Waste Tire
The Arizona Department of Revenue (ADOR) is informing businesses that sell new tires and motor vehicles of upcoming changes to the fee imposed on the sale of motor vehicle tires.
Arizona imposes a fee on the sale of motor vehicle tires. Sales that are subject to the waste tire fees include both separate sales of the tires themselves as well as sales of tires on new vehicles.
Who Must Pay the Fee?
Businesses that make retail sales of new motor vehicle tires and manufacturers of new motor vehicles must pay the waste tire fee, including:
- retailers of new motor vehicle tires,
- retailers of new motor vehicles with a gross weight of under 10,000 pounds,
- wholesalers that sell new motor vehicle tires to the state or a political subdivision of the state, and
- wholesalers that sell new motor vehicle tires to a private entity that does not resell the new tires (including wholesalers that sell to used car dealerships).
The fees do not apply to tires for off-road vehicles or non-motorized vehicles, such as bicycles.
See Publication 560 for examples.
How Much is the Fee?
Fee for periods on and before March 31, 2025:
The waste tire fee is 2% of the retail price of the tire, up to a maximum of $2.00 per tire. The fee for new vehicles (where the price of the tires is not listed separately on the invoice) is $1.00 per tire.
Fee for periods effective April 1, 2025:
The waste tire fee is 2% of the retail price of the tire, up to a maximum of $4.66 per tire. The fee for new vehicles (where the price of the tires is not listed separately on the invoice) is $2.33 per tire.
As part of the Form TR-1 update, you will be required to identify the number of tires sold at a price of less than $233.00 per tire and the number of tires sold at a price of $233.00 or more per tire. You will also be required to report the gross sales proceeds attributable to the category of tires sold at a price of less than $233.00 per tire, and the gross sales proceeds attributable to the category of tires sold at a price of $233.00 or more per tire. For retailers of new vehicles (where the price of the tires is not listed separately on the invoice), you will be required to identify the number of tires that accompanied new vehicles sold and the total fees collected.
Beginning April 1, 2025, businesses should collect the correct waste tire fee from your customers. Therefore, you will need to update your point-of-sale systems, effective April 1, 2025 to account for the increased maximum fee, the number of new tires sold in each price category, and the corresponding gross sales proceeds for each tire price category.
Beginning July 1, 2026, the fees will be adjusted annually based on a formula established by the Arizona Department of Environmental Quality pursuant to A.A.C. R18-13-2022.
Due Dates
Waste tire fees collected by retailers must be remitted to the Arizona Department of Revenue on a quarterly basis, with the reporting Form TR-1. The return and payment are due on the 20th of the month following the end of each quarter - that is April 20, July 20, October 20, and January 20. Delinquent penalties are 5% per month for late filing and 10% for late payment, up to a maximum of 25%. The interest rate for delinquent accounts accrues at the same rate as charged by the IRS.
Resources
Form TR-1 - Waste Tire Fee form
Publication 560 - Waste Fee