For Immediate Release
August 8, 2005

Arizona Authorizes Percentage-Based Reporting for Use Tax

Arizona Authorizes Percentage-Based Reporting for Use Tax

Arizona Authorizes Percentage-Based Reporting for Use Tax

Taxpayer may now be authorized to report their use tax based on a percentage, rather than on actual purchases. The Arizona Director of Taxation may allow the Taxpayer to use a percentage-based reporting method, instead of having to use actual purchases to determine the amount of Arizona use tax due.

In order to do this, the Taxpayer must:

  1. Categorize its purchases and transactions according to a specified standard outlined in a letter of authorization issued from the Director to the Taxpayer;
  2. Review approved sample invoices for each category of transactions when determining the percentage of taxable transaction; and
  3. Use the determined percentage to calculate the amount of use tax due.

The Director of Taxation has several options available when determining the standards that the Taxpayer must use to calculate the use tax. Transactions may be categorized:

  1. by dollar amount;
  2. by the types of taxable items purchased;
  3. by the purpose for which the items will be used; or
  4. by any other standard the Director deems appropriate.

For Taxpayer electing to pay use taxes directly to the Arizona Department of Revenue, the effective date for purchases based on a percentage-based reporting method will be on or after June 30, 2005. For all other Taxpayer, the Legislation will be effective for taxable purchases beginning on or after June 30, 2007.

If you would like additional information on this topic or have any questions, please contact the taxdesk@thesaltgroup.com

 

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