You owe tax on advertising if:
You are in the business of selling "local advertising" within the city. This
tax is paid on the advertising income of persons in such businesses as
billboards, direct mail, radio, television, etc. The commissions and fees
retained by an advertising agency are not part of the taxable income.
Tax rate on advertising
The tax rate is 1.75% of the gross income from "local advertising."
Collection of Tax
You may choose to charge the tax separately on each sale, or include
Transaction Privilege Tax in your price. If you over charge any tax to your
customers, you must remit the excess tax to the city.
If your price includes Transaction Privilege Tax, you can compute how much
of the total price is Transaction Privilege Tax. You may deduct the
Transaction Privilege Taxes from your gross receipts.
What is "local advertising"?
Local advertising is the advertising of products, services, and
activities with a presence within the state.
What is "local advertising"?
Advertising is considered "local advertising" unless it fits one of the
following "national advertising" categories:
The following are some examples of "local advertising" and are taxable:
A product or service which is sold nationally or at least in other areas as
well as Arizona. To qualify, the ad must not name just one specific Arizona
business or one chain of Arizona businesses. It may name several different
- A facility or service which is not located in Arizona.
- A product which can only be bought from an out-of-State supplier.
- Political advertising for a United States Presidential or Vice Presidential
- Advertising by means of a coupon for a product good at any business which
carries the product. This does not apply if the coupon is only good at one
business or business chain.
- Advertising a transportation service which includes substantial interstate
and foreign carriage.
- A chain of stores including some within the State when only the common
business name is identified.
- Sales of real estate located within the State.
- A hospital located within the State.
- An ad for a motel chain as long as the ad identifies any location within the State.
- Stockbrokers doing business within the State.
- A nonprofit organization which has an office within the State.
- Political ads except for President & Vice President.
- A restaurant chain which has an outlet within the State.
- Service businesses when the service is provided within the State.
- Coupons which can be redeemed only at a location within the State.
- An entertainment event which will be held at a location within the State.
These examples are typically "national advertising" when the ad does not name a specific Arizona business or chain:
- A soft drink sold nationally and available in numerous stores.
- A new movie.
- A Las Vegas hotel.
- A Caribbean cruise.
- Lots for sale in San Diego.
- A coupon for purchase of toothpaste.
- Records and tapes by mail order from out of state.
- An airline company.
- A railroad.
When is an advertising business operating "within the city"?
Businesses are generally considered to be doing business in the City if a
major portion of their dissemination facilities are located in the City. A
broadcasting studio located in the City is an example.
Outdoor advertising such as billboards is taxable based on the city in which
the billboard is located.
Advertising income from newspapers and periodicals is taxable as part of the