Section R15-5-170. Interstate and Foreign Transactions

A.      Gross receipts from sales of tangible personal property made in interstate or foreign commerce are deductible from the tax base if all of the following apply:

1.        The order is received from a location outside of Arizona; and

2.        The retailer ships or delivers the tangible personal prop- erty to a location outside of Arizona for use outside of Arizona.

B.       In meeting the above requirements, if delivery is made by the retailer to a common carrier for transportation to a location outside Arizona, the common carrier is deemed to be the agent of the retailer for purposes of this rule regardless of who is responsible for payment of the freight charges.

C.      Suitable records shall be kept to substantiate the deduction for a sale made in interstate commerce. As such, records shall identify the tangible personal property sold and the delivery destination. The following records may be sufficient to sub- stantiate the exemption:

1.        Suitable records for substantiating the receipt of an order from out-of-state may include purchase orders, letters, or written memoranda on the receipt of orders placed by telephone.

2.        Suitable records for substantiating out-of-state shipments include:

a.         Internal delivery orders supported by receipts of expenses incurred in delivering the property and signed on the delivery date by the person who deliv- ers the property;

b.        Common carrier’s receipt or bill of lading;

c.         Parcel post receipt;

d.        Export declaration;

e.         Receipt from a licensed broker; or

f.         Proof of export or import signed by a customs offi- cer.

Historical Note

Renumbered from R15-5-1814 and amended effective August 9, 1993 (Supp. 93-3).