US Arizona enacts remote seller tax and marketplace collections

Arizona is set to impose tax obligations on out-of-state sellers, plus marketplace facilitator collections duties. The new rules come into place 1 October 2019.

Remote sellers will be required to remite Arizona’s transaction privilege tax (TPT) for their sales to local consumer to the Arizona Department of Revenue. TPT is charged on the retailer, unlike sales taxes in other US states which are charged on the consumer.

There will be an initial annual sales registration threshold of $200,000, falling to $100,000 by 2021. Once over the threshold, the seller must apply for a TPT licence to start collecting the tax.

Marketplaces which help facilitate remote third-party sellers’ transactions in Arizona will be obliged to collect TPT if transactions on the marketplace are above $100,000 per annum. This includes the marketplace’s own transactions in addition to remotes sellers’ transactions on their platform.

Arizona is following the majority of US states in introducing out-of-state retailer and marketplace tax obligations following the 2018 Supreme Court Wayfair vs South Dakota ruling. This replaced the physical nexus benchmark to taxing with the economic nexus test – merely selling from another state will trigger taxing obligations.