Transcript P-Card Summer School - University of Arizona

Arizona
Sales Tax & Use Tax
Tax Compliance
Financial Services Office
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Sales Tax Defined
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Transaction Privilege Tax: tax imposed on
vendors for the privilege of doing business in
AZ
Vendors register as a merchant in AZ and
have a AZ business license
AZ vendors usually pass the tax on to the
customers, but the vendors are ultimately
liable for the tax (file sales tax return and
remit the tax to the State)
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Sales Tax Rate
AZ State Tax:
 5.6% for most of the categories
including retail, restaurant, utilities,
communications, job printing
publication, and lease of personal
property.
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Sales Tax Rate
Pima County excise tax:
 0.5% for most of the classifications
such as retail, restaurant, utilities,
communications, job printing,
publication.
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Sales Tax Rate
Tucson city sales tax
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The University of Arizona DOES NOT charge
city sales tax to its customers but pays to
Tucson vendors if charged
Tax rate is 2% for most of the classifications,
such as retail, restaurant, job printing,
publication, lease of personal property, and
amusement
4% for utilities and telecommunication
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Sales Tax Rate: Summary
For most of the categories:
 State : 5.6%
 Pima County: 0.5%
 State & County Combined: 6.1%
 Tucson City*: 2%
Applies when the University is a purchaser
and purchase from a Tucson Vendor
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Sales Tax Rate:
Transient Lodging
Transient Lodging Classification (Hotel
Tax*)
 State: 5.5%
 Pima County 0.55%
 Tucson City: 6%
 Total in Tucson: 12.05%
*varies if the hotel is located in different
state, county and city
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Use Tax Defined
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Tax on the use, storage or consumption
of tangible personal property in AZ
AZ Purchasers are liable for the use tax
on goods purchased from an out-of-state
vendor which did not collect the use tax
(out-of-state vendor may collect use tax)
If the sales tax has been paid on the
purchase, then exempt from use tax
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Use Tax Rate
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AZ State use tax rate is generally 5.6%
Counties generally do not impose use
tax
The university is not subject to city use
tax
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Tax at University of Arizona As a
Purchaser
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The University is NOT an exempt entity for AZ sales and use
tax purpose
The University of Arizona generally pays sales tax to the
vendor or self-assesses use tax on its purchases if the vendor
does not charge sales tax/use tax
Specific exemptions may apply if in the AZ State Statutes – on
a purchase-by-purchase basis
If there is a sales tax exemption, then a corresponding use tax
exemption generally also exists
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Nontaxable/Tax-exempt Services
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Professional and personal services
Repair, maintenance and installation services (if
charges are separately stated on invoices and
records)
Warranty or service contract (if not required to
purchase with the tangible personal property,
and is charged separately on an invoice)
Delivery charges (freight or shipping) if
separately stated on the invoice
Internet access and cable services
Conference registration fees
Professional membership dues
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General Exemptions on Tangible
Personal Property
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Machinery and equipment used in research and
development
Chemicals used in research and development
Printed and other media materials (available to the
public) by UA Libraries
Food for home (human) consumption
Medically prescribed drugs, equipment or devices
Purchase for retail
Others as set forth in statutes such as ARS 42-5061
or ARS 42-5159
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Tax Exemption on Research Equipment
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Research does not include
 (1) social science
 (2) psychology
 (3) computer software development
 (4) non-technological activities or technical services
Equipment does not include
 (1) expendable materials
 (2) office equipment, furniture and supplies
 (3) hand tools
 (4) janitorial equipment
 (5) licensed motor vehicles
 (6)shops, buildings, depots
http://www.fso.arizona.edu/fso/deptman/10/1014spec.html
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Tax Exemption on
Research Equipment (Cont’d )
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Equipment should be used exclusively for
research
Dollar amount does not necessarily affect
the decision
A repair or replacement part of a taxexempt research equipment is exempt
Leases and rentals of tax-exempt research
equipment are exempt
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Exemption on Chemicals
Used in Research
Research does not include
(1) social science
(2) psychology
(3) computer software development
(4) non-technological activities or technical services
Chemicals cannot be used or consumed in activities such as
packaging, storage or transportation
It is up to the researcher who orders the item to determine
whether it is “chemical”
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Supplies and Materials Used in Research
– Generally NOT exempt
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If an item does not fit into “equipment
used in research” or “chemical used in
research,” it generally DOES NOT qualify
for tax exemption.
