Tuesday, January 6, 2015
Arizona Taxation Changes for Restoration
The state of Arizona has one of the most convoluted taxation schemes in the country, however they are attempting to make it less onerous. In January 2015 and 2016 changes to licensing and taxation take effect starting to untangle the web of confusion.
If you visit this link it will explain the changes to both taxation and licensing:
Tax and Licensing changes
I have also attached a list of Q&A on taxation scenarios at this link:
Q&A on AZ taxation for contracting
In short it appears as though Restoration will fall under no license and tax on material only. It will be considered Maintenance, Repair, Replacement, Alteration.
refinishing hardwood floors.
“Repair” is an activity that returns real property to a usable state from a partial or total
state of inoperability or non-functionality. Examples of repairs include: recharging partially
“Replacement” is the act of replacing something that exists with something else, including
The upgrading of existing systems. Examples of replacement include replacing an HVAC
system that is no longer functioning at optimum levels with a new, more efficient unit or
replacing a deteriorated shingled roof with a new one.
enlarging a patio, sandblasting a building’s façade, and tamping railroad ties.
Materials purchased by a contractor for use in maintenance, repair, replacement, or
alteration activities will generally be subject to retail TPT at the time of purchase, unless
such purchases are otherwise exempt from retail TPT.
If you visit this link it will explain the changes to both taxation and licensing:
Tax and Licensing changes
I have also attached a list of Q&A on taxation scenarios at this link:
Q&A on AZ taxation for contracting
In short it appears as though Restoration will fall under no license and tax on material only. It will be considered Maintenance, Repair, Replacement, Alteration.
“Maintenance” is the upkeep of property or equipment. Examples of maintenance include:
an annual system checkup that includes topping off any fluids, re-staining a wood deck, andrefinishing hardwood floors.
“Repair” is an activity that returns real property to a usable state from a partial or total
state of inoperability or non-functionality. Examples of repairs include: recharging partially
or totally nonfunctional air‐conditioning units with refrigerant, clearing partially or
completely blocked pipes of debris, readjusting satellite dishes to restore reception, and
replacing worn washers in leaky or totally inoperable faucets.“Replacement” is the act of replacing something that exists with something else, including
The upgrading of existing systems. Examples of replacement include replacing an HVAC
system that is no longer functioning at optimum levels with a new, more efficient unit or
replacing a deteriorated shingled roof with a new one.
“Alteration” is an activity that causes a direct physical change to real property without
causing a change in the identity of the real property. Examples of alterations include:enlarging a patio, sandblasting a building’s façade, and tamping railroad ties.
Materials purchased by a contractor for use in maintenance, repair, replacement, or
alteration activities will generally be subject to retail TPT at the time of purchase, unless
such purchases are otherwise exempt from retail TPT.
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About Author
- Len Paradise Sr.
- Retired Asst. Fire Chief, former developer, business owner, consultant.