Latest Information on Transaction Privilege Tax Changes

Updated TPT Guidance
On November 18, 2015, the Arizona Department of Revenue, Arizona Multihousing Association and League of Arizona Cities and Towns met with Arizona REALTORS® to discuss the transaction privilege tax (TPT) simplification process. The new Licensing and Reporting Guidance for Residential Rental Property Managers will provide direction to our REALTOR® members who practice property management in Arizona.

Previous update from May 22, 2015 below
Calling All Property Managers – TPT Simplification Update

In our continuing effort to educate and make the TPT simplification process a smooth transition, the Arizona Department of Revenue (AZDOR) has issued a Residential Rentals FAQs to assist in answering many of the common questions they have received, as well as Property Management Companies Residential Rentals Instructions. In addition, the PMC MOU has been updated to a fillable form for ease in completion and the PMC Contract Agreement Language provided by the department has been updated.

5-22-2015 Residential Rentals Spreadsheet

5-22-2015 PMC MOU

5-22-2015 PMC Contract Agreement Language

5-22-2015 Residential Rentals FAQ

For any questions regarding the process, please contact the AZDOR at (602) 255-3381.

Previous update from May 5, 2015 below
Dear Property Managers,

As we continue to work through the process of remitting all sales tax on residential rental payments to the Arizona Department of Revenue (AZDOR) remember that the AZDOR needs your list of owners and their properties no later than June 30th. The electronic list you provide to AZDOR will be used to create an individual license for each owner. If your owners are already individually licensed you do not need to provide any additional information to AZDOR.

AZDOR has created a template if you wish to provide your list of owners electronically as opposed to completing an individual application for each owner. Please see the attached residential rentals spreadsheet for more information and a list of the required data fields. Note that if any of the data fields are incomplete the spreadsheet will be returned and individual licenses will not be able to be generated by AZDOR or the non-program cities.

Property Management Companies (PMC) can submit all of their Arizona properties directly to AZDOR, PMCs do not need to breakout the non-program cities as AZDOR will provide the list to non-program cities (this is slightly different than what is outlined in the attached 2015 transition guidance for property managers). AZDOR and the non-program cities will then use the data that the PMC provide them to generate a license for each individual owner. If you have already started the process of licensing each owner with AZDOR and/or the non-program cities please continue to do so. The key is that all residential rental property owners must be individually licensed.

Key Information (please see the attached Recommended Process RR for New Licenses for more detail)

  • PMC Responsibilities:
    • Complete the Power of Attorney (POA) – AZDOR Form 285 for each client  or
    • Complete the attached PMC MOU and update client agreements with appropriate POA language if necessary.
  • Provide all of the information necessary to complete all fields on the spreadsheet.
  • PMC’s must ensure the following before sending the spreadsheets to the AZDOR to prevent delay’s in creating the accounts.
  • Email the completed spreadsheet and signed MOU to the AZDOR – PMCdata@azdor.gov. The signed copy of the MOU must be emailed along with the spreadsheet, so that the AZDOR can create the account and return the license certificate to the PMC. Note: Without a signed MOU the account cannot be created and the license certificate cannot be mailed to the PMC.
  • The PMC’s should not send payments (checks or cash) with the spreadsheet. If there are any fees, a bill(s) will be sent to the PMC.
  • The PMC’s will continue to file and pay TPT by jurisdiction using the original license until notified by the AZDOR to begin using the new license.
      • Properties with the same owner and same SSN or EIN must be grouped together
      • All fields must be complete
      • Primary address is to be the owner’s address
      • Mailing address is to be the PMC’s address (unless otherwise noted)
      • Physical address is to be the address of the rental property
  • AZDOR (Arizona Department of Revenue) Responsibilities:
    • Create TPT accounts from the information provided on the spreadsheet.
    • Mail license certificates to the PMC.
    • AZDOR to provide spreadsheet to non-program cities so they can develop a license certificate for each owner.
    • If you have any questions please contact AZDOR at (602) 255-3381.

Associated Documents:

Residential Rentals Spreadsheet

Recommended Process RR New Licenses

285 POA INSTRUCTIONS

285 POA

PMC Contract Agreement Language 042915 v.1.0

PMC MOU 04-28-15 v 1 1

2015 Transition Guidance for Property Managers – see most recent update

Residential Rental Matrix – 2015

Sample 285

Previous update from January 14, 2015 below
In the continued discussions with the Department of Revenue (ADOR), the Arizona League of Cities and Towns, the Arizona Multi-housing Association and AAR, we have all agreed to the stipulations in the 2015 Transition Guidance for Property Managers PDF. The document, prepared by the Arizona League of Cities and Towns outlines the following clarifications and “transitions” for 2015. The other document titled Residential Rental Matrix – 2015 is a reference tool to determine residential rental tax.

