Are the Services I’m Providing Taxable?

Dear M & M:

I am uncertain if the service I am providing is taxable. When I first called the Arizona Department of revenue they said it was a service. Now I am hearing it might be taxable under the heading of Amusement.

–Danny

Dear Danny:

According to the Arizona Department of Revenue. The transaction privilege tax is imposed on persons engaged in business under the amusement classification by Arizona Revised Statutes Title 42 (Taxation) Article 2 (Transition Privilege Classifications) Section 5073 (Amusement Classification) or look under A.R.S. §42-5073 online at the following web site; (http://www.azleg.gov/ArizonaRevisedStatutes.asp?Title=42).

The statute reads, “If you operate or conduct a business that charges admission or user fees for exhibition, amusement or entertainment, you may be subject to the Transaction Privilege Tax. Examples of taxable business activities include but are not limited to:  Sporting events, Concerts, Tours, Bowling or Golfing, Coin-operated Video Games, Theaters, Movies, Shows, Tennis Courts, Carnivals.“

As always there are several common exemptions. One should read the entire chapter to get a better understanding of the rules that apply to you. The following statutory exemptions may be found in Arizona Revised Statutes (A.R.S. §42-5073).

For Additional Information, call: Phoenix… (602) 255-2060 Toll free from area codes 520 & 928 (800) 843-7196 Or Write to: Arizona Department of Revenue, Taxpayer Information & Assistance, P.O. Box 29086, Phoenix AZ 85038-9086 or Arizona Department of Revenue, Taxpayer Information & Assistance, 1600 W Monroe, Phoenix AZ 85007.

For Related Tax Information Online: The Internet Address is; www.azdor.gov. As always get your lawyer, accountant or CPA involved in this if you have any questions or are uncertain. In addition remember; although the Arizona Department of Revenue is confident that the oral responses given by its employees is correct, the Department is not bound by that oral advice.

We encourage you to put your questions in writing, and the Arizona Department of Revenue Attorneys will answer you in writing. It can take 30 to 60 days to get a response.

Walk-in Service is available Monday—Friday, 8 a.m. – 5 p.m. in Phoenix at 1600 W Monroe, Tucson Government Mall, 400 W Congress.

In addition, make sure you understand what tax rate you should be collecting if your service is considered taxable.

What Is the Tax Rate on Amusements? How Do I Pay? The current combined tax rates can be found in the Arizona State, County and City Transaction Privilege and Other Tax Rate Tables under Business Class Code 012 for Amusement at the following web site; (http://www.azdor.gov/Business/TransactionPrivilegeTax/TPTRates.aspx).

Many cities impose their own tax rates. “Program cities” have the state collect their taxes using a state form, the Transaction Privilege, Use and Severance Tax Return (Form TPT-1). Cities that collect privilege tax independently of the state and are called “non-program” cities.

If you are unsure whether your city collects its own tax or if the state collects for it, checks the Arizona State, County and City Transaction Privilege and Other Tax Rate Tables or call your city officials to find out. Sources: AZ. Dept. of Revenue. Remember get it in writing.

-M&M

To ask your questions: Call the Small Business Development Center (SBDC) at Cochise College (520)-515-5478 or email schmittm@cochise.edu or contact the Sierra Vista Economic Development Foundation(EDF) at 520-458-6948 or email  hollism@svedf.org

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