A new Arizona law prohibits landlords from charging residential renters a sales tax as of Jan. 1.Renters who believe their landlord is still charging the tax should contact their landlord or the Arizona Department of Revenue.Tenants can also file a consumer complaint with the Arizona Attorney General’s Office or pursue legal action.Residential tenants in Arizona should no longer be paying a tax on their monthly rent under a 2023 state law.Republican state lawmakers two years ago prioritized repealing the tax charged by some municipalities as a way to offer some financial relief from high housing costs. Gov. Katie Hobbs, a Democrat, ultimately signed the repeal into law — over the objections of city leaders — in a deal that won Republican votes for a transportation tax extension plan.The tax should have disappeared by Jan. 1.In the weeks since then, renters have complained of landlords who converted the tax to a fee or who continued charging the tax. Arizona Attorney General Kris Mayes’ office, acting on complaints from tenants, demanded a Mesa landlord change course after it appeared to turn the tax into a fee in exchange for not raising rent.The Arizona Republic is investigating whether property managers are following the law, and here’s how you can help with our reporting.Here are some of the common questions readers and renters have asked about the tax repeal, and what you should do if you think your landlord isn’t following the law.Can renters of manufactured home lots still be charged the tax?No, according to Richie Taylor, spokesperson for the attorney general. The law repeals the rental tax on “real property that is rented or leased for residential purposes.”The Arizona Department of Revenue, the state’s tax collection and enforcement agency, confirmed the tax should not be charged on manufactured home lots as long as they are rented for residential purposes and for 30 days at a time or more.How do I tell if my landlord has stopped charging the tax?First, check your monthly bill to see if the charges are itemized, showing individual fees and taxes charged. The rental tax might be called a sales tax or transaction privilege tax.If the bill is not itemized, you can ask your landlord to confirm the tax is not part of your bill, according to Taylor and the Department of Revenue.“Landlords may try to disguise the now prohibited rental tax as a new fee,” Taylor said, advising renters to check for fees that are the same amount as what they paid in rental tax.Can the landlord add a new administrative fee, if it’s on a current lease?No, your landlord may not change your current lease to an administrative fee without your consent, Taylor said.If the lease term has ended, the landlord can make changes, but the tenant can negotiate those or choose not to renew, he said.What should I do if I think my landlord is still charging the tax?”If you believe that your landlord is still collecting tax, you may wish to contact your landlord to clarify if tax is still included in your rent,” Rebecca Wilder, spokesperson for the Department of Revenue, wrote in an email. “If your landlord does not respond or if the landlord indicates that he does not intend to adjust your rent, you may wish to contact legal counsel to determine your options.”The law sets up provisions for renters to bring civil lawsuits, putting the burden on landlords to show that they are not charging the tax or fees in place of the tax.The Attorney General’s Office also encourages renters to consider filing a consumer complaint. More information about how to do so, and how to file a complaint online, is available at www.azag.gov/complaints/consumer.“Under state statute, consumer complaints are completely confidential, so we would never share someone’s information with the public or the landlord without their express consent,” Taylor said, noting that retaliating against someone for filing a complaint is prohibited under Arizona law.I rent a single-family home from a private individual. I pay the same amount monthly, and it is not itemized for the rental tax. What do I do?“Private landlords are also required to stop collecting rental tax, and your rental bill should be reduced,” Taylor said.But there are reasons why some renters would not see a decrease month-over-month.Some cities never charged a rental tax, so renters there should not see any change. Those include Tucson and Flagstaff.Many cities in the Phoenix metro area did charge a tax between 1% and 3%. Here are the tax rates from some of the largest municipalities (and the amount your monthly bill should have decreased as of Jan. 1):Phoenix: 2.3%Mesa: 2%Scottsdale: 1.75%Tempe, Peoria: 1.8%Goodyear, Avondale: 2.5%Buckeye: 3%The Department of Revenue publishes a guide to taxes charged in municipalities, see if yours charged a tax on residential rentals here.Wilder noted other circumstances that might mean a tenant doesn’t see a change in their monthly costs. Some municipalities allowed people to rent a certain number of units before charging the tax, she said, and some landlords may not have charged the tax separately on the rent bill.Are landlords required to give notice to renters about the repeal?Nothing about the 2023 law required landlords to notify tenants they would stop charging the tax, according to the Department of Revenue.The Department of Revenue also has published an FAQ about the tax repeal. See it here.But Taylor said notifying tenants is a best practice, to keep renters informed.Why was the tax repealed?The tax repeal, and transportation tax extension, were major issues at the Arizona Capitol two years ago as Hobbs tried to find her leverage with GOP majorities in the Legislature. Hobbs initially vetoed a version of the GOP’s rental tax repeal bill, but later signed into law a revised version. That version, sponsored by Senate President Warren Petersen, R-Gilbert, required the savings be passed on to renters.Cities that imposed the tax objected to the law, noting that it generates millions of dollars each year to fund government services. They unsuccessfully urged lawmakers to backfill the funding, and some implemented cuts or considered increasing other taxes to offset the hit to their bank accounts.Phoenix may consider a sales tax increase to offset declining revenues in part due to the repeal of the tax on rentals.Reach reporter Stacey Barchenger at stacey.barchenger@arizonarepublic.com or 480-416-5669.
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