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What To Know About Arizona Form 5005

Posted by Brandon Keim | Jan 31, 2025 | 0 Comments

Form 5005 relates to Arizona's transaction privilege tax. Subcontractors must have this form for their records to show they aren't liable for any tax.

This exemption doesn't relate to any income a subcontractor earns on a project. 

TPT

Arizona has a transaction privilege tax (TPT). Despite being referred to as a sales tax, TPT is instead a tax on businesses that conduct businesses within the state. Businesses must have a TPT license from the Arizona Department of Revenue in order to engage in business activities.

Form 5005

Known as the Contractor's Certificate, Form 5005 relates directly to TPT. It addresses who is liable for paying the tax.

Contractors must provide this form to both the Arizona Department of Revenue and all subcontractors. The form establishes that subcontractors are exempt from taxes. 

While this form is submitted to the Department of Revenue, subcontractors should still keep their copy. This form establishes that they're exempt from any state taxes.

Subcontractors can be exempt from:

  • Prime contracting TPT
  • Liability for an amount that's equal to the retail TPT for materials involved in a project related to maintenance, repair, replacement, or alteration (MRRA)

Without Form 5005, subcontractors may find themselves responsible for TPT taxes.

Project Changes

MRRA projects aren't static, but changes to the project don't affect a subcontractor's tax liability. If a contractor has already submitted Form 5005 to all subcontractors, this means that subcontractors have already submitted all of the receipts for the job's materials. Their exemption from paying taxes doesn't change because of alterations to the project.

Contractors, not subcontractors, have six months to file the MRRA Credit Summary Workbook after changes to a project.

Sub-Subcontractor 

In situations when a subcontractor hires another subcontractor, the first subcontractor, not the contractor, is responsible for providing the new subcontractor with a Form 5005. Arizona also recommends that subcontractors include a copy of their Form 5005 from the contractor to all subcontractors.

Unlicensed Sub-subcontractors

While unlicensed subcontractors don't have to report TPT, they should still have a copy of Form 5005. When presented in conjunction with Form 5000M, they will be able to purchase materials tax-exempt.

If you need help, 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.

About the Author

Brandon Keim

A Certified Tax Law Specialist, CPA, partner at Frazer Ryan Goldberg & Arnold LLP, and former Senior IRS Trial Attorney, Brandon Keim holds an LL.M. in Taxation from Georgetown University Law Center.

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The act of visiting or communicating with Brandon A. Keim via this website or by email does not constitute an attorney-client relationship. Communications from non-clients via this website are not subject to client confidentiality or attorney-client privilege. Further, the articles, discussion, commentary, forms and sample documentation contained in this website are offered as general guidance only and are not to be relied upon as specific legal advice. For legal advice on a specific matter, please consult with an attorney who is knowledgeable and experienced in that area. Attorneys listed in this website practice only in the jurisdictions in which they are admitted. This website is governed by the Arizona Rules of Professional Conduct.

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