Chapter 16
LICENSE,
PRIVILEGE AND EXCISE TAXES[1]
Art. I. General Conditions and Definitions, §§
16-1—16-120
Art. II. Determination of Gross Income, §§
16-200—16-290
Art. IV. Privilege Taxes, §§ 16-400—16-480
Art. V. Administration, §§ 16-500—16-597
Art. III. Licensing and Recordkeeping, §§
16-300—16-370
Art. VI. Use Tax, §§ 16-600—16-660
Art. VII. Reserved
Art. VIII. Reserved
ARTICLE
I. GENERAL CONDITIONS AND DEFINITIONS
Sec.
16-1. Words of tense, number and gender;
code references.
(a) For
the purposes of this Chapter, all words of tense, number, and gender shall
comply with A.R.S. Section 1-214 as amended.
(b) For
the purposes of this Chapter, all code references, unless specified otherwise,
shall:
(1) Refer to this City Code;
(2) Be deemed to include all amendments to such code references.
(Ord.
No. 87.17, § 1,
Sec.
16-100. General definitions.
For the purposes of this Chapter, the
following definitions apply:
Assembler
means a person who
unites or combines products, wares, or articles of manufacture so as to produce
a change in form or substance of such items without changing or altering
component parts.
Broker
means any person engaged
or continuing in business who acts for another for a consideration in the
conduct of a business activity taxable under this Chapter, and who receives for
his principal all or part of the gross income from the taxable activity.
Business
means all activities or
acts, personal or corporate, engaged in and caused to be engaged in with the
object of gain, benefit, or advantage, either direct or indirect, but not
casual activities or sales.
Business
day means any day of the
week when the Tax Collector's office is open for the public to conduct the Tax
Collector's business.
Casual
activity or sale means a
transaction of an isolated nature made by a person who neither represents
himself to be nor is engaged in a business subject to a tax imposed by this
Chapter. However, no sale, rental,
license for use, or lease transaction concerning real property nor any activity
entered into by a business taxable by this Chapter shall be treated, or be
exempt, as casual. This definition shall
include sales of used capital assets, provided that the volume and frequency of
such sales do not indicate that the seller regularly engages in selling such
property.
Combined
taxes means the sum of
all applicable Arizona Transaction Privilege and Use Taxes; all applicable
transportation taxes imposed upon gross income by this County as authorized by
Chapter 8.3, Title 42, Arizona Revised Statutes; and all applicable taxes
imposed by this Chapter.
Commercial
property is any real
property, or portion of such property, used for any purpose other than lodging
or lodging space, including structures built for lodging but used otherwise,
such as model homes, apartments used as offices, etc.
Communications
channel means any line,
wire, cable, microwave, radio signal, light beam, telephone, telegraph, or any
other electromagnetic means of moving a message.
Construction
contracting refers to
the activity of a construction contractor.
Construction
contractor means a
person who undertakes to or offers to undertake to, or purports to have the
capacity to undertake to, or submits a bid to, or does himself or by or through
others, construct, alter, repair, add to, subtract from, improve, move, wreck,
or demolish any building, highway, road, railroad, excavation, or other
structure, project, development, or improvement to real property, or to do any
part thereof. "Construction
contractor" includes subcontractors, specialty contractors, prime
contractors, and any person receiving consideration for the general supervision
and/or coordination of such a construction project except for
remediation contracting. This definition
shall govern without regard to whether or not the construction contractor is
acting in fulfillment of a contract.
Delivery
(of notice) by the Tax Collector means
"receipt (of notice) by the taxpayer".
Delivery,
installation or other direct customer services means services or labor, excluding repair
labor, provided by a taxpayer to or for his customer at the time of transfer of
tangible personal property; provided further that the charge for such labor or
service is separately billed to the customer and maintained separately in the
taxpayer's books and records.
Engaging,
when used with reference
to engaging or continuing in business, includes the exercise of corporate or
franchise powers.
Equivalent
excise tax means either:
(1) A Privilege or Use Tax levied by another
Arizona municipality upon the transaction in question, and paid either to such
Arizona municipality directly or to the vendor; or
(2) An excise tax levied by a political
subdivision of a state other than Arizona upon the transaction in question, and
paid either to such jurisdiction directly or to the vendor; or
(3) An excise tax levied by a Native American
Government organized under the laws of the federal government upon the
transaction in question, and paid either to such jurisdiction directly or to
the vendor.
Federal
government means the
United States Government, its departments and agencies; but not including
national banks or federally chartered or insured banks, savings and loan
institutions, or credit unions.
Food
means any items intended
for human consumption as defined by rules and regulations adopted by the
Department of Revenue, State of
Hotel
means any public or
private hotel, inn, hostelry, tourist home, house, motel, roominghouse,
apartment house, trailer, or other lodging place within the City offering
lodging, wherein the owner thereof, for compensation, furnishes lodging to any
transient, except foster homes, rest homes, sheltered care homes, nursing
homes, or primary health care facilities.
Jet
fuel means jet fuel as defined in A.R.S. Section 42-5351.
Job
printing means the
activity of copying or reproducing an article by any means, process, or method.
"Job printing" includes engraving of printing plates, embossing,
copying, micrographics, and photo reproduction.
Lessee
includes the equivalent
person in a rental or licensing agreement for all purposes of this Chapter.
Lessor
includes the equivalent
person in a rental or licensing agreement for all purposes of this Chapter.
Licensing
(for use) means any
agreement between the user ("licensee") and the owner or the owner's
agent ("licensor") for the use of the licensor's property whereby the
licensor receives consideration, where such agreement does not qualify as a
"sale" or "lease" or "rental" agreement.
Lodging
(lodging space) means
any room or apartment in a hotel or any other provider of rooms, trailer
spaces, or other residential dwelling spaces; or the furnishings or services
and accommodations accompanying the use and possession of said dwelling space,
including storage or parking space for the property of said tenant.
Manufactured
buildings means a
manufactured home, mobile home or factory built building, as defined in A.R.S.
Section 41-2142.
Manufacturer
means a person engaged
or continuing in the business of fabricating, producing, or manufacturing
products, wares, or articles for use from other forms of tangible personal
property, imparting to such new forms, qualities, properties, and combinations.
Mining
and metallurgical supplies means
all tangible personal property acquired by persons engaged in activities
defined in subsection 16-432 for such use. This definition shall not include:
(1) Janitorial
equipment and supplies.
(2) Office equipment, office furniture, and
office supplies.
(3) Motor vehicles licensed for use upon the
highways of the State.
Modifier
means a person who
reworks, changes, or adds to products, wares, or articles of manufacture.
Nonprofit
entity means any entity
organized and operated exclusively for charitable purposes, or operated by the
Federal Government, the State, or any political subdivision of the State.
Occupancy
(of real property) means
any occupancy or use, or any right to occupy or use, real property including
any improvements, rights, or interests in such property.
Out-of-city
sale means the sale of
tangible personal property and job printing if all of the following occur:
(1) Transference of title and possession occur
without the City; and
(2) The stock from which such personal property
was taken was not within the corporate limits of the City; and
(3) The order is received at a permanent
business location of the seller located outside the City; which location is
used for the substantial and regular conduct of such business sales activity. In no event shall the place of business of
the buyer be determinative of the situs of the receipt of the order.
For
the purpose of this definition it does not matter that all other indicia of
business occur within the City, including, but not limited to, accounting,
invoicing, payments, centralized purchasing, and supply to out-of-city
storehouses and out-of-city retail branch outlets from a primary storehouse
within the City.
Out-of-state
sale means the sale of
tangible personal property and job printing if all of the following occur:
(1) The order is placed from without the State
of
(2) The property is delivered to the buyer at a
location outside the State; and
(3) The property is purchased for use outside
the State.
Owner-builder
means an owner or lessor
of real property who, by himself or by or through others, constructs or has
constructed or reconstructs or has reconstructed any improvement to real
property.
Person
means an individual,
firm, partnership, joint venture, association, corporation, estate, trust,
receiver, syndicate, broker, the Federal Government, this State, or any
political subdivision or agency of this State.
For the purposes of this Chapter, a person shall be considered a
distinct and separate person from any general or limited partnership or joint
venture or other association with which such person is affiliated. A subsidiary corporation shall be considered
a separate person from its parent corporation for purposes of taxation of
transactions with its parent corporation.
Prosthetic
means any of the
following tangible personal property if such items are prescribed or
recommended by a licensed podiatrist, chiropractor, dentist, physician or
surgeon, naturopath, optometrist, osteopathic physician or surgeon,
psychologist, hearing aid dispenser, physician assistant, nurse practitioner or
veterinarian:
(1) Any man-made device for support or
replacement of a part of the body, or to increase acuity of one of the
senses. Such items include: prescription
eyeglasses; contact lenses; hearing aids; artificial limbs or teeth; neck,
back, arm, leg, or similar braces.
(2) Insulin, insulin syringes, and glucose test
strips sold with or without a prescription.
(3) Hospital beds, crutches, wheelchairs,
similar home health aids, or corrective shoes.
(4) Drugs
or medicine, including oxygen.
(5) Equipment used to generate, monitor, or
provide health support systems, such as respiratory equipment, oxygen
concentrator, dialysis machine.
