Arizona

Contact Person/Dept.: Tax Research & Analysis Section
Agency: Arizona Dept. of Revenue
Tel. No.: (602) 716-6803
Fax No.: (602) 716-7995
E-mail: www.azdor.gov

1. If your State exempts fundraising sales by certain groups from sales or use taxes, please indicate which of the following are exempt in your State.

Public Schools (K-12) - Exempt

Private Schools (K-12)

School Groups (e.g., clubs, bands, teams) -Exempt

PTAs

PTOs

Other parent groups(please identify)

Church Groups

Youth Sports League

501 (c)(3) organizations - Exempt

501 (c)(6) organizations

Other (specify:__________________)

1a Are local sales and use taxes in your State applied to these groups in the same manner as State sales and use taxes are applied to these groups?

Not known

1b Please set forth any comments including a list of groups not listed above whose fundraising activities are exempt from sales and use taxation in your State.

Arizona's transaction privilege (sales) tax is a tax on the privilege of conducting business in the state. It is a tax on the seller, not on the purchaser. Every person engaging in a taxable activity is subject to tax. The statutory definition of "person" specifically excludes a school district. [A.R.S. § 42-5001(8)] Therefore, all sales by a public school are excluded from taxation.

The tax does not apply to sales by any nonprofit organization organized and operated exclusively for charitable purposes and recognized by the United States Internal Revenue Service as such a nonprofit organization for charitable purposes. [A.R.S. § 42-5061(A)(4)] Therefore, sales made by an organization that is designated as a 501(c)(3) organization by the IRS are not subject to tax.

2. If your State exempts fundraising sales of certain products from sales and use tax, please indicate which of the following products are exempt.

2a Are local sales and use taxes in your State applied to these products in the same manner as State sales and use taxes are applied to these products?

No

2b Please set forth any comments including a list of products not listed above that are exempt from sales and use taxation for fundraising purposes in your State.

In addition to the exemptions discussed under question 1b for sales by certain organizations, an exemption is provided for sales of food for home consumption.
[A.R.S. § 42-5061(A)(15), 42-5101,42-5102 and A.A.C. R15-5-1860]

Generally, when an organization sells magazine subscriptions as a fundraising activity, the organization is acting as an agent of the magazine publisher. The exemption provided for a school district or nonprofit organization does not flow through to the magazine publisher.

 

3. If some or all fundraising groups or products qualify for exemption from sales and use tax in your State, please indicate any exceptions to or limitations on such exemptions. (Check all that apply and specify the limitation.)

No limitations

 

4. If some or all fundraising groups qualify for exemption from sales and use tax in your State, please set forth the procedure through which a group may establish its qualification for the exemption. Attach relevant statutes, regulations, procedures, etc.

The organization should maintain a copy of the letter of qualification received from the I.R.S. in its records.

 

5. If some or all fundraising products qualify for exemption from sales and use tax in your State, please set forth the procedure for establishing a product’s qualification for the exemption. Attach relevant statutes, regulations, procedures, etc.

Sales of "food" for home consumption are not subject to tax. "Tax exempt foods" are generally those items of food intended for home consumption which, if purchased from an eligible grocery business, would be eligible to be purchased with food coupons issued by the United States Department of Agriculture. [A.A.C. R15-5-1860] The USDA makes determinations as to whether a product qualifies for purchase with food stamps.

 

6. In instances where a fundraising product or group is not exempt from sales or use tax, please indicate who bears the responsibility for collecting and remitting the tax.

The "seller" bears the burden.

If the fundraising group is making sales on their own behalf, they are responsible for payment of the tax. If the fundraising group is making sales as an agent of the company furnishing the goods, the company furnishing the goods is responsible for payment of the tax. The facts and circumstances of each situation will determine who the seller/taxpayer is.

 

7. In instances where a fundraising product or group is not exempt from sales or use tax, what is the basis for calculating the sales/use tax?

Price paid by consumer to fundraising group. The tax base is the amount paid by the consumer, regardless of whether it is the fundraising group or the distributor that is responsible for payment of the tax to the department.

 

8. Provide any additional information regarding the sales and use tax treatment of fundraising transactions and/or groups in your State. Also set forth any statements, disclosures, disclaimers, etc., to be provided as part of the clearinghouse regarding your state’s practices and procedures. Attach additional sheets if necessary.

The preceding information is provided for general guidance only and is not intended to address a taxpayer's specific circumstance. Specific questions should be directed to the department.