arizona-sales-tax.md176 lines5.6 KB
v20State
| 1 | --- |
| 2 | name: arizona-sales-tax |
| 3 | description: Use this skill whenever asked about Arizona sales tax, Arizona Transaction Privilege Tax (TPT), Arizona use tax, Arizona tax nexus, or any request involving Arizona state-level consumption taxes. Trigger on phrases like "Arizona sales tax", "AZ sales tax", "TPT", "Transaction Privilege Tax", "Arizona DOR", or any request involving Arizona TPT compliance. CRITICAL -- Arizona has a Transaction Privilege Tax on the SELLER, not a traditional sales tax. ALWAYS load us-sales-tax first. |
| 4 | version: 2.0 |
| 5 | --- |
| 6 | |
| 7 | # Arizona Transaction Privilege Tax (TPT) Skill v2.0 |
| 8 | |
| 9 | ## Section 1 -- Quick reference |
| 10 | |
| 11 | | Field | Value | |
| 12 | |---|---| |
| 13 | | Jurisdiction | Arizona, United States | |
| 14 | | Jurisdiction code | US-AZ | |
| 15 | | Tax type | Transaction Privilege Tax (TPT) -- NOT a traditional sales tax; tax is on the SELLER | |
| 16 | | State TPT rate | 5.6% (retail classification) | |
| 17 | | Local add-on range | 0% -- 5.6% (city + county) | |
| 18 | | Maximum combined rate | ~11.2% | |
| 19 | | Sourcing | Origin-based for most TPT classifications | |
| 20 | | Economic nexus | $100,000 in gross proceeds or gross income (revenue only) | |
| 21 | | Primary legislation | A.R.S. Title 42, Chapter 5 | |
| 22 | | Tax authority | Arizona Department of Revenue (ADOR) | |
| 23 | | Filing portal | https://www.aztaxes.gov | |
| 24 | | SST member | No | |
| 25 | | Federal framework skill | us-sales-tax | |
| 26 | | Skill version | 2.0 | |
| 27 | |
| 28 | **CRITICAL: Arizona TPT is a tax on the privilege of doing business in Arizona, imposed on the SELLER. It is NOT a sales tax on the buyer, though sellers typically pass it through.** |
| 29 | |
| 30 | --- |
| 31 | |
| 32 | ## Section 2 -- Required inputs and refusal catalogue |
| 33 | |
| 34 | ### Required inputs |
| 35 | |
| 36 | | # | Question | Why it matters | |
| 37 | |---|----------|----------------| |
| 38 | | 1 | Arizona TPT license number? | Required for filing | |
| 39 | | 2 | Filing frequency? | Monthly, quarterly, annual | |
| 40 | | 3 | Nexus type? | $100K threshold | |
| 41 | | 4 | Business classification? | Different TPT rates by classification | |
| 42 | | 5 | Contractor? | Prime contracting has special 65/35 split rules | |
| 43 | | 6 | Sell into multiple cities? | City TPT rates vary significantly | |
| 44 | |
| 45 | ### Refusal catalogue |
| 46 | |
| 47 | **R-AZ-1 -- Prime contracting classification.** 65/35 split between real property and materials is complex. Escalate. |
| 48 | |
| 49 | --- |
| 50 | |
| 51 | ## Section 3 -- Transaction pattern library |
| 52 | |
| 53 | ### 3.1 Retail classification (5.6% state) |
| 54 | |
| 55 | | Pattern | Taxable? | Notes | |
| 56 | |---|---|---| |
| 57 | | General TPP | TAXABLE | Retail classification | |
| 58 | | Clothing | TAXABLE | No exemption | |
| 59 | | Grocery food (unprepared) | EXEMPT | A.R.S. §42-5061(A)(1) | |
| 60 | | Prepared food | TAXABLE | | |
| 61 | |
| 62 | ### 3.2 SaaS and digital goods |
| 63 | |
| 64 | | Pattern | Taxable? | Notes | |
| 65 | |---|---|---| |
| 66 | | Canned software (physical or download) | TAXABLE | TPP | |
| 67 | | SaaS (cloud-hosted) | TAXABLE | Arizona treats SaaS as taxable | |
| 68 | | Digital goods | TAXABLE | | |
| 69 | |
| 70 | ### 3.3 Services |
| 71 | |
| 72 | | Pattern | Taxable? | Notes | |
| 73 | |---|---|---| |
| 74 | | Professional services | NOT TAXABLE | | |
| 75 | | Job printing | TAXABLE | Separate classification | |
| 76 | | Restaurants/bars | TAXABLE | Restaurant classification | |
| 77 | | Transient lodging | TAXABLE | Transient lodging classification | |
| 78 | | Personal property rental | TAXABLE | Rental classification | |
| 79 | | Prime contracting | TAXABLE | 65/35 rule applies | |
| 80 | |
| 81 | ### 3.4 Exemptions |
| 82 | |
| 83 | | Pattern | Status | |
