It differs from a sales tax in that the tax is imposed on the business, not the purchaser. While a business may pass the tax on to the consumer in the manner of a sales tax, the business is responsible for reporting and remitting the appropriate tax on their business activity.
What is Transaction Privilege and Use Tax?
Transaction privilege tax is commonly referred to as a sales tax. Arizona's Transaction Privilege Tax (TPT) is imposed on the privilege of conducting business in this state.
Tax Reporting Requirements & Payment of Tax
Businesses are required to report and pay Phoenix privilege sales tax on their taxable business activity on a monthly, quarterly, or annual frequency. Reporting frequency is based upon taxable gross income. You may request a change in filing frequency after you have established a minimum of 6 months of reporting history. All new accounts must file monthly for a minimum of six months prior to requesting a change in filing frequency.
| Reporting Frequency | Annual Taxable Gross Income | Due Date |
| Annual | $0 to $5,000 | January 20th of each Year |
| Quarterly | $5,001 to $49,999 | 20th of the month following the reporting quarter (Example: March 2025 return is due by April, 20, 2025) |
| Monthly | $50,000 or greater | 20th of the month following the end of the month (Example: January 2025 return is due by February 20, 2025) |
Penalty & Interest
A late return is subject to a penalty of 5% per month until filed. The late tax balance is subject to a one-time 10% penalty. Total penalties cannot exceed 25% of the tax due. A delinquent tax balance is also subject to interest on the balance at the end of each month from the month the tax becomes delinquent. See interest rates.
Interest on Unpaid Tax Balances/Refunds
Interest on unpaid tax balances accruing through the end of September 2005 is charged at 1% per month. Beginning October 2005, the City’s interest rate is the variable interest rate charged by the state on Transaction Privilege (sales) Tax (TPT) balances. City interest is charged on a monthly basis (the annual rate divided by 12). For example, an annual rate of 7% divided by 12 is a monthly interest rate of 0.5833%.
Reminder
The return is delinquent if not received in accordance with the State's Transaction Privilege and Use Tax Due Date Calendar accessible at the Arizona Department of Revenue's online AZTaxes.gov website. Postmarks are not proof of timely filing. A tax return is due even if you have zero receipts.