Comptroller's Office  Policies and Procedures Manual
Effective: 01/01/2000	Revised: 03/14/02

CMP 120: Sales Tax Exemption for Purchases

To provide information on certain sales tax exemptions on university purchases

Arizona Revised Statutes § 42-5061

University policy

Arizona universities are NOT exempted from paying any applicable sales taxes on purchases of goods within the State of Arizona. The universities also are responsible for paying use tax to the Arizona Department of Revenue for applicable purchases made from out-of-state vendors.

Several technical exemptions apply to auxiliary operations, e.g., the purchase of books by the NAU Bookstore, prescription drugs sold at the Fronske Health Center. Additionally, a broader exemption was enacted by the State of Arizona effective December 31, 1992, that provides exemption from transaction privilege taxes on machinery and equipment used in research and development. This exemption applies to state sales and use tax and is also applicable to most cities in Arizona. Please complete and submit the following form to request this exemption. 

Certification Form for Tax Exempt Machinery and Equipment Purchased for Research and Development.

The law further indicates that the exemptions do not apply to expendable supplies; janitorial equipment and hand tools; office equipment, furniture and supplies; tangible personal property used in selling and distributing activities; motor vehicles; shops, buildings, docks, depots, etc.; and motors and pumps used in drip irrigation systems.

If a subsequent sales tax audit disallows the exemption from transaction privilege taxes, the department ordering the equipment could be charged at that time for the unpaid taxes.

For additional information on state sales tax, see CMP 108, Sales Tax.

For additional information on state and use tax, see the Purchasing Services Policies and Procedures Manual.