The use tax applies even to purchases made personally by consumers.
AFN file photo

State revenue officials are hoping a new tax form and a public relations campaign convince more Arizonans to send them money after they buy items from out of state, whether online or on vacation.

The new fill-in-the-blanks form created by the Department of Revenue lets shoppers put in how much they spent and then compute what they owe the state by multiplying that by 5.6 percent. Paying the applicable city sales tax requires a few more steps.

But the bottom line is a belief that the state can get more money from its residents.

Anyone who has purchased something at an Arizona store knows the retailer adds on all the appropriate state and local taxes. And even online sales from companies that have a physical presence in the state – such as Walmart, Target and even Amazon – are supposed to include what is formally known as Arizona’s “transaction privilege tax.”

Shoppers who go online – or travel elsewhere – to buy everything from clothing to furniture and electronics are legally required to compute what they would have paid had they purchased the items in Arizona and send that off to the state every month.

How many do?

Department spokesman Ed Greenberg said Arizona collected $300 million last year in use tax. But more than 99 percent of that came from businesses that not only have a more formal process of reporting but also are subject to audits.

He has no figures for how many individuals are complying with the law. More to the point, Greenberg said, he has no way of knowing how many Arizonans are not.

But the state is proceeding with the presumption that there are tax dollars out there from individual shoppers that are due the state.

“The intent of the form is to improve customer service for Arizonans using the use tax payment program,” he said, both making it easier for consumers who want to comply with the law and for Department of Revenue officials to process.

Greenberg said it’s not just about the state generating more dollars.

“The use tax was instituted to protect Arizona sellers who otherwise would be at a competitive disadvantage when it comes to out-of-state sellers,” he said.

Consider a $300 camera.

If purchased in Arizona, the state tax alone would add $16.80 to the bill. And that doesn't count local taxes which, at a rate of 2 percent, can add another $6 to the total price.

The use tax applies even to purchases made personally by consumers.

So, someone who purchased a wind chime while vacationing in Oregon, where there is no sales tax, also would be required to pay the levy on returning home.

And to complicate matters, if the purchase is made in a state with a lower tax rate than Arizona, the Arizona resident would owe the balance plus the local tax.

There’s no minimum purchase which does not count. So, technically speaking, that $5 “We Visited Montana” mug triggers a mandate to send 28 cents to the state.

“It all circles back to the reason for the use tax being instituted,” Greenberg said. “That was to level the playing field as much as possible ... and protect Arizona sellers so they’re not at a competitive disadvantage.”

Greenberg said his agency is operating under the presumption that Arizonans are not knowingly and purposely shorting the state.

“The Department of Revenue recognizes consumers who may not even realize they could be required to pay use tax on many of their out-of-state purchases,” he said. “We’re hoping the consumers will become more aware that this voucher program is in place and be more aware of the use tax payment program.”

And in case anyone was wondering, there actually is a penalty for those who do not comply – assuming they’re caught – that's 4.5 percent of the tax.

The form and instructions are at: https://www.azdor.gov/Portals/0/ADOR-forms/11300/11349_f.pdf

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