In Arizona, businesses are required to pay the transaction privilege tax (TPT). While commonly referred to as a sales tax, TPT is instead a tax on businesses for the privilege of conducting business in the state.

Businesses based in Arizona, including online sellers, must get a license from the Arizona Department of Revenue (ADOR). Depending on where a business is located or operates, a business may also need a business or occupational license from the city or local government.

Businesses must renew annually by January 1. This is the case even if they don't owe a renewal fee. Arizona, however, gives businesses a 31-day grace period to renew.

Renewal fees are based on the region where a business or a location is based. Fees are assessed according to jurisdiction, and when businesses have locations in multiple jurisdictions, they may have multiple renewal fees. Remote sellers and marketplace facilitators aren't required to pay renewal fees.

Businesses must renew their TPT licenses annually. If a business has multiple locations, it must renew electronically. Each license is valid for one calendar year. Businesses in their first year must also renew by January 1, regardless of how recently they obtained their license.

What Happens if Businesses Miss The January 31 TPT Renewal Deadline?

If businesses don't pay the renewal fee by January 31, they will be required to pay the renewal fee plus 50 percent of that fee.

Arizona automatically renews TPT licenses. Any automatically renewed license will be required to pay any renewal fees and penalties.

TPT Renewals for Closed Businesses

Because Arizona automatically renews TPT licenses, business owners must cancel the TPT license to avoid the renewal fee. If an owner fails to cancel their license by the renewal deadline, the license will be automatically renewed, and the owner will be required to pay any fees and penalties.

This is also the case when a business has multiple locations and only shutters some of the locations. The business needs to inform ADOR of those closures to avoid renewal fees for the closed locations.

If you have questions about TPT licenses, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.