Arizona Sales Tax Deductions

Deduction Code Changes

As of January 1, 2015, Arizona broadened the list of state, county, and city deduction codes listed on its TPT-1 in an effort for taxpayers to properly claim deductions on the return.  The TPT-1 is the Transaction Privilege (Sales), Use, and Severance Tax Return.

City codes have changed and are now standard between all cities and match state deduction codes in most cases.

All deductions taken on the return must have a deduction code from the choices available.  Deduction codes 888 and 999 are no longer permissible.  If a taxpayer uses these former codes, they will be disallowed; penalties and interest may be incurred.  Deductions with no deduction code are not allowed; penalties and interest may be incurred.

Taxpayers should have received a letter from Arizona indicating these changes.  Arizona Department of Revenue’s website was updated March 23, 2015 to reflect these revised deduction codes changes and business code applicability.

 

New deduction codes added:

584 – TPP sold to Form 5009L subcontractor for incorporation into prime contracting project

712 – property sold to contractor for MRRA project on an Indian Reservation

715 – transport by motor carriers or light motor vehicles, fees paid to MVD

744 – veterans’ organizations: sales of food and drink on premises

 

Business code applicability changed:

548 – US Government: retail sales allowed 50% TPT income deduction 100% use tax deduction

570 – business activity for enrolled Native American or tribal entity that occurs on reservation

584 – TPP sold to Form 5009L subcontractor for incorporating into prime contracting project

 

Certain codes no longer valid:

888 – other city deductions (used when specific deduction is not listed)

999 – other state deductions (used when specific deduction is not listed)

 

Where to Find Deduction Codes:

The revised standard list revised March 23, 2015, is located on Arizona Department of Revenue’s website on both the forms page and the TPT Simplification page.  For additional information on business code applicability and standard codes, see www.azdor.gov/TPTSimplification/DeductionCodes.aspx and www.azdor.gov/Forms/TransactionPrivilegeTax.aspx.

Tips for the Taxpayer

Use the correct state, county, and city deduction codes ensuring business code applicability for those codes.  Avoid penalties and interest by ensuring all deductions have a valid code.

For More Information

If you are interested in learning more about this topic or other tax topics, please visit our Tax Publications under News and Events at www.allynintl.com.

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Allyn files state and local sales and use tax returns in every US taxing jurisdiction.  We can manage your tax compliance, create a solid tax process, and provide audit defense for your company.

Contact us and we can provide a customized cost-effective solution to meet your company’s needs.  For further information on Allyn Tax services, please contact: tax@allynintl.com.

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