Ariz. Admin. Code § 15-5-2210.01

Current through Register Vol. 30, No. 50, December 13, 2024

Section R15-5-2210.01 - Factoring

"Factoring" means a method by which the taxpayer may determine the amount of the tax when the tax is collected as an unspecified part of the selling price.

1. The taxpayer may use any factoring method resulting in a tax amount equal to the tax as calculated using the separate and distinct item of charge method.

2. The following factoring method is approved and recommended by the Department.

To calculate the tax under the factoring method, the total cost to the consumer is divided by one plus the cumulative amount of the state and applicable county, city, and town tax rates, stated as a decimal. The result of this calculation is then multiplied by the cumulative tax rate to arrive at the amount of the tax on the sale. The gross receipts subject to tax, plus the cumulative tax on that amount, shall equal the total cost to the consumer.

To factor:

Total cost to the consumer $105

Divide the total cost to the

consumer by 1 plus the tax

rate (1.00 plus .05)

$105 divided by 1.05 equals the

price of tangible personal property $100

Tax as calculated ($100 times 5%) $5

Ariz. Admin. Code § R15-5-2210.01

New Section adopted effective October 14, 1993 (Supp. 93-4).