Beyond financial numbers, one of the confusing parts of navigating both the federal and Arizona tax systems is the abundance of acronyms and numbers. Two examples of these acronyms are TPTs and EIN.

Many businesses and organizations will have both. They each serve an important but different purpose.

What is a TPT?

In Arizona, the transaction privilege tax (TPT) is a tax on businesses for the privilege of doing business in the Grand Canyon State. It is sometimes incorrectly referred to as a sales tax.

Businesses must acquire a TPT license from the Arizona Department of Revenue (ADOR) when they sell goods or engage in certain types of services. This is in addition to any business or occupational licenses the state, counties, or cities may require.

For businesses with multiple locations in Arizona, they can decide between having a single TPT license or a license for each location. Part of this decision may come down to local tax rates. While the ADOR collects all taxes, local tax rates can vary.

What is an EIN?

An Employee Identification Number (EIN) is a federal tax ID. Businesses, individuals, tax-exempt organizations, and entities, such as LLCs and estates, can all apply for an EIN.

Businesses should only have one EIN. The exception is if someone buys a previously existing business. In this situation, the new owner should apply for a new EIN.

One increasingly common use of EINs is for workers who freelance. They can provide clients with their EIN instead of their social security number.

Before an organization can apply for an EIN, they must first be legally recognized in their state of business. In Arizona, this means that a business must first register with the ADOR and get a TPT license. Once a business has a TPT license and satisfies other requirements under Arizona law, it can apply for an EIN.

Get Help From an Experienced Arizona TPT Attorney

If you have questions about TPTs, EINs, or other tax acronyms, 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.