Sources
How the material on this site is checked, what is currently unresolved, and what has changed as a result of asking.
How this works
Every definition, rule, and classification on this site traces to a primary source: the Arizona Revised Statutes, the Model City Tax Code, or published guidance from the Arizona Department of Revenue. Each glossary entry names its source and carries the date it was last checked against it.
ADOR guidance summarizes statute. Where guidance and statute differ, the statute governs, and the entry says so.
Published sources sometimes differ from one another, or leave a question unanswered. When that happens the question is submitted to ADOR Tax Policy rather than guessed at, and the affected entries carry a marker until an answer arrives.
An answer arrives in one of three forms, and they do not carry the same weight. An information letter states the Department's general position. A private taxpayer ruling binds the Department as to the taxpayer who asked for it. A tax procedure notice is published guidance of general application — and can be rescinded, as two governing this material were on 2026-01-01. Where a rate is what is needed rather than a rule, the address lookup at AZTaxes.gov returns it for a given job site.
Questions currently with ADOR
Entries affected by these questions carry a red flag wherever they appear. A flag states that a question has been submitted, and leads to that question's own page.
ADOR Tax Policy states a response time of 25 business days for Transaction Privilege Tax questions, answered in the order received. Follow-ups are sent on business day 25 and every 10 business days after that.
Whether the six-month window for requesting an MRRA credit is a deadline
ADOR's MRRA Credit Request Procedure says the credit should be requested within no more than six months of the change from MRRA to modification. A.R.S. § 42-5008.01 sets no period for the offset it provides. The question asks whether a request made after six months is refused, and on what authority.
How a prime contractor with no subcontractors recovers the tax on its own materials when an MRRA project becomes modification
ADOR's MRRA Credit Request Procedure is built around subcontractors — Form 5005, their affidavits, and the MRRA Credit Summary Workbook — and says nothing about a prime contractor with none. ADOR's MRRA Contracting page says a licensed contractor may amend its returns when a project becomes modification. The question asks which route applies, or whether the two are interchangeable.
Whether a prime contractor's receipt must state the tax separately
A.R.S. § 42-5075(F) requires a prime contractor to give the purchaser a written receipt that separately states the tax. ADOR's Contracting FAQs say a licensed contractor may, but need not, show tax as a separate line item. The question asks which governs, and what follows where a receipt does not state the tax.
Whether replacement requires a reason for leaving the old item in place
A.R.S. § 42-5075(S)(11) treats work as replacement regardless of whether the existing component or system is physically removed. ADOR's MRRA Contracting page lets the old item stay only where it remains non-operational and removing it makes no sense or is not possible. The question asks whether an item left in place counts as replaced where removing it was possible, and if not, what standard applies.
Whether the 25% alteration cushion covers overruns no change order caused, and contracts with mixed work
A.R.S. § 42-5075(S)(1)(d) keeps work an alteration where it exceeds the threshold by not more than 25% for any reason, if the owner and the contractor reasonably believed at the start that it was an alteration. ADOR's MRRA Contracting page says a project remains an alteration contract as long as it has no maintenance, repair or replacement elements when bid. The question asks whether the cushion covers an overrun no change order caused, and a contract that had such elements at bid.
How the dates of substantial completion and final completion are fixed under the design phase services exclusion
A.R.S. § 42-5075(O) defines a punch list as minor modification work performed after substantial completion and before final completion, and lists inspection to determine those dates as a construction phase service. It defines neither date. The question asks whether ADOR applies a definition of each, or accepts the dates the construction contract sets.
Whether each work order under a private master agreement is classified separately
ADOR's Contracting FAQs say that for Job Order Contracting, each work order is considered separately when deciding between MRRA and modification. Arizona's statutory definition of job-order-contracting, at A.R.S. § 34-101, belongs to the public procurement code. The question asks whether the per-work-order rule reaches work orders issued under a private master services agreement.
