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az-sales-tax.md187 lines6.3 KB
v20Arizona
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| 1 | --- |
| 2 | name: az-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 | jurisdiction: US-AZ |
| 6 | validation_status: ai-drafted-q3 |
| 7 | --- |
| 8 | |
| 9 | # Arizona Transaction Privilege Tax (TPT) Skill v2.0 |
| 10 | |
| 11 | ## Section 1 -- Quick reference |
| 12 | |
| 13 | | Field | Value | |
| 14 | |---|---| |
| 15 | | Jurisdiction | Arizona, United States | |
| 16 | | Jurisdiction code | US-AZ | |
| 17 | | Tax type | Transaction Privilege Tax (TPT) -- NOT a traditional sales tax; tax is on the SELLER | |
| 18 | | State TPT rate | 5.6% (retail classification) | |
| 19 | | Local add-on range | 0% -- 5.6% (city + county) | |
| 20 | | Maximum combined rate | ~11.2% | |
| 21 | | Sourcing | Origin-based for most TPT classifications | |
| 22 | | Economic nexus | $100,000 in gross proceeds or gross income (revenue only) | |
| 23 | | Primary legislation | A.R.S. Title 42, Chapter 5 | |
| 24 | | Tax authority | Arizona Department of Revenue (ADOR) | |
| 25 | | Filing portal | https://www.aztaxes.gov | |
| 26 | | SST member | No | |
| 27 | | Federal framework skill | us-sales-tax | |
| 28 | | Skill version | 2.0 | |
| 29 | |
| 30 | **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.** |
| 31 | |
| 32 | --- |
| 33 | |
| 34 | ## Section 2 -- Required inputs and refusal catalogue |
| 35 | |
| 36 | ### Required inputs |
| 37 | |
| 38 | | # | Question | Why it matters | |
| 39 | |---|----------|----------------| |
| 40 | | 1 | Arizona TPT license number? | Required for filing | |
| 41 | | 2 | Filing frequency? | Monthly, quarterly, annual | |
| 42 | | 3 | Nexus type? | $100K threshold | |
| 43 | | 4 | Business classification? | Different TPT rates by classification | |
| 44 | | 5 | Contractor? | Prime contracting has special 65/35 split rules | |
| 45 | | 6 | Sell into multiple cities? | City TPT rates vary significantly | |
| 46 | |
| 47 | ### Refusal catalogue |
| 48 | |
| 49 | **R-AZ-1 -- Prime contracting classification.** 65/35 split between real property and materials is complex. Escalate. |
| 50 | |
| 51 | --- |
| 52 | |
| 53 | ## Section 3 -- Transaction pattern library |
| 54 | |
| 55 | ### 3.1 Retail classification (5.6% state) |
| 56 | |
| 57 | | Pattern | Taxable? | Notes | |
| 58 | |---|---|---| |
| 59 | | General TPP | TAXABLE | Retail classification | |
| 60 | | Clothing | TAXABLE | No exemption | |
| 61 | | Grocery food (unprepared) | EXEMPT | A.R.S. §42-5061(A)(1) | |
| 62 | | Prepared food | TAXABLE | | |
| 63 | |
| 64 | ### 3.2 SaaS and digital goods |
| 65 | |
| 66 | | Pattern | Taxable? | Notes | |
| 67 | |---|---|---| |
| 68 | | Canned software (physical or download) | TAXABLE | TPP | |
| 69 | | SaaS (cloud-hosted) | TAXABLE | Arizona treats SaaS as taxable | |
| 70 | | Digital goods | TAXABLE | | |
| 71 | |
| 72 | ### 3.3 Services |
| 73 | |
| 74 | | Pattern | Taxable? | Notes | |
| 75 | |---|---|---| |
| 76 | | Professional services | NOT TAXABLE | | |
| 77 | | Job printing | TAXABLE | Separate classification | |
| 78 | | Restaurants/bars | TAXABLE | Restaurant classification | |
| 79 | | Transient lodging | TAXABLE | Transient lodging classification | |
| 80 | | Personal property rental | TAXABLE | Rental classification | |
| 81 | | Prime contracting | TAXABLE | 65/35 rule applies | |
| 82 | |
| 83 | ### 3.4 Exemptions |
| 84 | |
| 85 | | Pattern | Status | |
| 86 | |---|---| |
| 87 | | Grocery food | EXEMPT | |
| 88 | | Prescription drugs | EXEMPT | |
