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Changes to Arizona economic threshold registration and reporting requirements October 2019

Overview

Effective October 1, 2019, the Arizona Department of Revenue implemented new economic threshold registration and reporting requirements for remote sellers and marketplace facilitators. The Arizona Department of Revenue has published information about the new law and has also published FAQs for remote sellers and marketplace facilitators.

AvaTax

Resolution

  • Taxpayers should evaluate the new laws (linked above) and how they apply to the taxpayer’s business. If taxpayers are unsure on how the new tax rules apply to them, they should consult with the AZ DOR or a tax professional. 

Items to consider:

  • Determine if you need to contact the DOR to update your registration.
  • Determine if you should be collecting at higher rates.
     
  • Do I need to change anything in AvaTax?
    This depends on your business’ registration with the State, your current nexus settings, and if you have an active AZ TPT2 filing calendar for Avalara to file on your behalf. Settings and filing calendars should correspond with your registration with the state and must be maintained by Avalara customers to ensure that returns are filed accurately. 

    Avalara has determined the majority of scenarios businesses may encounter and actions needed within Avatax to meet collection and reporting requirements for Arizona. Once you have determined which scenario fits for your current registration with Arizona, please update settings and filing calendars as needed. 
Scenario Action
Registered as an in-state retailer with a physical presence. (Physical presence may be non-permanent, such as rentals.) 
  • Confirm your nexus is set to sales tax only. Per the state, businesses that are registered as an in-state retailer should have all general sales being reported using the sales tax rates. 
  • Set up in-state physical registered locations in AvaTax. Pass location codes on transactions so sales can be broken out correctly.
Registered as a remote seller over the economic threshold.
  • Confirm your nexus is set to sales tax only. The State now requires that Remote Sellers over the economic threshold collect at the corresponding higher sales tax rates.
  • A question has been added to the AZ filing calendar to confirm remote seller registration. For Avalara to file your return with the new corresponding 600 series business codes, you must go into the calendar and answer “Yes” to the question.
  • You may be a remote seller that is registered to report as having a presence in state. If you are not sure of your registration type, contact the State before directing Avalara to use remote seller reporting business codes.
Registered as a voluntary remote seller under the economic threshold. 
  • Confirm your nexus setting is Sales or Sellers Use. Remote sellers who do not meet the required economic threshold can still voluntarily collect tax to report to AZ and are not required to use the higher rates. 
  • If you are not registered with AZ to use the 600 series business codes for remote sales, you should not select “Yes” for the Remote Sales question for the AZ; this will cause reporting issues and notices.
  • If you would like to collect using the higher rates and reporting for the 600 series business codes, you can request to have a business registration updated even if the threshold is not met. Contact the Arizona DOR E-Commerce team via the email or phone number listed under Resources, below.

 

Resources:

If you have questions regarding new remote seller/marketplace facilitator requirements for Arizona, please contact the Arizona Department of Revenue.

Arizona has a dedicated E-Commerce team; phone line and email:  833-293-7253 (833-AZeSale) or by email: azesale@azdor.gov

Direct general questions to 602-255-3381.

If you have questions about AvaTax settings, setting up your filing calendar, or setting up your locations in AvaTax, contact Avalara Support.

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