(6) Durable medical equipment which has a
federal health care financing administration common procedure code, is
designated reimbursable by Medicare, can withstand repeated use, is primarily
and customarily used to serve a medical purpose, is generally not useful to a
person in the absence of illness or injury and is appropriate for use in the
home.
Qualifying
community health center means:
(1) An entity that is recognized as nonprofit
under 501(c)(3) of the United States Internal Revenue Code, that is a
community-based, primary care clinic that has a community-based board of
directors and that is either:
(a) The
sole provider of primary care in the community.
(b) A nonhospital affiliated clinic that is
located in a federally designated medically underserved area in this state.
(2) Includes
clinics that are being constructed as qualifying community health centers.
Qualifying
health care organization means an entity that is recognized as nonprofit
under Section 501(c) of the United States Internal Revenue Code and that uses
at least eighty percent of all monies that it receives from all sources each
year only for health and medical related educational and charitable services,
as documented by annual financial audits prepared by an independent certified
public accountant, performed according to generally accepted accounting
standards and filed annually with the Arizona Department of Revenue.
Qualifying hospital means:
(1) A licensed hospital which is organized and
operated exclusively for charitable purposes, no part of the net earnings of
which inures to the benefit of any private shareholder or individual.
(2) A licensed nursing care institution or a
licensed residential care institution or a residential care facility operated
in conjunction with a licensed nursing care institution or a licensed kidney
dialysis center, which provides medical services, nursing services or health
related services and is not used or held for profit.
(3) A hospital, nursing care institution or
residential care institution which is operated by the federal government, this
State or a political subdivision of this State.
Receipt
(of notice) by the taxpayer
means the earlier of actual receipt or the first attempted delivery by
certified United States mail to the taxpayer's address of record with the Tax
Collector.
Remediation means those actions that are reasonable,
necessary, cost-effective and technically feasible in the event of the release
or threat of release of hazardous substances into the environment such that the
waters of the state are or may be affected, such action as may be necessary to
monitor, assess and evaluate such release or threat of release, actions of
remediation, removal or disposal of hazardous substances or taking such other
actions as may be necessary to prevent, minimize or mitigate damage to the
pubic health or welfare or to the waters of the state which may otherwise
result from a release or threat of release of a hazardous substance that will
or may affect the waters of the state.
Remediation activities include the use of biostimulation with indigenous
microbes and bioaugmentation using microbes that are nonpathogenic,
nonopportunistic and that are naturally occurring. Remediation activities may include community
information and participation costs and providing an alternative drinking water
supply.
Rental
equipment means tangible
personal property sold, rented, leased, or licensed to customers to the extent
that the item is actually used by the customer for rental, lease, or license to
others; provided that:
(1) The vendee is regularly engaged in the
business of renting, leasing, or licensing such property for a consideration;
and
(2) The item so claimed as "rental
equipment" is not used by the person claiming the exemption for any
purpose other than rental, lease, or license for compensation, to an extent
greater than fifteen percent (15%) of its actual use.
Rental
supply means an
expendable or nonexpendable repair or replacement part sold to become part of
"rental equipment", provided that:
(1) The documentation relating to each
purchased item so claimed specifically itemizes to the vendor the actual item
of "rental equipment" to which the purchased item is intended to be
attached as a repair or replacement part; and
(2) The vendee is regularly engaged in the
business of renting, leasing, or licensing such property for a consideration;
and
(3) The item so claimed as "rental
equipment" is not used by the person claiming the exemption for any
purpose other than rental, lease, or license for compensation, to an extent
greater than fifteen percent (15%) of its actual use.
Repairer
means a person who
restores or renews products, wares, or articles of manufacture.
Resides
within the city means in
cases other than individuals, whose legal addresses are determinative of
residence, the engaging, continuing, or conducting of regular business activity
within the City.
Restaurant
means any business
activity where articles of food, drink, or condiment are customarily prepared
or served to patrons for consumption on or off the premises, also including
bars, cocktail lounges, the dining rooms of hotels, and all caterers. For the purposes of this Chapter, a
"fast food" business, which includes street vendors and mobile
vendors selling in public areas or at entertainment or sports or similar
events, who prepares or sells food or drink for consumption on or off the
premises is considered a "restaurant", and not a
"retailer".
Retail
sale (sale at retail) means
the sale of tangible personal property, except the sale of tangible person
property to a person regularly engaged in the business of selling such
property.
Retailer
means any person engaged
or continuing in the business of sales of tangible personal property at retail.
Solar daylighting means a device that is specifically
designed to capture and redirect the visible portion of the solar beam, while
controlling the infrared portion, for use in illuminating interior building
spaces in lieu of artificial lighting.
Solar energy device means a system or
series of mechanisms designed primarily to provide heating, to provide cooling,
to produce electrical power, to produce mechanical power, to provide solar
daylighting or to provide any combination of the foregoing by means of
collecting and transferring solar generated energy into such uses either by
active or passive means, including wind generator systems that produce
electricity. Solar energy systems may
also have the capability of storing solar energy for future use. Passive systems shall clearly be designed as
a solar energy device, such as a trombe wall, and not merely as a part of a
normal structure, such as a window.
Speculative
builder means either:
(1) An owner-builder who sells or contracts to
sell, at anytime, improved real property (as provided in Section 16-416),
consisting of:
A. Custom, model, or inventory homes,
regardless of the stage of completion of such homes; or
B. Improved residential or commercial lots
without a structure; or
(2) An owner-builder who sells or contracts to
sell improved real property, other than improved real property specified in
subsection (1) above:
A. Prior to completion; or
B. Before the expiration of twenty-four (24)
months after the improvements of the real property sold are substantially
complete.
Substantially
complete means the
construction contracting or reconstruction contracting:
(1) Has passed final inspection or its
equivalent; or
(2) Certificate of occupancy or its equivalent has been issued; or
(3) Is ready for immediate occupancy or use.
Supplier
means any person who
rents, leases, licenses, or makes sales of tangible personal property within
the City, either directly to the consumer or customer or to wholesalers,
jobbers, fabricators, manufacturers, modifiers, assemblers, repairers, or those
engaged in the business of providing services which involve the use, sale,
rental, lease, or license of tangible personal property.
Tax
Collector means the
Management Services Director or his designee or agent for all purposes under
this Chapter.
Taxpayer
means any person liable
for any tax under this Chapter.
Taxpayer
Problem Resolution Officer
means the individual designated by the City to perform the duties identified in
Sections 16-515 and 16-516. In cities
with a population of 50,000 or more, the Taxpayer Problem Resolution Officer
shall be an employee of the City. In
cities with a population of less than 50,000, the Taxpayer Problem Resolution
Officer need not be an employee of the City.
Regardless of whether the Taxpayer Problem Resolution Officer is or is
not an employee of the City, the Taxpayer Problem Resolution Officer shall have
substantive knowledge of taxation. The
identity of and telephone number for the Taxpayer Problem Resolution Officer
can be obtained from the Tax Collector.
Telecommunication
service means any
service or activity connected with the transmission or relay of sound, visual
image, data, information, images, or material over a communications channel or
any combination of communications channels.
Transient means any person who either at the
person’s own expense or at the expense of another obtains lodging space or the
use of lodging space on a daily or weekly basis, or on any other basis for less
than thirty (30) consecutive days.
Utility
service means the
producing, providing, or furnishing of electricity, electric lights, current,
power, gas (natural or artificial), or water to consumers or ratepayers.
(Ord. No. 87.17, § 1, 4-23-87; Ord. No.
88.32, § 1(1), (2), 4-28-88; Ord. No. 90.25, 7-12-90; Ord. No. 95.03, 1-12-95;
Ord. No. 96.42, 12-12-96; Ord. No. 96.43, 12-12-96; Ord. No. 98.12, 3-12-98;
Ord. No. 98.14, 3-12-98; Ord. No. 98.37, 06-25-98; Ord. No. 2007.20, 4-19-07;
Ord. No. 2008.26, 8-14-08)
Sec.
16-110. Definitions—Income-producing
capital equipment.
(a) The following tangible personal property,
other than items excluded in subsection (d) below, shall be deemed "income‑producing
capital equipment" for the purposes of this Chapter:
(1) Machinery or equipment used directly in
manufacturing, processing, fabricating, job printing, refining or metallurgical
operations. The terms "manufacturing",
"processing", "fabricating", "job printing",
"refining", and "metallurgical" as used in this paragraph
refer to and include those operations commonly understood within their ordinary
meaning. "Metallurgical operations" includes leaching, milling, precipitating,
smelting and refining.
(2) Mining machinery, or equipment, used
directly in the process of extracting ores or minerals from the earth for
commercial purposes, including equipment required to prepare the materials for
extraction and handling, loading or transporting such extracted material to the
surface. "Mining" includes underground, surface and open pit
operations for extracting ores and minerals.
(3) Tangible personal property, sold to persons engaged in business
classified under the telecommunications classification, consisting of central
office switching equipment; switchboards; private branch exchange equipment;
microwave radio equipment, and carrier equipment including optical fiber,
coaxial cable, and other transmission media which are components of carrier
systems.
(4) Machinery, equipment, or transmission lines
used directly in producing or transmitting electrical power, but not including
distribution. Transformers and control
equipment used at transmission substation sites constitute equipment used in
producing or transmitting electrical power.
