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Arizona Sales Tax Is Called What?

  • Dec 22, 2015 | Suzanne Kearns

As if sales tax could be any more confusing, the state of Arizona has managed to complicate things even more. The truth is, Arizona sales tax doesn’t even exist. According to the State of Arizona Department of Revenue, the state doesn’t impose an AZ sales tax on consumers, but rather a "transaction privilege tax" (TPT) on vendors.

So, what’s the privilege that Arizona sellers are required to pay for? Doing business in Arizona. That’s right -- consumers aren’t charged a tax on the items they purchase, but sellers are required to pay a privilege tax for the right to sell goods in the state.

The tax is passed on to certain types of businesses, including those involved in retail sales, and if you fall into that category, you’ll be required to pay state, county, and possibly a city transaction privilege tax. Some of the other types of businesses that are required to pay a TPT are restaurants and bars, transient lodging, advertising, commercial and personal property leasing, amusements, constructing contracting, manufactured buildings, transportation, communications, publishing, and printing.

Unfortunately, the non-existent Arizona sales tax is just as confusing as a regular tax. For instance, some of the jurisdictions collect their own taxes, which might differ from state taxes. A perfect example is with advertising. The state does not require vendors to pay TPT on the service, but some cities do. The state makes it easier for sellers to determine which jurisdictions charge TPT on which items by providing a convenient chart that outlines all the tax rates in each municipality, as well as what each jurisdiction considers taxable.

Keep in mind that although the transaction privilege tax isn’t technically a sales tax, most vendors choose to pass along the tax to consumers, so in the end, it appears that Arizona sales tax does exist after all.

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.
Avalara Author
Suzanne Kearns
Avalara Author Suzanne Kearns