteen cities in Arizona are currently “Non-Program Cities,” meaning they administer their own taxes. As Mr. Raber explained in his letter to the League of Arizona Cities and Towns, the “complexity and scale of programming” involved “preclude DOR from implementing single point of administration by January 1, 2015.” As a result, “the eighteen ‘Non-Program Cities’ will continue to license and collect TPT from their taxpayers for one additional year.”

Gradual implementation

On a more positive note, Mr. Raber revealed that the Audit and Contracting provisions of TPT Reform are on track to take effect on January 1, 2015. The timeline for final implementation is as follows:

  • January 1, 2015: Implement a Single Audit and Contracting components.
  • July 1, 2015: Implement a new joint tax application with geo coding.
  • October 1, 2015: Enhance the AZTaxes.gov e-filing system.
  • October 1, 2015: Release the new form for filing monthly TPT returns, allowing taxpayers to report data by business location.
  • October 1, 2015: Implement bulk filing capabilities for taxpayers to file by business location.
  • October 1, 2015: Generate location-based reporting required by cities.
  • Between October 1 and December 2015: Implement an electronic license renewal process for all taxpayers, including Non-Program City taxpayers.
  • January 1, 2016: Begin administering TPT for all municipal taxing jurisdictions.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.