Sales Tax Obligations of Purchasers in Arizona

April 13, 2006

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Arizona imposes various requirements on purchasers doing business in Arizona. The items below should help you with the most frequently asked questions concerning purchasers and sales and use tax issues.

Tax exemption certificates. There are no general exemptions for sales to churches, schools, and other nonprofit organizations, so these sales are subject to the transaction privilege tax or the use tax unless specifically exempt (for example, there is a specific exemption for sales to nonprofit organizations that operate rodeos).

Resale exemptions. Gross receipts from the following sales are not taxable under the retail classification:

the sale of tangible personal property to be resold by the purchaser in the ordinary course of business
the sale of tangible personal property to be leased out by a person in the business of leasing such personal property
the sale of repair or replacement parts for tangible personal property that is to be leased out by a person engaged in the business of leasing such tangible personal property

Resale certificate exemption. Anyone conducting business under a taxable classification and claiming a deduction from the tax must mark the invoice indicating the deduction and obtain a resale exemption certificate executed by the purchaser. The exemption certificate must include the following information:

the name and address of the purchaser
the precise nature of the business of the purchaser
the purpose for which the purchase was made
facts necessary to establish the appropriate deduction
the tax license number of the purchaser (to the extent the deduction depends on the purchaser conducting business)
a certification that the person executing the certificate is authorized to do so on behalf of the purchaser

Blanket resale certificates. A vendor and a purchaser may agree to use a blanket certificate that will continue in force for a period stated on the certificate. The main purpose of a blanket resale certificate is that both parties can avoid the hassle of having to present a certificate for every transaction. The vendor may refuse to honor a blanket certificate if the vendor believes that the information contained in the certificate is no longer accurate or complete.

Purchases from out-of-state vendors. If a purchase from an out-of-state retailer is subject to another state's sales tax, then the purchaser may take a credit against the use tax equal to the amount of sales tax paid in the state of purchase.