Income from short term rentals- stays of less than 30 days- is subject to the Arizona Transaction Privilege Tax (TPT) under Arizona Revised Statutes section 42-5070 and the Model City Tax Code -444 and -447.
A TPT license must be acquired from the Department of Revenue, and can be issued on a seasonal basis as long as that option is selected on the application. This applies to property owners who plan to rent residences for the upcoming Super Bowl, and the Department notes the license should be active in the month of February with the return due in March. If the property is to be rented for additional time periods, those periods also need to be covered by the TPT license. If a property owner/ manager does not wish to continue in short- term rentals, the TPT license should be cancelled. In addition, prospective short-term landlords may also need a business license for their city, which is different from the TPT license, and is issued by the individual city rather than by the state DOR.
Business code 025 should be used to report stays shorter than 30 days for properties where owners/ operators take direct bookings in the state or county; for cities, these stays should be reported under the hotel code- 044. Some cities may impose an additional hotel tax, which should be reported using business code 144. For those rentals booked through an online lodging marketplace (OLM), the same process will be used, however all income can be deducted under code 775, as the OLM is responsible for remitting the tax. More information on OLMs can be found on the OLM Factsheet.
(“Arizona DOR Releases Short-Term Rentals TPT Guidance.” Tax News, Tax Articles and Information – Tax Notes, 10 Jan. 2023)