City of Tempe Privilege (Sales) Tax
The City of Tempe, and most other cities in Arizona, impose a Transaction Privilege (Sales) Tax on specific business activities just like the State of Arizona. The City tax is in addition to the tax imposed by the State. The City of Tempe tax rate, imposed on the business, is two percent (2.0%) on most activities and one and eight-tenths percent (1.8%) on construction contracting and sales of food for home consumption. A taxable business will need to get licensed with both the City of Tempe as well as obtain a license with the State of Arizona. A list of the taxable activities within Tempe can be found at Taxable Activities.
Note: The City of Tempe and the State of Arizona maintain separate and distinct privilege (sales) tax codes. As a result, there are certain situations and circumstances where the taxability of certain business activities is different between the two codes.
State law, the Legal Arizona Worker's Act, requires Individuals /Sole Proprietors to submit a copy of one of twelve documents that indicates authorized presence in the United States. The City of Tempe will accept and process your application but will not issue a license until documentation has been received.
Tax Reporting Requirements
Individuals applying for a Privilege (Sales) Tax license are required to report and pay Tempe's privilege tax on their taxable revenue on either a monthly, quarterly, or annual frequency. Reporting frequency is based upon annual taxable revenue. You may request an annual filing frequency only after you have established a 6 month reporting history.
The annual license fee is $50, and the application fee is $20. Privilege Tax Licenses must be renewed annually.
Tax Reports and Payment of Tax
|$50,000 or greater
$5,000 to $49,999
$0 to $4,999
A tax return is due even if you have zero receipts. Mark the appropriate box on the tax return, sign and mail. Mail your tax report and payment to our processing center:
||City of Tempe
Tax and License Division
Forms Processing Center
PO Box 29618
Phoenix AZ 85038-9618
If you receive an Account Statement and have questions, call our general number (480) 350-2955.
The transaction privilege tax is commonly referred to as a sales tax. However, the tax is on the privilege of doing business in Tempe and is not a true sales tax. The licensing and taxable activities for Tempe may differ from the State and other Arizona cities. Every effort is made to provide adequate and accurate information. However, any verbal advice or information we give you is not binding on the City. If you need a specific response to a tax code issue, we recommend that you submit your questions in writing to our Division, and maintain our written response for your records.