The Gilbert Town Council put in effect an a 1.5% transaction privilege tax on October 1, 2010. Previously, the ordinance only applied to property owners who owned three or more residential units in the state.
There has been much confusion on the tax, and most Gilbert residents have not been aware of the tax until lately. Even though the tax was initiated in October of 2010 Gilbert is just now starting to enforce and collect the tax.
If you do have a rental you have to initiate the tax by following these steps. Because many rental owners are unaware of the changes they have not registered their rental properties and therefore have not starting paying taxes.
Details are still coming out on the plan, the biggest question still remaining is will Gilbert try to collect the tax revenue dating back to the passage of the bill that has so far went uncollected.
What we do know is Gilbert has hired four full time employees that are to be tasked with getting the program up and running and collecting the transaction privileged tax from this point moving forward.
The other details of the plan are below:
If my residential rental unit is now taxable, what do I need to do? All residential rental property owners must obtain a transaction privilege tax (TPT) license from the Arizona Department of Revenue. License applications are available on their website at www.azdor.gov or at the East Valley Department of Revenue Office located at 275 E German, Bldg 2, Suite 180 in Gilbert, AZ 85297.
(Crossroads: Gilbert Rd and Germann Rd – 480-545-3500)
How much is the license fee? There is a one-time license fee of $2.00 for the Town of Gilbert only option of the TPT license. You will need to indicate that the License Type is “TPT for Cities Only” on the application (Section A, Question #1).
How do I remit my transaction privilege tax (TPT) due to the Town? Gilbert is a “program city” with the Arizona Department of Revenue which means that all tax is paid through them. Owners of residential rental units will be required to report their rental income and remit the tax to the Department of Revenue on a monthly basis.
If a residential unit becomes subject to tax on October 1, 2010, the first tax return will cover the period October 1, 2010 through October 31, 2010 and is due by November 20, 2010.
Tax return forms are available online at www.azdor.gov under the forms tab. The monthly form is entitled TPT-1. You may also complete the form and pay online at www.aztaxes.gov.
My rental unit is currently vacant; do I still need to file a return? Yes. Even if you had zero rental income, you are still required to file a return. On the return you will indicate no activity for the reporting period.
My property is managed by a property management company. Can they obtain my license and file my returns? A property management company may complete the license application for the property owner; however, the property owner must sign the application. Monthly forms will need to be submitted for the property reporting the rent amount and the tax collected.
Many property management companies collect the tax from the tenants and submit under their TPT number on behalf of the property owner.
It is the responsibility of the property owner to make sure the tax is submitted as required by law.
If a landlord lives in Gilbert but only owns rental property outside of Gilbert Town limits, does he or she still need a Gilbert tax license (TPT)? No. A Gilbert license is not required if all of the property is located outside of Gilbert. However, the landlord should contact the city where the rentals are located to determine their specific licensing requirements.
What if I currently have a lease on my rental property? Many leases contain a clause that states the tenant will pay any applicable taxes due. We recommend that you review your current lease document and, if necessary, seek appropriate legal advice.
How was the public notified of the code change?
Citizen’s budget committee meetings
Town Council meetings
East Valley Tribune newspaper articles
Arizona Republic Gilbert Section newspaper articles
Town of Gilbert website