The Arizona Department of Revenue has issued a ruling stating that a business that operates an online marketplace and makes online sales on behalf of third-party merchants is a retailer conducting taxable sales. The ruling states that gross receipts of that marketplace business derived from sales of tangible personal property to Arizona purchasers are subject to Arizona transaction privilege tax (TPT), provided that the business already has nexus for Arizona TPT purposes. The ruling states that a taxpayer operating an online market place is a retailer making taxable sales on behalf of a third-party merchant if it does the following:
This appears to indicate that online marketplace providers that otherwise have nexus in Arizona will be deemed the seller for third party retailers that sell on its platform and that the online marketplace has the responsibility to collect and remit tax on all taxable sales. This is the first state to take this position directly and not through a legislative change. We will continue to monitor this to determine if a challenge is filed to the constitutionality of this position. (TPR 16-3, Arizona Transaction Privilege Tax Ruling, Arizona Department of Revenue, September 20, 2016) (TPR 16-3, Arizona Transaction Privilege Tax Ruling, Arizona Department of Revenue, September 20, 2016)
UPDATE: Arizona has proposed legislation, H.B. 2702, following the Wayfair decision that would implement an economic nexus threshold for remote sellers and require marketplace facilitators to collect tax on behalf of their sellers.