(HELP 😵‍💫)Arizona transaction privilege tax license

[Johnny McKeon]

Hey BP, I need help with the Arizona transaction privilege tax license. do you guys know or do you know someone that would know how to help with this?

I have a question about the Arizona transaction privilege tax

Do you just have to pay the city a percentage ? For example the city of Mesa is 2% I believe and that is passed through to the tenant

or is it the city, county and State each owed a percentage? For example the city of Mesa 2% Maricopa County 5.6% and the state x percentage? 

And which one do you pass on to the tenants? Just the city or all of them

Thank you for your help!

[Doug McVinua]

@Johnny McKeon The Arizona Transaction Privilege Tax is paid to the state of Arizona Department of Revenue. As a property manager, we report and pay monthly for each property we manage. You will need to obtain a license for each property, calculate the appropriate tax, report and pay it. The tax amount is set by each City depending on the type of rental, short-term, long-term, residential, commercial, etc.

I write it into the lease so that the tenant pays the appropriate tax, so it's a neutral gain/loss for the property owner.

It is one of our least favorite jobs, but we take care of the tax and reporting for the owners as part of our service.

[Bruce Woodruff]

They are added together.... County/State. For our STRs, VRBO and AIR collect from the guests and pay the State

[Johnny McKeon]

@Doug McVinua and @Bruce Woodruff



Thank you Doug & Bruce for the quick reply! it really helps. All my 41 units are multi-family long-term rentals (4plex's up to a 7 unit)

I attached and highlighted my transaction privilege tax license. Where I am being charged 5.6% for Maricopa county & 1.5% up to 2.3% for the city. 

are you also being charged for the county?
And if you are being charged for the county are your tenants paying for the county and City?


Let's say for example in the city of Mesa, AZ the tenants will be charged 2% for the city and 5.6% for Maricopa County. all together that is 7.6% on the rent & other income. let's say the rent is $1,500 per month . and the supposed combined tax is 7.6% (5.6% & 2%) that equals $114 per mo the tenants are supposed to pay and then I collect and pay to the AZ Gov. That just seems like a lot of tax to pay for tenants living in apartments

I reached out to other property managers and property owners and they said they are only paying the city tax

I looked on the az dept of revenue website for the transaction privilege tax license and I don't see where it says rental real estate pays the county. it just has a rental matrix for the different city tax rates.

Side note. what do you charge Doug to manage multifamily?

Thank you so much for your help!! 

[Dan Schwartz]

@Johnny McKeon you don't have to pay the Maricopa 5.6%.  Code 029 shouldn't be on your TPT-1.

This page has a lot of resources, but you've probably seen them.  https://azdor.gov/transaction-...

I recommend attending one of their Property Owner Workshops (link below).  They're all online now.  I had questions of procedure after the municipalities transferred management/collection to the state, and went to one of these workshops. It was in person and they literally sat with me on my laptop and showed me step-by-step what to do. They also made sure all forms were filled out correctly before submitting them. It was very helpful.  I hope they are still helpful over WebEx.. You may find that it's easier to manage all of the accounts under one login by registering as a PMC (Property Management Company). 

https://azdor.gov/taxpayer-edu...

[Johnny McKeon]

Thank you , @Dan Schwartz!!!!! for sharing your resources and your experience!!

 I spoke with the property management company that manages the apartment communities branded as the Tides here in Arizona, and several other owner/managers and they all said the same thing as you. they are only collecting  the city tax for the transaction privilege tax which is paid by the tenant and then owners need to pay to AZ Dept. of Revenue. They are not paying the county anything

I also met with a family friend who happens to be an Asset manager and he showed me their TPT (Transaction Privilege Tax) license which only had code 045.

Thank you so much for confirming that I have the wrong codes ( 029) on my TPT license. I am having my CPA company called Fox Peterson do my taxes for the properties and handle the monthly TPT reporting. They have made several mistakes already that I am finding.

 They are charging me $80 per month for the monthly TPT reporting. Now, I just need to figure out how to have them correct this because the GOV thinks I owe them extra money because of the wrong codes..

you wouldn't happen to know how to make corrections to a filed TPT would you?

[Dan Schwartz]

@Johnny McKeon glad to help.  i Think you file an amended return on paper.  Or that may have been after a certain time had passed since the original filing.  

At $80 a month - or really, any amount - they should be doing it accurately.  Point out their error and have them refile everything.  It will be a lot easier on you.    They have the original filings, but make sure you have copies of everything prior to firing them.  They probably filed online.  

Consider saving the $80 a month and taking this on yourself.  If your annual liability is less than $2,000, you can file once per year by Jan 31.  It takes longer to remember how to login once per year than it does to fill out the form….

https://azdor.gov/transaction-...

Reach out if you need help.  This trips a lot of people up, but it’s not actually that complicated. 

On a separate issue, I had to call AZ DOR business line yesterday.  Hold time was less than 15 minutes, they were super helpful as usual, and the issue was resolved right away.  Don’t be afraid to talk directly to them as well.