Statutes, codes, and regulations
Arizona Administrative Code
Title 15 - REVENUEChapter 5 - Department of Revenue - Transaction Privilege and Use Tax Section
Article 22 - TRANSACTION PRIVILEGE TAX - ADMINISTRATION
Section R15-5-2216 - Liability Relief for Marketplace Facilitators and Remote Sellers

Ariz. Admin. Code § 15-5-2216

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Current through Register Vol. 30, No. 24, June 14, 2024
Section R15-5-2216 - Liability Relief for Marketplace Facilitators and Remote Sellers
A. In this Section:
1. "Affiliated person" has the same meaning as prescribed in A.R.S. § 42-5043.
2. "Incorrect information" means any information that was given to the marketplace facilitator by the marketplace seller and that is not accurate. Incorrect information does not include any of the following:
a. Mistakes related to the process of filing a return, such as the frequency, non-filing, or manner of filing;
b. Mistakes related to the manner of remitting tax liability to the Department;
c. Failure to remit all amounts collected and represented as tax.
3. "Errors other than sourcing" means errors related to the details of a sale and errors related to tax rates. "Errors other than sourcing" does not include any of the following:
a. Mistakes related to the process of filing a return, such as the frequency, non-filing, or manner of filing.
b. Mistakes related to the manner of remitting tax liability to the Department.
c. Failure to remit all amounts collected and represented as tax.
4. "Taxable sales" means gross sales sourced to this state less any allowable deductions or exemptions.
B. A marketplace facilitator or remote seller may apply for liability relief pursuant to A.R.S. § 42-5043 as outlined by Department-issued procedure.
C. A marketplace facilitator or remote seller may not obtain liability relief under A.R.S. § 42-5043 if the marketplace facilitator or remote seller does not act in good faith. "Good faith" means acting with honesty and with no knowledge of circumstances that would render the marketplace facilitator or remote seller ineligible for liability relief.
D. In processing an application for liability relief pursuant to A.R.S. § 42-5043, the Department will waive penalties and interest when reasonable cause exists. Whether reasonable cause exists is based on the facts and circumstances of the specific request for relief, which may include whether the marketplace facilitator should have known that the information provided by the marketplace seller was incorrect; whether the marketplace facilitator or remote seller applied for liability relief for the same errors other than the sourcing in the prior 12 months; and other relevant factors.
E. The liability relief limitations provided in A.R.S. § 42-5043 for a marketplace facilitator shall be applied in relation to the total tax liability of all the marketplace sellers selling on the marketplace facilitator's marketplace. Nothing in this rule shall be construed as allowing any liability relief for a marketplace facilitator in relation to its own sales or sales on behalf of any of its affiliates.
1. Example: ABC, a marketplace facilitator, applies for liability relief based on a filing error in 2019 because it applied a lower tax rate to all of one of its marketplace seller's sales. The total tax due for all taxable Arizona sales for all marketplace sellers' sales in 2019 is $63,000. Liability relief may be granted to ABC for up to $3,150 (5% × 63,000).
2. Example: Assume the same facts as in the example found in subsection (E)(1). Besides sales that ABC facilitated on behalf of third-party marketplace sellers, ABC also made its own sales through its marketplace. These direct sales by ABC resulted in an actual combined tax liability of $10,000 that ABC erroneously reported to the Department as $5,000. ABC will not be granted liability relief for errors resulting from these direct sales.
3. Example: In 2020, ABC, a marketplace facilitator, files an amended return based on incorrect information provided to it by one of its marketplace sellers. ABC applies for liability relief as soon as possible after discovering the error. The evidence shows that ABC acted in good faith and could not have known that the information was incorrect. This constitutes an error under A.R.S. § 42-5043(A)(1). This statutory provision authorizes the Department to grant relief, and there is no limitation on the amount of relief that can be granted. The Department may grant relief that is reasonable under the circumstances.
4. Example: In 2020, XYZ, a remote seller, deducted amounts for sales that it thought were exempt, but after further research, realized were in fact taxable. XYZ's total tax due from its gross sales for the period under consideration is $31,500. Pursuant to A.R.S. § 42-5043(B)(2), liability relief for XYZ's non-sourcing related error may be granted in any amount up to $945 (3% × $31,500).
5. Example: In 2022, ABC, a marketplace facilitator, files an amended return based on incorrect information provided to it by one of its marketplace sellers. In the same year, ABC also makes a filing error by using the incorrect tax rate on a sale. ABC applies for liability relief in both instances. The Department may grant liability relief under A.R.S. § 42-5043(A)(1) for errors resulting from the incorrect information provided to ABC by its seller. However, no liability relief is available for ABC's filing error, pursuant to A.R.S. § 42-5043(B).
6. Example: XYZ, a remote seller, files a paper tax return late and also pays late. Consequently, XYZ accrues penalties for late filing, late payment, and filing in an inappropriate manner (i.e., not electronically through AZTaxes.gov). The Department may grant penalty relief in all instances if XYZ shows reasonable cause.

Ariz. Admin. Code § R15-5-2216

Repealed effective February 22, 1989 (Supp. 89-1). Adopted by exempt rulemaking at 25 A.A.R. 3010, effective 10/1/2019.