(5) Pipes or valves four inches (4") in
diameter or larger and related equipment, used to transport oil, natural gas,
artificial gas, water, or coal slurry.
For the purpose of this Section, related equipment includes: compressor units, regulators, machinery and
equipment, fittings, seals and any other parts that are used in operating the
pipes or values.
(6) Aircraft, navigational and communication
instruments, and other accessories and related equipment sold to:
(A) A person holding a federal certificate of
public convenience and necessity or foreign air carrier permit for air
transportation for use as or in conjunction with or becoming a part of aircraft
to be used to transport persons, property or United States mail in intrastate,
interstate or foreign commerce.
(B) Any foreign government for use by such
government outside of this State.
(C) Persons who are not residents of this State
and who will not use such property in this State other than in removing such
property from this State. This subdivision also applies to corporations that
are not incorporated in this State, regardless of maintaining a place of
business in this State, if the principal corporate office is located outside
this State and the property will not be used in this State other than in
removing the property from this State.
(7) Machinery, tools, equipment and related
supplies used or consumed directly in repairing, remodeling or maintaining aircraft,
aircraft engines or aircraft component parts by or on behalf of a certificated
or licensed carrier of persons or property.
(8) Railroad rolling stock, rails, ties and
signal control equipment used directly to transport persons or property.
(9) Machinery
or equipment used directly to drill for oil or gas or used directly in the
process of extracting oil or gas from the earth for commercial purposes.
(10) Buses or other urban mass transit vehicles
which are used directly to transport persons or property for hire or pursuant
to a governmentally adopted and controlled urban mass transportation program
and which are sold to bus companies holding a federal certificate of
convenience and necessity or operated by a city, town or other governmental
entity or by any person contracting with such governmental entity as part of a
governmentally adopted and controlled program to provide urban mass
transportation.
(11) Metering, monitoring, receiving, and
transmitting equipment acquired by persons engaged in the business of providing
utility services or telecommunications services; but only to the extent that
such equipment is to be used by the customers of such persons and such persons
separately charge or bill their customers for use of such equipment.
(12) Groundwater measuring devices required under
A.R.S. Section 45-604.
(13) Machinery or equipment used in research and
development. In this paragraph,
"research and development" means basic and applied research in the
sciences and engineering, and designing, developing or testing prototypes,
processes or new products, including research and development of computer
software that is embedded in or an integral part of the prototype or new
product or that is required for machinery or equipment otherwise exempt under
this section to function effectively.
Research and development do not include manufacturing quality control,
routine consumer product testing, market research, sales promotion, sales
service, research in social sciences or psychology, computer software research
that is not included in the definition of research and development, or other
non-technological activities or technical services.
(14) (Reserved)
(15) Included in income-producing capital
equipment are liquid, solid or gaseous chemicals used in manufacturing,
processing, fabricating, mining, refining, metallurgical operations, research
and development or job printing, if using or consuming the chemicals, alone or
as part of an integrated system of chemicals, involving direct contact with the
materials from which the product is produced for the purpose of causing or
permitting a chemical or physical change to occur in the materials as part of
the production process. This subsection
does not include chemicals that are used or consumed in activities such as
packaging, storage or transportation but does not affect any deduction for such
chemicals that is otherwise provided by this code. Chemicals meeting the requirements of this
subsection are deemed not to be expendable under subsection (d) of this
Section.
(16) Cleanrooms that
are used for manufacturing, processing, fabrication or research and
development, as defined in paragraph (13) of this subsection, of semiconductor
products. For purposes of this
paragraph, "cleanroom" means all property that comprises or creates
an environment where humidity, temperature, particulate matter and
contamination are precisely controlled within specified parameters, without
regard to whether the property is actually contained within that environment or
whether any of the property is affixed to or incorporated into real
property. Cleanroom:
(A) Includes the integrated systems,
fixtures, piping movable partitions, lighting and all property that is
necessary or adapted to reduce contamination or to control airflow,
temperature, humidity, chemical purity or other environmental conditions or
manufacturing tolerances, as well as the production machinery and equipment
operating in conjunction with the cleanroom environment.
(B) Does not include the building or other
permanent, nonremovable component of the building that houses the cleanroom
environment.
(17) Machinery and equipment that are purchased by
or on behalf of the owners of a soundstage complex and primarily used for
motion picture, multimedia or interactive video production in the complex. This paragraph applies only if the initial
construction of the soundstage complex begins after
(A) "Motion picture, multimedia or
interactive video production" includes products for theatrical and
television release, educational presentations, electronic retailing,
documentaries, music videos, industrial films, cd-rom, video game production,
commercial advertising and television episode production and other genres that
are introduced through developing technology.
(B) "Soundstage complex" means a
facility of multiple stages including production offices, construction shops
and related areas, prop and costume shops, storage areas, parking for
production vehicles and areas that are leased to businesses that complement the
production needs and orientation of the overall facility.
(18) Tangible personal property that is used by
either of the following to receive, store, convert, produce, generate, decode,
encode, control or transmit telecommunications information:
(A) Any direct broadcast satellite television or
data transmission service that operates pursuant to 47 Code of Federal
Regulations parts 25 and 100.
(B) Any satellite television or data
transmission facility, if both of the following conditions are met:
(i) Over two-thirds of the transmissions,
measured in megabytes, transmitted by the facility during the test period were
transmitted to or on behalf of one or more direct broadcast satellite
televisions or data transmission services that operate pursuant to 47 Code of
Federal Regulations parts 25 and 100.
(ii) Over two-thirds of the transmissions,
measured in megabytes, transmitted by or on behalf of those direct broadcast
television or data transmission services during the test period were
transmitted by the facility to or on behalf of those services.
For
purposes of subdivision (B) of this paragraph, "test period" means
the three hundred sixty-five day period beginning on the later of the date on
which the tangible personal property is purchased or the date on which the
direct broadcast satellite television or data transmission service first
transmits information to its customers.
(19) Machinery and equipment that is used directly
in the feeding of poultry, the environmental control of housing for poultry,
the movement of eggs within a production and packaging facility or the sorting
or cooling of eggs. This exemption does
not apply to vehicles used for transporting eggs.
(20) Machinery or equipment, including related
structural components, that is employed in connection with manufacturing,
processing, fabricating, job printing, refining, mining, natural gas pipelines,
metallurgical operations, telecommunications, producing or transmitting
electricity or research and development that is used directly to meet or exceed
rules or regulations adopted by the Federal Energy Regulatory Commission, the
United States Environmental Protection Agency, the United States Nuclear
Regulatory Commission, the Arizona Department of Environmental Quality or a
political subdivision of this State to prevent, monitor, control or reduce
land, water or air pollution.
(21) Machinery or equipment that enables a
television station to originate and broadcast or to receive and broadcast
digital television signals and that was purchased to facilitate compliance with
the Telecommunications Act of 1996 (P.L. 104-104; 110 Stat. 56; 47 United
States Code Section 336) and the Federal Communications Commission order issued
April 21, 1997, 47 Code of Federal Regulations Part 73. This paragraph does not exempt any of the
following:
(A) Repair or replacement parts purchased for
the machinery or equipment described in this paragraph.
(B) Machinery or equipment purchased to replace
machinery or equipment for which an exemption was previously claimed and taken
under this paragraph.
(C) Any machinery or equipment purchased after
the television station has ceased analog broadcasting, or purchased after
(b) The
term "income‑producing capital equipment" shall further include
ancillary machinery and equipment used for the treatment of waste products
created by the business activities which are allowed to purchase "income‑producing
capital equipment" defined in subsection (a) above.
(c) The
term "income‑producing capital equipment" shall further include
repair and replacement parts, other than the items in subsection (d) below,
where the property is acquired to become an integral part of another item
itemized in subsections (a) or (b) above.
(d) The
tangible personal property defined as income‑producing capital equipment
in this Section shall not include:
(1) Expendable
materials. For purposes of this
paragraph, expendable materials do not include any of the categories of
tangible personal property specified in subsections (a), (b) or (c) of this
Section regardless of the cost or useful life of that property.
(2) Janitorial equipment and hand tools.
(3) Office equipment, furniture, and supplies.
(4) Tangible personal property used in selling
or distributing activities.
(5) Motor vehicles required to be licensed by
the State of
(6) Shops, buildings, docks, depots, and all
other materials of whatever kind or character not specifically included as
exempt.
(7) Motors and pumps used in drip irrigation systems.
(e) For
the purposes of this Section:
(1) "Aircraft" includes:
(A) An airplane flight simulator that is
approved by the Federal Aviation Administration for use as a Phase II or higher
flight simulator under Appendix H, 14 Code of Federal Regulations Part 121.
(B) Tangible personal property that is
permanently affixed or attached as a component part of an aircraft that is
owned or operated by a certificated or licensed carrier of persons or property.
(2) "Other accessories and related
equipment" includes aircraft accessories and equipment such as ground
service equipment that physically contact aircraft at some point during the
overall carrier operation.
(Ord.
No. 87.17, § 1(16-110),
Sec.
16-115. Definitions—Computer software;
custom computer programming.
