Revised Arizona Form 5005

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

There have been a lot of sales tax updates for Arizona businesses in the construction/contracting industries. The modified Contractor’s Certificate (Form 5005) is yet another item you need to consider.

Arizona Form 5005 is a certificate that provides subcontractors with the validation required for tax exemption of a particular project, for a period of time, or until revoked. The certificate establishes responsible party for the transaction privilege tax. The form must be completed by the prime contractor assuming the contracting transaction privilege tax liability for any given contracting project. The Arizona Department of Revenue has revised Arizona Form 5005 as of June 10, 2015. The new Form 5005 may be issued by either a prime contractor, a general contractor working on an MRRA project or the person assuming the responsibility of remitting the tax due on the prime contracting project.

Some of the new exemption certificate rules require contractors to prove: (1) they do not work directly for the owner of the real property, but work on a job that is in control of a taxable prime contractor; (2) they may only use the exemption certificate for materials that will be incorporated into a taxable construction project; (3) may not have a delinquent tax balance; and (4) they must submit documentation to the Department showing that it meets these conditions. If a prime contractor does not issue Form 5005 to a subcontractor, the subcontractor should assume the project is not a modification and the retail tax will be due on materials purchased.

You can find the new form 5005 at Arizona Department of Revenue’s website http://www.azdor.gov/.

By Shant Andonian