Whether Form 5009L may be used on an MRRA project
ADOR's Modification v MRRA Summary lists Form 5009L in its MRRA column as an alternative for unlicensed contractors. A.R.S. § 42-5009(L) limits the certificate to property incorporated into a project whose gross receipts are taxable under § 42-5075, and § 42-5075(P) excludes an MRRA contract with no modification activity from that tax. The question asks whether the certificate may be used on an MRRA project, and if not, what the chart's MRRA entry refers to.
Whether building a road to a landfill, or a cell within one, is prime contracting
A.R.S. § 42-5075(M) says constructing roads to a landfill and cells within one "may be deemed" prime contracting, without saying who deems it or on what basis. The question asks whether that work is taxable in the ordinary case, and what would make it not.
Whether an owner building to sell may buy materials exempt, and from which taxes
ADOR's Contracting Guidelines page says contractors other than the owner may buy materials exempt, and the owner is not permitted to. Model City Tax Code guideline TG 2001-01 says an owner building improvements to sell may claim an exemption from city tax on direct materials, on a written declaration with its city license number. The question asks which taxes such an owner may buy exempt from, and what documentation establishes it.
Resolved
Questions submitted, the answer received, and every place that answer changed something.
Which county valuation governs the residential alteration threshold
What ADOR said. The parcel's most recent full cash value governs, not the limited property value. ADOR cites A.R.S. 42-5075(S)(1)(a) directly and directs use of the county assessor's website to establish full cash value, with the alteration contract value at 25 percent or less of that figure.
What changed. The glossary entries Full cash value, Limited property value, County assessor, Notice of Value, and Alteration threshold; the Classifier's residential threshold branch.
How overhead and profit are allocated across activity buckets in a mixed contract
What ADOR said. Allocate overhead and profit pro rata by direct costs. Convert the total costs associated with each activity type into a percentage and allocate overhead and profit to each on that basis. ADOR confirms this method is listed as acceptable in the Evaluating Mixed Construction Contracts worksheet.
What changed. The glossary entries De minimis, Bucket, Combined modification charges, and Overhead and profit; the Classifier's mixed-contract bucket calculator.
Which amount is compared to the alteration threshold on a mixed contract
What ADOR said. On a mixed contract, only the alteration portion is compared with the alteration threshold, not the total contract. The contract amount in A.R.S. 42-5075(S)(1)(a) applies to contracts that are purely alteration; for mixed contracts, ADOR's Evaluating Mixed Construction Contracts worksheet is the correct reading. In ADOR's example, a $150,000 contract with $100,000 of alteration does not convert to modification against a $125,000 threshold, 25 percent of the parcel's full cash value.
What changed. The glossary entries Contract amount, Alteration, Alteration threshold, and Full cash value; the Classifier's threshold computation.
Whether a contract at exactly 15% is de minimis
What ADOR said. A contract whose modification portion is exactly 15 percent of the total contract value remains MRRA: de minimis includes 15 percent. ADOR traces the 15-percent-or-less wording to the former Taxpayer Notice 15-1, carried into its Contracting FAQs, and reads the worksheet's 'less than 15%' as not excluding exactly 15 percent.
What changed. The glossary entries De minimis and Combined modification charges; the Classifier's de minimis branch.
Whether a scope-related change order's modification content re-enters the de minimis computation
What ADOR said. A change order that directly relates to the original scope of work is folded into the original contract, and the de minimis computation is redone on the combined total; a reclassification applies from the start of the contract. A.R.S. 42-5075(P)(2) decides only whether a change order is part of the original contract or a separate one. A change order unrelated to the original scope is treated as a new contract from its date.
What changed. The glossary entries Change order, De minimis, Reclassification, and MRRA Credit Request; the Classifier's change-order handling.
Rechecking sources
Every source cited on this site is rechecked on a quarterly schedule, and immediately whenever ADOR publishes a revision to the contracting guidelines or the legislature amends a cited statute. Entries updated by a recheck have their verification date advanced; entries whose substance changed are noted in the resolved list above where an ADOR answer prompted the change.
