The Town of Carefree imposes a 3% privilege tax on the gross receipts derived from the rental of commercial property and on qualified residential properties. Gross rent receipts includes rent, late fees, sewer-trash charges, and non-refundable deposits. Effective January, 2014, Carefree assesses a 3% use tax for out of state, untaxed purchases over $1,000. The use tax removes this competitive advantage that internet based businesses may have over current and future local businesses by applying a uniform local tax rate. Internet purchases under $1,000 as well as items such as prescription drugs are exempt from the use tax.
Residential rental property located within the Town is subject to this tax if the property owner has 3 or more residential rental units within the state of Arizona. However, if the residential rental property owner also has any commercial rental property in the state, then all of the residential rental property within Carefree would be subject to the Town's tax. Finally, should a property manager handle the residential rental for a property owner, then the rent receipts from that property are subject to the tax, even if the owner should own less than 3 units in the state.
The Carefree privilege tax is collected by the Arizona Department of Revenue, on behalf of the Town. Please call (602) 255-3381 to discuss any questions you may have on this matter or go to the website Arizona Department of Revenue.
Arizona Department of Revenue
The Arizona Department of Revenue has released the Arizona Transaction Privilege Tax Notice (PDF) that addresses various questions and provides examples involving changes to the prime contracting classification for Arizona transaction privilege tax due to AZ House Bill 2389 effective January 1, 2015.
The department has issued new TPT/Sales tax renewal requirements as of January 1, 2017. For more information click here.