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The Sudsiest Tax-Exempt Items in AZ Sales Tax Law

  • Dec 12, 2015 | Suzanne Kearns

Have you ever wondered how hotels and other lodging businesses can provide guests with personal hygiene products and condiments free of charge? In Arizona, sales tax laws give owners of transient lodging establishments a break when it comes to purchasing certain items to provide to the guests who stay at their facility -- a sales tax exemption.

Specifically, if you run a hotel or other transient lodging facility, you can purchase “personal hygiene items or articles used by human beings for food, drink, condiment, except alcoholic beverages” for your guests as long as you provide them free of charge. According to the regulation, the guests should consume or use the products during their occupancy.

The Arizona sales tax law covers such an extensive array of "transient lodging" that one wonders who doesn't qualify. The regulation says this AZ sales tax exemption is for "a hotel or motel, including an inn, tourist home or house, dude ranch, resort, campground, studio or bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location or other similar structure, and also including a space, lot or slab that is occupied or intended or designed for occupancy by transients in a mobile home or house trailer furnished by them for such occupancy.”

The law goes on to clarify what types of businesses do not qualify for the exemption: convalescent homes, hospitals, jails, military installations, fraternity and sorority houses, and governmental agencies, institutions, or corporations dedicated religious, educational, or charitable purposes. In addition, if you lease a mobile home or house trailer for more than thirty consecutive days, or lease or rent four or fewer rooms in an owner-occupied home to transient lodgers and have no more than a 50 percent occupancy rate for thirty or more days, you won’t qualify for the exemption either.

If you do qualify, AZ sales law lets you go tax-free on all the tiny soaps and shampoos you need.

Have other questions regarding how to manage collecting, filing, or remitting sales tax in Arizona? Check out our Guide to Arizona Sales Tax Compliance.

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