Arizona appellate court finds that in-state distributors constituted physical presence

• The Arizona Court of Appeals Division One ruled that an online auto parts retailer’s use of Arizona distributors created a substantial nexus in Arizona for transaction privilege tax purposes.
• The court determined that the retailer’s use of distributors constituted a physical presence, even though the retailer did not maintain any inventory, employees, or physical presence in the state.
• The court did not apply the Arizona statute implementing the Wayfair decision retroactively to the audit period, but noted that the retailer’s sales to Arizona customers exceeded the economic presence threshold.

Source PwC

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