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Q: What is Transaction Privilege Tax (Sales Tax)?

A: The transaction privilege tax (TPT) is commonly referred to as sales tax. It differs from a true sales tax in that it is a tax on the privilege of doing business in Arizona. The seller is liable for the tax but may pass the burden of the tax on to the purchaser. For additional information, please refer to the Arizona Revised Statutes, the Arizona Department of Revenue, or the Model City Tax Code.

Q: How do I obtain a Transaction Privilege (Sales) Tax license?

A: The City of Surprise participates as a "Program City" with the Arizona Department of Revenue (ADOR). Therefore, you must apply for a license through ADOR. This can be done online at Arizona Department of Revenue.

Q: What is a "Program City"?

A: A "Program City" is a municipality that has an agreement with the Arizona Department of Revenue to act as the collecting agent for transaction privilege tax and remit it back to the municipality.

Q: What is the current transaction privilege (sales) tax rate?

A: Please see the City of Surprise Transaction Privilege Rate Chart for tax rates.

Q: How do I pay The City of Surprise transaction privilege tax?

A: The Arizona Department of Revenue collects The City of Surprise tax along with the State and County tax. Report your City of Surprise tax on your State form TPT-1. Forms are available online at the Arizona Department of Revenue.

Q: What region code and business code should I use when reporting The City of Surprise tax on the TPT-1 form?

A: The region code for The City of Surprise is "SP". Refer to the Transaction Privilege Tax Rate Chart for the appropriate business code.

Q: How do I calculate my taxes due?

A: Taxes are calculated by stating the gross receipts for the reporting period on the (TPT-1) tax return, entering the itemized deductions, then multiplying the resulting net taxable amount by the combined (City/State/County) rate. Refer to the Transaction Privilege Rate Chart for the combined rate.

Q: Are sales to the City of Surprise taxable?

A: Yes, all sales (except sales for resale) that you make to the City of Surprise are taxed in the same manner as other taxable sales.

Q: Are internet sales taxable?

A: Yes, items sold by a business located in the City of Surprise via the internet to Arizona residents are taxable at the State/County rate and the City of Surprise rate and must be reported on the TPT-1 form.

Q: What if I don’t collect the tax from my customers?

A: If you do not separately state the transaction privilege tax on your customer’s invoice or contract, you may factor the tax when reporting the tax to the State, County, and City. For additional information, click here.

Q: Is the rental of commercial real property taxable?

A: Yes, commercial rentals are taxable at 2.2% for the City of Surprise and 0.5% for the County for a combined total of 2.7%.

Q: What are the registration and tax requirements for residential rentals?

A:

You must register the property with the County Assessor’s office as a rental property. Failure to do so could result in a daily fine of up to $150.00. Information and forms are available at: https://mcassessor.maricopa.gov/faq/faq-rental-registration.php

Residential rentals are taxable at 2.2% for the City of Surprise (unless you meet the exemption below). Residential rentals are not taxed by the State or County. You will need an Arizona State Privilege License in order to report the rental tax collected for the City of Surprise. Please note that you are only applying for a program city license, so you will pay the fee that corresponds with that particular city. The fee for The City of Surprise is $10.00. You will need to submit a Transaction Privilege Tax City Only Application.

Exemption: If you have less than 2 residential rentals within the State and no commercial rental properties within the state, you are not deemed to be in the rental business, and are therefore exempt from the tax. However, if your rental property is leased through a Property Manager, every residential rental property located in the City of Surprise is subject to tax. In addition, each property owner is required to have a tax license, regardless of the City of Surprise minimum number of rentals.

Note: If you also own a commercial rental anywhere in the State, every residential rental property located in the City of Surprise is subject to tax, regardless of the City of Surprise minimum number of rentals.