The Arizona Department of Revenue (DOR) reminds taxpayers that short-term residential rentals are considered lodging rental stays for less than 30 days. The income from short-term rental stays is subject to Arizona transaction privilege tax (TPT). If, for example, an Arizona property owner is only renting their residence for the Gem Show, they will need a seasonal Arizona TPT license. They may also need a business license for the city where the residence is located, which is different from a TPT License.
Taxpayers should contact the specific city for the business license, as the DOR does not issue city business licenses. A seasonal TPT license is obtained from the DOR’s website and choosing the seasonal filing frequency option on the application. The license should be active for the month of February (the TPT return would be due in March) or the length of renting the home. This license will be active until it is canceled.
In addition, a property owner/operator is required to include the TPT license number on any advertising associated with the short-term rental. An owner/operator or property manager of the short-term rental that takes bookings directly should use business code 025 to report lodging bookings for fewer than 30 days for the state/county. The business code used to report these types of transactions for the cities is 044 for hotels. Some cities impose an additional hotel tax; taxpayers should use business code 144 to report the additional hotel for those cities.
Contact your R&A professional for guidance if this applies to you.