Sourcing
In short
Deciding which jurisdiction an amount belongs to. In contracting it follows the work, with two named exceptions.
In full
Sourcing decides which jurisdiction an amount is reported to and therefore which combined rate applies.
The general rule in contracting is that it follows the work. Gross receipts from a modification project are sourced to the location the project takes place, and the retail equivalent on materials used in an MRRA project is reported to the location of the project.
Two cases are sourced away from the project, and both arise from something going wrong. Where materials bought against a Form 5009L are used on a nontaxable contract, A.R.S. § 42-5009(L)(3) sources the liability under § 42-5040(A)(2) — the purchaser's location, with the billing address as the fallback where there is no delivery address. Form 5009L states the contractor's principal place of business instead, which is not what § 42-5040 says. Where a contractor cancels a TPT license while holding materials bought exempt, ADOR reports the retail equivalent at the rate of the contractor's principal place of business.
Speculative builder tax is sourced differently again, because it is not sourced to a project at all — it is a city tax on the sale of improved real property within that city's boundaries.
Manufactured buildings have their own situs rules: where the dealer contracts to deliver to a setup site in Arizona or performs the setup, the situs is the setup site; where not, it is the dealership location; and where delivery is to a setup site outside Arizona, the transaction is excluded.
A.R.S. § 42-5075(N); ADOR Modification Contracting; ADOR MRRA Contracting; Arizona Form 5009L; Model City Tax Code § 416(a)