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What is the City of Phoenix transaction privilege (sales) tax rate?
The Phoenix tax rate is 2.3% on most business activities such as Amusements, Construction Contracting, Speculative Builders, Owner-Builders, Job Printing, Publishing, apartment or other Residential Real Estate Property Rental, Rental of Tangible Personal Property (except for Short-Term Motor Vehicle Rental), Restaurants and Bars, Manufactured Buildings, and Transportation. A two-level tax rate structure of 2.3% and 2.0% applies to the business activities of Retail Sales and Use Tax. Special rates apply to Advertising at 0.5%; Rental of Commercial Real Estate Property at 2.4%; Short-Term Motor Vehicle Rental at 4.3%; Hotel/Motel at 5.3%; Utilities at 2.7%; and Telecommunications at 4.7%. The above listed tax rates do not include the State and County tax rates. See the combined tax rate chart for this information.
How long do I need to keep my transaction privilege (sales) tax records?
If you are licensed and reporting on time, you are required to keep records for at least four years.
When is my tax return due?
The monthly tax return is due on the 20th of the month following the reporting month. The quarterly tax return is due on the 20th of the month following the end of the quarter and the annual tax return is due on January 20th each year. The return is delinquent if not received by the Arizona Department of Revenue on behalf of the City of Phoenix in accordance with the State's Transportation 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. To avoid timeliness issues, you may want to utilize the State's online system at AZTaxes.gov to file your tax return and make your payments electronically.
Can I file quarterly or annually?
When you are first issued a license, you will be required to report on a monthly filing frequency. After at least six months of reporting, you can request to be changed to a calendar annual or a quarterly filing frequency. The filing frequency are based on statutory business income levels. If your income level increases, you are responsible for notifying the Arizona Department of Revenue so that your filing method is updated to the appropriate frequency for the City of Phoenix tax jurisdiction.
Do I file a tax return if I had no sales income for the tax period?
Yes.
Can I deduct my business expenses from gross revenue?
No. Business expenses are generally not deductible.
How do I correct an error on a previously filed tax return?
For tax periods subsequent to January 2017, you must contact the Arizona Department of Revenue in order to amend a previously filed tax return. For tax periods prior to January 2017, make a photocopy of your copy of the return (both sides), and using a BLACK pen, write "AMENDED" on the photocopy. Cross through all incorrect amounts to be amended. Write the correct amounts next to the incorrect amounts. Sign the amended return. Send the amended return, with additional payment due if applicable, to City of Phoenix, Revenue Enforcement Division, Accounts Receivable Section, P.O. Box 2005, Phoenix, AZ 85001.
How can I get a copy of a tax return?
For tax periods subsequent to January 2017, you must contact the Arizona Department of Revenue in order to request a copy of a previously filed tax return. For tax periods prior to January 2017, contact the Revenue Enforcement Division, Accounts Receivable Section at phone number (602) 262-6785, option 4, then 3 to request a duplicate of your tax return.
I need to file a tax return, but it is late. What do I need to do?
For tax periods subsequent to January 2017, you must contact the Arizona Department of Revenue for further instructions. For tax periods prior to January 2017, complete your tax return as normal, send it in with payment for the tax, and we will compute any penalty and interest. If you pay the entire tax amount, it will not cost extra for us to bill you later for the penalty and interest, as we do not charge penalty on penalty. 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 the Interest Rates page for further information. To avoid timeliness issues, you may want to utilize our free online system at https://www.phoenix.gov/financesite/Pages/etax.aspx to file your tax return and make your payments electronically.
What is Use Tax?
Use Tax applies to items that were purchased or leased without paying transaction privilege (sales) tax for use in the business, typically from out-of-state vendors. These items become taxable when they are purchased or removed from inventory for use. Use Tax does not apply to purchases or leases of items that are resold or released in the normal course of business.
Payments
Where do I pay my taxes?
For tax periods subsequent to January 2017, you must contact the Arizona Department of Revenue for further instructions. For tax periods prior to January 2017, you have four choices: 1) File your tax return and payment electronically on free online system at https://www.phoenix.gov/financesite/Pages/etax.aspx . 2) File your tax return and remit payment by mail in the envelope provided. 3) Pay in person at the City of Phoenix Payment Center, 305 West Washington Street, 1st floor, Phoenix, Arizona 85003. 4) Deposit your return and payment in the City drop box located on the south side of Washington Street just west of Third Avenue.
Who do I contact about paying my property tax?
If your property is in Phoenix or any other area of Maricopa County, visit the Maricopa County Assessor's website.
Deductions
Can I just show my total deductions on the front of the return?
For tax periods subsequent to January 2017, you must contact the Arizona Department of Revenue for further instructions. For tax periods prior to January 2017, all deductions must be shown in detail on the back of your City of Phoenix tax return form for each business activity listed on the front of your form. Please use the boxes on the back of the return (lines A1 through A19) for the most commonly taken deductions. Deductions pre-printed with 'XXXXXXXX' in the box are not allowed for that activity.
What deductions can I take?
For tax periods subsequent to January 2017, you must contact the Arizona Department of Revenue for deduction information. For tax periods prior to January 2017, please view the allowable deduction list to see allowable deductions for each business activity. If you still don't know if you can claim a deduction, call our offices at phone number (602) 262-6785, option 5.
How do I claim a deduction that isn't shown on the back of the tax return form?
For tax periods subsequent to January 2017, you must contact the Arizona Department of Revenue to verify any deductions and for further instructions. For tax periods prior to January 2017, show the amount of the deduction(s) on line A20 on the back of the City of Phoenix return and provide the explanation with the deduction code(s).
What is a tax exemption (resale) certificate?
An exemption (resale) certificate is designed to transfer the tax liability from the seller to the purchaser when accepted in good faith. The State of Arizona requires that the State form be used when documenting a State exemption and therefore, we recommend that you utilize Form 5000 which is accessible on the Arizona Department of Revenue's website at https://www.azdor.gov/Forms/TransactionPrivilegeTax.aspx . However, the State form lists some exemptions that are not necessarily deductible for City sales tax. Please be sure to verify any deductions that may need further explanation.
What records are required to document tax exempt sales?
All tax exempt sales to Arizona customers should be supported by a City of Phoenix or State of Arizona exemption certificate completed by your customer at the time of the sale. For exempt sales to out-of-state customers, records should be retained to show where the order was placed from and where the order was shipped to.
Are sales to nonprofit organizations, such as churches and charitable groups, exempt?
Not in general. Churches and nonprofit organizations, other than hospitals, are taxable on their purchases unless they are licensed to remit tax on their sales and complete the exemption certificate.