Effective agreements for 2015:

  • Property Managers are allowed to continue filing tax returns in the same manner they did for each City and ADOR in 2014.
  • Property Managers that hold the license with a city which did not license individual Owners in 2014 does not need to have all of their Owners complete license applications and pay license fees by January 30, 2015 as previously requested, because these are not considered license renewals.
  • Not later than June 30, 2015, all individual Owners must have complete license applications on file with the Non-Program Cities, or with ADOR for properties located in Program Cities.
  • Any Owner formerly reported under Property Manager’s license that has already become licensed doesn’t need to do anything. ADOR and the Cities will continue to accept Property Manager tax returns through 2015 if they were allowed in 2014.

For a more thorough explanation of each bullet point, please see the 2015 Transition Guidance for Property Managers document.

Additionally, the ADOR will be finalizing the memorandum of understanding (MoU) for Owners to complete, which will be utilized instead of requiring a power of attorney in order for the Property Manager to act on behalf of the Owners in matters related to the ADOR.

Previous update from December 30, 2014 below
Over the last several weeks you have received correspondence from the Arizona Department of Revenue (ADOR) as well as individual cities regarding the Transaction Privilege Tax (referred to TPT or sales tax) collections for residential rentals as a result of the TPT simplification legislation that was passed by the Arizona legislature in 2013. The ADOR and Arizona’s Cities and Towns are working together to achieve the goal of simplifying the manner in which taxpayers report and pay their TPT. Due to the complexity in incorporating the City’s requirements into ADOR’S information technology system, ADOR will not be the single point of licensing, filing and payment of all TPT on January 1, 2015, as originally planned.

As we are working to transfer all TPT payments to the ADOR effective January 1, 2016, each rental property owner needs to be individually licensed (as opposed to property management companies’ master licenses). The Arizona Association of REALTORS® (AAR) and the Arizona Multi-housing Association (AMA) have been working with ADOR and the League of Cities and Towns as they roll out these changes. Unfortunately many changes were made that impact our members, however, AAR and AMA did not have input on these changes. We are now however, working with all stakeholders to amend the process and give our members time to implement the changes in a more efficient manner.

As we continue to work through the logistics we are asking all members to continue to remit sales taxes as you have over the last several years and do not make any changes or complete new applications / or TPT licenses. Many of you have received correspondence (example of correspondence) telling you that the new or renewal applications need to be completed by January 1, 2015. ADOR and the non-program cities (see below for a list) have agreed to waive all penalties and work with AAR and the AMA to gather this information in a more efficient (electronic) manner. You will not be required to meet the January 1, 2015 deadline. ADOR and the League of Cities and Towns have reviewed this email and are in agreement with this new process.

Again please continue to remit taxes as you have and do not renew your license at this time. We will send you more information as we continue to meet with the Cities and ADOR on a weekly basis. If you have any questions please contact the AZDOR at (602) 255-3381.

TPT Non-Program Cities

The Department of Revenue does not collect taxes for all cities within Arizona. The cities that collect their own taxes are commonly referred to as “Non-Program Cities”. The following is a list of Non-Program Cities, their telephone numbers, certain tax rates and links to their respective web sites. Non-Program cities collect and administer their own taxes, which are reported on their own tax forms. The state/county and program city taxes must still be reported and remitted to the state. Contact the Non-Program cities for a complete listing of their rates.

Apache Junction (480) 982-8002
Privilege Tax – 2.2%
Utilities /Telecom – 3.2%
Retail Tax for Single item over $2000 – 1.2 %

Avondale (623) 333-2000
Privilege Tax – 2.5%
Retail Tax for a Single item over $5000 – 1.5%
Use Tax – 1.5 %

Chandler (480) 782-2280
Privilege Tax/Use Tax – 1.5%
Rest & Bar – 1.8%
Utilities/Telecommunications – 2.75%

Douglas (520) 417-7333
Privilege Tax – 2.8%
Retail Tax for a Single item over $10,000 – 1.8%
Use Tax – 2.5 %

Flagstaff (928) 213-2250
Privilege Tax – 2.051%
Use Tax – 1%

Glendale (623) 930-3190
Privilege Tax 2.2%
Use Tax – 2.9%
Rest & Bar – 3.9%
Telecommunications – 6.1%

Mesa (480) 644-2316
Privilege Tax/Use Tax – 1.75%

Nogales (520) 287-6571
Privilege Tax – 2%

Peoria (623) 773-7160
Privilege Tax – 1.8%
Rest & Bar – 2.8%
Utilities – 3.3 %

Phoenix (602) 262-6785
Privilege Tax/Use Tax – 2%
Telecommunications – 4.7%
Utilities – 2.7 %

Prescott (928) 777-1268
Privilege Tax/Use Tax – 2%

Scottsdale (480) 312-2400
Privilege Tax – 1.65%
Use Tax – 1.45 %

Sedona (928) 204-7205
Privilege Tax – 3%

Tempe (480) 350-2955
Privilege Tax/Use Tax – 1.8%
Contracting – 1.8 %

Tucson (520) 791-4566
Privilege Tax/Use Tax – 2%

 

For more information please visit the Department of Revenue TPT Simplification Update for additional information.

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