Arizona: Sales Tax Handbook
What constitutes sales tax nexus in Arizona?
One of the more complicated aspects of Arizona sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of Arizona, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in Arizona, the vendor must register for a Arizona sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in Arizona.
Sales Tax Nexus in Arizona
According to Arizona's law, retailers who have tax nexus can be defined in several distinct ways. To have tax nexus, the business must meet a minimum of one of the following requirements:
Having an office or any other place of business within the state's boundaries, the regular presence of any employees, agents or any other representatives in Arizona for longer than two days, has ownership of any real or personal property in the state, keeps goods in warehouse within the state's boundaries, or performs deliveries of any type of merchendise in Arizona in vehicles which are owned by the taxpayer.
For additional details on sales tax nexus law in Arizona, see the nexus information page from the Department of Revenue at https://www.azdor.gov/Audits/Nexus/NexusTPT.aspx
Taxation of Internet-Based Sales in Arizona
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Generally, Arizona does not charge sales tax on Internet-based transactions determined to have nexus within the state. This means that purchases from Amazon.com and other Internet-based retailers may be sales-tax-free.
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within Arizona, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in Arizona?
The folks at the sales tax compliance company Avalara are an approved Arizona sales tax partner, and you can use their free Arizona nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay Arizona sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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