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Arizona Your Business Partner for All Things Sales Tax

Arizona Sales Tax Guide for Online Sellers

Prepared by Sales Tax Helper

Table of Contents

  1. Introduction
  2. Nexus Considerations
  3. General Rules and Compliance Considerations
  4. Registration, Collection, and Sourcing Rules
  5. Collection, Rates, and Remittance
  6. Pitfalls and Risks
  7. International Sellers
  8. Audit Considerations
  9. Voluntary Disclosure Agreements (VDAs)
  10. Conclusion
  11. References & Resources

1. Introduction

Purpose of This Guide

For online sellers, DTC brands, marketplace sellers, and eCommerce businesses operating in
Arizona, the state's transaction privilege tax (TPT) rules present unique challenges and
opportunities. Whether you're selling on Amazon, Etsy, Shopify, or your own website,
understanding Arizona's TPT obligations is critical for maintaining compliance and avoiding
costly penalties.

This guide is specifically designed for online sellers who need to navigate Arizona's TPT
requirements, including:

  • Economic Nexus Rules: Understanding when online sales trigger Arizona TPT
    obligations
  • Marketplace Facilitator Laws: How platforms like Amazon handle tax collection on
    your behalf
  • Physical Presence Nexus: How inventory storage and fulfillment centers create tax
    obligations
  • Registration and Filing: Step-by-step guidance for compliance with Arizona
    requirements
  • International Seller Obligations: Special considerations for foreign businesses selling
    to Arizona customers

Why This Matters for Online Sellers

Arizona's transaction privilege tax laws significantly impact eCommerce businesses in several
ways:

  • Economic Nexus: Effective October 1, 2019, remote sellers and marketplace facilitators
    must register to collect TPT in Arizona if they exceed the state's graduated economic
    nexus thresholds: $200,000 in 2019, $150,000 in 2020, and $100,000 in 2021 and
    thereafter
  • Inventory Nexus: Amazon FBA sellers and those using third-party fulfillment services
    are exposed to physical nexus in Arizona when their inventory is stored in the state,
    regardless of whether they meet economic thresholds
  • Marketplace Facilitator Relief: Arizona's marketplace facilitator law requires platforms
    making or facilitating more than $100,000 in sales on behalf of third-party sellers to
    Arizona customers to collect and remit TPT
  • Criminal Liability: Failure to properly collect and remit TPT can result in criminal
    penalties and personal liability for business owners

Understanding these rules is essential because Arizona collected over $9 billion in transaction
privilege tax revenues statewide in 2021, and the state aggressively enforces its tax laws through audits, criminal prosecutions, and compliance programs.

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  • State- and industry-specific insights and compliance tips
  • Updates on new rules and best practices to stay ahead

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