Arizona Imposes Tax on Sales of Food by Mobile Vendors

Arizona has enacted legislation imposing tax on sales of food by mobile food units. Mobile food units now fall under the restaurant classification for sales tax purposes. Thus, sales of food by street or sidewalk vendors who use a mobile facility are no longer exempt from tax.

Mobile Food Units

A “mobile food unit” is a food establishment that:

  • is licensed by the state;
  • is readily movable;
  • sells food or beverages for immediate service and consumption, and other incidental retail items; and
  • makes those sales from a vehicle.

Local Taxes

The legislation also allows a city, town, or other taxing jurisdiction to impose a tax on mobile food vendors. The taxing authority may impose any of the following taxes or fees:

  • transaction privilege;
  • sales;
  • use;
  • franchise; or
  • other similar tax or fee.

The taxing authority may impose the tax for sales of:

  • food or beverages for immediate service and consumption; and
  • incidental retail items.

Mobile Food Vendors

A “mobile food vendor” is any person who:

  • owns, controls, manages, or leases a mobile food unit; or
  • contracts with a person to prepare foods and sell from, drive, or operate a mobile food unit.

Record Keeping

Vendors must maintain records that show the separate receipts from sales in areas where they do business. Otherwise, the Department of Revenue will collect local tax on the vendor’s total receipts at the highest rate for any jurisdiction.

Ch. 286 (H.B. 2371), Laws 2018, effective August 3, 2018

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