/ Modified oct 3, 2019 9:34 a.m.

Out-of-state retailers now have to pay Arizona tax

Arizona joins over 40 states in taxing e-commerce as the transaction privilege tax takes effect.

tax return

Online shopping could get more expensive in Arizona.

Businesses without a physical presence in the state will now have to pay taxes on products they sell here. The change is part of a tax bill signed by Gov. Doug Ducey in May that takes effect this month.

Ed Greenberg, spokesman for the Arizona Department of Revenue, said the transaction privilege tax is Arizona’s version of the sales tax. But it’s the responsibility of the seller to pay the tax, not the buyer.

"A seller can choose to pass on that tax to their customers. It’s not required. It’s a decision by that business," he said.

Only businesses that earned more than $200,000 in sales to Arizona this year qualify for the tax. That threshold will lower to $150,000 next year and $100,000 for following years. Arizona is one of over 40 states that changed their tax laws after a 2018 Supreme Court decision allowed states to tax out-of-state companies.

A spokesperson for Amazon said the company has begun collecting the transaction privilege tax for third-party sellers on its site.

An analysis by the state Legislature estimates the tax could bring in $85 million annually. However, when paired with tax cuts also passed in May, the state will collect less revenue compared to past years.

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