## Dispensed Water Taxability in Arizona
### Introduction
Determining the taxability of dispensed water in Arizona requires an understanding of the state’s sales tax laws. This article provides a comprehensive overview of the relevant regulations and exemptions applicable to the sale of dispensed water.
### Sales Tax Overview
In Arizona, sales tax is imposed on the sale or rental of tangible personal property and certain services. Tangible personal property is defined as “personal property that can be seen, weighed, measured, felt, or touched.”
### Taxability of Dispensed Water
Dispensed water is generally subject to sales tax in Arizona. This includes water dispensed from:
– Vending machines
– Water coolers
– Bottled water delivery services
### Exemptions
However, there are certain exemptions that may apply to the sale of dispensed water.
#### Bulk Water Sales
The sale of bulk water (i.e., water sold in containers larger than 1 gallon) is exempt from sales tax if the water is used for:
– Industrial purposes
– Agricultural irrigation
– Firefighting
#### Water for Human Consumption
The sale of water for human consumption is exempt from sales tax if:
– The water is dispensed from a public water source
– The water is not sold in a sealed container
Examples of Exempt Sales:
– Water dispensed from a faucet or water cooler
– Water provided by a water filtration system
– Water used for drinking, cooking, or bathing
Examples of Taxable Sales:
– Bottled water purchased from a store
– Water dispensed from a vending machine
– Water delivered in sealed containers
### Tax Rate
The sales tax rate for dispensed water in Arizona is 5.6%. This rate applies to both taxable sales of bulk water and water for human consumption.
### Reporting Requirements
Businesses that sell dispensed water in Arizona are required to collect and remit sales tax. The amount of sales tax collected must be reported on the business’s sales tax return.
### Penalties and Interest
Businesses that fail to properly collect and remit sales tax may be subject to penalties and interest. The Arizona Department of Revenue has the authority to assess penalties of up to 25% of the unpaid tax.
### Conclusion
The taxability of dispensed water in Arizona depends on the nature of the sale and the intended use of the water. Businesses that sell dispensed water should carefully review the sales tax laws and exemptions to ensure that they are properly collecting and remitting sales tax. Failure to do so could result in penalties and interest.
### Frequently Asked Questions
1. Is water from a home water filtration system taxable?
No, water dispensed from a home water filtration system is exempt from sales tax.
2. Is water used for a pool or hot tub taxable?
Yes, water used for a pool or hot tub is subject to sales tax.
3. Can I deduct the cost of dispensed water on my income taxes?
No, the cost of dispensed water is not deductible on your income taxes.
4. How can I get more information about sales tax on dispensed water in Arizona?
You can contact the Arizona Department of Revenue at (602) 716-6300 or visit their website at https://azdor.gov/.