Liquor Luxury Tax

In general, Arizona operates on a three-tier distribution system for liquor sales. The first tier consists of manufacturers or producers of liquor who sell to licensed wholesalers. The second tier consists of licensed wholesalers who sell to licensed retailers. The third tier consists of licensed retailers who make final sales to consumers, and not for resale. Farm wineries, microbreweries or craft distillers are not subject to the three-tier distribution system and may sell to retailers or consumers within the state directly.

Within the three-tier distribution system, Arizona imposes a “luxury” tax only at the second tier level (i.e. on the wholesaler for sales of liquor within the state). Producers or manufacturers (first tier) and licensed retailers (third tier) are generally not liable for luxury taxes.

Wholesalers of spirituous or vinous liquor must file a return and pay the luxury tax within the state of Arizona. They must also file a return and pay the tax if they are purchasing malt liquors for resale within the state.

Luxury tax on liquor applies to the following sale, production and purchase in the state of Arizona:

• Wholesaler of spirituous, vinous, and/or malt liquors
• Purchaser of malt liquors for resale
• Domestic craft distilleries
• Domestic farm wineries
• Domestic microbreweries
• Domestic cider producer and retail sales or to retail licensee

Luxury tax rates are as follows (please see A.R.S. §42-3052):

Spirituous Liquors

• per gallon $3.00

Vinous Liquor

• more than 24% alcohol (per gallon) $4.00

Vinous Liquor

• less than 24% alcohol (per gallon) $0.84

Malt Liquor (Beer)

• per gallon $0.16

To file and remit luxury liquor taxes, wholesalers, craft distilleries, farm wineries, direct shipment licensees and microbreweries will use Arizona Forms 815 and 835 (please see Liquor Tax Reporting Forms).

• Form 815 should be used by wholesalers selling within Arizona and wholesalers of malt liquors purchasing for resale within the state.
• Form 835 should be used by craft distilleries, farm wineries, direct shipment licensees and microbreweries making sales at retail or to retail licensees.
• Out-of-state producers are not subject to Arizona luxury liquor tax and therefore are not required to file a return.

To remit Arizona Forms 815 or 835, please mail with payment to:

Arizona Department of Revenue
Liquor Tax
P.O. Box 29019
Phoenix, AZ 85038-9019

For those businesses needing copies of past remitted returns, please complete Arizona Form 450 and mail to:

Arizona Department of Revenue
Copy Desk
P.O. Box 29216
Phoenix, AZ 85038-9216

Taxpayers with additional questions can direct inquiries to [email protected], or call (602) 716-7801.

Applying for Transaction Privilege Tax License

Because direct sales to customers in Arizona fall under the retail classification of transaction privilege tax (TPT), licensed liquor retailers in Arizona, farm wineries, microbreweries and craft distillers located in the United States are liable for TPT when selling spirituous, vinous or malt liquor within the state. Retailers can apply for a TPT license online at AZTaxes.gov.

Arizona liquor license holders engaged in activities subject to Arizona TPT trying to register for a TPT license through AZTaxes.gov, and don’t know how to answer some of the registration questions, should apply the following information when applying for TPT:

• Select Code 44-45 of the North American Industry Classification Code (NAICS) and an Industry Title indicating a “non-store retailer.”
• Select Business Code 017 (retail) per A.R.S. §4-203.04.
• Select a region to apply for a TPT license. Businesses that may not yet know the Arizona location for shipments may register for Maricopa County (MAR) initially as this county encompasses the majority of the Phoenix metropolitan area. Please be aware that by doing so, there will be future applicable city registration fees applied when returns are filed and indicate which cities shipments were sold. A list of fees can be viewed on page 4 of the JT-1 application.

For additional questions, customer assistance for luxury liquor tax can be reached at (602) 716-7801, or [email protected].

Licensing Information

To obtain a liquor license in Arizona, businesses can contact the Arizona Department of Liquor Licensing Division at (602) 542-5141 or go to the agency's website.

Licensed liquor retailers in Arizona including farm wineries, microbreweries and craft distillers located in the United States are liable for transaction privilege tax (TPT) when selling spirituous, vinous or malt liquor within Arizona. Direct sales to customers in Arizona from these licensed liquor retailers fall under the retail classification of TPT.

Retailers can apply for a TPT license online at AZTaxes.gov.

View TPT license registration information

Reporting

Wholesalers, farm wineries, manufacturers, direct shipment licensees, microbreweries, and craft distillers are required to file returns indicating the amount of liquor sold in gallons using Arizona Form 815 or 835 as applicable. (See Arizona Revised Statutes (A.R.S.) § 42-3353 through A.R.S. § 42-3355)

Liquor distillers, out-of-state producers and manufacturers are no longer required to send in invoices with their liquor luxury tax returns to ADOR. (Pursuant to Laws 2017, Chapter 60, Section 9, A.R.S. § 42-3352).

Liquor distillers, out-of-state producers and manufacturers are only required to maintain a copy of the sale invoice in their records. If ADOR needs this information at any time, it will reach out to the distiller, out-of-state producers or manufacturer for an invoice record. (Per the new law, effective August 9, 2017)

View Liquor Tax Reporting forms

Please direct inquiries regarding liquor luxury tax for wholesale producers and direct shipment licensee HERE.

Additional Resources