When the new Phoenix Premium Outlets opened last week it was flooded with eager shoppers, but many of those shoppers were confused when they saw the taxes applied to their purchases.
Some stores were adding 13.3 percent taxes, others were at 8 percent. Some, like Tommy Bahama’s, were charging 13 percent one day and 8.8 percent the next. The problem was confusion over federal tax law and how it works on tribal land. As more customers realized the mistake it has now been corrected. The correct transaction privilege tax applied to purchases at the Phoenix Premium Outlets for non-tribal members is 8.8 percent and 6 percent for tribal members.
“The combined taxes applicable to retail sales at the Phoenix Premium Outlets are comparable to the combined tax rates imposed in neighboring Valley cities,” said Zuzette Kisto, director of communications for the Gila River Indian Community (GRIC).
Under federal law, state governments may impose sales tax on retail sales within Indian reservations if the transaction involves a non-tribal member merchant, like the outlets, and non-tribal member purchaser, unless the tax is otherwise preempted by federal law, Kisto explained. Because the merchants at the outlets are non-tribal, any retail sale to a non-tribal member is subject to the state transaction privilege tax. That tax is preempted by federal law for tribal members because only GRIC has authority to tax sales to tribal members within the reservation.
“The Gila River Indian Community, itself, also taxes all retail sales at the Phoenix Premium Outlets regardless of whether the purchaser is a tribal member of the community or a non-tribal member,” Kisto said. “However, the city of Phoenix and city of Chandler transaction privilege and other taxes do not apply to retail sales at Phoenix Premium Outlets since they have no jurisdiction to tax activities that occur within the reservation.”
Taxes non-tribal members will see at the Phoenix Premium Outlets include Arizona and Maricopa county’s transaction privilege tax, which is approximately 7.3 percent and the Gila River Indian Community’s transaction privilege tax, which is 1.5 percent. Total taxes for non-tribal members are 8.8 percent. GRIC members must show tribal ID and will be charged a 6 percent transaction privilege tax.
The Gila River Indian Community will generate revenue from the outlets through sales tax and by the rent Phoenix Premium Outlets pays as a tenant on their land.
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