Arizona Sales Tax License Revocation / Business
Shutdown Checklist
Introduction
If your Arizona Transaction Privilege Tax license has been revoked or you are shutting down your business, understanding what happens next is critical. A TPT license revocation means the
Arizona Department of Revenue has canceled your permission to collect and remit this tax.
This can happen for several reasons, including failure to file returns, failure to pay taxes owed, or violations of tax regulations. When your license is revoked, you can no longer legally operate as a TPT vendor in Arizona.
Ignoring this status creates serious problems. Continuing to collect TPT without an active license is illegal and can result in penalties, interest, and enforcement action.
What This Issue Means
A TPT license revocation is an official action by the Arizona Department of Revenue that cancels your authority to collect and remit this tax to the state. When revoked, your license becomes inactive unless you apply for reinstatement.
This means you cannot legally collect TPT from customers on taxable goods or services.
Although commonly referred to as sales tax, Arizona’s Transaction Privilege Tax is actually a tax on vendors for the privilege of doing business in the state.
A license revocation differs from cancellation. Arizona law distinguishes between cancellation, which creates inactive status for non-filing or non-payment for specific periods, and revocation, which occurs for violations or non-compliance after a hearing process.
Why the State Issues This
The Arizona Department of Revenue revokes TPT licenses for specific compliance failures.
Common triggers include failure to file required returns for multiple consecutive periods, failure to pay taxes owed, failure to respond to state notices or correspondence, or violation of tax laws or regulations.
Arizona Revised Statutes section 42-5005 allows revocation after thirteen consecutive months of failing to file returns unless reasonable cause exists. Revocation may also occur if you violate any provision of the tax article or rules adopted under it after the state provides you notice and an opportunity for a hearing.
Revocation prevents unlicensed businesses from continuing to collect TPT illegally and protects tax revenue. License revocation serves as an enforcement mechanism to ensure compliance with Arizona tax laws.
What Happens If This Is Ignored
If you continue to operate or collect TPT after revocation, the state may pursue additional enforcement actions. This can include civil penalties, assessment of unpaid taxes with interest and penalties, liens against your business assets or personal property, wage garnishment, or referral for criminal prosecution.
The Arizona Department of Revenue may also pursue collection through court action. Ignoring revocation status does not make the underlying tax debt disappear and typically makes the situation worse.
What This Does NOT Mean
A license revocation does not automatically mean criminal charges have been filed. It is an administrative action, not a criminal conviction. Revocation also does not automatically create a lien on your property, though the state may file a lien separately if taxes remain unpaid.
Revocation does not cancel your responsibility to pay taxes you owe.
Steps to Take After Receiving Revocation Notice
Locate and Review the Revocation Notice
Find the official notice from the Arizona Department of Revenue that revoked your license. Note the date of the notice and identify the stated reason for revocation.
Determine Your Current Tax Debt Status
Contact the Arizona Department of Revenue at (602) 255-3381 to request a current account
balance. Ask for details on all unpaid returns, periods, and amounts. Request the current
interest and penalties assessed on the account. Obtain written confirmation of the total amount owed.
Locate All Unfiled Returns
Review your business records for all tax return periods from the date you opened to the revocation date. Identify any periods for which you did not file a return.
Review Your Business Status
Determine whether you are actively operating, have ceased operations, or plan to cease operations. If you are still operating, you are operating without a license, which is illegal.
File Any Outstanding Returns
Gather your business records for each unfiled tax return period. Calculate the TPT owed for each period based on your records. Obtain Form TPT-1 from the Arizona Department of
Revenue website or file electronically through the state's online tax portal. Complete each unfiled return with accurate figures.
Filing late returns does not eliminate penalties or interest, but it establishes your tax liability on the state’s records. Submit all unfiled returns to the Department of Revenue electronically if the system allows.
Respond to the Revocation Notice
Review the revocation notice for any specific instructions on how to respond. Arizona Revised
Statutes section 42-5005 requires the Department to provide ten days’ written notice of a hearing before revocation. If the notice provides a deadline to request a hearing, note that date.
Submit your response within the stated timeframe, if provided.
Address the Tax Debt
If you owe unpaid taxes, contact the Arizona Department of Revenue Collections Unit at (602)
542-5551 to discuss payment options. Understand that penalties and interest continue to accrue until the debt is paid in full.
Obtain Closure Documentation
If you have resolved all outstanding returns and plan to cease operations, request a closure letter from the Arizona Department of Revenue. This document confirms your final status with the state.
Notify Other State Agencies
Contact the Arizona Department of Economic Security at (602) 771-6601 if you have employees to address unemployment insurance and wage withholding accounts. Update your business registration with the Arizona Corporation Commission at (602) 542-3026 if you were registered as a corporation or LLC.
Document All Actions Taken
Retain copies of all correspondence with the Arizona Department of Revenue. Document the date and content of phone calls. Maintain copies of all filed returns and payment receipts. Store these documents for at least seven years.
Common Mistakes to Avoid
Ignoring the revocation notice leads to further enforcement. Continuing to collect TPT after revocation is illegal. Not filing outstanding returns prevents the state from knowing what taxes you owe. The state may estimate the tax owed and assess it against you at a higher amount.
Missing deadlines to request a hearing typically forecloses your right to challenge the revocation. Sending partial payments without communication may result in the state applying payments in ways that do not match your intent.
Reinstatement Requirements
After cancellation or revocation of your license, you cannot obtain a new permit until specific conditions are met. Every required report must be filed. Outstanding fees, taxes, interest, and penalties due must be paid. Compliance with all provisions of Arizona tax law must be demonstrated.
If the Arizona Department of Revenue cancelled your license in error, reinstatement may occur at no charge. If you cancelled the permit yourself, you must reapply and pay all applicable fees.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement, and aren’t sure how to respond, our team can help you understand your options and next steps.
We help with
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
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