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City Tax in Arizona: Get with the Program… and the Non-Program

Just as a state can create their own alcoholic beverage regulations, so can they implement their own, distinct, taxing regulations. Arizona has recently clarified their sales tax requirements, applicable to wineries licensed to sell offsite sales of wine directly to Arizona consumers.

According to the Arizona Department of Revenue, sales tax (called, “transaction privilege or use” tax) must be remitted on a local basis. This is the way Arizona tax has been handled since Arizona first became available to direct shippers in September of 2006; tax rates are based on the destination of the order. Most cities in Arizona have the State Department of Revenue collect their taxes for them. However, there are thirteen cities within Arizona that collect their own taxes. These cities are commonly referred to as “Non-Program” Cities. Non-Program Cities collect their own taxes independently from the State. This means direct wine shippers are required to register with all of the thirteen Non-Program cities that they ship to, individually, and remit separate sales tax returns to each of the cites they are registered with.

What does this mean to you? If you are licensed to sell wine directly to consumers in Arizona, you must contact each of the Non-Program cities directly in order to register to collect and remit sales tax with each Non-Program city (this is in addition to becoming licensed to pay County and “Program-City” tax with the state of Arizona). Only wineries that produce less than 20,000 gallons per year can currently become licensed to ship wine directly to consumers in Arizona via the Out-of-State Domestic Farm Winery permit. Wineries that produce more than 20,000 gallons and wineries without a permit can ship onsite sales to Arizona without a permit. In this scenario, wineries are not required to remit sales tax.

The thirteen Non-Program cities are: Apache Junction, Avondale, Chandler, Flagstaff, Glendale, Mesa, Nogales, Peoria, Phoenix, Prescott, Scottsdale, Tempe, and Tucson. A sales tax license usually costs around $50 per city annually, in addition to an application fee, which can range from $0 to $25.

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