Arizona businesses register for a Transaction Privilege Tax (TPT) License from the Arizona Department of Revenue, and you can apply online at AZTaxes.gov. The state fee is $12 per location plus any city fees, and you must renew every license by Jan. 1. Remote sellers need one once their direct Arizona sales pass $100,000 in the current or previous year.
TPT is Arizona's version of sales tax. It's a tax on the seller, as explained in the section on how TPT differs from a sales tax.
You need an Arizona Transaction Privilege Tax (TPT) License if you do business in Arizona in an activity subject to TPT, such as retail sales, restaurants, or personal property rentals. You can't start or continue business in Arizona until you have the license.
SaaS in Arizona is taxable. The Arizona Court of Appeals has treated subscription software as a rental of tangible personal property, which falls under TPT’s personal property rental classification.
There's an exception for young business owners. People under 19 can run a business without a license if it earns $10,000 or less in gross income in a calendar year.
If you have no physical presence in Arizona, you need a TPT License once you pass the Arizona economic nexus threshold: more than $100,000 in gross sales to Arizona customers in the previous or current calendar year. Arizona has no transaction-count threshold.
Arizona’s $100,000 threshold applies only to the retail classification. Income from other classifications, including personal property rental, where SaaS falls, doesn’t count toward it.
ADOR’s Transaction Privilege Tax Ruling TPR 24-1 says this directly. Its example is an out-of-state company with no Arizona presence that earns $250,000 a year from software subscriptions to Arizona customers. ADOR says that company doesn’t have economic nexus.
So if you sell only SaaS in Arizona and have no physical presence there, you don’t need a TPT license, regardless of your sales volume.
Sales made through a marketplace facilitator don't count, as long as you have the marketplace's exemption certificate or other written confirmation that it reports and pays the tax on those sales for you. Without it, those sales count as your income, and you owe the TPT on them.
Get your license once you pass the threshold. You then start remitting TPT on the first day of the month that begins at least 30 days later, and you keep collecting for the rest of that year and all of the next.
For example, if you pass $100,000 on Feb. 15, your first remittance period starts April 1.
If you crossed the threshold in the past and never registered, a voluntary disclosure agreement can limit what you owe. Arizona's Voluntary Disclosure Program generally looks back four years and may abate penalties once the tax and interest are paid.
If you have physical nexus in Arizona, you need a TPT License before you start doing business, regardless of sales volume. These activities create physical presence, alone or together:
Visits with no sales, such as attending a business meeting, don't create physical presence on their own.
An Arizona business that sells only online, with no storefront, is still an Arizona-based retailer. The $100,000 threshold doesn't apply to it.
Inventory at a third-party fulfillment center you don't control is treated differently, as covered in the next section.
Arizona's marketplace facilitator law makes marketplace facilitators responsible for TPT on the sales they facilitate for other sellers. Whether you still need your own TPT License depends on how you sell:
Temporarily storing goods at a third-party fulfillment center you don't control likely doesn't create physical nexus. That's the usual setup for Amazon FBA sellers.
Your direct sales still count toward the $100,000 threshold. Affiliate ownership can also create sales tax nexus in Arizona.
You need a Federal Employer Identification Number (FEIN) to get an Arizona TPT License. A sole proprietor with no employees can use a Social Security number instead, but a single-member LLC must have an FEIN.
The checklists below follow the Arizona Joint Tax Application (Form JT-1), the state's paper version of the application.
A sole owner, a managing member, a corporate officer, or at least two partners must sign the application. Agents and representatives can't. If a married couple owns the business, both spouses must sign.
The application also asks:
Construction contractors can't apply online. They must mail or hand-deliver a paper JT-1, and new or out-of-state contractors must post a bond first unless they qualify for an exemption.
The Arizona Department of Revenue (ADOR) offers four ways to apply:
Remote sellers and out-of-state marketplace facilitators can also apply on paper with Form 11381, the Out-of-State Marketplace Facilitator/Remote Seller Transaction Privilege Tax Application. Sellers based outside the U.S. must use this form.
On AZTaxes.gov, select Enroll to File and Pay Online under Businesses, then select Start Registration.
Enter your name, phone number, and email, accept the Terms of Use, and select Register. Your email becomes your AZTaxes username.
ADOR then emails you a temporary password that expires after 24 hours. When you first log in, you set your own password, answer four security questions, and create a 6- to 10-digit e-signature PIN, which you'll use to sign your application. ADOR's account setup guide walks through each screen.
Tip: ADOR recommends an owner or officer set up the account. That person becomes the Primary User and can give access to an accountant or office manager as a Delegate User.
Log in to AZTaxes.gov and select Business Registration.
Remote sellers then select Register New Business Remote Seller/Out-of-State Marketplace Facilitator and choose Remote Seller as the license type. ADOR's remote seller instructions list these steps.
Follow the prompts and enter the details from the checklists above: your business, owners and officers, Arizona locations, business codes, and cities.
Sign with your e-signature PIN and pay the license fees. Remote sellers get a confirmation number when they submit.
Warning: ADOR doesn't deliver a license until every fee is paid in full.
Complete, accurate AZTaxes.gov applications usually get a TPT License number the same day. Remote sellers get a confirmation number first while ADOR processes the application.