(a) Computer software means any computer
program, part of such a program, or any sequence of instructions for automatic
data processing equipment. Computer
software which is not "custom computer programming" is deemed to be
tangible personal property for the purposes of this Chapter, regardless of the
method by which title, possession, or right to use the software is transferred
to the user.
(b) Custom computer programming means any
computer software which is written or prepared exclusively for a customer and
includes those services represented by separately stated charges for the
modification of existing prewritten programs when the modifications are written
or prepared exclusively for a customer.
(1) The term does not include a prewritten
program which is held or existing for general or repeated sale, lease or
license, even if the program was initially developed on a custom basis for in-house,
or for a single customer's, use.
(2) Modification to an existing prewritten
program to meet the customer's needs is custom computer programming only to the
extent of the modification, and only to the extent that the actual amount
charged for the modification is separately stated on invoices, statements, and
other billing documents supplied to the customer.
(Ord.
No. 87.17, § 1,
Sec.
16-120. Reserved.
(Ord.
No. 87.17, § 1,
ARTICLE
II. DETERMINATION OF GROSS INCOME
Sec.
16-200. Determination of gross income—In
general.
(a) Gross
income includes:
(1) The value proceeding or accruing from the
sale of property, the providing of service, or both.
(2) The total amount of the sale, lease,
license for use, or rental price at the time of such sale, rental, lease, or
license.
(3) All receipts, cash, credits, barter,
exchange, reduction of or forgiveness of indebtedness, and property of every
kind or nature derived from a sale, lease, license for use, rental, or other
taxable activity.
(4) All other receipts whether payment is advanced
prior to, contemporaneous with, or deferred in whole or in part subsequent to
the activity or transaction.
(b) Barter,
exchange, trade-outs, or similar transactions are includable in gross income at
the fair market value of the service rendered or property transferred,
whichever is higher, as they represent consideration given for consideration
received.
(c) No
deduction or exclusion is allowed from gross income on account of the cost of
the property sold, the time value of money, expense of any kind or nature,
losses, materials used, labor or service performed, interest paid, or credits
granted.
(Ord.
No. 87.17, § 1,
Sec.
16-210. Determination
of gross income—Transactions between affiliated companies or persons.
In transactions between affiliated
companies or persons, or in other circumstances where the relationship between
the parties is such that the gross income from the transaction is not
indicative of the market value of the subject matter of the transaction, the
Tax Collector shall determine the "market value" upon which the City
Privilege and Use Taxes shall be levied. "Market value" shall
correspond as nearly as possible to the gross income from similar transactions
of like quality or character by other taxpayers where no common interest exists
between the parties, but otherwise under similar circumstances and conditions.
(Ord.
No. 87.17, § 1,
Sec.
16-220. Determination of gross
income—Artificially contrived transactions.
The Tax Collector may examine any
transaction, reported or unreported, if, in his opinion, there has been or may
be an evasion of the taxes imposed by this Chapter and to estimate the amount
subject to tax in cases where such evasion has occurred. The Tax Collector
shall disregard any transaction which has been undertaken in an artificial
manner in order to evade the taxes imposed by this Chapter.
(Ord.
No. 87.17, § 1,
Sec.
16-230. Determination of gross income
based upon method of reporting.
The method of reporting chosen by a
taxpayer, as provided in Section 16-520, necessitates the following adjustments
to gross income for all purposes under this Chapter:
(a) Cash basis. When a person elects to
report and pay taxes on a cash basis, gross income for the reporting period
shall include:
(1) The total amounts received on "paid in
full" transactions, against which are allowed all applicable deductions
and exclusions; and
(2) All amounts received on accounts
receivable, conditional sales contract, or other similar transactions, against
which no deductions and no exclusions from gross income are allowed. Interest on finance contracts may be deducted
if separately itemized on all books and records.
(b) Accrual basis. When a person elects to
report and pay taxes on an accrual basis, gross income shall include all gross
income for the applicable period regardless of whether receipts are for cash,
credit, conditional, or partially deferred transactions, and regardless of whether
or not any security document or instrument is sold, assigned, or otherwise
transferred to another. Persons
reporting on the accrual basis may deduct bad debts, provided that:
(1) The amount deducted for the bad debt must
be deducted from gross income of the month in which the actual charge-off was
made, and only to the extent that such amount was actually charged-off, and
also only to the extent that such amount is or was included as taxable gross
income; and
(2) If any amount is subsequently collected on
such charged-off account, it shall be included in gross income for the month in
which it was collected, without deduction for expense of collection.
(Ord.
No. 87.17, § 1,
Sec.
16-240. Exclusion of cash discounts,
returns, refunds, trade-in values, vendor-issued coupons, and rebates from
gross income.
(a) The
following items are not included in gross income:
(1) Cash discounts allowed by the vendor for
timely payment, but only discounts allowed against taxable gross income.
(2) The value of property returned by customers
to the extent of the amount actually refunded either in cash or by credit and
the amount refunded was included in taxable gross income.
(3) The trade-in allowance for tangible
personal property accepted as payment, not to exceed the full sales price for
any tangible personal property sold, when the full sales price is included in
taxable gross income. Trade-in
allowances are not allowed for manufactured buildings taxable under Section
16-427.
(4) When coupons issued by a vendor are later
accepted by the vendor as a discount against the transaction, the discount may
be excluded from gross income as a cash discount. Amounts credited or refunded
by a vendor for redemption of coupons issued by any person other than the
vendor may not be excluded from gross income.
(5) Rebates issued by the vendor to a customer
as a discount against the transaction may be excluded from gross income as a
cash discount. Rebates issued by a
person other than the vendor may not be excluded from gross income, even when
the vendee assigns his right to the rebate to the vendor.
(6) In computing the tax base, gross proceeds
of sales or gross income does not include a manufacturer’s cash rebate on the
sales price of a motor vehicle if the buyer assigns the buyer’s right in the
rebate to the retailer.
(b) If
the amount specified in subsection (a) above is credited by a vendor subsequent
to the reporting period in which the original transaction occurs, such amount
may be excluded from the taxable gross income of that subsequent reporting
period, but only to the extent that the excludable amount was reported as
taxable gross income in that prior reporting period.
(Ord.
No. 87.17, § 1,
Sec.
16-250. Exclusion of combined taxes
from gross income; itemization; notice; limitations.
(a) When tax is separately charged and/or
collected. The total amount of gross
income shall be exclusive of combined taxes only when the person upon whom the
tax is imposed shall establish to the satisfaction of the Tax Collector that
such tax has been added to the total price of the transaction. The taxpayer must provide to his customer and
also keep a reliable record of the actual tax charged or collected, shown by
cash register tapes, sales tickets, or other accurate record, separating net
transaction price and combined tax. If
at any time the Tax Collector cannot ascertain from the records kept by the
taxpayer the total or amounts billed or collected on account of combined taxes,
the claimed taxes collected may not be excluded from gross income, unless such
records are completed or clarified to the satisfaction of the Tax Collector.
(1) Remittance
of all tax charged and/or collected.
When an added charge is made to cover City (or combined) Privilege and
Use Taxes, the person upon whom the tax is imposed shall pay the full amount of
the City taxes due, whether collected by him or not, and in the event he collects
more than the amount due he shall remit the excess to the Tax Collector. In the event the Tax Collector cannot
ascertain from the records kept by the taxpayer the total or amounts of taxes
collected by him, and the Tax Collector is satisfied that the taxpayer has
collected taxes in an amount in excess of the tax assessed under this Chapter,
the Tax Collector may determine the amount collected and collect the tax so
determined in the manner provided in this Chapter.
(2) Itemization. A taxpayer, in order to be entitled to
exclude from his gross income any amounts paid to him by customers for combined
taxes passed on to the customer, must prove that he has provided his customer
with a written record of the transaction showing at a minimum the price before
the tax, the combined taxes, and the total cost. This shall be in addition to the record
required to be kept under subsection (a) above.
(b) When tax has been neither separately
charged nor separately collected.
When the person upon whom the tax is imposed shall establish by means of
invoices, sales tickets, or other reliable evidence, that no added charge was
made to cover combined taxes, the taxpayer may exclude tax collected from such
income by dividing such taxable gross income by 1.00 plus a decimal figure
representing the effective combined tax rate expressed as a fraction of 1.00.
(Ord.
No. 87.17, § 1,
Sec.
16-260. Exclusion of fees and taxes from
gross income; limitations.
(a) There
shall be excluded from gross income of vendors of motor vehicles those motor
vehicle registration fees, license fees and taxes, and lieu taxes imposed
pursuant to Title 28, Arizona Revised Statutes in connection with the initial
purchase of a motor vehicle, but only to the extent that such taxes or fees or
both have been separately itemized and collected from the purchaser of the
motor vehicle by the vendor, actually remitted to the proper registering, licensing,
and taxing authorities, and the provisions of Article III, regarding
recordkeeping, are met. For the purpose
of the exclusion provided by this subsection only, the terms vendor and vendee
shall also apply to a lessor and lessee, respectively, of a motor vehicle if,
in addition to all other requirements of this subsection, the lease agreement
specifically requires the lessee to pay such fees or taxes, and such amounts
are separately itemized in the documentation provided to the lessee.
(b) There
shall be excluded from gross income of vendors at retail of heavy trucks and
trailers, the amount attributable to Federal Excise Taxes imposed by 26 U.S.C.
