Unlike the vast majority of states throughout the United States, which employ a "sales tax" to tax the value of goods sold (where the purchaser is the taxpayer, and the vendor is the collector), Arizona instead taxes the business of the vendor selling the goods based on the "privilege" of transacting business in the State of Arizona (hence, the term "privilege tax"). Notably, this tax generally does not affect businesses selling services.
Arizona's privilege tax is widely considered one of, if not, the most difficult tax systems in America due to its complexity, the categories of taxable goods, the numerous exemptions at play and the unfortunate fact that Arizona's cities and county's also have a privilege tax system that, while similar, is not fully harmonized with the Arizona's state TPT regime.
Because the burden of the tax falls upon businesses, it is incumbent upon business owners and management to understand their legal tax obligation, and obtain experienced counsel in order to meet their compliance obligations.
That is why we offer experienced and specialized advice to businesses new to the Arizona TPT tax regime.
Notable Representation:
Acted as the purchaser's lead Arizona TPT counsel on a $3.2 billion national resort real estate transaction;
Advised multiple out-of-state technology companies moving to Arizona, or companies with a substantial business presence in Arizona regarding the sale and taxability of "Software as a Service" (SaaS) applications;
Counseled and resolved a significant TPT issue for a multi-national corporation regarding its TPT obligations stemming from a promotional sweepstakes dealing with Arizona sited property;
Advised a major regional auto dealer regarding the taxability of advertising between local tax jurisdictions;
Advised a large custom home builder located in Scottsdale regarding the applicability of the Arizona Model Tax Code "Speculative Builder Tax";
Provided legal opinions and advice to multiple general and subcontracting businesses regarding their TPT liability under the Prime Contracting (State level tax) and Speculative Builder (Local level tax) categories.
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