Arizona Sales Tax Guide
Chapter 5: Filing and paying Arizona sales tax
You're registered with the Arizona Department of Revenue and you've begun collecting sales tax. Congratulations! Remember, those tax dollars don't belong to you. As an agent of the state of Arizona, your role is that of intermediary transferring tax dollars from consumers to state and local tax authorities. Let's take a deeper look at how filing Arizona Transaction Privilege Tax returns impacts your business.What does it mean to file an Arizona Transaction Privilege Tax return?
Technically speaking, filing Arizona Transaction Privilege Tax returns is a two-step process comprised of submitting the required sales data and remitting the collected tax dollars (if any) to state and local tax authorities.
In most states, there are a number of options for submitting sales tax data to the state. Business owners may complete a Arizona sales tax filing form and mail it to the Arizona Department of Revenue or they can file electronically online. In all states, filing online is recommended.
The filing process forces the business owner to detail their total sales, the amount of Transaction Privilege Tax they have collected, and from where. The Arizona Department of Revenue wants to be kept up to date on your business growth (or lack thereof) to make sure they are getting the tax dollars due. By completing ongoing filing of monthly, quarterly, or semi-annual, or annual Arizona sales tax returns, they stay abreast of your growing company.When am I required to file my Transaction Privilege Tax return?
The Arizona Department of Revenue will assign you a filing frequency. Typically, this is determined by the size of your business. State governments typically ask larger businesses to file more frequently. Visit our Arizona filing due dates page for more information.Am I required to file and pay my Arizona sales tax at the same time?
Arizona Transaction Privilege Tax returns must be filed and paid at the same time and are governed by the same due date.I want to webfile my Arizona sales tax. What are my options?
Avalara has built the TrustFile product to allow business owners a quick and easy way to prepare and webfile Arizona sales tax returns. Users can sign up and use the service to prepare Arizona returns free for 30-days.
Filers may also file directly with the Arizona Department of Revenue by visiting their site and entering your transaction data manually. This is a free service, but preparing Arizona sales tax (breaking it down by jurisdiction) can be time consuming - especially for larger sellers.Can a 3rd party file my Transaction Privilege Tax on my behalf?
Yes! Many business owners recognize they are not a tax professional and therefore, choose to outsource their Transaction Privilege Tax sales and use tax filing to services like Avalara TrustFile or to an accountant or bookkeeper. This is a normal business practice that can save business owners time and help them avoid costly mistakes due to inexperience and a lack of deep knowledge about Arizona sales tax code.What happens if I file or pay my Transaction Privilege Tax return late?
Penalties of up to 25% are assessed on TPT returns filed after the prescribed due date. Late filing penalties are computed against the total amount of tax reported on the return, not the total amount of outstanding TPT. In the event of an underpayment, taxpayers do not get any credit for tax that was paid on or before the due date.
Business that are required to file with EFT but fail do do so may be charged a penalty of 5% of the amount of collected tax not remitted by EFT.Do I need to file a return if I didn't collect any Transaction Privilege Tax in Arizona?
Yes! Once you've successfully registered for and been issued a Transaction Privilege Tax License, you are required to file at the completion of each assigned collection period regardless of whether any Transaction Privilege Tax was collected. This is what is known as a "zero-tax filing".
Failure to submit a required zero-tax filing can result in penalties imposed on your business by the Arizona Department of Revenue so don't take this responsibility lightly.If I close my business, do I need to file a final Transaction Privilege Tax return?
Yes! The Arizona Department of Revenue requires all businesses to "close their books" by filing a final Transaction Privilege Tax return. This also holds true for business owners selling or otherwise transferring ownership of their business.Does the Arizona Department of Revenue offer a discount for filing on time?
Vendor discounts are rebates offered to tax filers by state tax jurisdictions to compensate filers for the effort involved with collecting, filing, and remitting Transaction Privilege Tax in a timely manner. Such discounts are frequently cited as outdated by those who see them as a tax loophole for big businesses. With online buying and SaaS services like Avalara TrustFile, the days of managing receipts, balancing books, and writing checks to the state have long since been replaced by computer automation.
The Arizona Department of Revenue currently offers a vendor discount (also known as a dealer collection allowance) of 1% with a maximum of $10,000 and a minimum of None.