Section 4051, but only to the extent that the provisions of Article III,
relating to recordkeeping, have been met.
(c) There
shall be excluded from gross income the following fees, taxes, and lieu taxes,
but only to the extent that such taxes or fees or both have been separately
itemized and collected from the purchaser by the vendor, actually remitted to
the proper registering, licensing, and taxing authorities, and the provisions
of Article III, regarding recordkeeping, are met:
(1) Emergency telecommunication services excise
tax imposed pursuant to A.R.S. Section 42-5252.
"Emergency telecommunication services" means telecommunication
services or systems that use number 911 or a similarly designated telephone
number for emergency calls;
(2) The telecommunication devices for the deaf
and the severely hearing and speech impaired excise tax imposed pursuant to
A.R.S. Section 42‑5252;
(3) Federal excise taxes on communications
services as imposed by 26 U.S.C. Section 4251;
(4) Car rental surcharge imposed pursuant to
A.R.S. Section 48-4234;
(5) Federal excise taxes on passenger vehicles
as imposed by 26 U.S.C. Section 4001(.01);
(6) Waste tire disposal fees, imposed pursuant
to A.R.S. Section 44‑1302; lead
acid battery fees, imposed pursuant to A.R.S. Section 44-1323; and used oil
fees imposed pursuant to A.R.S. Section 49-814(B), (C).
(d) There
shall be excluded from gross income of vendors of motor vehicles dealer
documentation fees, but only to the extent that such fees have been separately
itemized and collected from the purchaser of the motor vehicle by the vendor.
(Ord.
No. 87.17, § 1,
Sec.
16-265. Reserved.
(Ord.
No. 95.03,
Sec. 16-266. Exclusion of motor carrier revenues from
gross income.
There shall be excluded from gross
income the gross proceeds of sale or gross income derived from any of the
following:
(a) A motor carrier's use on the public
highways in this State if the motor carrier is subject to a fee prescribed in A.R.S.
Title 28, Chapter 15, Article 4 or A.R.S. Title 28, Chapter 16, Article 4.
(b) Leasing, renting or licensing a motor
vehicle subject to and upon which the fee has been paid under A.R.S. Title 28,
Chapter 16.
(c)
The
sale of a motor vehicle and any repair and replacement parts and tangible
personal property becoming a part of such motor vehicle, to a motor carrier who
is subject to a fee prescribed in A.R.S. Title 28, Chapter 16 and who is
engaged in the business of leasing, renting or licensing such property.
(d) For the purposes of these exclusions,
"motor carrier" includes a motor vehicle weighing 26,000 pounds or
more, a lightweight motor vehicle which weighs 12,001 pounds to 26,000 pounds
and a light motor vehicle weighing 12,000 pounds or less, which pay the fee
prescribed in A.R.S. Title 28, Chapter 15 or A.R.S. Title 28, Chapter 16.
(Ord.
No. 95.03,
Sec.
16-270. Exclusion of gross income of
persons deemed not engaged in business.
(a) For
the purposes of this Section, the following definitions shall apply:
(1) Federally
exempt organization means an organization which has received a
determination of exemption, or qualifies for such exemption, under 26 U.S.C.
Section 501(c) and rules and regulations of the Commissioner of Internal
Revenue pertaining to same, but not including a "governmental
entity", "nonlicensed business", or "public educational
entity."
(2) Governmental
entity means the Federal Government, the State of Arizona, any other state,
or any political subdivision, department, or agency of any of the foregoing;
provided further that persons contracting with such a governmental entity to
operate any part of a governmentally adopted and controlled program to provide
urban mass transportation shall be deemed a governmental entity in all
activities such person performs when engaged in said contract.
(3) Non-licensed
business means any person conducting any business activity for gain or
profit, whether or not actually realized, which person is not required to be
licensed for the conduct or transaction of activities subject to the tax
imposed under this Chapter.
(4) Proprietary
club means any club which has qualified or would otherwise qualify as an
exempt club under the provisions of 26 U.S.C. Section 501(c)(7), (8), and (9),
notwithstanding the fact that some or all of the members may own a proprietary
interest in the property and assets of the club.
(5) Public
educational entity means any educational entity operated pursuant to any
provisions of Title 15, Arizona Revised Statutes.
(b) Transactions
which, if conducted by any other person, would produce gross income subject to
tax under this Chapter shall not be subject to the imposition of such tax if
conducted entirely by a public educational entity; governmental entity, except
"proprietary activities" of municipalities as provided by regulation;
or non-licensed business.
(c) Transactions
which, if conducted by any other person, would produce gross income subject to
the tax under this Chapter shall not be subject to the imposition of such tax
if conducted entirely by a federally exempt organization or proprietary club
with the following exceptions:
(1) Transactions involving proprietary. clubs
and organizations exempt under 26 U.S.C. Section 501(c)(7), (8), and (9), where
the gross revenue of the activity received from persons other than members and
bona fide guests of members is in an amount in excess of fifteen percent (15%)
of total gross revenue, as prescribed by Regulation. In the event this fifteen percent (15%) limit
is exceeded, the entire gross income of such entity shall be subject to the
applicable tax.
(2) Gross income from unrelated business income
as that term is defined in 26 U.S.C Section 512, including all statutory
definitions and determinations, the rules and regulations of the Commissioner
of Internal Revenue, and his administrative interpretations and guidelines.
(3) Fund-raising activities of charitable,
religious, or educational organizations, which include events for which
admission is charged where attendance exceeds ten thousand (10,000) shall be
deemed regularly conducted business activity for purposes of this Chapter.
(d) Except
as may be provided elsewhere in this Chapter, transactions where customers are
exempt organizations, proprietary clubs, public educational entities,
governmental entities, or non-licensed businesses shall be deemed taxable
transactions for the purpose of the imposition of taxes under this Chapter,
notwithstanding that property so acquired may in fact be resold or leased by
the acquiring person to others. In the
case of sales, rentals, leases, or licenses to proprietary clubs or exempt
organizations, the vendor may be relieved from the responsibility for reporting
and paying tax on such income only by obtaining from its vendee a verified
statement that includes:
(1) A statement that when the property so
acquired is resold, rented, leased, or licensed, that the otherwise exempt
vendee chooses, or is required, to pay City Privilege Tax or an equivalent
excise tax on its gross in come from such transactions and does in fact file
returns on same; and
(2) The Privilege License number of the
otherwise exempt vendee; and
(3) Such other information as the Tax Collector
may require.
(e) Franchisees
or concessionaires operating businesses for or on behalf of any exempt
organization, governmental entity, public educational entity, proprietary club,
or non-licensed business shall not be considered to be such an exempt
organization, club, entity, or non-licensed business, but shall be deemed to be
a taxpayer subject to the provisions of this Chapter, except as provided in the
definition of governmental entity, regarding urban mass transit.
(f) In
any case, if a federally exempt organization, proprietary club, or non-licensed
business rents, leases, licenses, or purchases any tangible personal property
for its own storage or use, and no City Privilege or Use Tax or equivalent
excise tax has been paid on such transaction, said organization, club, or
business shall be liable for the Use Tax upon such acquisitions or use of such
property.
(Ord.
No. 87.17, § 1,
Sec.
16-280. Reserved.
(Ord. No.
87.17, § 1,
Sec.
16-285. Reserved.
(Ord.
No. 87.17, § 1,
Sec.
16-290. Reserved.
(Ord.
No. 87.17, § 1,
ARTICLE
III. LICENSING AND RECORDKEEPING
Sec.
16-300. Licensing requirements.
(a) The
following persons shall make application to the Tax Collector for a Privilege
License, accompanied by a non-refundable fee of seventy dollars ($70) and no
person shall engage or continue in business or engage in such activities until
he shall have such a license:
(1) Every person desiring to engage or continue
in business activities within the City upon which a Privilege Tax is imposed by
this Chapter.
(2) Every person, engaging or continuing in
business within the City, storing or using tangible personal property in this
City upon which a Use Tax is imposed by this Chapter.
(3) Reserved.
(b) A
person engaged in more than one activity subject to City Privilege and Use Taxes
at any one business location is not required to obtain a separate license for
each activity; provided that, at the time such person makes application for a
license, he shall list on such application each category of activity in which
he is engaged. The licensee shall inform
the Tax Collector of any changes in his business activities, location, or
mailing address within thirty (30) days.
(c) Limitation. The issuance of a Privilege
License by the Tax Collector shall in no way be construed as permission to
operate a business activity in violation of any other law or regulation to
which such activity may be subject.
(Ord.
No. 87.17, § 1,
Sec.
16-305. Special licensing requirements.
(a) Partnerships.
Application for a Privilege License for a partnership engaging or continuing in
business in the City shall provide, as a minimum, the names and addresses of
all general partners. Licenses issued to
persons engaged in business as partners, limited or general, shall be in the
name of the partnership.
(b) Corporations. Application for a
Privilege License for a corporation engaging or continuing in business in the
City shall provide, as a minimum, the names and addresses of both the Chief
Executive Officer and Chief Financial Officer of the corporation. Licenses issued to persons engaged in business
as corporations shall be in the name of the corporation.
