UPDATE: 2015 Change to Exemption for Arizona Retail Sales to Out-of-State Buyers

Your Guide to State, Local, Federal, Estate + International Taxation

The Arizona Department of Revenue has released additional information on the effective 1/1/2015 change to the retail sales tax exemption for sales to out of state buyers after the amendment of Arizona Revised Statutes (A.R.S.) § 42-5061.A.14.

Under prior law, the exemption for sales to out of state buyers included language that made tangible personal property sales exempt from sales tax merely by shipping or delivering directly to an out of state location (even if the buyer was in your Arizona retail location).

The law was changed for all tangible personal property except MOTOR VEHICLES (old law still applies).

Beginning 1/1/2015, qualifying tangible personal property sales (except motor vehicles) for the transaction privilege tax (sales tax) exemption under interstate and foreign commerce must follow these rules:

  • The sale must be BOTH ordered from an out-of-state location and delivered to an out-of-state location.
  • The exemption for buyers only temporarily in Arizona NO LONGER EXISTS.

Arizona’s information release included the following example:

“A customer goes into a retail store and purchases tangible personal property. The customer asks that the tangible personal property be shipped to a location in Canada. Prior to January 1, 2015, this sale was not subject to tax. As of January 1, 2015, this sale is subject to tax.”

Additional information is available in the ADOR release found here.

By Melinda Nelson, CPA