Arizona's Remote Seller/Marketplace Facilitator Legislation Takes Effect October 1
October 1, 2019
By Jay Jetter, Soheila Shahidi and Julie Quigley
Arizona Governor Doug Ducey signed House Bill (H.B.) 2757 into law on May 31, 2019. H.B. 2757 requires “remote sellers” and “marketplace facilitators” to begin filing and paying transaction privilege tax (TPT) in Arizona starting October 1, 2019. The legislation is a direct result of the landmark 2018 U.S. Supreme Court decision in South Dakota v. Wayfair that permits states to require out-of-state businesses without a physical presence in that state to nonetheless collect and remit tax on sales from transactions in their state if certain economic nexus thresholds are met.
Under the new law, a remote seller is a person who sells products for delivery into Arizona but does not itself have a physical presence in Arizona. Physical presence includes having a brick-and-mortar store, people or property in Arizona.
A marketplace facilitator is a person who facilitates the sale of products by listing or advertising them for sale at a physical place or electronic platform and that accepts payment of behalf of the seller and remits payment to the seller.
A remote seller has economic nexus and is therefore required to collect and remit TPT, if in the current or previous year the gross income generated from direct sales into Arizona exceeds the following thresholds:
$150,000 (2020); and
$100,000 (2021 and beyond).
A marketplace facilitator has economic nexus and must collect and remit TPT if in the current or previous calendar year it facilitates, on its own behalf or on behalf of at least one remote seller, more than $100,000 in annual sales to Arizona customers.
Because of Arizona’s new laws, retailers selling items of tangible personal property into Arizona should carefully review the above provisions to determine whether they must pay Arizona TPT.
On October 1, 2019, the above law takes effect and remote sellers and marketplace facilitators that meet the above thresholds and other requirements must begin collecting TPT.
On November 1, 2019, remote sellers and marketplace facilitators that meet the above thresholdswill begin filing and paying TPT for the October period.