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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29558
Experience:  Taxes, Immigration, Labor Relations
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I am just learning bookkeeping and am helping out my family

Customer Question

I am just learning bookkeeping and am helping out my family business which involves the sale and delivery of landscape rock, gravel, sand, etc.
I know that all material that we sell is taxable unless the purchaser qualifies as a licensed tax-exempt purchaser (I think that it is an AZ5000). However, occasionally we are hired to clear and move material to dump for a customer that involves only labor and the use of our truck and maybe a tractor. In a situation such as this is the labor taxable? Thank you for your help.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

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 the transaction privilege tax is usually passed on to the consumer, it is actually a tax on the vendor.

If you are selling a product or engaging in a service subject to transaction privilege tax, you will most likely need to obtain the state transaction privilege tax (TPT) license from the Arizona Department of Revenue (commonly referred to as a sales tax, resale, wholesale, vendor or tax license) and a transaction privilege tax or business/occupational license from the city(ies) in which you are based and/or operate.

Expert:  Lev replied 1 year ago.

Prime contractors are subject to transaction privilege tax under the prime contracting classification. A prime contractor is a person who performs, coordinates or supervises construction work, including contracting with any subcontractors. The prime contractor is the person responsible for the completion of the contract.
A prime contractor who only furnishes labor in the performance of contracting work is subject to the tax as well as one who furnishes both labor and materials.
Subcontracting income is not subject to transaction privilege tax if the subcontractor can demonstrate that the job was within the control of a prime contractor and that the prime contractor is liable for the tax on the job. If the subcontractor is given a Transaction Privilege Tax Prime Contractor’s Certificate (Form 5005) that has been completed by the prime contractor, the subcontractor is relieved of the burden of proof.
See for reference
https://www.azdor.gov/Portals/0/Brochure/603.pdf
https://www.azdor.gov/Portals/0/Brochure/622.pdf
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