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Northern Arizona University
Purchasing Policy and Procedure

Sales and Use Tax


POLICY:

STATE AND LOCAL TAXES

The University is subject to the payment of state and local sales tax and state use tax.

TAXES AND COMPETITIVE BIDDING

The amount of any applicable sales or use tax is not to be considered as a factor in determining the low bid of competing bidders.

FEDERAL TAXES

The University is not liable for federal excise taxes on transportation, freight, tires, automobiles, fuels, and other items carrying a federal tax.

Note: Northern Arizona University is registered as a tax-exempt institute with the federal government, registration number A246357.

SALES TAX

Purchases made from in-state suppliers are subject both to state sales tax and to local sales tax from the county and city where the merchandise is purchased. Out-of-state suppliers who do a considerable amount of business in Arizona are required to obtain a state sales tax license. If an out-of-state supplier has an Arizona sales tax license number, state sales tax applies to that purchase.

EXCEPTIONS

Sales tax exemptions include:

  1. Labor
  2. Professional services
  3. Items for resale
  4. Original artworks
  5. Prescription drugs
  6. Prosthetic appliances
  7. Custom software-canned software that has been modified to meet customer's needs is not considered custom software.
  8. Warranty-when listed separately on an invoice
  9. Service Agreement-when listed separately on an invoice
  10. Installation-when listed separately on an invoice
  11. Retail purchases made from federal funds where title remains with the federal government (50 percent exemption)
  12. Purchases directly from manufacturer made from federal funds where title remains with the federal government (100 percent exemption).
    - and -
  13. Purchases of equipment to be used solely for research and development (ARS.42-5061 AND ARS.42-5159).
  14. For additional information connect to the Comptrollers Web Site page on NAU Identification Numbers and Tax-Exempt Status.

USE TAX

All out-of-state purchases other than those from out-of-state suppliers with Arizona sales tax license numbers are subject to use tax. Use tax applies only to tangible personal property.

The University's financial system (Advantage) accumulates use tax for all out-of-state purchases for which tax applies, and the University remits payment directly to the State Department of Revenue. Use tax added to invoices by out-of-state suppliers will not be paid.

EXCEPTIONS

Use tax exemptions include:

  1. All items excluded from sales tax
  2. Solar energy devices
  3. Items purchased from out-of-state on which we have paid another state's sales tax
  4. Freight from F.O.B. point to University
  5. Dues
  6. Foreign duty
  7. Royalties
  8. License
  9. Rentals
  10. Broadcasting rights
  11. Booking fees
  12. Advertising
    - and -
  13. Purchases made from federal funds where title remains with the federal government.
  14. Custom software-canned software that has been modified to meet customer's needs is not considered custom software.
  15. Warranty-when listed separately on an invoice
  16. Service Agreement-when listed separately on an invoice
  17. Installation-when listed separately on an invoice