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When Does a Business Need a TPT License?

Posted by Brandon Keim | Oct 18, 2024 | 0 Comments

While often referred to as a sales tax, the transaction privilege tax (TPT) is actually a tax on businesses instead of customers. The state describes it as a tax on businesses for the privilege of doing business. Businesses subject to TPT must be licensed.

In general, businesses that sell a product or provide services must obtain a TPT license. This includes home-based businesses and special, limited events. As of 2024, the license is $12, regardless of the size of the business or how long it will do business in Arizona.

Multiple TPTs

In addition to a state-level TPT license, businesses may also need a license from any and all cities in which they do business. Whether they need multiple state-level TPT licenses depends on several factors.

For businesses with multiple locations and the same owner, they can decide whether to license each location separately or consolidate them under one license. When each location has its own TPT license, it files and reports on its own. For consolidated returns, owners file a single tax return.

If a business has several branches or divisions, how many TPT licenses it needs depends on the organization. If all of the sub-businesses operate under the same LLC and Employment Identification Number (EIN), the business can have a single TPT license. 

How to Register a TPT

Businesses must register for a TPT license as soon as they begin doing business in Arizona. They must also register with both the Department of Revenue and the Department of Economic Security and submit From JT-1, Arizona Joint Tax Application.

Businesses must have a Federal Employer Identification Number (FEIN) to apply for a TPT License. Once they apply, they will receive separate communications from the Department of Revenue and the Department of Economic Security.

Unable to Make Payments

If a business is subjected to an audit or is unable to meet its required TPT payments, businesses can work with the Arizona Department of Revenue to resolve the issue. While a business may still have to pay interest or fine, communicating with the state is always a better option than radio silence.

If you need help with TPT licenses or are having trouble meeting tax payments, 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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