Table of Contents
- Introduction
- Nexus Considerations
- General Rules and Compliance Considerations
- Registration, Collection, and Sourcing Rules
- Collection, Rates, and Remittance
- Pitfalls and Risks
- International Sellers
- Audit Considerations
- Voluntary Disclosure Agreements (VDAs)
- Conclusion
- 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.
- Full access to this and other expert-written guides
- Our Nexus Checker to assess your exposure across states
- State- and industry-specific insights and compliance tips
- Updates on new rules and best practices to stay ahead