Tax & Licensing Frequently Asked Questions
Licensing
Who do I call for other licenses not handled by the
Licensing Office?
Do I need a business license?
I am opening a booth at a trade show or craft show for just a weekend.
Do I need a license?
I was a sole proprietor but I have changed to a corporation, partnership, or
limited liability corporation. Do I need a new license?
What other licenses and permits are necessary for me to start my business?
Tax
Do I need to charge transaction privilege tax?
What if a merchant over collects the tax?
When are the tax returns due?
When are the tax returns mailed out to businesses?
Do I have to file a tax return if I had no taxable activity?
Are there any penalties for filing a tax return late?
Can penalties be waived?
May I deduct any of my expenses?
Are wholesale sales exempt from tax?
My customer has a 501(c)(3) designation (non-profit status). Are they
exempt from tax?
If I feel I overpaid tax on my return, how do I obtain a refund?
If I failed to claim an exemption with a merchant, how do I obtain a refund?
What is the difference between the transaction privilege tax and a sales
tax?
I am opening a booth at a trade show or craft show for just a weekend.
Do I need to pay tax?
Who do I call for other licenses not handled by the Mesa Licensing Office?
Please see our links
page for information about other licenses such as:
Arizona Tax License
Contractor's License
Marriage License Liquor License
Driver's License Massage
Therapy License
Vehicle Licensing
Do I need a business license?
Mesa does not have a "business license" which encompasses all businesses.
The City of Mesa utilizes a transaction privilege tax license for all
businesses that generate taxable income and some special licenses for
certain activities such as liquor sales. Some businesses do not need
any Mesa license to operate in Mesa. Please call us at (480) 644-2316
to ask whether your business requires a license. Because we have a
transaction privilege tax rather than a typical "sales tax," licenses are
required for a broader range of activities. Transaction
privilege tax licenses are required to be posted in a conspicuous place
within your business at all times.
I am opening a booth at a trade show or craft show. Do I need a
license? Do I need to pay tax?
Selling at a trade show or craft show is subject to the same tax and license
obligations as a retail store. You must have a license and must pay
tax on your sales. If this is the only time you will be making sales
in Mesa, you must obtain a temporary transaction privilege tax license.
I was a sole proprietor but I have changed to a corporation, partnership, or
limited liability corporation. Do I need a new license?
Yes. When there is a change in business ownership, a new license is
required.
What other licenses and permits are necessary for me to start my business?
The City of Mesa issues licenses for city transaction privilege tax and for
some special activities. We also issue
building permits,
sign
permits (.pdf file), occupancy permits (contact
Development & Sustainability), and
administer
zoning
laws.
Most businesses must also obtain a state
transaction privilege tax license
for purposes of reporting their state and county taxes. There are
numerous other requirements relating to state and federal regulatory
agencies, the Internal Revenue Service, unemployment insurance, workman's
compensation insurance, etc. that may affect your business. The city
staff cannot fully advise you of all the issues you may need to start your
business.
Do I need to charge transaction privilege tax?
The transaction privilege tax is imposed on the merchant rather than on the
customer. The business can choose whether to charge the tax
separately or build it into their sales price. Those businesses that
build it into their sales price are allowed to compute or "factor" the tax
for purposes of taking a deduction for transaction privilege tax collected.
Click here to
see an example of "factoring" the tax.
What if a merchant over collects the tax?
Tax collected in excess of the tax rate must be remitted on your tax return.
The excess tax should be prorated to the city, county, and state
proportionately to their tax rates.
When are the tax returns due?
Most tax returns are due on the 20th of the month following the month the
sales occur. Certain businesses with small tax liabilities are
permitted to file quarterly or annually.
When are the tax returns mailed out to businesses?
Tax returns are printed on the 25th of each month and mailed before the end
of the month. Please allow adequate time for mail delivery before
calling to have another return faxed or mailed to you.
Do I have to file a tax return if I had no taxable activity?
Tax returns must be filed for all filing periods even if there was no
taxable activity. You may fax a return to us which has no taxable
activity. (fax (480) 644-3999).
Are there any penalties for filing a tax return late?
Penalties are assessed for filing returns late. The penalties increase
when the delinquency extends for additional months. Also there is
interest and a late payment penalty for late payment of the tax even though
the return may have been filed on time. Penalties are computed as a
percentage of the tax due for the period covered by the return.
TPT
interest rates (on DOR website)
Can penalties be waived?
Penalties for late filing or late payment may be waived under certain
circumstances. Interest charges may not be waived. Requests for
waiver of penalties must be submitted in writing together with any
supporting facts and documentation.
May I deduct any of my expenses?
Expenses are a cost of doing business and are not deductible in most cases.
The tax is imposed on gross receipts less specifically allowed exemptions or
deductions.
Are wholesale sales exempt from tax?
A deduction is allowed for "sales for resale." These are sales to
another licensed merchant who is purchasing them to resell to his customers.
If you claim this deduction you should obtain a signed exemption certificate
from your customer listing his state transaction privilege tax number, his
business name, the nature of his business, and a statement that the item is
being purchased for resale in the course of business. If this
certificate is reasonable and supports the deduction, it is very good
documentation in support of your deduction.
My customer has a 501(c)(3) designation (non-profit status). Are they
exempt from tax?
Sales to most non-profit organizations are not exempt from tax. Such
organizations are exempt on their sales to raise funds to further their
exempt activities. There is an exemption for sales to certain
qualifying health care organizations. These organizations should be
able to supply a copy of a letter from the Arizona Department of Revenue
supporting their exemption.
If I feel I overpaid tax on my return, how do I obtain a refund?
If you feel you have overpaid tax on your return, you should send us a
letter asking for credit or for a refund. The letter should include
your business name and license number and the time period in which the
overpayment occurred. You should describe the nature of the
overpayment and how we may contact you if we have questions.
Please enclose any supporting documentation that you feel is relevant.
If I failed to claim an exemption with a merchant, how do I obtain a refund?
The city will only refund tax to the party who paid it on their return.
You need to ask for a refund from the merchant from whom you made the
purchase. You will need to supply the merchant with an exemption
certificate supporting the exemption that you are claiming.
What is the difference between the transaction privilege tax and a sales
tax?
The transaction privilege tax is a tax on the privilege of doing business in
the city. It is imposed on the merchant rather than on the
customer. Also it is broader than a Sales Tax in that it taxes more
than sales of tangible personal property. Some activities which
are services are taxable. The tax applies to the gross receipts of the
business less specifically allowed exemptions and deductions.