(c) Multiple locations or multiple business
names. A person engaged in or
conducting one or more businesses at two (2) or more locations or under two (2)
or more business names shall procure a license for each such location or business
name. A "location" is a place
of a separate business establishment.
(d) Reserved.
(Ord.
No. 87.17, § 1,
Sec.
16-310. Licensing—Duration of license;
transferability; display.
(a) Except
as provided in Section 16-320, the Privilege License shall be valid only for
the calendar year in which it is issued unless renewed each year by filing the
appropriate application for renewal and paying the renewal fee of fifty dollars
($50) which is due and payable on January 1 and shall be considered delinquent
if not received on or before the last business day of January. Application and
payment for renewal must be received within the Tax Collector's office by such
date to be deemed filed and paid.
(b) The
Privilege License shall be nontransferable between owners or locations, and
shall be on display to the public in the licensee's place of business.
(c) Any
licensee who permits his license to expire through cancellation as provided in
Section 16-320, by his request for cancellation, by surrender of the license,
or by the cessation of the business activity for which the license was issued,
and who thereafter applies for license, shall be granted a new license as an
original applicant and shall pay the current license fee. Any licensee who loses or misplaces his
Privilege License which is still in effect shall be charged the current license
fee for each reissuance of a license.
(d) Any
taxpayer who fails to renew his license on or before the date provided in
subsection (a) above shall be deemed to be operating without a license. After such date taxpayer is required to pay a
fifteen dollar ($15) late renewal penalty, in addition to the annual license
renewal fee provided in subsection (a) above.
(e) Reserved.
(f) Reserved.
(g) Reserved.
(h) Reserved.
(i) Reserved.
(j) Reserved.
(Ord.
No. 87.17, § 1,
Sec.
16-315. Transient privilege licenses.
Notwithstanding the provisions of
Section 16-300, a person who will be engaged in business for a period of thirty
(30) days or less, may be issued a transient privilege license, which shall be
valid only for a thirty (30) day period following the application date, upon
payment of a transient application and license fee of twenty-five dollars ($25)
in lieu of all other fees imposed under this article. In the event that a person obtaining and
operating a business activity by virtue of a transient privilege license,
continues to conduct said business beyond the thirty (30) days set forth in
such license, such person shall be deemed to be conducting a business activity
in the city without a valid privilege license, and shall be subject to all
penalties imposed on such activity under this chapter. In addition thereto, such person shall not be
relicensed with either a privilege license under the provisions of Section
16-300, or a further temporary license under the provision of this section
without paying all other applicable application fees and annual fees.
(Ord.
No. 88.32, § 1(5), 4-28-88; Ord. No. 2008.52, 10-2-08)
Sec.
16-320. Licensing—Cancellation;
revocation.
(a) Cancellation. The Tax Collector shall be authorized to
cancel the City Privilege License of any licensee as "inactive" if
the taxpayer, required to report monthly to the City, has neither filed any
return nor remitted to the City any taxes imposed by this Chapter for a period
of six (6) consecutive months; or, if required to report quarterly, has neither
filed any return nor remitted any taxes imposed by this Chapter for two (2)
consecutive quarters; or, if required to report annually, has neither filed any
return nor remitted any taxes imposed by this Chapter when such annual report and
tax are due to be filed with and remitted to the Tax Collector.
(b) Revocation. If any licensee fails to pay any tax,
interest, penalty, fee, or sum required to be paid to the City under this
Chapter, or if such licensee fails to comply with any other provisions of this
Chapter, the Tax Collector shall be authorized to revoke the City Privilege
License of said licensee.
(c) Notice and hearing. The Tax Collector shall deliver notice to
such licensee of cancellation or revocation of the Privilege License. If within twenty (20) days the licensee so
notified requests a hearing, he shall be granted a hearing before the Tax
Collector.
(d) After
cancellation or revocation of a taxpayer's license, the taxpayer shall not be
relicensed until all reports have been filed; all fees, taxes, interest, and
penalties due have been paid; and he is in compliance with the provisions of
this Chapter.
(Ord.
No. 87.17, § 1,
Sec.
16-330. Operating without a license.
It shall be unlawful for any person who
is required by this Chapter to obtain a Privilege License to engage in or
continue in business within the City without a license. The Tax Collector shall assess any delinquencies
in tax, interest, and penalties which may apply against such person upon any
transactions subject to the taxes imposed by this Chapter.
(Ord.
No. 87.17, § 1,
Sec.
16-350. Recordkeeping requirements.
(a) It
shall be the duty of every person subject to the tax imposed by this Chapter to
keep and preserve suitable records and such other books and accounts as may be
necessary to determine the amount of tax for which he is liable under this
Chapter. The books and records must
contain, at a minimum, such detail and summary information as may be required
by Regulation; or when records are maintained within an electronic data
processing (EDP) system, the requirements established by the Arizona Department
of Revenue for privilege tax filings will be accepted. It shall be the duty of every person to keep
and preserve such books and records for a period equal to the applicable
limitation period for assessment of tax, and all such books and records shall
be open for inspection by the Tax Collector during any business day.
(b) The
Tax Collector may direct, by letter, a specific taxpayer to keep specific other
books, records, and documents. Such
letter directive shall apply:
(1) Only for future reporting periods; and
(2) Only by express determination of the Tax
Collector that such specific recordkeeping is necessary due to the inability of
the City to conduct an adequate examination of the past activities of the
taxpayer, which inability resulted from inaccurate or inadequate books,
records, or documentation maintained by the taxpayer.
(Ord.
No. 87.17, § 1,
Sec.
16-360. Recordkeeping—Claim of
exclusion, exemption, deduction, or credit; documentation; liability.
(a) All
deductions, exclusions, exemptions, and credits provided in this Chapter are
conditional upon adequate proof and documentation of such as may be required
either by this Chapter or Regulation.
(b) Any
person who claims and receives an exemption, deduction, exclusion, or credit to
which he is not entitled under this Chapter, shall be subject to, liable for,
and pay the tax on the transaction as if the vendor subject to the tax had
passed the burden of the payment of the tax to the person wrongfully claiming
the exemption. A person who wrongfully
claimed such exemption shall be treated as if he is delinquent in the payment
of the tax and shall be subject to interest and penalties upon such
delinquency. However, if the tax is
collected from the vendor on such transaction it shall not again be collected
from the person claiming the exemption, or if collected from the person claiming
the exemption it shall not also be collected from the vendor.
(Ord.
No. 87.17, § 1,
Sec.
16-370. Inadequate or unsuitable records.
In the event the records provided by the
taxpayer are considered by the Tax Collector to be inadequate or unsuitable to
determine the amount of the tax for which such taxpayer is liable under the
provisions of this Chapter, it is the responsibility of the taxpayer either:
(a) To provide such other records required by
this Chapter or Regulation; or
(b) To correct or to reconstruct his records,
to the satisfaction of the Tax Collector.
(Ord.
No. 87.17, § 1,
ARTICLE
IV. PRIVILEGE TAXES
Sec.
16-400. Imposition of privilege taxes;
presumption.
(a) There
are hereby levied and imposed, subject to all other provisions of this Chapter,
the following Privilege Taxes for the purpose of raising revenue to be used in
defraying the necessary expenses of the City, such taxes to be collected by the
Tax Collector:
(1) A Privilege Tax upon persons on account of
their business activities, to the extent provided elsewhere in this Article, to
be measured by the gross income of persons, whether derived from residents of
the City or not, or whether derived from within the City or from without.
(2) Reserved.
(b) Taxes imposed by this Chapter are in
addition to others. Except as
specifically designated elsewhere in this Chapter, each of the taxes imposed by
this Chapter shall be in addition to all other licenses, fees, and taxes levied
by law, including other taxes imposed by this Chapter.
(c) Presumption. For the purpose of proper administration of
this Chapter and to prevent evasion of the taxes imposed by this Chapter, it
shall be presumed that all gross income is subject to the tax until the
contrary is established by the taxpayer.
(d) Limitation of exemptions, deductions, and
credits allowed against the measure of taxes imposed by this Chapter. All exemptions, deductions, and credits set
forth in this Chapter shall be limited to the specific activity or transaction
described and not extended to include any other activity or transaction subject
to the tax.
(Ord.
No. 87.17, § 1,
Editor's note—(a) Voters granted authority to city council on
September 14, 1993, to increase the privilege and use tax from 1% to 1.2%. Ord. No. 93.37, adopted
(b)
Voters granted authority to city council on
(c)
Voters granted authority to city council on
Sec.
16-405. Advertising.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business activity upon every person engaging or
continuing in the business of "local advertising" by billboards,
direct mail, radio, television, or by any other means. However, commission and fees retained by an
advertising agency shall not be includable in gross income from "local
advertising". All delivery or
disseminating of information directly to the public or any portion thereof for
a consideration shall be considered "local advertising", except the
following:
(1) The advertising of a product or service
which is sold or provided both within and without the State by more than one
"commonly designated business entity" within State, and in which the
advertisement names either no "commonly designated business entity"
within the State or more than one "commonly designated business
entity". "Commonly designated
business entity" means any person selling or providing any product or
service to its customers under a common business name or style, even though
there may be more than one legal entity conducting business functions using the
same or substantially the same business name or style by virtue of a franchise,
license, or similar agreement.
(2) The advertising of a facility or of a
service or activity in which neither the facility nor a business site carrying
on such service or activity is located within the State.
