Skip to main content
Avalara Help Center

Set Up Arizona Returns

This article applies to:Returns Central

Tell Us Where You Collect Tax 

Add Arizona to the places where you collect tax. This tells AvaTax to calculate tax on Arizona transactions. See the Arizona Department of Revenue website for details about nexus, registration, and taxes in Arizona.

Arizona has local jurisdictions that you may need to add when you add the state.

Before you add Arizona, there are two things you need to do:

When you add Arizona, pick the right tax type based on the way your business is registered and the tax return you need to file. Sales tax in Arizona is actually the Arizona Transaction Privilege Tax (TPT).

When selecting the tax type for Arizona:

  • If your business is registered for a Transaction Privilege Tax (TPT) license, select Sales tax only.
    • If you're an in-state seller, your sales tax liability is reported using the standard Transaction Privilege Tax rates and business codes.
    • If you're an out-of-state seller, make sure to indicate that you're registered as a remote seller when you add returns. Your sales tax liability is reported using the 600 series business codes for remote sellers and marketplace facilitators.
  • If you're an out-of-state seller registered for a Use Tax license but not a Transaction Privilege Tax (TPT) license, select Sales or sellers use tax only.

Learn more about the Transaction Privilege Tax for out-of-state sellers and in-state sellers from the Arizona Department of Revenue.

"Sourcing" determines the location where a sale is taxed. Arizona is an origin-sourced state.

Add Your Company Locations 

Add any physical locations you have in Arizona. 

When you add a location:

  • Be sure to enter the three-digit, state-assigned Location Code under Additional Information
  • After you validate the location address, make sure it falls in the jurisdictions you expect. If not, you may want to manage your jurisdiction overrides

Out-of-state locations that are registered with Arizona can't be added in AvaTax. Enter the three digit state-assigned location code for the location you would like your out of state sales reported to when asked as part of scheduling the return.

Schedule Your Returns

After you tell us where you collect tax and add locations, you're ready to schedule returns. Go to Returns in AvaTax to provide a funding power of attorney and schedule your returns

Your company name and taxpayer ID from Your Company Details show up on your returns. Make sure they match what’s on your registration information.

Use this info to schedule your returns. Keep in mind that the selections you made when you told us where you collect tax, any location codes you entered, and the forms you select are related and should tie together.

  • Select form AZ TPT-2 to report all tax types. Confirm your filing frequency on the registration information provided by the state.
    • Make sure you enter your Arizona TPT account number correctly. Example: 12345678
    • For out-of-state locations that are registered with Arizona, enter the three digit state-assigned location code for the location you would like your out of state sales reported to when asked as part of scheduling the return.
    • If you're an out-of-state seller, make sure to indicate that you're registered as a remote seller when you schedule this return. This ensures that your sales tax liability is reported using the 600 series business codes for remote sellers and marketplace facilitators.
    • Avalara files the AZ TPT2 in place of the EZ return, which is allowed by the State. Avalara doesn't support the AZ TPT EZ form.
    • Enter the AZ e-PIN associated with your account.
      • If you don't know the e-PIN, a primary user will need to request a new e-PIN.
      • If you're not the primary user on the account, you may need to complete a Business Account Update form to change the primary user.
  • Select form AZ-TPT-ES if you're required to make Arizona prepayments.
    • This form is used by Avalara so we know you're required to make prepayments. Arizona no longer uses this form.
    • Some Arizona taxpayers are required to make an annual accelerated prepayment in June of each year. Avalara calculates this prepayment using 50% of the preceding May's liability.
    • See the Arizona Department of Revenue website or contact the Arizona Department of Revenue at 602-255-3381 for more info about prepayments
    • Enter the AZ e-PIN associated with your account.
      • If you don't know the e-PIN, a primary user will need to request a new e-PIN.
      • If you're not the primary user on the account, you may need to complete a Business Account Update form to change the primary user.
  • Many reservations are reported on the AZ TPT-2 form with a reservation-specific region code. Some reservations report local taxes separately. Select forms for any tribal territories that report separately if you're registered there. If a jurisdiction's form isn't available, Avalara doesn't support filing for that jurisdiction.

Electronic Filing

  • Arizona returns must be filed electronically based on these thresholds:
    • 2019: $10,000 annual liability for prior year
    • 2020: $5,000 annual liability for prior year
    • 2021: $500 annual liability for prior year
  • When you schedule a return, provide the primary user login credentials for your AZ account.
    • Make sure that your Transaction Privilege Tax account is associated with this login information.
  • To ensure Avalara has access to electronically file your return, please grant our team access via a delegate user on the Arizona Department of Revenue website.
    • You must be the primary user to add Avalara to the account. Contact the state if you're not sure who's the primary user of your account.
    • Log in to your AZ account as the primary user. Select to add a user under Security.
    • Fill in the user details using this information:
      • First Name: Avalara
      • Last Name: Inc.
      • Email: electronic.filing@avalara.com
      • Phone: 206-826-4900
      •  Access should be granted for filing, paying, and the ability to review prior periods.
    • After you've added Avalara as a user, send a confirmation email to avataxreturns@avalara.com so we can verify that we have access for filing.
    • Make sure you include the Avalara user login credentials on the scheduled return.
  • We can't file electronically for you unless we have your primary user login credentials or the Avalara user login credentials you set up for us.

Remote Sellers

If you’re out-of-state seller, you may have a requirement to remit tax to Arizona as a remote seller. Remote Sellers have a requirement to calculate the full sales tax rate like an in-state seller would; however, the return would label these sales as a remote seller by reporting a 600 series business code. If you are a remote seller and require reporting your sales under the 600 series business code, please ensure you are set up correctly to calculate the appropriate tax type and rate and have indicated this requirement on your scheduled return.

Tax Calculation

  1. In Avalara, go to Settings > Where you collect tax.
  2. Review the tax type listed for Arizona. 
    • If the tax type listed shows 'Sales or sellers use tax', please proceed to step 3.
    • If the tax type listed shows 'Sales tax only', please skip to step 6.
  3. Select Details.
  4. Change the Tax Type dropdown menu to select 'Sales tax only'.
  5. Click 'Done with Arizona' at the bottom of the page.
  6. Review past transactions to ensure they have calculated correctly. If you have any transactions that calculated the sellers use tax type and lesser rate in a period where Avalara is filing the return on your behalf, these will need to be corrected. Otherwise, your return could report an unexpected business code, local jurisdictions, or rates which may cause notices to generate from the jurisdiction.
    • If necessary, you may need to recalculate your transactions that are not in a Locked status but please note there is a rate difference between Sales and Seller's Use. So the tax amounts on transactions are likely to change.

Reporting Requirement

  1. In Avalara, go to Returns > View and add returns.
  2. Select Details on the AZ TPT2 form
    • If the AZ TPT2 form is not one of your active forms and you would like Avalara to begin filing on your behalf, click 'Add a tax return' to schedule it for filing.
  3. Select 'Yes' on the question "Are you registered as a Remote Seller in Arizona?"
    • If you select 'No' while your tax type is set to 'Sales tax only', your return will be reported as if you are an in-state seller which may cause notices to generate from the jurisdiction.
  4. Click 'Save filing settings' at the bottom of the page.

 

NOTE: Arizona does not allow rental data to be reported with remote sellers business codes as that implies that it is in-state seller activity. If you are a remote seller, please ensure that you are not utilizing a rental tax code. You may use the Avalara Tax Codes Search tool to determine the best tax code for your scenario.

  • Was this article helpful?