Short-Term Rentals Targeted with Recent AZ “Sales Tax” Legislation

Short-Term Rentals Targeted with Recent AZ “Sales Tax” Legislation 

In April of 2018, Arizona passed Senate Bill 1382, effective January 1, 2019, which included changes to the Transaction Privilege Tax (TPT) licensing and reporting requirements for Online Lodging Marketplaces (OLMs). An OLM is any digital platform that provides, at a cost, an unaffiliated third party with a platform to rent lodging accommodations (such as Airbnb, VRBO, and HomeAway). As a result of the Bill, all OLMs are now required to register with the Arizona Department of Revenue (ADOR) and remit TPT for all taxing jurisdictions. However, property owners that book only through an OLM are still obligated to obtain a TPT license and file a tax return showing the gross receipts received from the OLM with a deduction equal to that amount.
 
In May of 2019, Arizona passed House Bill 2672, effective August 27, 2019, which imposed a requirement that property owners list their TPT license number on each advertisement for each lodging accommodation, including on any OLM postings. ADOR recommends that the TPT License number be included in the description of the property on all advertisements. If the property is advertised through an OLM, the owner must be able to substantiate that they gave the OLM their current TPT license number.
 
The ADOR will impose penalties for not obtaining a TPT license or displaying that license on an advertisement. A total of $250 will be assessed for a first offense and $1,000 for any subsequent offense. Owners will also be assessed additional penalties for failure to comply with city or county ordinances where there is a final adjudication of an ordinance violation. Those penalties range from $500 to half of the gross monthly revenues of the accommodation where the violation occurred or $1,500, whichever is greater.