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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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We have a tax exempt number in the state of Arizona. We are

Customer Question

We have a tax exempt number in the state of Arizona. We are purchasing materials from a vender in the state of Arizona and having the vendor ship these materials to a job in Colorado. This vendor does not have a store in Colorado - so that is why they are being drop shipped from Arizona. Are we required to pay sales tax? If so - would it be Arizona sales tax or Colorado sales tax???
Submitted: 6 years ago.
Category: Tax
Expert:  RD replied 6 years ago.

RD :

Are the goods shipped by common carrier? Is the title to the goods taken in Arizona or will be transferred in Colorado when goods are delivered?

JACUSTOMER-b3d7mxoc- :

I beleive the goods are shipped via a trucking service. I would suppose that on occassion - if the goods were minimal, they might be shipped via UPS. We are a plumbing contractor licensed in the state of Arizona, New Mexico, and Colorado. The vendor I am referring to is HD Supply. They do not have an office/warehouse in Colorado - so we do one of two things. We buy the goods and the local HD Supply warehouse sends them to our Arizona location and then WE ourselves personally truck the goods to our Colorado job. On occasion - we need to get materials to Colorado ASAP and therefore, we have HD Supply drop-ship the goods directly to the Colorado job site. We do not have a sales tax exempt license in the state of Colorado.

JACUSTOMER-b3d7mxoc- :

We are willing to pay sales tax in this circumstance - we just want to make sure if we are acutallu required to do so. HD Supply says yes - but we just want to be clear on Arizona law.

JACUSTOMER-b3d7mxoc- :

Thank you for your help. Any documentation that we could present to Hd SUply would be great.

RD :

Sales in interstate commerce are exempt from tax if sufficient documentation is maintained by the seller to show the order was shipped out of sate.

RD :

If you buy the goods in AZ and take delivery in AZ than either you pay sales tax to the supplier or pay use tax to the State(if you claim exemption from sales tax by providing a certificate to the Supplier).

RD :

If the delivery is taken in CO than you will pay use tax in CO state and it will not be subject to tax in AZ State.

RD :

Here is a link explaining use tax and circumstances under which you pay use tax in AZ

RD :

http://www.azdor.gov/LinkClick.aspx?fileticket=ItnNlyLg-HI%3d&tabid=102

Customer :

okay - thank you for your help. I think this makes things very clear and I will this along to the supplier, as well.

Customer :

Regards,

Customer :

Cindy

RD :

Thanks for using this service. I will appreciate if you can accept the answer and leave a feedback.