Transaction Privilege Tax SimplificationEffective January 1, 2015, the Arizona Department of Revenue (DOR) will become the single point of administration and collection of state, county and transaction privilege tax (TPT), commonly referred to as a Sales, Resale, Wholesale, Vendor or Tax License. For business owners where cities administered their own taxes, this means that the taxpayer no longer has to file and pay separate filings and returns with the state and then the city.  Rather, there will now be one location to file and pay a return.  Additionally, business owners will be able to file and pay on one form for all jurisdictions.

Real property rentals, commercial leasing, construction contracting, and owner/builders are types of business activities subject to TPT.  Other business activities subject to TPT include, but are not limited to:  retail sales, restaurants/bars, hotel/motel (transient lodging), advertising, amusements, personal property rentals, manufactured building, severance (mining, timbering), transportation, printing, publishing, utilities, communications, air/railroad, private cars/pipelines and use tax.  See http://www.azdor.gov/Business/TransactionPrivilegeTax.aspx.

What to Expect

  • Taxpayers who file for more than one location must e-file their tax return.
  • All taxpayers will receive an annual renewal notice this fall from DOR. If you conduct business in a city that has a renewal fee, you will pay DOR the renewal fee(s).
  • TPT licenses will be valid for one calendar year. This means you will need to renew your license annually with DOR.
  • If you do not renew your city TPT license timely, you may be penalized up to $25.
  • If your business has multiple locations or under multiple names and files a consolidated tax return, you will be required to pay only one municipal TPT renewal fee for each jurisdiction.
  • If your business operates in multiple locations or under multiple names and does not file a consolidated tax return, you will be required to pay a license renewal for each location in each jurisdiction.
  • There will no longer be the e-signature document required when registering on AZTaxes.gov.  This means you will no longer need to mail in a signature card when you register for AZTaxes.gov.

For more information, go to https://www.azdor.gov/TPTSimplification.aspx;

http://www.azdor.gov/About/FAQs/TPT.aspx.

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By educating buyers and sellers about what they can expect, you can manage their expectations and avoid misunderstandings that can lead to disputes. Assist your clients in becoming more informed by educating them about the following documents involved in a real estate transaction.

  • Manage Expectations Purchase Contract: Provide your client with a sample copy of the purchase contract early in the relationship. In a resale transaction using the AAR Resale Contract, point out important provisions, such as the fixtures and personal property that will be conveyed with the home, the seller’s warranties, and the buyer’s financing obligations and disapproval rights. In a new home transaction, emphasize to the buyer that new home contracts are not standardized and generally do not allow the buyer an opportunity to disapprove items or to cancel.
  • Public Report: Explain the importance of the Public Report to the buyer of a new home and explain that the Public Report should be read before signing a new home contract. Although some of the Public Report information becomes outdated, subsequent buyers may also benefit from reviewing the Public Report.
  • Seller’s Property Disclosure Statement (“SPDS”): Use the SPDS Seller Advisory to educate the seller about the importance of the SPDS. Explain to the buyer that the SPDS is a disclosure of what the seller actually knows; it is not a representation of every possible defect. Inform the buyer to carefully review the SPDS and verify any important information during the Inspection Period.
  • Homeowners Association (“HOA”) Documents: Explain to the buyer that the Covenants, Conditions and Restrictions (“CC&Rs”) may impact the buyer’s use of the property. Tell the new home buyer to read the CC&Rs before signing the purchase contract. In a resale transaction using the AAR Resale Contract, inform the buyer that the CC&Rs must be reviewed within five days after receipt.
  • Title Commitment: Tell the buyer to closely review the title commitment, paying particular attention to the Schedule B Exceptions. Refer the buyer to the escrow officer or an attorney if there are questions or concerns about the title commitment.

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