Transaction Priviledge Tax Arizona... Confused.

 
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Old 03-22-2009, 07:23 PM   #1
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Transaction Priviledge Tax Arizona... Confused.


I hope this is the right place to post this....

Im applying for my contractor license in arizona and on the application, and in the contractors guide it says all prime contractors must have a TPT license to do business in the state of arizona. Its also refered to as a sales tax which is passed on through the customers. i guess every month im supposed to file a slip for TPT and return it to the department of revenue even if i dont make anything at all. ok... this is so confusing i hope someone can help. i have a couple questions.

1. what if im a contractor and i work for a company instead of owning my own. do i still have to be accountable for this tax? i guess most contractors are 1099 so im assuming yes... but im not sure.

2. is the TPT a replacement for any state taxes i normally pay? how does this all work with my az tax filing?

3. if u live in AZ, how do u deal with this TPT issue? please share your thoughts and stories.

4. there are a list of cities in the valley that say they dont use the TPT system.... phoenix being one of them.... this is SO CONFUSING. how am i supposed to keep all of this straight?

5. Im just running a handyman business with just me. i dont really intend on making a ton maybe 20 grand a year to start. any advise on how to handle this TPT issue?

thanks for any help! -Dustin in Phoenix-
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Old 03-22-2009, 07:58 PM   #2
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Re: Transaction Priviledge Tax Arizona... Confused.


I'm in Va. and never heard of it. Hope this helps though. http://www.azdor.gov/TpT/tptrates/indextpt.asp

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Old 03-22-2009, 09:01 PM   #3
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Re: Transaction Priviledge Tax Arizona... Confused.


First off, from someone that used to live in AZ - hire an accountant that knows construction quickly. There are so many quirks & tweaks to their system it isn't funny. Basically you make a sale - you add tax to it. Materials purchased for resale / use are GENERALLY not taxed. Don't forget almost all the cities have the same requirements & the bond you have to pay.

I would also recommend not trying to skirt the tax issues - the State added in a new system where all building permits & the value listed goes to the Dept of Revenue. If you advertise anywhere & are not licensed, they got you (New Times, the Repugnant, Web, etc...) Trust me, they want their money

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Old 03-22-2009, 09:24 PM   #4
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Re: Transaction Priviledge Tax Arizona... Confused.


One other quick item - check out the State's web site & even the cities in question. They have some real top notch sites when it comes to licensing, requirements, permits, etc... I would kill to have just half the info available here in this state. As I recall, there are a few booklets available specifically for contractors & the Dept of Revenue has a Taxpayer Information & Assistance group to help answer questions.
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Old 03-23-2009, 06:05 AM   #5
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Re: Transaction Priviledge Tax Arizona... Confused.


Quote:
Originally Posted by mechanix View Post
1. what if im a contractor and i work for a company instead of owning my own. do i still have to be accountable for this tax? i guess most contractors are 1099 so im assuming yes... but im not sure.

2. is the TPT a replacement for any state taxes i normally pay? how does this all work with my az tax filing?

3. if u live in AZ, how do u deal with this TPT issue? please share your thoughts and stories.

4. there are a list of cities in the valley that say they dont use the TPT system.... phoenix being one of them.... this is SO CONFUSING. how am i supposed to keep all of this straight?

5. Im just running a handyman business with just me. i dont really intend on making a ton maybe 20 grand a year to start. any advise on how to handle this TPT issue?

thanks for any help! -Dustin in Phoenix-
I'm going by what WA state was like. Very similar it sounds like.

1. yes. if you're 1099 and they pay you without taking out taxes, you pay sales tax. Your invoice should say "4 hours x $30/hr = $120 + 5% sales tax = $126. It's just like going to a store. The people you work for already know you have to charge sales tax. Do not make the mistake of taking it out of your pocket.

2. it's a sales tax, not income tax. your income in the example above is $120, not $126. Separate filing for both. You may also have a B&O tax to pay and that DOES come out of your pocket.

4. Take a deep breath and head over to the tax dept. pick up the paperwork and educate yourself. WA state was similar. Most towns were different. Seattle you had to pay extra for the baseball stadium or something rather. Pick it up quick or you're going to get bit in the rear.

5. Pay it. Charge the customer. That's the way it goes. Don't make too much of it. It's business.
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Old 03-23-2009, 06:11 AM   #6
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Re: Transaction Priviledge Tax Arizona... Confused.


Oklahoma has proposed a "service" tax for years....so they can tax labor or services of professionals, etc. As we see government budgets come up short, we may all see variations of this stuff....and ultimately, the consumer will pay.
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Old 03-23-2009, 11:35 AM   #7
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Re: Transaction Priviledge Tax Arizona... Confused.


thanks guys for the advise I got more help then i thought i would so fast! i really appreciate it.

ya i think im going to head to the tax office instead of trying to figure it out all alone. since there are like 10 cities in the valley that makes the phoenix area, it gets really messed up trying to figure out what i need to do when i work in whatever town. thats the biggest challenge i see.

another challenge is when i have small jobs why should I say anything? do state officials audit and compare things with your federal taxes? i mean, ive never heard of state sales tax audits on the small guys... but i could be wrong. it is good advise not to skirt the issue.... this one just seems like im being punished for having my license. may as well be a handyman without having this licence. but i already took the testing required and it seems maybe ill get more business being licenced and bonded.... i dont know i guess ill just do it and see what happens.
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Old 03-23-2009, 01:37 PM   #8
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Re: Transaction Priviledge Tax Arizona... Confused.


Mechanix - you might want to rethink that third paragraph & delete it

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