Effective October 1st, Arizona will be implementing a new addition to the transaction privilege tax (TPT), which will impact remote sellers and marketplace facilitators.
Remote sellers can be categorized as anyone who sells and/or ships products directly to Arizona consumers without having a physical presence in the state. If a remote seller generates annual gross proceeds or gross income from direct Arizona sales of more than $200,000 in 2019, $150,000 in 2020, $100,000 in 2021, etc., the seller must pay the tax.
A marketplace facilitator is a business that facilitates the sale of goods as a third-party lister, accepts payment for the seller, and distributes the payment to the seller. The marketplace facilitator must collect a TPT from its sellers if, in the current or previous calendar year, it made over $100,000 of its annual gross proceeds or gross income in Arizona.
Ed Greenberg, the Arizona Department of Revenue (ADOR) director of communications, anticipates that as many as four thousand remote sellers will be impacted by the tax. Sellers and facilitators can register for the tax or verify a transaction privilege license on ADOR’s website starting on September 9th.
ADOR has also rolled out resources, including a support team and online webpage, to ease the transition into this new policy.
“The Department of Revenue recognizes the remote seller tax is comprehensive with a number of different areas for businesses outside the state that fall under the tax now required to review and may have questions,” Greenberg said. “With that in mind, the department has moved forward with a number of different dedicated resources on ADOR’s main website to assist a remote seller with questions about the tax. This includes frequently asked questions, information on the legislation and TPT requirements, and links to helpful sites.”
The TPT page on the website provides more in-depth information about tax thresholds, updates about the tax, and details surrounding exemptions and refunds.
In addition to its online resources, ADOR introduced a support team, E-Commerce Compliance and Outreach (ECCO), to assist remote sellers and marketplace facilitators with any questions regarding the tax. Plus, the team of specialists will be able to aid any Arizona-based companies that operate in other states.
The ECCO team can be reached Monday through Friday between 8 a.m. and 5 p.m. by phone (833-293-7253) or by email (firstname.lastname@example.org).
“The E-Commerce and Compliance Outreach or ECCO team is a team of ADOR experts in place and designated to respond to questions over the phone or email if a remote seller has gone to the website and has additional questions that it would prefer to discuss with an agency specialist in real-time,” Greenberg said. “Everything from questions about tax laws in the state, to legal questions to general inquiries. The ECCO team is also in place for Arizona-based sellers that are making sales to customers outside the state, which is an area of support the Department of Revenue feels is important to provide to Arizona-based companies.”
Greenberg emphasizes that ADOR is dedicated to supporting sellers of all sizes as they navigate the transaction tax privilege tax, as well as any other taxes they may face.
“The Arizona Department of Revenue is responsible for administering the state’s comprehensive tax system based on policy decisions by Arizona’s elected leaders,” he said. “In the area of transaction privilege tax, specifically the remote seller tax, the Department of Revenue is committed to working with all sellers regardless of business model, which means finding equitable tax treatment for brick and mortar, as well as remote sellers, based on the policy decision that was made at the Arizona Legislature.”