Renting, Leasing, Licensing for Use of Tangible Personal Property (includes rental of equipment, automobiles, tools, furniture, coin-operated laundromats/car washes, etc.)

If you plan to be in the business of leasing or renting tangible personal property for a consideration, you may be subject to transaction privilege (sales) tax/licensing under the Personal Property Rental classification. For more information, see section below titled, "Engaging in activities subject to transaction privilege (sales)/use tax" or click here. (24)

Examples include, but are not limited to, the following: appliances; canned computer software; carpet cleaning equipment; cars, clothing, trucks, boats, planes, etc.; coin-operated washing, drying, and dry-cleaning machines;* coin-operated car-washing machines;* construction equipment; data processing equipment; dvd’s, video games, movies, etc. for personal use; floor polishers; furniture; gardening equipment; linens and towels; machines; office equipment; restaurant equipment; televisions and other electronics; tools; tuxedos and other clothing, etc.

Please note: The hiring of mobile equipment (cranes, airplanes, limousines, camping vehicles etc.) is considered rental, leasing, or licensing of tangible personal property whenever the charge is for a fixed sum or hourly rate. By comparison, the activity of a common carrier conveying goods or persons for a fee based upon distance, and not time, shall be considered transporting for hire. So, if you are charging by the hour or a fixed sum, you are subject to transaction privilege (sales) tax under the personal property rental classification. If you are charging by the distance, and not time, then you are subject to transaction privilege (sales) tax under the transporting for hire classification. (24)

Additional Information:
Arizona Department of Revenue, Publications: 606 Personal Property Rental, 616 Transporting

*Coin-operated income may be exempt from state transaction privilege (sales) tax (TPT), however, certain cities impose TPT on this income. For questions about whether your business activity is subject to state or local transaction privilege (sales) or use tax, contact the Arizona Department of Revenue.

Rental Vehicle Surcharge paid directly to Arizona Department of Transportation

A person engaged in the business of renting vehicles without drivers (a rental company) is required to collect, at the time the vehicle is rented, a surcharge on each contract that is for a period of 180 days or fewer. This surcharge is paid directly to the Arizona Department of Transportation. (24)

Contact: Arizona Department of Transportation, Motor Vehicle Division, Rental Vehicle Surcharge Unit

paid to the Arizona Department of Revenue

There are three separate rental vehicle surcharges that apply based on the county in which the lessor is located.

Automobiles leased in Maricopa or Pima County are subject to a one-time surcharge per contract of $2.50 for Maricopa County or $3.50 for Pima County. This fee applies to all cars leased for a period of less than one year and designed to carry fewer than 15 passengers, whether or not the car is licensed in Arizona.

For automobiles leased in Maricopa County, there is an additional car rental surcharge that is the greater of $2.50 or 3.25% of the gross income of each contract.

The above surcharges are in addition to regular sales tax and are reported to the Department of Revenue on Form TPT-2. (24)

Contact: Arizona Department of Revenue, 602.255.3381 or toll free 800.843.7196 (from 520 or 928 area code)