Assigned to FICO AS PASSED BY COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
REVISED
AMENDED
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.
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. §§ 42-5001; 42-5005; and 42-5040).
The Joint Legislative Budget Committee (JLBC) issued a fiscal note for H.B. 2382, as
amended by the Senate Finance and Commerce Committee, which estimated that the third-party
service provider certification process would generate additional workload and costs for ADOR.
JLBC assumes that ADOR will use the certification application fees to cover the additional costs
(JLBC Fiscal Note).
Provisions
1. 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.
2. Requires a certified third-party service provider to meet all ADOR-established requirements. FACT SHEET – Amended/Revised
H.B. 2382
Page 2
3. Allows a taxpayer to use a certified third-party service provider to assist the taxpayer in
sourcing transactions involving tangible personal property.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Removes the requirement for ADOR to establish a Taxpayer Assistance Team and Taxpayer
Education Campaign.
2. Removes the modification of the sourcing of retail sales of tangible personal property.
House Action Senate Action
WM 1/24/24 DPA 8-1-0-1 FICO 3/18/24 DPA 4-0-3
3
rd
Read 2/21/24 55-0-4-0-1
FACT SHEET – Amended/Revised
H.B. 2382
Page 3
Revisions
• Updates the fiscal impact statement.
Prepared by Senate Research
March 26, 2024
MG/AB/cs