Do You Need to Get a Sales Tax Permit in Arizona?
Quick Answer: You need to get a sales tax permit in Arizona if you have a physical presence or meet economic nexus requirements. More detailed information on nexus requirements in Arizona is included below.
What is Sales Tax Nexus Anyway?
Your business owes sales tax in any state where it has “sales tax nexus”. In short, if you have sales tax nexus you need to collect and remit sales tax. If you don’t have sales tax nexus, you generally don’t need to get a permit.
Sales tax nexus is a legal term that means you have crossed a threshold and now have a sales tax collection responsibility in the state. Nexus can be created by having a physical presence, an economic presence, or by other factors. Nexus rules vary by state and retailers have specific nexus rules based on where they have people, property or inventory.
What Should You Do Once You Determine You Have Sales Tax Nexus?
Once you determine that you have sales tax nexus in Arizona, your next step is to register for a sales tax permit in the state. Check out our blog post on getting a sales tax permit in Arizona for more information about that process. If you are not interested in doing the work of getting the permit yourself, TaxValet can handle the permit registration for you with our Sales Tax Permit Registration Service.
Common Ways to Have Sales Tax Nexus in Arizona
1. Economic nexus in Arizona
The sales tax in Arizona is called a Transaction Privilege Tax. In 2019, if you have $200,000 per year of sales into Arizona, then you are required to register for, collect, and pay Transaction Privilege Tax to the state. Please be aware that the sales threshold will drop in future years. In 2020 the requirement becomes $150,000 per year of sales, and in 2021 the amount drops to $100,000. If you meet this threshold, it does not matter if you have a physical presence in Arizona. Nexus has been created based on your volume of sales.
See the Arizona Department of Revenue for more information
2. Physical presence in Arizona
From the Arizona Department of Revenue Nexus Program TPT, Arizona considers a seller to have physical nexus if they have any of the following:
- Employees present in the state conducting business on behalf of the company
- Ownership or lease of real or personal property in Arizona
- Maintenance of an office or place of business in Arizona
- Delivery of merchandise into Arizona on vehicles owned or leased by the taxpayer
- Independent contractors or other non-employee representatives present in Arizona for the purpose of establishing and maintaining a market for the taxpayer
If you need help determining which states you have a physical presence in, check out our Sales Tax Starter Kit service.
Free State Audit Risk Guide
See which states pose the greatest risk to your business.
State-by-State Audit Risk Percentages
Do You Need a Sales Tax Permit in Arizona If You Only Sell on Marketplaces?
If you are an online retailer who ONLY sells on approved marketplaces (such as Amazon, eBay, etc), Arizona sales tax will be remitted by the marketplace and you do not need to get a sales tax permit in Arizona. However, you may choose to apply for an exemption certificate so you can purchase inventory tax-free.
For more information about this exemption, see Arizona FAQ: Am I required to be licensed and file if I am a marketplace seller?
If you are an e-commerce seller who is unsure of where you need to get a sales tax permit, check out our Sales Tax Starter Kit service. In fact, if at any point you are stuck and want a team of experts to handle all of this for you, don’t hesitate to contact us.
Disclaimer: Our attorney wanted you to know that no financial, tax, legal advice or opinion is given through this post. All information provided is general in nature and may not apply to your specific situation and is intended for informational and educational purposes only. Information is provided “as is” and without warranty.