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ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
AMENDED
TPT; exemptions; motor vehicles; nonresidents
Purpose
Expands the transaction privilege tax (TPT) exemption and the municipal tax prohibition on sales of motor vehicles to nonresidents of Arizona for use outside of Arizona to include the sale of commercial motor vehicles that meet outlined criteria.
Background
The gross proceeds of sales or gross income derived from sales of motor vehicles to nonresidents of Arizona for use outside of Arizona, if the motor vehicle dealer ships or delivers the motor vehicle to a destination outside of Arizona, is exempt from the TPT imposed on the retail classification (A.R.S. § 42-5061).
A city, town or special taxing district may not levy TPT or a sales, use or other similar tax on the sales of motor vehicles to nonresidents of Arizona that are shipped or delivered by a motor vehicle dealer for use outside of Arizona (A.R.S. § 42-6004).
A nonresident who purchases an unregistered vehicle in Arizona for removal to the purchaser's state of residence must obtain a special 90-day nonresident registration permit. The nonresident must obtain the 90-day nonresident registration permit by applying to the Arizona Department of Transportation (ADOT) or a motor vehicle dealer and paying the necessary fees. An affidavit must accompany the application and must contain a statement that: 1) the purchaser is not a resident of Arizona; 2) the vehicle is purchased to be registered out of state within 90 days after the issuance of the special 90-day nonresident registration permit; and 3) the vehicle is not purchased for transfer to a resident of Arizona (A.R.S. § 28-2154).
A commercial motor vehicle is a motor vehicle or combination of motor vehicles designed, used or maintained to transport passengers or property for a commercial enterprise that is not exempt from statutory gross weight fees and that includes any of the following: 1) a single vehicle or combination of vehicles with a gross weight of more than 26,000 pounds that is used for intrastate commerce; 2) a single vehicle or combination of vehicles with a gross weight of more than 10,000 pounds that is used for interstate commerce; 3) a school bus; 4) a bus; 5) a vehicle designed to transport 8 or more passengers for hire; and 6) a vehicle used to transport hazardous materials (A.R.S § 28-5201).
If the TPT exemption for motor vehicle sales to nonresidents for use outside the state results in a decrease in TPT collections, there may be a corresponding fiscal impact to the state General Fund.
Provisions
2. Applies the modified TPT exemption and municipal tax prohibition to taxable periods beginning the first day of the month following the general effective date.
3. Contains a technical conditional enactment.
4. Makes technical and conforming changes.
5. Becomes effective on the general effective date or later, subject to the provisions of the conditional enactment.
Amendments Adopted by Committee
· Removes the TPT exemption and the municipal tax prohibition for an automobile or truck that is sold to a nonresident by a manufacturer or motor vehicle dealer in Arizona.
Amendments Adopted by Committee of the Whole
1. Limits the TPT exemption and municipal tax prohibition to commercial motor vehicles that meet outlined criteria and are used to transport property for interstate commerce.
2. Eliminates the special five-day nonresident registration permit.
3. Makes conforming changes.
Senate Action
FIN 2/16/22 DPA 8-2-0
Prepared by Senate Research
February 23, 2022
MG/AN/slp