What is Transaction Privilege Tax (TPT)? You may know TPT as sales tax, however TPT is really a tax on a vendor for simply having the privilege of doing business in the state of Arizona. Only certain business activities are subject to the tax and have to be licensed.
Arizona Senate bill 1720 was passed by the Arizona Legislature and went into effect on September 29, 2021. Due to its passage, peer-to-peer (P2P) vehicle sharing businesses (think Uber or Lyft) must now pay TPT on all rentals managed through their platform. P2P car sharing doesn’t involve car rental agents, short-term car rentals or car rentals that include a driver.
Who is responsible for paying TPT? The P2P business platform owner is responsible for paying the tax and doing the TPT filings. Private car owners do not need a TPT license, and they also don’t need to pay TPT to present their cars for rent through a P2P platform.
To steer clear of any additional cost however, private car owners can validate the car is an individual-owned share car and not subject to reporting and that either:
- when purchased, TPT or Arizona’s use tax was paid; or
- if purchased out-of-state and brought to Arizona, an out-of-state sales or use tax was paid.
If you need to certify your individually owned, shared vehicle for P2P use, visit the Arizona Department of Revenue website to apply. If you have more questions, there is more detail provided on the AZDOR website or contact a Henry + Horne professional.