| 89 | | Manufacturing machinery (directly in manufacturing) | EXEMPT | |
| 90 | | Resale | EXEMPT | |
| 91 | | Interstate commerce | EXEMPT | |
| 92 | |
| 93 | --- |
| 94 | |
| 95 | ## Section 4 -- Rate lookup |
| 96 | |
| 97 | ### 4.1 TPT classifications and state rates |
| 98 | |
| 99 | | Classification | State rate | |
| 100 | |---|---| |
| 101 | | Retail | 5.6% | |
| 102 | | Mining | 3.125% | |
| 103 | | Utilities | 5.6% | |
| 104 | | Telecommunications | 5.6% | |
| 105 | | Transient lodging | 5.5% | |
| 106 | | Restaurants/bars | 5.6% | |
| 107 | | Contracting (prime) | 5.6% | |
| 108 | | Rental of TPP | 5.6% | |
| 109 | |
| 110 | --- |
| 111 | |
| 112 | ## Section 5 -- Classification rules |
| 113 | |
| 114 | ### 5.1 TPT is on the seller |
| 115 | |
| 116 | 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. |
| 117 | |
| 118 | ### 5.2 Model City Tax Code |
| 119 | |
| 120 | Arizona cities adopt the Model City Tax Code with local modifications. City rates and exemptions can vary significantly. |
| 121 | |
| 122 | --- |
| 123 | |
| 124 | ## Section 6 -- Return form and filing |
| 125 | |
| 126 | Filed via AZTaxes.gov. Single return covers state + county + city TPT. |
| 127 | |
| 128 | --- |
| 129 | |
| 130 | ## Section 7 -- Thresholds, penalties, and deadlines |
| 131 | |
| 132 | ### 7.1 Economic nexus |
| 133 | |
| 134 | | Parameter | Value | |
| 135 | |---|---| |
| 136 | | Threshold | $100,000 in gross proceeds or gross income | |
| 137 | | Transaction count | None | |
| 138 | | Effective date | October 1, 2019 | |
| 139 | |
| 140 | --- |
| 141 | |
| 142 | ## Section 8 -- Edge cases |
| 143 | |
| 144 | ### EC1 -- Prime contracting |
| 145 | |
| 146 | **Situation:** Contractor builds a house. |
| 147 | **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. |
| 148 | |
| 149 | --- |
| 150 | |
| 151 | ## Section 9 -- Test suite |
| 152 | |
| 153 | ### Test 1 -- Retail sale in Phoenix |
| 154 | |
| 155 | **Input:** $500 item. Combined rate: ~8.6%. |
| 156 | **Expected:** Tax = ~$43. |
| 157 | |
| 158 | ### Test 2 -- Grocery food exempt |
| 159 | |
| 160 | **Input:** $200 groceries. |
| 161 | **Expected:** Tax = $0. Grocery food exempt in AZ. |
| 162 | |
| 163 | --- |
| 164 | |
| 165 | ## Section 10 -- Prohibitions |
| 166 | |
| 167 | - NEVER call Arizona's tax a "sales tax" without noting it is a Transaction Privilege Tax on the SELLER. |
| 168 | - NEVER forget that city TPT rates and exemptions can differ from the state. |
| 169 | - NEVER apply destination-based sourcing for most TPT classifications -- Arizona is generally origin-based. |
| 170 | - NEVER treat grocery food as taxable -- it is exempt in Arizona. |
| 171 | - NEVER compute any number -- all arithmetic is handled by the deterministic engine, not Claude. |
| 172 | |
| 173 | --- |
| 174 | |
| 175 | ## Disclaimer |
| 176 | |
| 177 | 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. |
| 178 | |
| 179 | |
| 180 | --- |
| 181 | |
| 182 | ## Disclaimer |
| 183 | |
| 184 | This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon. |
| 185 | |
| 186 | The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com). Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes. |
| 187 |
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Quality
Q3: AI-drafted
AI-generated with structure and citations. Not independently verified.
Needs deep research against tax authority websites to reach Q2.
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About
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-AZty-2025
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