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Arizona’s Approach To Online Sales Tax

Monika Miles

Have you been following our series on how states are approaching the online sales tax debate? So far we’ve taken a look at Colorado, Alabama, Washington and Texas; today we look at Arizona! Keep reading to see how the Grand Canyon State is approaching the issue.

A Summary of Arizona’s Online Sales Tax Legislation

Unlike the other states we’ve covered so far, Arizona interprets the 1992 court case, Quill Corp. v. North Dakota, a little bit more directly. The precedent set forth established that companies need to have a physical presence in the state (or nexus) in order for the state to collect sales tax on a purchase.

While many states establish economic nexus through a variety of provisions, Arizona’s 2015 Tax Handbook clearly states that physical presence as defined by Quill is key. And, as points out, “According to the same section, a company with no physical presence in the state, but whose products are both available in independently-owned Arizona stores and directly from the company via the internet, is not responsible for collecting sales tax.” 

Arizona’s Recent Sales Tax Changes

While Arizona doesn’t have any pending sales tax legislation, it’s worth noting the state did recently implement the Transaction Privilege Tax (TPT) Simplification bill, which provides a single point of contact for taxpayers. Once a taxpayer files their return, the Department of Revenue collects and administers the funds to the state, county and city districts. What does this have to do with online sales tax and nexus? For sellers who have a physical presence within the state, they now only need to submit a single return; they previously needed to remit up to 15 different monthly returns. More information about the bill is available here.

As you can see, Arizona is the first state we’ve covered that doesn’t seem to be adding legislation to increase the definition of nexus. It will be interesting to see how other states address the issue as we continue with the series. Stay tuned for our next installment, when we look at Nevada! In the meantime, please let us know if you have any questions about how online sales tax, nexus or other multi-state tax news may affect your business. 

Contact Us Today!

Monika Miles

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.

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