Arizona's transaction privilege tax (TPT) differs from traditional sales tax. It's a direct tax on businesses for the privilege of doing business in Arizona. Businesses can pass the tax on to consumers. With the rise in online marketplaces, the question is what happens when a business isn't physically based in Arizona. 

In 2018, the U.S. Supreme Court ruled that states may require out-of-state businesses to collect taxes on sales from in-state transactions. Whether an online business needs to collect tax depends on economic and transactional thresholds established by the state. 

As of October 2019, Arizona requires remote sellers to collect and remit TPT when they reach certain transaction thresholds. This law covers both remote sellers and marketplace facilitators.  

Marketplace Facilitators 

Arizona defines a marketplace as a physical or electronic place, platform, or forum. This can be a store, website, catalog, or software application that offers items for sale.  

A facilitator is an organization or individual who creates a sales platform for sellers. Amazon is perhaps the largest example of a marketplace facilitator. 

Thresholds 

Not all remote sellers or marketplace facilitators have to collect and remit TPT. Arizona establishes thresholds, or minimums, that sellers and facilitators must meet before they're required to pay TPT. 

As of 2024, the state has different threshold amounts for remote sellers and marketplace facilitators. Arizona refers to this as the economic nexus – namely, that the connection between the seller or facilitator and the state is significant enough to establish a relationship even without a physical presence in the state. 

Sellers and facilitators meet this economic nexus when they reach the threshold amount either during the previous calendar year or in the current year. As of 2024, these amounts are: