Glossary · Licensing & Bonding
Principal place of business
In short
Whether a contractor's base is in Arizona. It decides bonding, and it has a statutory definition with a staffing test.
In full
Principal place of business decides whether a contractor is treated as based in Arizona, and the consequence is bonding: A.R.S. § 42-5006(A) requires a bond where the taxpayer's principal place of business is outside this state.
It is not a mailing address and not where the owner lives. A.R.S. § 42-5007(F) defines it as "a location where a person has continuously operated a facility with at least one full-time employee for the preceding twelve consecutive months."
That definition opens with the words "In this section." It is written for § 42-5007 and the security that section requires. A.R.S. § 42-5006(A) uses the same phrase for the bonding question and defines it nowhere. ADOR applies the § 42-5007(F) test to both, which is a reasonable reading and is not one the statute states.
Both halves matter. A contractor with an Arizona address but no facility does not meet it, and a contractor with a facility staffed only by the owner as a sole proprietor, or only by subcontracted labor, has an employee question to answer before relying on it.
The phrase also turns up in sourcing, in two places where something has gone wrong — and in one of them it is the form talking rather than the statute. Where materials bought under a Form 5009L are used on a nontaxable contract, Form 5009L says the liability is sourced to the contractor's principal place of business; A.R.S. § 42-5009(L)(3) sources it under § 42-5040(A)(2), which reaches the purchaser's location. Where a contractor cancels a TPT license while holding exempt materials, ADOR reports the retail equivalent at the rate of the contractor's principal place of business.
A.R.S. § 42-5007(F); A.R.S. § 42-5006(A); A.R.S. § 42-5009(L)(3); ADOR Bond for Contractors