Transaction privilege tax
Encyclopedia
Transaction privilege tax (TPT) refers to a gross receipts tax
levied by the state of Arizona
on certain persons for the privilege of conducting business in the state. TPT differs from the “true” sales tax imposed by many other U.S. states
as it is imposed upon the seller
or lessor
rather than the purchaser
or lessee
. The seller/lessor may pass the burden of the tax on to the purchaser/lessee, but the seller or lessor is the party that remains ultimately liable to Arizona for the tax. TPT is imposed under 16 separate business classifications: amusement, commercial lease, job printing, membership camping, mining, owner builder sales, personal property rental, pipeline, prime contracting, private car line, publication, restaurant, retail, telecommunications, transient lodging, transporting, and utilities. (Effective November 1, 2006, the Arizona State Legislature repealed the membership camping classification statute, reducing the total number of tax classifications from 17 to 16.) State tax rates for the various classifications are as follows: 5.5% for the transient lodging classification, 3.125% for the mining classification, 0% for the commercial lease classification, and 5.6% for all other tax classifications. Taxes are imposed on the total gross receipts of taxable businesses, with the exception of prime contractors, who are taxed on 65% of their gross receipts. All gross receipts for a person subject to tax under a particular tax classification are subject to tax unless otherwise specifically exempted or excluded by statute. Exemptions and deductions of one tax classification may not be used under another classification unless specifically delineated.
privilege taxes is separate and distinct from the imposition of state TPT. The League of Arizona Cities and Towns created the Model City Tax Code (MCTC) for the purposes of imposing and administering city taxes. All Arizona cities utilize the MCTC in the imposition of their privilege and use taxes. Certain local options and model options exist, allowing each city to alter or qualify the imposition of its privilege tax or use tax.
Gross receipts tax
A gross receipts tax or gross excise tax is a tax on the total gross revenues of a company, regardless of their source. A gross receipts tax is similar to a sales tax, but it is levied on the seller of goods or service consumers...
levied by the state of Arizona
Arizona
Arizona ; is a state located in the southwestern region of the United States. It is also part of the western United States and the mountain west. The capital and largest city is Phoenix...
on certain persons for the privilege of conducting business in the state. TPT differs from the “true” sales tax imposed by many other U.S. states
Sales taxes in the United States
There is no federal sales or use tax in the United States. 45 states and the District of Columbia impose sales and use taxes on the retail sale, lease and rental of many goods, as well as some services. Many cities, counties, transit authorities and special purpose districts impose additional local...
as it is imposed upon the seller
Sales
A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....
or lessor
Leasing
Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments....
rather than the purchaser
Sales
A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....
or lessee
Leasing
Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments....
. The seller/lessor may pass the burden of the tax on to the purchaser/lessee, but the seller or lessor is the party that remains ultimately liable to Arizona for the tax. TPT is imposed under 16 separate business classifications: amusement, commercial lease, job printing, membership camping, mining, owner builder sales, personal property rental, pipeline, prime contracting, private car line, publication, restaurant, retail, telecommunications, transient lodging, transporting, and utilities. (Effective November 1, 2006, the Arizona State Legislature repealed the membership camping classification statute, reducing the total number of tax classifications from 17 to 16.) State tax rates for the various classifications are as follows: 5.5% for the transient lodging classification, 3.125% for the mining classification, 0% for the commercial lease classification, and 5.6% for all other tax classifications. Taxes are imposed on the total gross receipts of taxable businesses, with the exception of prime contractors, who are taxed on 65% of their gross receipts. All gross receipts for a person subject to tax under a particular tax classification are subject to tax unless otherwise specifically exempted or excluded by statute. Exemptions and deductions of one tax classification may not be used under another classification unless specifically delineated.
Arizona county taxes
Arizona county excise taxes “piggyback" the imposition of the state's TPT. All sales subject to TPT are also subject to applicable county excise taxes.Arizona city taxes
The imposition of Arizona cityCity
A city is a relatively large and permanent settlement. Although there is no agreement on how a city is distinguished from a town within general English language meanings, many cities have a particular administrative, legal, or historical status based on local law.For example, in the U.S...
privilege taxes is separate and distinct from the imposition of state TPT. The League of Arizona Cities and Towns created the Model City Tax Code (MCTC) for the purposes of imposing and administering city taxes. All Arizona cities utilize the MCTC in the imposition of their privilege and use taxes. Certain local options and model options exist, allowing each city to alter or qualify the imposition of its privilege tax or use tax.