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Arizona Business: Sales Tax Nexus Considerations

author photo of Gabrielle Luoma

Are you an online business with multi-state activity? If so, there’s one word that should be flashing in your mind day and night - and that’s NEXUS. The word translates into “physical presence” - or the degree of connection between your company and a jurisdiction. And it is that degree of connection which determines if you need to register in a state – and then comply with its sales and use tax requirements.

In the past, that connection was often quite apparent - like having an employee or a brick and mortar location. But these days that connection can be far less obvious. For example, simply working with a drop-shipper in a jurisdiction or even attending a trade show, can trigger nexus in some jurisdictions.

If you are based in Arizona – or have any activity in the state – it is important that you carefully review (and carefully consider) current nexus rules. Arizona nexus requirements, per the Arizona Department of Revenue, Pub 623 (June 2017), state that a business owner has nexus if:

• Employee(s) present in the state conducting business on behalf of the company for more than two days per year

• Maintenance of an office or place of business in Arizona

• Delivery of merchandise into Arizona on vehicles owned or leased by the taxpayer.

• Ownership or lease of real or personal property in Arizona.

• Independent contractors or other non-employee representatives present in Arizona for more than two days per year for the purpose of establishing and maintaining a market for the taxpayer.

As you review the Arizona nexus requirements (or those of any other state), it becomes very apparent that nexus is a very confusing issue. It can be a tricky thing even when you are looking at one single state – let alone several – given that requirements can (and will) differ in each. It is imperative that you do the necessary research to ensure that you understand all nexus requirements in all states/jurisdictions where you have any sort of business activity.

If you require assistance in this area - and/or are interested in having a nexus survey prepared (which reviews your activity in each state and helps to make a nexus determination) please contact us to discuss.

Questions or Consultation Requests?

Do you have questions about Arizona transaction privilege tax (and/or multi-state sales tax) - or does your business need assistance with other tax issues? Gabrielle welcomes inquiries from users.

Please use the "Request a Consultation" link on the GMLCPA FIRM PROFILE page to submit your question or consultation request.

Other recent “Arizona (AZ)” posts by Gabrielle Luoma, CPA, CGMA:

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