Assigned to FICO FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
FACT SHEET FOR H.B. 2382
TPT; sourcing; validation
Purpose
Requires, by January 1, 2026, the Arizona Department of Revenue (ADOR) to establish a
certification process for third-party providers who offer sourcing services to taxpayers for
transactions involving tangible personal property and outlines how liability is determined for
sourcing errors. Directs ADOR to establish a Taxpayer Assistant Team and Taxpayer Education
Campaign.
Background
Transaction privilege tax (TPT), commonly referred to as a sales tax, is a tax on vendors for
the privilege of doing business in Arizona. A person who desires to engage or continue in business
and who receives gross proceeds of sales or gross income subject to TPT must annually apply to
ADOR for a TPT license.
Current statute requires retail sales of tangible personal property to be sourced to: 1) the seller's
business location, if the seller receives the order at a business location in Arizona; or 2) the
purchaser's location in Arizona, if the seller receives the order at a business location outside the
state of Arizona or, if there is no delivery address, to the purchaser's billing address. An order is
received when all the information necessary to accept the order has been received by or on behalf
of the seller, regardless of where the order is accepted or approved. The place of business or
residence of the purchaser does not determine where the order is received. Tangible personal
property is personal property that may be seen, weighed, measured, felt or touched or that is in
any other manner perceptible to the senses (A.R.S. ยงยง 42-5001; 42-5005; and 42-5040).
The Joint Legislative Budget Committee (JLBC) fiscal note for H.B. 2382 estimates the
prescribed certification administration, reporting requirements and program implementations
would generate additional workload for ADOR. ADOR projects a fiscal impact of $3,600,000,
however, JLBC believes H.B. 2382 could be implemented at a dollar level comparable to prior
initiatives since there are no substantive changes to tax collection processes (JLBC Fiscal Note).
Provisions
Taxpayer Assistance Team
1. Requires ADOR to establish and maintain Taxpayer Assistance Team to ensure taxpayers are
levying the correct TPT rate and sourcing the transaction to the correct jurisdictions.
2. Requires the Taxpayer Assistance Team to select a random sample of TPT licenses and
municipal privilege tax licenses to verify that the business location identified on the license
corresponds to the TPT rate and source of the transaction used by the taxpayer. FACT SHEET
H.B. 2382
Page 2
3. Directs the Taxpayer Assistance Team, upon identifying a taxpayer is not levying the correct
TPT rate or sourcing the transaction to the correct jurisdiction, to notify the taxpayer and
provide resources to assist the taxpayer in determining the correct TPT rate and sourcing
information for that taxpayer.
4. Prohibits information collected by the Taxpayer Assistance Team from being used for
enforcement purposes.
Sourcing Transactions Involving Tangible Personal Property
5. Revises the requirements for the sourcing of certain transactions involving tangible personal
property to specify that retail sales of tangible personal property must be sourced to:
a) the seller's business location, if the seller receives the order at a business location in
Arizona and the seller regularly conducts retail sales at that business location; or
b) the purchaser's delivery address in Arizona, if the seller does not receive the order at a
business location in Arizona where the seller regularly conducts retail sales.
6. Clarifies that an order is received when all the purchaser's information necessary to process,
rather than accept, the order has been received by or on behalf of the seller, regardless of from
where the order is accepted, approved or delivered.
7. Removes the specification that the purchaser's place of business or residence does not
determine where the order is received.
Third-Party Service Provider Certification
8. Requires ADOR, by January 1, 2026, to establish a process that authorizes third-party
providers who offer sourcing services to taxpayers for transactions involving tangible personal
property to obtain certification in Arizona.
9. Requires a certified third-party service provider to meet all ADOR-established requirements.
10. Allows a taxpayer to use a certified third-party service provider to assist the taxpayer in
sourcing transactions involving tangible personal property.
11. Requires the Director of ADOR to:
a) supervise and regulate all third-party providers required to obtain certification;
b) establish minimum standards for certification and a quality assurance program for
authorized third parties to ensure that a certified third-party service provider complies with
minimum standards;
c) post a list of certified third-party service providers on ADOR's website; and
d) adopt rules for certification administration and enforcement.
12. Allows the Director of ADOR to:
a) investigate and audit third-party service providers as necessary to ensure compliance; and
b) require that a certified third-party service provider or any employees or agents of the
provider be certified by ADOR to perform certain functions. FACT SHEET
H.B. 2382
Page 3
13. Allows a person to apply to ADOR to be a certified third-party service provider on a form
prescribed and furnished by the Director of ADOR and requires a certification applicant to
submit all documents and fees with the application containing:
a) the applicant's name, telephone number and address and the primary contact person;
b) verification that the applicant meets the Director-prescribed requirements; and
c) other information required by the Director of ADOR.
14. Immunizes a taxpayer that uses a certified third-party provider for sourcing transactions
involving tangible personal property from liability for failing to pay the correct amount of tax
due to an error in sourcing the transaction.
15. Deems a taxpayer liable for failing to pay the correct tax amount if the failure was due to an
error other than an error in sourcing the transaction.
16. Subjects a certified third-party service provider to liability for the amount of tax a taxpayer
failed to pay due to an error in sourcing the transaction, unless the error was due to incorrect
information the certified third-party provider received from ADOR.
Miscellaneous
17. Requires ADOR, by December 31, 2024, to conduct a Taxpayer Education Campaign to
educate and obtain feedback from remote sellers and marketplace facilitators and other TPT
license holders located in unincorporated areas on issues related to the correct use of TPT rates
and transaction sourcing methods.
18. Requires ADOR, by March 31, 2025, to submit a report on the Taxpayer Education Campaign
to the Governor, the President of the Senate and the Speaker of the House of Representatives
and provide a copy to the Secretary of State.
19. Makes technical and conforming changes.
20. Becomes effective on the general effective date.
House Action
WM 1/24/24 DPA 8-1-0-1
3
rd
Read 2/21/24 55-0-4-0-1
Prepared by Senate Research
March 14, 2024
MG/AB/cs