Arizona – Local Transaction Privilege Tax Changes

SALT Report 1258 – The local transaction privilege tax rate has changed in certain areas of Arizona.  The Arizona transaction privilege tax is commonly referred to as a sales tax; however, the tax is on the privilege of doing business in Arizona and is not a true sales tax.  Although the transaction privilege tax is usually passed on to the consumer, it is actually a tax on the vendor.  Arizona transaction privilege taxes are imposed on persons engaged in certain business and means that various business activities are subject to state, county, and city transaction privilege tax.

Effective December 1, 2011, La Paz County began to levy a judgment tax that is to be applied at 10% of the transaction privilege tax rate levied by the state. The total combined rate for most transactions will be 8.1%.

The rate change will affect the following:

  • Non-metal mining
  • Utilities
  • Communications
  • Transporting
  • Private rail cars
  • Pipelines
  • Publishing
  • Job printing
  • Restaurant and bar
  • Amusements
  • Rentals of personal property
  • Prime contracting
  • Retail
  • Transient lodging – hotel and motel room rentals
  • Owner/builder contracting, and
  • Jet fuel excise tax

Any increase in the rate of tax does not apply to contracts entered into or pursuant to written bids made by prime contractors or owner/builders on or before September 12, 2011. To claim the reduced rate, the prime contractor or owner/builder must maintain documentation to verify the date of the contract or written bid.  Gross income received from pre-existing prime contracts should be reported under class 122, and gross income received from pre-existing owner/builder contracts should be reported under class 123.

For Further Information:

Arizona Department of Revenue – Transaction Privilege Tax Changes and News