ADOR mails the license certificate. You can't print the certificate online.
Display a separate license certificate at each business location. Include your eight-digit license number on every return and payment.
The state fee is $12 per location. Businesses with an Arizona location also pay a license fee for each city where they do business, unless the city charges none.
ADOR's License Fee Worksheet lists every city's fee. Paper applicants total their fees on the JT-1's own worksheet and send a check with the form.
ADOR may require a bond if it finds you may not be able to pay on time, or if you or a related business has a history of delinquent payments.
Construction contractors are different. New and out-of-state contractors must post a bond of at least $2,000 unless they qualify for an exemption.
ADOR's application page gives these times for complete, accurate applications:
The AZTaxes.gov FAQ gives a longer estimate: four to six weeks for the mailed license, for both online and mailed applications. Allow that much time if you need the certificate by a set date.
Arizona's transaction privilege tax is a tax on the seller for the privilege of doing business in the state. You may pass the cost on to customers, but you owe the tax to Arizona and its cities either way.
TPT covers 16 business classifications, including retail, restaurants and bars, hotels, commercial leases, personal property rentals, and contracting. Your business codes on the application tell ADOR which ones apply to you.
One TPT License covers state, county, and city TPT. You select your cities on the state application and report city TPT to ADOR along with state and county TPT.
A TPT License isn't a general city business license. Arizona cities generally require a separate city business license from anyone selling at retail in the city, in addition to the city privilege tax license you get through ADOR.
Check with each city where you have a location. Remote sellers and marketplace facilitators with no physical presence in Arizona don't need any city business licenses.
Your TPT License is valid for one calendar year and must be renewed by Jan. 1, including licenses issued late in the year.
If you file one consolidated return for several locations, you pay each city's renewal fee once, not for each location.
Warning: Skipping the renewal doesn't cancel your license. ADOR renews it automatically and bills the renewal fee plus the penalty. If you close, cancel the license in AZTaxes.gov.
Remote sellers and out-of-state marketplace facilitators renew in January only if they passed the $100,000 threshold in the calendar year that just ended. Their renewal is free.
If you were under $100,000 in both years, you may cancel your license. A license you don't cancel is renewed automatically, and you must keep filing returns, including zero returns.
Contact ADOR's E-Commerce Compliance and Outreach team to reinstate it if you pass the threshold again.
Charge Arizona sales tax from the day you start doing business in Arizona. Remote sellers start on the first day of the month that begins at least 30 days after they pass the threshold.
Your rate combines the state rate with any county and city rates, which you can find with the AZTaxes.gov rate lookup tool.
Remote sellers report each sale using the rates for the customer's shipping address, or the billing address if there's no shipping address.
Your filing frequency depends on your estimated annual combined state, county, and city TPT liability:
Remote sellers and marketplace facilitators generally file monthly. To change your frequency later, mail a Business Account Update form. You can't change it online.
You file Arizona TPT returns by the 20th of the month after each filing period. Electronic returns and payments are on time if ADOR receives them by the last business day of that month, and paper returns by the second-to-last business day.
You have to file a return for every period, even if you had no sales. Penalties and interest run from the 20th, not from the end of the grace period.
You must file electronically if any of these apply:
Renew every year by Jan. 1, as covered in the renewal section above.
Registration rules in other states differ, and many permits never expire.
Yes, for practical purposes. TPT is commonly called a sales tax, and the TPT License is what you need to collect and remit tax on Arizona sales.
The difference is legal: TPT is a tax on the seller, not the buyer, so you owe it even if you don't collect it from customers.
It depends on your business. A sole proprietor with no employees can use a Social Security number. A single-member LLC and most other businesses need an EIN.
Foreign sellers without a U.S. tax ID can write "FOREIGN" in the ID field of the paper remote seller application. Once they get an EIN, they add it with a Business Account Update so they can file online.
No, as long as every Arizona sale goes through Amazon or another marketplace facilitator that reports and pays the TPT on those sales. That's true whether or not you're based in Arizona.
Keep the marketplace's exemption certificate or other written confirmation. If you also sell through your own website, those direct sales may require a license.
Yes. Vendors who only sell at Arizona special events still need a license. The $12 state fee covers any number of events, but you pay a city fee for each city where you aren't already licensed.
An out-of-state seller that makes sales at an Arizona trade show, and usually makes similar sales outside Arizona, needs a seasonal license. Those sales don't count toward the $100,000 remote seller threshold, and you can cancel the license after reporting them.
Yes, if they're based in Arizona. An Arizona wholesale business needs a TPT License to buy items for resale tax-free, and it files returns that deduct its wholesale sales.
An out-of-state wholesaler needs one if an Arizona distributor creates physical presence for it, or once it passes the $100,000 remote seller threshold.
Yes. A TPT License can't be transferred to a new owner. You also need a new license if a sole proprietor becomes a corporation or partnership, or if the business moves.
The new license costs the same $12 state fee plus any city fees.
Numeral is an end-to-end sales tax compliance platform for ecommerce and SaaS businesses. Top brands like Ridge, Muddy Bites, Graza, and Grüns spend less than five minutes a month on sales tax.
Learn more
