Phoenix Tax Adviser | Retail Sales Changes
Effective January 1, 2015, the Arizona Department of Revenue put into effect a new amendment to the retail sales law. This amendment applies to the sales of tangible personal property to nonresidents. Sales to a nonresident of tangible personal property, other than a motor vehicle, shipped or delivered to a location outside Arizona for use outside the state are subject to retail sales tax at the seller’s business location.
Tangible personal property is defined as everything other than real estate that is used in a business. Examples of tangible personal property include computers, furniture, tools, machinery, signs, equipment, leasehold improvements, supplies and leased equipment. Tangible personal property does not include inventory.
An example of this situation would be a customer enters a retail store. The customer would like to purchase a piece of tangible personal property but have it shipped to a location in Canada. Prior to January 1, 2015 this sale was exempt from sales tax. The retailer would have used code 540 when filing their sales tax form to lower their taxable sales. As of January 1, 2015, code 540 is no longer allowed and this sale is subject to sales tax.
The amendment does not affect sales made if the order for the tangible personal property is received from a location outside the state and the tangible personal property is shipped or delivered by the seller to a location outside the state. This sale would still be exempt from sales tax. This also applies if the order is placed through the retail seller’s website.
Here is a link to the Department of Revenue’s website where they have more information http://www.azdor.gov/Portals/0/Newsroom/RETAIL%20CHANGES%20EFFECTIVE%20JANUARY%201%202015.pdf
As always, should you have any questions or need further clarification on this or any other tax matter, do not hesitate to contact us at Dusseau & Makris, PC, you Phoenix Tax Advisers.