Arizona Sales Tax Filing Update October 2019

Arizona has passed a law requiring Marketplaces to collect and remit sales tax on sales facilitated through the marketplace effective October 1, 2019.

Amazon, eBay, Etsy, and Walmart began this collection on October 1, 2019.

📣 Your Arizona Reports have been updated as of November 2019, to reflect these changes  for sales on and after October 1, 2019.

Please review general information regarding Marketplace Facilitators and how your TaxJar Sales Tax Reports support these changes here in our FAQ
.

In this article, we summarize Arizona's state guidance on the following questions:

I've never registered for an Arizona license. Do I need to register for a sales tax license in Arizona now?

If you have never registered for a sales tax license in Arizona and your only sales in Arizona are through a Marketplace and your Marketplace Facilitator collects and remits sales tax on your behalf in this state, you will NOT need to register for an Arizona sales tax license.

  • If you are a retailer with a physical presence in Arizona or you are a remote seller who has crossed the economic nexus threshold for Arizona, then you will need to register for an Arizona sales tax license.
  • If you do not meet any of the criteria that create nexus in Arizona (physical, economic or otherwise), you won't need to register for a sales tax license in this state.

I have already registered for a license in Arizona and all of my sales are Marketplace-only sales. Should I cancel my existing registration?

Yes. If your only sales in the state are marketplace sales, the Arizona Department of Revenue states that you will not be required to be licensed or report, so long as you have an exemption certificate(s) or other proper documentation indicating that the marketplace facilitator will file TPT on behalf of the marketplace seller.

  • However, if you are a marketplace seller who has already registered due to physical presence, you have voluntarily registered or you have economic nexus, you should remain registered, according to the DOR. 

Do I need to collect taxes on my Arizona sales on other platforms?

Yes--if you have nexus in the state (physical or economic) and you make sales to customers in Arizona on platforms outside of the marketplace that is automatically collecting and remitting, you will also need to collect tax on your end on the Arizona orders that are processed on the other platforms.

Do I still need to file returns in Arizona?

Yes--once you register for a license, you will be required to file a return based on the frequency the state has assigned you.

  • If you've previously registered, the state expects you to remain registered and continue to file returns including zero returns.

I still need to file returns in Arizona.  How do I do this without paying double tax on the sales that were collected and remitted by my Marketplace?

When filing your return, your "Marketplace Sales" are automatically included in "Gross Sales" on your TaxJar report.

  • You would enter the full "Gross Sales" amount as shown on your TaxJar report into the line for total sales on your sales tax return.
  • Then, in the "Deductions" column we display the Marketplace exempt sales as "Other Exempt -(Marketplace).

    • The receipts and deductions should be grouped and reported using the business code 605 and deduction code 804 (see example image below from the Arizona DOR).
  • Please note, a deduction may only be taken if you have the proper exemption certificate or other appropriate documentation. Here is more information on how to obtain this exemption certificate on the Arizona Department of Revenue's website.

If you make sales on other platforms in addition to the Marketplace, you'll need to make sure you remit the tax you collected for those sales when you file.

  • If you're enrolled in AutoFile for Arizona, our system will handle the Marketplace sales deduction process automatically.
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