Transaction privilege tax (TPT) refers to a
gross receipts tax
A gross receipts tax or gross excise tax is a tax on the total gross revenues of a company, regardless of their source. A gross receipts tax is often compared to a sales tax; the difference is that a gross receipts tax is levied upon the seller of ...
levied by the
state of Arizona
Arizona ( ; nv, Hoozdo Hahoodzo ; ood, Alĭ ṣonak ) is a state in the Southwestern United States. It is the 6th largest and the 14th most populous of the 50 states. Its capital and largest city is Phoenix. Arizona is part of the Four Co ...
on certain persons for the privilege of conducting business in the state. TPT differs from the "true"
sales tax imposed by many other U.S. states as it is imposed upon the
seller
Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale.
The seller, or the provider of the goods or services, completes a sale in ...
or
lessor rather than the
purchaser or
lessee
A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial ...
. The seller/lessor may pass the burden of the tax on to the purchaser/lessee, but the seller or lessor is the party that remains ultimately liable to Arizona for the tax. TPT is imposed under 16 separate business classifications: amusement, commercial lease, job printing, membership camping, mining, owner builder sales, personal property rental, pipeline, prime contracting, private car line, publication, restaurant, retail, telecommunications, transient lodging, transporting, and utilities. (Effective November 1, 2006, the
Arizona State Legislature
The Arizona State Legislature is the state legislature of the U.S. state of Arizona. It is a bicameral legislature that consists of a lower house, the House of Representatives, and an upper house, the Senate. Composed of 90 legislators, the ...
repealed the membership camping classification statute, reducing the total number of tax classifications from 17 to 16.) State tax rates for the various classifications are as follows: 5.5% for the transient lodging classification, 3.125% for the mining classification, 0% for the commercial lease classification, and 5.6% for all other tax classifications. Taxes are imposed on the total gross receipts of taxable businesses, with the exception of prime contractors, who are taxed on 65% of their gross receipts. All gross receipts for a person subject to tax under a particular tax classification are subject to tax unless otherwise specifically exempted or excluded by statute. Exemptions and deductions of one tax classification may not be used under another classification unless specifically delineated.
Arizona county taxes
Arizona
county excise taxes "piggyback" the imposition of the state's TPT. All sales subject to TPT are also subject to applicable county excise taxes.
Arizona city taxes
The imposition of Arizona
city privilege taxes is separate and distinct from the imposition of state TPT. The League of Arizona Cities and Towns created the Model City Tax Code (MCTC)
Model City Tax Code
/ref> for the purposes of imposing and administering city taxes. All Arizona cities utilize the MCTC in the imposition of their privilege and use taxes. Certain local options and model options exist, allowing each city to alter or qualify the imposition of its privilege tax or use tax.
See also
*Tax
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
*Sales tax
A sales tax is a tax paid to a governing body for the sales of certain goods and services. Usually laws allow the seller to collect funds for the tax from the consumer at the point of purchase. When a tax on goods or services is paid to a govern ...
*Sales taxes in the United States
Sales taxes in the United States are taxes placed on the sale or lease of goods and services in the United States. Sales tax is governed at the state level and no national general sales tax exists. 45 states, the District of Columbia, the te ...
Notes
{{reflist
External links
Arizona Department of RevenueList of Arizona countiesLeague of Arizona Cities and Towns
Taxation in Arizona
Sales taxes