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Computer Hardware, Software
& Services
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Hardware: generally taxable
Custom software is not taxable
Pre-written software is taxable, regardless if it is
CD-Rom or through digital means
Computer services such as analysis, design, repair,
support engineering are not taxable
Maintenance and warranty agreement for hardware
and software: is generally not taxable if it is sold as
a separate item and the price is stated separately
Software maintenance agreement for canned
updates, modification or revisions is taxable
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Internet Purchase
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Internet purchases are generally subject to Sales
Tax or Use Tax
Some companies charge sales tax on their online
sales
Other companies do not charge sales tax leaving
the liability of use tax on the purchaser
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Apply for Tax Exemption
with the Vendor
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Vendors usually charge sales tax on tangible personal
property in absence of a Sales Tax Exemption
Certificate
The Tax Exemption Certificate should provide the
University’s Federal Tax ID (74-2652689), AZ Sales
Tax License Number (20221243), and the reason for
exemption
The Tax Exemption Certificate for a P-card purchase
must be signed by the individual at the Department
who authorizes the purchase
Tax exemption certificate is located on eForms:
http://uabis.arizona.edu/eforms/Launcher.asp?FormID=172
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Tax
Exemption
Certificate
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Tax
Exemption
Certificate
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Apply Exemption on Use Tax
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When an out-of-state vendor is registered to collect use
tax, provide the Sales Tax Exemption Certificate to
claim exemption on use tax with the vendor.
If the vendor does not charge any sales or use tax,
document the reason for the use tax exemption and keep
in file (can use Sales Tax Exemption Certificate or
memo)
Reconcilers must check the ‘service/tax exempt’ box in
PaymentNet to avoid paying Use Tax
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Tax at University of Arizona As
a Seller
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Department’s responsibility (1) identify
the taxable sales, collecting the sales and
tax revenues and depositing the revenues
to the University accounts; (2) maintain
detailed records of sales activities.
FSO’s responsibility: prepare Sales Tax
return and remit the tax receipts to the
State of Arizona
Common Tax Exemptions on
Sales
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Professional or Personal Services
Sales to vendors for resale
Freight or shipping if separately stated on the invoice
Sales to a non-resident for use outside Arizona when the retail
item is shipped or delivered the outside Arizona.
Textbooks required for course work sold by bookstore
Sales or renting to nonprofit or state-operated hospitals and
healthcare facilities (must have an Exemption Letter issued by AZ
department of revenue)
A certain food sales, including vending machine food, student meal
tickets and patient food
Others as set forth in ARS 42-5061 or ARS 42-5159
Special Case: Retail Sales to Out-of-State
Customers
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If an order is called in by an out-of-state
purchase and delivered directly to the out-ofstate address, the sales are tax-exempt: must
maintain the proper shipping documentation
If the out-of-state customer picks up the
merchandise in AZ, sales are taxable unless the
purchaser has proof of out-of-state residence and
the merchandise is shipped out of State for use
out of State. The department must maintain
appropriate exemption certificate provided by
the purchaser.
Publications
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If the item (e.g. newspapers, magazines,
journals) is published in AZ, the publisher is
liable for sales tax even the customer subscribe
from out-of-state
Books are under retail category so sales tax is
exempt on out-of-state sales
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Special Case:
Sales to Federal Government
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Retail sales are taxable at one-half of the
regular tax rate (3.05%).
Exempt on products sold directly to the
US government as a manufacturer,
modifier, assembler or repairer of such
products
Resources:
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www.fso.arizona.edu/tax-services
 Arizona Sales and Use Tax
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Contact Information
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For assistance to determine the taxability
of a purchase/sales:
FSO-Tax Compliance: 621-1957
For assistance to record the purchase, sales
and related tax; correction of use tax:
FSO-Financial Management: 621-6748
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Questions?
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