Please note: Adobe Acrobat may be required to read some of these items.
What is the city of Phoenix transaction privilege (sales) tax rate?
The Phoenix tax rate is 2.3% on most business activities such as Amusements, Construction Contracting, Speculative Builders, Owner-Builders, Job Printing, Publishing, apartment or other Residential Real Estate Property Rental, Rental of Tangible Personal Property (except for Short-Term Motor Vehicle Rental), Restaurants and Bars, Manufactured Buildings, and Transportation. A two-level tax rate structure of 2.3% and 2.0% applies to the business activities of Retail Sales and Use Tax. Special rates apply to Advertising at 0.5%; Rental of Commercial Real Estate Property at 2.4%; Short-Term Motor Vehicle Rental at 4.3%; Hotel/Motel at 5.3%; Utilities at 2.7%; and Telecommunications at 4.7%. The above listed tax rates do not include the State and County tax rates. See the combined tax rate chart for this information.
How long do I need to keep my transaction privilege (sales) tax records?
If you are licensed and reporting on time, you are required to keep records for at least four years.
When is my tax return due?
The monthly tax return is due on the 20th of the month following the reporting month. The quarterly tax return is due on the 20th of the month following the end of the quarter and the annual tax return is due on January 20th each year. The return is delinquent if not received by the City before the close of business on the last business day of the month. Postmarks are not proof of timely filing. To avoid timeliness issues, you may want to utilize our free online system at https://www.phoenix.gov/financesite/Pages/etax.aspx to file your tax return and make your payments electronically.
Can I file quarterly or annually?
When you are first issued a license, you will be required to report on a monthly filing frequency. After at least six months of reporting, you can request to be changed to a calendar annual or a quarterly filing frequency. The requirements for filing are the following:
· Annual filing: If annual taxable revenue is not more than $5,000.
· Quarterly filing: If annual taxable revenue is between $5,001 and $49,999.
· Monthly filing: If annual taxable revenue is at or exceeds $50,000.
If your income level increases, you are responsible for notifying the City so that your filing method is updated to the appropriate frequency.
Do I file a tax return if I had no sales income for the tax period?
Yes. Simply check the box on your tax return form that reads "No business activity," sign, and date your return.
Can I deduct my business expenses from gross revenue?
No. Business expenses are generally not deductible.
How do I correct an error on a previously filed tax return?
Make a photocopy of your copy of the return (both sides), and using a BLACK pen, write "AMENDED" on the photocopy. Cross through all incorrect amounts to be amended. Write the correct amounts next to the incorrect amounts. Sign the amended return. Send the amended return, with additional payment due if applicable, to City of Phoenix, Tax Accounting, P.O. Box 2005, Phoenix, AZ 85001.
How can I get a copy of a tax return?
Contact the Tax Accounting Section at phone number (602) 262-6785, option 6 to request a duplicate of your tax return.
I need to file a tax return, but it is late. What do I need to do?
Complete your tax return as normal, send it in with payment for the tax, and we will compute any penalty and interest. If you pay the entire tax amount, it will not cost extra for us to bill you later for the penalty and interest, as we do not charge penalty on penalty. A late return is subject to a penalty of 5% per month until filed. The late tax balance is subject to a one-time 10% penalty. Total penalties cannot exceed 25% of the tax due. A delinquent tax balance is also subject to interest on the balance at the end of each month from the month the tax becomes delinquent. See the Interest Rates page for further information. To avoid timeliness issues, you may want to utilize our free online system at https://www.phoenix.gov/financesite/Pages/etax.aspx to file your tax return and make your payments electronically.
What is Use Tax?
Use Tax applies to items that were purchased or leased without paying transaction privilege (sales) tax for use in the business, typically from out-of-state vendors. These items become taxable when they are purchased or removed from inventory for use. Use Tax does not apply to purchases or leases of items that are resold or released in the normal course of business.
Where do I pay my taxes?
You have four choices: 1) File your tax return and payment electronically on free online system at https://www.phoenix.gov/financesite/Pages/etax.aspx . 2) File your tax return and remit payment by mail in the envelope provided. 3) Pay in person at the City of Phoenix Payment Center, 305 West Washington Street, 1st floor, Phoenix, Arizona 85003. 4) Deposit your return and payment in the City drop box located on the south side of Washington Street just west of Third Avenue.
Who do I contact about paying my property tax?
If your property is in Phoenix or any other area of Maricopa County, visit the Maricopa County Assessor's website.
Can I just show my total deductions on the front of the return?
No. All deductions must be shown in detail on the back of your tax return form for each business activity listed on the front of your form. Please use the boxes on the back of the return (lines A1 through A19) for the most commonly taken deductions. Deductions pre-printed with 'XXXXXXXX' in the box are not allowed for that activity.
What deductions can I take?
Please view the allowable deduction list to see allowable deductions for each business activity. If you still don't know if you can claim a deduction, call our offices at phone number (602) 262-6785, option 6.
How do I claim a deduction that isn't shown on the back of the tax return form?
Show the amount of the deduction(s) on line A20 on the back of the return and provide the explanation with the deduction code(s).
What is a tax exemption (resale) certificate?
An exemption (resale) certificate is designed to transfer the tax liability from the seller to the purchaser when accepted in good faith. The State of Arizona requires that the State form be used when documenting a State exemption and therefore, we recommend that you utilize Form 5000 which is accessible on the Arizona Department of Revenue's website at https://www.azdor.gov/Forms/TransactionPrivilegeTax.aspx . However, the State form lists some exemptions that are not necessarily deductible for City sales tax. Please be sure to verify any deductions that may need further explanation.
What records are required to document tax exempt sales?
All tax exempt sales to Arizona customers should be supported by a city of Phoenix or state of Arizona exemption certificate completed by your customer at the time of the sale. For exempt sales to out-of-state customers, records should be retained to show where the order was placed from and where the order was shipped to.
Are sales to nonprofit organizations, such as churches and charitable groups, exempt?
Not in general. Churches and nonprofit organizations, other than hospitals, are taxable on their purchases unless they are licensed to remit tax on their sales and complete the exemption certificate.