Tax rates are not published anywhere on this site. Rates change and are issued with advance notice, so any figure reproduced here would eventually be wrong. Use the address lookup at AZTaxes.gov for the rate at a specific job site.
Sources cited in the glossary
Each glossary entry links to the sources it relies on. They are gathered here in one place, each listed once.
Arizona Revised Statutes
- A.R.S. Title 42 — section list
- A.R.S. § 32-1101
- A.R.S. § 32-1102
- A.R.S. § 32-1121 — Persons not required to be licensed
- A.R.S. § 34-101 — Definitions
- A.R.S. § 42-11001 — Property tax definitions
- A.R.S. § 42-1104 — Statute of limitation; exceptions
- A.R.S. § 42-1108 — Audit; deficiency assessments; nonaudit adjustments
- A.R.S. § 42-1125
- A.R.S. § 42-12002
- A.R.S. § 42-12003
- A.R.S. § 42-12004
- A.R.S. § 42-13051
- A.R.S. § 42-13301
- A.R.S. § 42-15101
- A.R.S. § 42-16051
- A.R.S. § 42-2003
- A.R.S. § 42-2052
- A.R.S. § 42-2101 — Private taxpayer rulings
- A.R.S. § 42-5001 — Definitions
- A.R.S. § 42-5005 — TPT and municipal privilege tax licenses
- A.R.S. § 42-5006
- A.R.S. § 42-5007 — Taxpayer security; out-of-state prime contractors
- A.R.S. § 42-5008
- A.R.S. § 42-5008.01 — Liability for amounts equal to retail transaction privilege tax due
- A.R.S. § 42-5009 — Certificates establishing deductions
- A.R.S. § 42-5014 — Return and payment of tax
- A.R.S. § 42-5040 — Sourcing of certain transactions
- A.R.S. § 42-5044 — Nexus; out-of-state businesses; threshold
- A.R.S. § 42-5061 — Retail classification
- A.R.S. § 42-5071 — Personal property rental classification
- A.R.S. § 42-5075
- A.R.S. § 42-5122 — Tax exemption; sales to Indian tribes
- A.R.S. § 42-5155 — Levy of tax; tax rate; purchaser's liability
- A.R.S. § 42-5159
- A.R.S. § 42-6001 — Collection and administration of city taxes
- A.R.S. § 42-6052
Arizona Department of Revenue
- ADOR — Bond for Contractors
- ADOR — Contracting FAQs
- ADOR — Contracting Forms
- ADOR — Contracting Guidelines
- ADOR — Deduction Codes
- ADOR — Disclosure and Compliance Programs
- ADOR — Evaluating Mixed Construction Contracts
- ADOR — Joint Tax Application for a TPT License
- ADOR — Letter Rulings
- ADOR — Location Based Reporting
- ADOR — Managed Audit Program
- ADOR — Modification Contracting
- ADOR — Modification v MRRA Summary
- ADOR — MRRA Contracting
- ADOR — MRRA Credit Request Procedure
- ADOR — Rescission of TPN 15-1
- ADOR — Rescission of TPN 18-1
- ADOR — Sales of Improved Property by a Speculative Builder
- ADOR — Speculative Builder
- ADOR — Tax Factoring
- ADOR — Tax Notices
- ADOR — Tax Rate Table
- ADOR — TPT Audit
- ADOR — TPT-EZ Transaction Privilege, Use and Severance Tax Return
- ADOR — Voluntary Disclosure and Compliance Program
- MCTC § 415 — Construction Contracting: Construction Contractors
- Model City Tax Code § 416 — Speculative Builders
- Model City Tax Code § 417 — Construction Contracting: Owner-Builders Who Are Not Speculative Builders
- Model City Tax Code — Appendix I
Other sources
Found something wrong?
The correction form takes a correction to anything inaccurate, and each one is checked against source the same way everything else on this site is. Every correction received is listed on that page with its date and what came of it.