| 84 | |---|---| |
| 85 | | Grocery food | EXEMPT | |
| 86 | | Prescription drugs | EXEMPT | |
| 87 | | Manufacturing machinery (directly in manufacturing) | EXEMPT | |
| 88 | | Resale | EXEMPT | |
| 89 | | Interstate commerce | EXEMPT | |
| 90 | |
| 91 | --- |
| 92 | |
| 93 | ## Section 4 -- Rate lookup |
| 94 | |
| 95 | ### 4.1 TPT classifications and state rates |
| 96 | |
| 97 | | Classification | State rate | |
| 98 | |---|---| |
| 99 | | Retail | 5.6% | |
| 100 | | Mining | 3.125% | |
| 101 | | Utilities | 5.6% | |
| 102 | | Telecommunications | 5.6% | |
| 103 | | Transient lodging | 5.5% | |
| 104 | | Restaurants/bars | 5.6% | |
| 105 | | Contracting (prime) | 5.6% | |
| 106 | | Rental of TPP | 5.6% | |
| 107 | |
| 108 | --- |
| 109 | |
| 110 | ## Section 5 -- Classification rules |
| 111 | |
| 112 | ### 5.1 TPT is on the seller |
| 113 | |
| 114 | TPT is a privilege tax on the seller for conducting business. The buyer is NOT legally liable. Most sellers pass the amount through to buyers. |
| 115 | |
| 116 | ### 5.2 Model City Tax Code |
| 117 | |
| 118 | Arizona cities adopt the Model City Tax Code with local modifications. City rates and exemptions can vary significantly. |
| 119 | |
| 120 | --- |
| 121 | |
| 122 | ## Section 6 -- Return form and filing |
| 123 | |
| 124 | Filed via AZTaxes.gov. Single return covers state + county + city TPT. |
| 125 | |
| 126 | --- |
| 127 | |
| 128 | ## Section 7 -- Thresholds, penalties, and deadlines |
| 129 | |
| 130 | ### 7.1 Economic nexus |
| 131 | |
| 132 | | Parameter | Value | |
| 133 | |---|---| |
| 134 | | Threshold | $100,000 in gross proceeds or gross income | |
| 135 | | Transaction count | None | |
| 136 | | Effective date | October 1, 2019 | |
| 137 | |
| 138 | --- |
| 139 | |
| 140 | ## Section 8 -- Edge cases |
| 141 | |
| 142 | ### EC1 -- Prime contracting |
| 143 | |
| 144 | **Situation:** Contractor builds a house. |
| 145 | **Resolution:** Prime contracting classification. 65% of contract price treated as real property improvement (not taxable); 35% treated as materials (taxable at TPT rate). Complex -- escalate. |
| 146 | |
| 147 | --- |
| 148 | |
| 149 | ## Section 9 -- Test suite |
| 150 | |
| 151 | ### Test 1 -- Retail sale in Phoenix |
| 152 | |
| 153 | **Input:** $500 item. Combined rate: ~8.6%. |
| 154 | **Expected:** Tax = ~$43. |
| 155 | |
| 156 | ### Test 2 -- Grocery food exempt |
| 157 | |
| 158 | **Input:** $200 groceries. |
| 159 | **Expected:** Tax = $0. Grocery food exempt in AZ. |
| 160 | |
| 161 | --- |
| 162 | |
| 163 | ## Section 10 -- Prohibitions |
| 164 | |
| 165 | - NEVER call Arizona's tax a "sales tax" without noting it is a Transaction Privilege Tax on the SELLER. |
| 166 | - NEVER forget that city TPT rates and exemptions can differ from the state. |
| 167 | - NEVER apply destination-based sourcing for most TPT classifications -- Arizona is generally origin-based. |
| 168 | - NEVER treat grocery food as taxable -- it is exempt in Arizona. |
| 169 | - NEVER compute any number -- all arithmetic is handled by the deterministic engine, not Claude. |
| 170 | |
| 171 | --- |
| 172 | |
| 173 | ## Disclaimer |
| 174 | |
| 175 | This skill is provided for informational and computational purposes only and does not constitute tax, legal, or financial advice. All outputs must be reviewed by a qualified professional before filing. |
| 176 |
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Use this skill whenever asked about Arizona sales tax, Arizona Transaction Privilege Tax (TPT), Arizona use tax, Arizona tax nexus, or any request involving Arizona state-level consumption taxes. Trigger on phrases like "Arizona sales tax", "AZ sales tax", "TPT", "Transaction Privilege Tax", "Arizona DOR", or any request involving Arizona TPT compliance. CRITICAL -- Arizona has a Transaction Privilege Tax on the SELLER, not a traditional sales tax. ALWAYS load us-sales-tax first.
US-ARty-2025