Schedule MSP: Multi-state Service Provider Election and Computation (2024)
Arizona · Arizona DOR · Used for tax years 2024
Arizona Schedule MSP is used to make the Multistate Service Provider election and report Arizona market sales from services or designated intangibles. It includes a qualification section for the first year of the election cycle. The election is irrevocable and binding for five co
Who files this form
Use Schedule MSP to make the Arizona Multistate Service Provider election, and include it with your tax return. The schedule lists filers of Forms 99T, 120, 120S, 120X, and 165.
In the first year of the election cycle, Part A determines whether you qualify. You qualify if you meet any one of these tests:
- Sales from services or designated intangibles whose benefit is received outside Arizona, divided by total sales everywhere, produce a ratio greater than 0.850000.
- You are a regionally accredited institution of higher education with at least one university campus in Arizona that has more than 2,000 students residing on campus.
- You are an employer with more than 2,000 employees in Arizona and derive more than 85% of your sales from support services provided to a regionally accredited institution of higher education.
If you answer “No” to all three tests, the form says you do not qualify and must stop.
What you'll need
Have your tax return and the information requested on Schedule MSP ready:
- Your name as shown on Form 99T, 120, 120S, 120X, or 165, and your Employer Identification Number (EIN).
- The beginning and ending dates of your tax year and the initial year of your election cycle.
- Your current election-cycle year, from Year 1 through Year 5.
- For Year 1, sales amounts and any applicable education or employee information needed to complete the qualification tests in Part A.
- Your Arizona market sales from services or designated intangibles for Part B.
How to file
Complete Schedule MSP and include it with your tax return. To make the election, submit the completed schedule with your timely filed original return.
- Enter your name, EIN, tax-year dates, initial election-year dates, and current election-cycle year.
- Complete Part A only in Year 1. Carry the ratio on line A3 to six decimal places and follow the Yes/No directions.
- Enter Arizona market sales from services or designated intangibles in Part B.
- Also enter the Part B amount on the applicable return:
- Form 99T: Schedule A, line A3b, column A.
- Form 120: Schedule E, line E3b, column A.
- Form 120S: Schedule A, line A3b, column A.
- Form 120X: Schedule A, line A3b, column A.
- Form 165: Schedule C, line C3b, column A.
The supplied form does not give a mailing address or e-filing instructions.
Common mistakes
- Do not leave Schedule MSP out of the return. The form directs you to include it with your timely filed original return to make the election.
- Complete Part A only in Year 1 of the election cycle.
- Do not omit the Part B amount from the applicable sales line on your tax return.
- Before making the election, note that it is irrevocable and binding for five consecutive taxable years, beginning with the first taxable year to which it applies.
Questions people ask
How long does the election last?
The election is irrevocable and binding for five consecutive taxable years, starting with the first taxable year to which it applies.
Do I complete Part A every year?
No. Complete Part A only in Year 1 of the election cycle. The schedule also asks you to identify the current cycle year, from Year 1 through Year 5.
Does a ratio of exactly 0.850000 qualify under line A4?
No. Line A4 requires a ratio greater than 0.850000. If your answer is “No,” continue to line A5 to check the next qualification test.
What amount goes in Part B?
Enter Arizona market sales from services or designated intangibles. Also enter that amount on the return line specified for your form.