(3) The advertising of a product which may only
be purchased from an out-of-state supplier.
(4) Political advertising for
(5) Advertising by means of product purchase
coupons redeemable at any retail establishment carrying such product but not
product coupons redeemable only at a single commonly designated business
entity.
(6) Advertising transportation services where a
substantial portion of the transportation activity of the business entity
advertised involves interstate or foreign carriage.
(b) Reserved.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 93.37, 10-14-93; Ord. No. 96.41, 10-24-96;
Ord. No. 2000.37, 9-14-00)
Sec.
16-407. Reserved.
(Ord.
No. 88.32, § 1(6), 4-28-88)
Sec.
16-410. Amusements, exhibitions, and
similar activities.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business activity upon every person engaging or
continuing in the business of providing amusement that begins in the city or
takes place entirely within the city, which includes the following type or
nature of businesses:
(1) Operating or conducting theaters, movies,
operas, shows of any type or nature, exhibitions, concerts, carnivals,
circuses, amusement parks, menageries, fairs, races, contests, games, billiard
or pool parlors, bowling alleys, skating rinks, tennis courts, golf courses,
video games, pinball machines, public dances, dance halls, sports events,
jukeboxes, batting and driving ranges, animal rides, or any other business
charging admission for exhibition, amusement, or entertainment.
(2) Reserved.
(3) Health
spas and fitness centers, which charge for the use of their premises, whether
on a per-event use or for long-term usage, such as membership fees.
(b) Deductions
or exemptions. The gross proceeds of
sales or gross income derived from the following sources is exempt from the tax
imposed by this section:
(1) Reserved.
(2) Amounts retained by the Arizona Exposition and State Fair Board from ride ticket sales at the annual Arizona State Fair.
(3) Income received from a hotel business subject to tax under Section 16-444, if all of the following apply:
(A) The hotel business receives gross income from a customer for the specific business activity otherwise subject to amusement tax.
(B) The consideration received by the hotel business is equal to or greater than the amount to be deducted under this subsection.
(C) The hotel business has provided an exemption certificate to the person engaging in business under this section.
(4) Income that is specifically included as the gross income of a business activity upon which another section of this article imposes a tax, that is separately stated to the customer and is taxable to the person engaged in that classification not to exceed consideration paid to the person conducting the activity.
(5) Income from arranging transportation connected to amusement activity that is separately stated to the customer, not to exceed consideration paid to the transportation business.
(c) The tax imposed by this section shall not include arranging an amusement activity as a service to a person’s customers if that person is not otherwise engaged in the business of operating or conducting an amusement themselves or through others. This exception does not apply to businesses that operate or conduct amusements pursuant to customer orders and send the billings and receive the payments associated with that activity, including when the amusement is performed by third party independent contractors. For the purposes of this paragraph "arranging" includes billing for or collecting amusement charges from a person’s customers on behalf of the persons providing the amusement.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 93.37, 10-14-93; Ord. 95.03, 1-12-95; Ord No.
95.50, 1-11-96; Ord. No. 96.41, 10-24-96; Ord. No. 98.13, 3-12-98; Ord. No.
2000.37, 9-14-00; Ord. No. 2007.20, 4-19-07)
Sec.
16-415. Construction
contracting—Construction contractors.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business upon every construction contractor engaging
or continuing in the business activity of construction contracting within the
City.
(1) However, gross income from construction
contracting shall not include charges related to groundwater measuring devices
required by A.R.S. Section 45-604.
(2) Reserved.
(3) Gross income from construction contracting
shall not include gross income from the sale of manufactured buildings taxable
under Section 16-427.
(4) For taxable periods beginning from and
after July 1, 2008, the portion of gross proceeds of sales or gross income
attributable to the actual direct costs of providing architectural or
engineering services that are incorporated in a contract is not subject to tax
under this Section. For the purposes of
this subsection, "direct costs" means the portion of the actual costs
that are directly expended in providing architectural or engineering services.
(b) Deductions and exemptions:
(1) Gross income derived from acting as a
"subcontractor" shall be exempt from the tax imposed by this Section.
(2) All construction contracting gross income
subject to the tax and not deductible herein shall be allowed a deduction of
thirty-five percent (35%).
(3) The gross proceeds of sales or gross income
attributable to the purchase of machinery, equipment or other tangible personal
property that is exempt from or deductible from privilege or use tax under:
(A) Section 16-465; subsections (g) and (p)
(B) Section 16-660, subsections (g) and (p)
shall
be exempt or deductible, respectively, from the tax imposed by this Section.
(4) The gross proceeds of sales or gross income
that is derived from a contract entered into for the installation, assembly,
repair or maintenance of income-producing capital equipment, as defined in
Section 16-110, that is deducted from the retail classification pursuant to
Section 16-465(g), that does not become a permanent attachment to a building,
highway, road, railroad, excavation or manufactured building or other
structure, project, development or improvement shall be exempt from the tax
imposed by this Section. If the
ownership of the realty is separate from the ownership of the income-producing
capital equipment, the determination as to permanent attachment shall be made
as if the ownership was the same. The
deduction provided in this paragraph does not include gross proceeds of sales
or gross income from that portion of any contracting activity which consists of
the development of, or modification to, real property in order to facilitate
the installation, assembly, repair, maintenance or removal of the
income-producing capital equipment. For
purposes of this paragraph, "permanent attachment" means at least one
of the following:
(A) To be incorporated into real property.
(B) To become so affixed to real property that
it becomes part of the real property.
(C) To be so attached to real property that
removal would cause substantial damage to the real property from which it is
removed.
(5) The gross proceeds of sales or gross income
received from a contract for the construction of an environmentally controlled
facility for the raising of poultry for the production of eggs and the sorting,
or cooling and packaging of eggs shall be exempt from the tax imposed under
this Section.
(6) The gross proceeds of sales or gross income
that is derived from the installation, assembly, repair or maintenance of clean
rooms that are deducted from the tax base of the retail classification pursuant
to Section 16-465, subsection (g) shall be exempt from the tax imposed under
this Section.
(7) The gross proceeds of sales or gross income
that is derived from a contract entered into with a person who is engaged in
the commercial production of livestock, livestock products or agricultural,
horticultural, viticultural or floricultural crops or products in this State
for the construction, alteration, repair, improvement, movement, wrecking or demolition
or addition to or subtraction from any building, highway, road, excavation,
manufactured building or other structure, project, development or improvement
used directly and primarily to prevent, monitor, control or reduce air, water
or land pollution shall be exempt from the tax imposed under this Section.
(8) The gross proceeds of sales or gross income
received from a post construction contract to perform post-construction
treatment of real property for termite and general pest control, including wood
destroying organisms, shall be exempt from tax imposed under this section.
(9) Through December 31, 2009, the gross
proceeds of sales or gross income received from a contract for constructing any
lake facility development in a commercial enhancement reuse district that is
designated pursuant to A.R.S. Section 9-499.08 if the contractor maintains the
following records in a form satisfactory to the Arizona Department of Revenue
and to the city:
(A) The certificate of qualification of the lake
facility development issued by the city pursuant to A.R.S. Section 9-499.08,
Subsection D.
(B) All state and local transaction privilege
tax returns for the period of time during which the contractor received gross
proceeds of sales or gross income from a contract to construct a lake facility
development in a designated commercial enhancement reuse district, showing the
amount exempted from state and local taxation.
(C) Any other information considered to be
necessary.
(10) Development or impact fees included in a
construction or development contract for payment to the state or local
government to offset governmental costs of providing public infrastructure,
public safety and other public services to a development.
(11) For taxable periods beginning from and after July
1, 2008 and ending before January 1, 2011, the gross proceeds of sales or gross
income derived from a contract to provide and install a solar energy
device. The contractor shall register
with the Department of Revenue as a solar energy contractor. By registering, the contractor acknowledges
that it will make its books and records relating to sales of solar energy
devices available to the Department of Revenue and the City, as applicable, for
examination.
(c) Subcontractor means a construction
contractor performing work for either:
(1) A construction contractor who has provided
the subcontractor with a written declaration that he is liable for the tax for
the project and has provided the subcontractor his City Privilege License number.
(2) An owner-builder who has provided the
subcontractor with a written declaration that:
(A) The owner-builder is improving the property
for sale; and
(B) The owner-builder is liable for the tax for
such construction contracting activity; and
(C) The
owner-builder has provided the contractor his City Privilege License number.
(3) A person selling new manufactured buildings
who has provided the subcontractor with a written declaration that he is liable
for the tax for the site preparation and set-up; and provided the subcontractor
his City Privilege License number.
Subcontractor
also includes a construction contractor performing work for another
subcontractor as defined above.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 90.25, 7-12-90; Ord. No. 93.37, 10-14-93;
Ord. No. 95.03, 1-12-95; Ord. No. 96.41, 10-24-96; Ord. No. 99.40, 12-16-99;
Ord. No. 2000.37, 9‑14‑00; Ord. No. 2007.20, 4-19-07; Ord. No.
2008.26, 8-14-08)
Sec.
16-416. Construction
contracting—Speculative builders.
(a) The
tax shall be equal to one and eight-tenths percent (1.8%) of the gross income
from the business activity upon every person engaging or continuing in business
as a speculative builder within the City.
