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Arizona TPT Simplification: FAQS for Building Contractors

  • Nov 25, 2014 | Gail Cole

 It can be complicated.

In the interest of facilitating the imminent transaction privilege tax (TPT) simplification, the Arizona Department of Revenue has posted FAQs for contractors (builders). Prime contractors are required to obtain a TPT licenses and are subject to TPT under the prime contracting classification. Highlights follow.

Building v maintenance and repair

Contractors are not required to obtain a prime contracting TPT license if business activities are limited to the maintenance, repair, replacement, or alteration of existing property and are contracted with the owners of the real property or the owners of the improvements to real property. These types of activities include but are not limited to:

  • Annual system checkups.
  • Returning real property to a usable state after a period of partial or total non-usability.
  • Upgrading existing systems.
  • Alterations such as enlarging a patio or sandblasting a façade.


Materials purchased for maintenance and repair are generally subject to TPT at the time of purchase. However, materials “purchased by a TPT-licensed contractor for incorporation into a construction project” are not. This is because the building project is subject to prime contracting TPT. A valid exemption certificate, issued by the Arizona Department of Revenue for each project, is required.


Any licensed TPT prime contractor who hires a non-licensed subcontractor “must obtain a project-specific exemption certificate.” This will allow the subcontractors to purchase exempt from sales tax the necessary taxable prime contracting materials.

All building contractors—TPT licensed or not, building or maintenance, are advised to read tax notice TPN 14-1 for additional information.

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photo credit: Paul L Dineen via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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.