Frequently Asked Questions
 

Who do I call for other licenses not handled by the Mesa Licensing Office?

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 Building Safety), 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.