Starting with the 2012 Arizona income tax return, Arizona use tax is no longer reported on the tax return. During the 2012 Arizona Legislative session this requirement was repealed. This means that 2011 was the only tax year in which the use tax needed to be reported on the tax return. We previously discussed this requirement in our December 2011 article.
During the debate on repealing the reporting requirement it was clear that very little additional tax was expected to be raised. The estimate was $470,000 extra use tax collected each year. Compared to an Arizona population of 6,500,000 that equates to about 7 cents per person. This is completely out of proportion to the amount of time that each taxpayer would need to incur to report the tax on their tax return.
Another factor helping the repeal is that Amazon, one of the major online retailers not charging sales tax will start charging Arizona sales tax on Arizona purchases from February 1, 2013. A lot of the other major online retailers already charge sales tax because they have physical stores in Arizona.
Even though Arizona use tax no longer needs to be reported on the tax return it still needs to be paid to the State and also your local City. So if you buy goods online from a retailer who does not charge sales tax or buy something outside of Arizona on which no sales tax was charged you need to pay use tax.
Read our December 2011 Arizona use tax article for more details and information on reporting use tax.
Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.
Posted By Mark Smith
Mark Smith, EA is an Enrolled Agent and accountant with over 30 years tax and accounting experience. He is the owner of Cranmere Accounting and Tax Services LLC. He can be contacted on (480) 363-4808 or by email at firstname.lastname@example.org if you need assistance with any of the above.