Short Term Regulations in Phoenix, AZ 2018-05-24T11:22:59+00:00

Short-Term Rental Regulations in Phoenix, AZ

Short-Term Rental Regulations in Phoenix, AZ

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Phoenix is the capital and most populous city of the U.S. state of Arizona. With 1,615,017 people (as of 2016), Phoenix is the fifth most populous city nationwide, the most populous state capital in the United States, and the only state capital with a population of more than one million residents.Phoenix is the anchor of the Phoenix metropolitan area, also known as the Valley of the Sun, which in turn is a part of the Salt River Valley. The metropolitan area is the 12th largest by population in the United States, with approximately 4.73 million people as of 2017.

CITY OF PHOENIX
TRANSACTION PRIVILEGE (SALES) AND USE TAX

WHO MUST PAY THE TAX?

Short Term Regulations in Phoenix, AZ – You must be licensed and pay tax under the Hotel/Motel classification if you are in the business of furnishing lodging to a person for less than thirty consecutive days (transient). Examples of taxable facilities include, but are not limited, to the following:

• public and private hotels
• motels
• inns
• hostels

• bed & breakfasts
• trailer space rentals
• apartment houses
• rooming houses

WHAT IS THE CITY TAX RATE?

The City’s tax rate for Hotel/Motel activity is 5.3% (non-transient hotel lodging tax rate is 2.3% and transient hotel lodging tax rate is 3%); the combined rate (including State & County taxes) is 12.57%. There is no State or County tax on non-transient lodging.

WHEN IS TAX DUE?

Your tax return and payment are due on the 20th day of the month following the reporting period.

WHAT IS TAXABLE?

Income subject to tax under the Hotel/Motel classification, rules defining a transient, other income received and purchases by a hotel are discussed in detail in the Arizona Department of Revenue Transaction Privilege Tax Ruling (TPR) 06-01 and the Matrix attached to the TPR effective January 1, 2007.

The Guideline identifies the primary differences between the application of tax by the State and by cities or towns and refers to Model Options and Local Options to the Model City Tax Code that may be adopted by each city or town.

MODEL OPTIONS AND LOCAL OPTIONS IN PHOENIX (as shown in the Matrix) THAT AFFECT HOTELS:
• Model Option 12 – exempting motor vehicle transportation

DEDUCTIONS THAT CAN BE TAKEN (when included in the gross income on the front of your tax return form):
1. State, County and City tax collected whether charged separately or included in the sales price
2. bad debts on which tax was paid on a previous City return
3. discounts, refunds, or returns

Hotels & Motels (cont.) City of Phoenix

4. Pass-through of taxable income: A deduction for income billed to a guest for the amount paid to another person whose business activity is taxable. If the guest billing and the amount billed are equal, no tax is due and any markup is taxable.
5. Otherwise non-taxable income (open to the public): A deduction for transactions or activities not taxed by the City and not limited to guests.
6. Income exempted under the Amusement activity or the Transportation/Transporting for Hire activity (open to the public): A deduction for income from Amusement or Transportation/Transporting for Hire activity not taxed by the City and not limited to guests.
7. Off-site provider commissions: A deduction for commissions received by a hotel from providers of goods or services with no presence at the hotel.

Note: Deductions 4 through 7 should be shown on the tax return form in the “Other” line at the bottom of the detailed deductions line, along with a brief explanation as stated above.

More detailed information on income that qualifies for exemption, exclusion, or deduction is provided in the State’s TPR 06-01 discussed above. The information in this brochure is not to be interpreted in conflict with the State Ruling or City Code. The State Ruling is available at www.azdor.gov/LegalResearch/Rulings.aspx.

CALCULATING THE TAX

You may choose to charge the tax separately or you may include tax in your price. If you include tax in your price (i.e., no separate charge for tax), you may back out the tax in order to compute the amount of tax included in your gross income. The formula is as follows:

TAXABLE SALES divided by 1 + COMBINED TAX RATE of 12.57% (State, County & City tax) Calculate the tax deduction as follows:
Taxable Sales  Factor (1.1257) = Computed Taxable Income
Taxable Sales less Computed Taxable Income equals your deduction for tax collected.

Example: $3,000.00 ÷ 1.1257 = $2,665.01
$3,000.00 – $2,665.01 = $334.99 (tax collected deduction)

If more tax was collected than was due, the City’s portion of excess tax collected must be paid to the City, unless it is refunded to the customer. Please refer to the Transaction Privilege (Sales) and Use Tax Instruction Sheet for instructions on how to report excess tax collected or the tax collected deduction.

This material is available in alternate formats upon request. For more information, call (602) 262- 6785, press 4, TTY (602) 534-5500 or write to City of Phoenix, TAX DIVISION, 251 W. Washington Street, 3rd Floor, Phoenix, Arizona 85003. For more information on our licensing, tax rates, tax return instructions or access to the city of Phoenix Tax Code, visit our website at www.phoenix.gov/finance/PLT.

Link to the  City of Phoenix Department of Finance
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Short Term Regulations in Phoenix, AZ

Posted By Noah Goldfeder

Marketing Team
Posted: Friday April 20th, 2018

Short Term Regulations in Phoenix, AZ

Posted By Noah Goldfeder

Marketing Team
Posted: Friday April 20th, 2018

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