On Aug. 9, the Jerome Town Council approved a new 3.5 percent tax on commercial rentals.
“Although residential rentals have been subject to a 3.5 percent local tax since 2010, commercial rentals were previously exempted,” stated Jerome Town Manager Candace Gallagher via press release Aug. 15. “Beginning on Nov. 1, 2016, commercial rentals will be taxed at the same rate as residential rentals.”
According to the Arizona Department of Revenue, “The Arizona transaction privilege tax is commonly referred to as a sales tax; however, the tax is on the privilege of doing business in Arizona and is not a true sales tax. Although TPT is usually passed on to the consumer, it is actually a tax on the vendor. TPT is applied to entities engaged in certain business classifications, including retail sales.”
Commercial property is defined as any real property, portion thereof, used for any purpose other than lodging or lodging space. Landlords of buildings originally built for lodging purposes but used for commercial purposes — such as model homes or apartment units used as office space — are subject to the tax.
“If you are a landlord of commercial property, and have not already done so, you will need to register with the Arizona Department of Revenue and obtain a TPT license,” the town stated on its Facebook page Aug. 18. “If you are already registered and filing sales tax returns, you will need to add a line to your return, beginning with your return covering the month of November.”
“I know nothing about it,” one Jerome candy shop owner who wished not to be named said when asked about how the tax would impact his business. Business owners repeated this, time and again, less than two weeks after the Town Council made the decision.
The Jerome Town Council has also approved an increase to the supplemental bed tax assessed on transient lodging facilities, increasing the tax to 3 percent as of Nov. 1. This brings the local tax rate for hotels and other transient lodging facilities to 6.5 percent.
Those landlords or business owners with questions regarding transaction privilege taxes can call ADOR, weekdays between 8 a.m. and 5 p.m., at (844) 698-9176 or by email at asktpt@azdor.gov. Gallagher can be reached for inquiry about the TPT tax or the bed tax at 634-7943 or c.gallagher@jerome.az.gov.
