New Arizona exemptions

A number of new transaction privilege (sales) tax exemptions have recently been enacted in Arizona.

• Agricultural aircraft used for the aerial application of fertilizer or pesticides or for aerial seeding is exempt retroactively to 1985 under HB 2133. Read more.

• Agricultural feed for livestock and poultry is exempt for all owners and boarders under HB 2326 (current law allows an exemption for commercial use only). The expanded exemption is expected to cost the state $1 million annually.

• Charter planes and related equipment are exempt retroactively to 1998 under HB 2533. This could cost the state up to $5 million each year.

• Data center equipment and software that is rented or leased is exempt retroactively to September 12, 2013, under HB 2584 (there is already an exemption for purchased data center equipment and software).

• Electricity and natural gas purchased by manufacturers and mining smelters is exempt under HB 2676, effective from and after December 31, 2016.

• Entry fees for charity races are exempt from transaction privilege tax under HB 2674, provided the events either consist of a bicycle ride, run, swim, walk or similar event until March 1, 2017, or are conducted by a nonprofit organization and consist of a bicycle ride, run, swim, walk or similar event. The exemption is effective retroactively with respect to entry fees paid by participants for an event that took place before the effective date of this act if the operator or conductor of the event did not collect from the participants amounts necessary to pay the transaction privilege tax liability.

• Fine art purchased by residents of another state and shipped out-of-state by the vendor is once again exempt under HB 2536. Read more.

• The delivery to a customer of natural gas purchased from someone other than a utility company is exempt from sales tax under SB 1505.

• Liquefied petroleum gas purchased for use in manufacturing or smelting businesses is exempt from sales and use taxes under HB 2025, applicable to taxable periods beginning the first day of the month following the general effective date.

Proper handling of exemptions is essential sales and use tax compliance. Learn about automating tax compliance documentation.