(1) The gross income of a speculative builder
considered taxable shall include the total selling price from the sale of
improved real property at the time of closing of escrow or transfer of title.
(2) "Improved real property" means
any real property:
(A) Upon which a structure has been constructed;
or
(B) Where improvements have been made to land
containing no structure (such as paving or landscaping); or
(C) Which has been reconstructed as provided by
Regulation; or
(D) Where water, power, and streets have been
constructed to the property line.
(3) "Sale of improved real property"
includes any form of transaction, whether characterized as a lease or
otherwise, which in substance is a transfer of title of, or equitable ownership
in, improved real property and includes any lease of the property for a term of
thirty (30) years or more (with all options for renewal being included as a
part of the term). In the case of multiple
unit projects, "sale" refers to the sale of the entire project or to
the sale of any individual parcel or unit.
(4) "Partially improved residential real
property", as used in this Section, means any improved real property, as
defined in subsection (a)(2) above, being developed for sale to individual
homeowners, where the construction of the residence upon such property is not
substantially complete at the time of the sale.
(b) Exclusions:
(1) In cases involving reconstruction
contracting, the speculative builder may exclude from gross income the prior
value allowed for reconstruction contracting in determining his taxable gross
income, as provided by Regulation.
(2) Neither the cost nor the fair market value
of the land which constitutes part of the improved real property sold may be
excluded or deducted from gross income subject to the tax imposed by this
Section.
(3) Reserved.
(4) A
speculative builder may exclude gross income from the sale of partially
improved residential real property as defined in subsection (a)(4) above to
another speculative builder only if all of the following conditions are
satisfied:
(A) The speculative builder purchasing the
partially improved residential real property has a valid City Privilege License
for construction contracting as a speculative builder; and
(B) At the time of the transaction, the
purchaser provides the seller with a properly completed written declaration
that the purchaser assumes liability for and will pay all privilege taxes which
would otherwise be due the City at the time of sale of the partially improved
residential real property; and
(C) The seller also:
(i) Maintains proper records of such transactions in a manner
similar to the requirements provided in this Chapter relating to sales for
resale; and
(ii) Retains a copy of the written declaration provided by the buyer
for the transaction; and
(iii) Is properly licensed with the City as a speculative builder and
provides the City with the written declaration attached to the City privilege
tax return where he claims the exclusion.
(5) For taxable periods beginning from and
after July 1, 2008, the portion of gross proceeds of sales or gross income
attributable to the actual direct costs of providing architectural or
engineering services that are incorporated in a contract is not subject to tax
under this Section. For purposes of this
subsection, "direct costs" means the portion of the actual costs that
are directly expended in providing architectural or engineering services.
(c) Tax
liability for speculative builders occurs at close of escrow or transfer of
title, whichever occurs earlier, and is subject to the following provisions
relating to exemptions, deductions and tax credits:
(1) Exemptions.
(A) The gross proceeds of sales or gross income
attributable to the purchase of machinery, equipment or other tangible personal
property that is exempt from or deductible from Privilege or Use Tax under:
(i) Section 16-465, subsections (g) and (p)
(ii) Section 16-660, subsections (g) and (p)
shall
be exempt or deductible, respectively, from the tax imposed by this Section.
(B) The gross proceeds of sales or gross income
received from a contract for the construction of an environmentally controlled
facility for the raising of poultry for the production of eggs and the sorting,
or cooling and packaging of eggs shall be exempt from the tax imposed under
this Section.
(C) The gross proceeds of sales or gross income
that is derived from the installation, assembly, repair or maintenance of clean
rooms that are deducted from the tax base of the retail classification pursuant
to Section 16-465, subsection (g) shall be exempt from the tax imposed under
this Section.
(D) The gross proceeds of sales or gross income
that is derived from a contract entered into with a person who is engaged in
the commercial production of livestock, livestock products or agricultural,
horticultural, viticultural or floricultural crops or products in this State
for the construction, alteration, repair, improvement, movement, wrecking or
demolition or addition to or subtraction from any building, highway, road,
excavation, manufactured building or other structure, project, development or
improvement used directly and primarily to prevent, monitor, control or reduce
air, water or land pollution shall be exempt from the tax imposed under this
Section.
(E) Development or impact fees included in a
construction or development contract for payment to the state or local
government to offset governmental costs of providing public infrastructure,
public safety and other public services to a development.
(2) Deductions.
(A) All amounts subject to the tax shall be
allowed a deduction in the amount of thirty-five percent (35%).
(B) The gross proceeds of sales or gross income
that is derived from a contract entered into for the installation, assembly,
repair or maintenance of income-producing capital equipment, as defined in
Section 16-110, that is deducted from the retail classification pursuant to Section
16-465(g), that does not become a permanent attachment to a building, highway,
road, railroad, excavation or manufactured building or other structure,
project, development or improvement shall be exempt from the tax imposed by
this Section. If the ownership of the
realty is separate from the ownership of the income-producing capital
equipment, the determination as to permanent attachment shall be made as if the
ownership was the same. The deduction
provided in this paragraph does not include gross proceeds of sales or gross
income from that portion of any contracting activity which consists of the
development of, or modification to, real property in order to facilitate the
installation, assembly, repair, maintenance or removal of the income-producing
capital equipment. For purposes of this
paragraph, "permanent attachment" means at least one of the
following:
(i)
To
be incorporated into real property.
(ii) To become so affixed to real property that
it becomes part of the real property.
(iii) To be so attached to real property that
removal would cause substantial damage to the real property from which it is
removed.
(C) For taxable periods beginning from and after
July 1, 2008 and ending before January 1, 2011, the gross proceeds of sales or
gross income derived from a contract to provide and install a solar energy
device. The contractor shall register
with the Department of Revenue as a solar energy contractor. By registering, the contractor acknowledges
that it will make its books and records relating to sales of solar energy
devices available to the Department of Revenue and the City, as applicable, for
examination.
(3) Tax
Credits.
The
following tax credits are available to owner-builders or speculative builders,
not to exceed the tax liability against which such credits apply, provided such
credits are documented to the satisfaction of the Tax Collector.
(A) A tax credit equal to the amount of City
Privilege or Use Tax, or the equivalent excise tax, paid directly to a taxing
jurisdiction or as a separately itemized charge paid directly to the vendor
with respect to the tangible personal property incorporated into the said
structure or improvement to real property undertaken by the owner-builder or
speculative builder.
(B) A tax credit equal to the amount of
Privilege Taxes paid to this City, or charge separately to the speculative
builder, by a construction contractor, on the gross income derived by said
person from the construction of any improvement to the real property.
(C) No credits provided herein may be claimed until such time that
the gross income against which said credits apply is reported.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 88.32, § 1(7), 4-28-88; Ord. No. 90.25,
7-12-90; Ord. No. 93.37, 10-14-93; Ord. No. 96.41, 10-24-96; Ord. No. 99.40,
12-16-99; Ord. No. 2000.37, 9‑14‑00; Ord. No. 2007.20, 4-19-07;
Ord. No. 2008.26, 8-14-08)
Sec.
16-417. Construction
contracting—Owner-builders who are not speculative builders.
(a) At
the expiration of twenty-four (24) months after improvement to the property is
substantially complete, the tax liability for an owner-builder who is not a
speculative builder shall be at an amount equal to one and eight-tenths percent
(1.8%) of:
(1) The gross income from the activity of construction contracting
upon the real property in question which was realized by those construction
contractors to whom the owner-builder provided written declaration that they
were not responsible for the taxes as prescribed in subsection 16-415(c)(2);
and
(2) The purchase of tangible personal property
for incorporation into any improvement to real property, computed on the sales
price.
(b) For
taxable periods beginning from and after July 1, 2008, the portion of gross
proceeds of sales or gross income attributable to the actual direct costs of
providing architectural or engineering services that are incorporated in a
contract is not subject to tax under this Section. For purposes of this
subsection, "direct costs" means the portion of the actual costs that
are directly expended in providing architectural or engineering services.
(c) The
tax liability of this Section is subject to the following provisions relating
to exemptions, deductions and tax credits:
(1) Exemptions.
(A) The gross proceeds of sales or gross income
attributable to the purchase of machinery, equipment or other tangible personal
property that is exempt from or deductible from Privilege or Use Tax under:
(i) Section 16-465, subsections (g) and (p)
(ii) Section 16-660, subsections (g) and (p)
shall
be exempt or deductible, respectively, from the tax imposed by this Section.
(B) The gross proceeds of sales or gross income
received from a contract for the construction of an environmentally controlled
facility for the raising of poultry for the production of eggs and the sorting,
or cooling and packaging of eggs shall be exempt from the tax imposed under
this Section.
(C) The gross proceeds of sales or gross income
that is derived from the installation, assembly, repair or maintenance of clean
rooms that are deducted from the tax base of the retail classification pursuant
to Section 16-465, subsection (g) shall be exempt from the tax imposed under
this Section.
(D) The gross proceeds of sales or gross income
that is derived from a contract entered into with a person who is engaged in
the commercial production of livestock, livestock products or agricultural,
horticultural, viticultural or floricultural crops or products in this State
for the construction, alteration, repair, improvement, movement, wrecking or
demolition or addition to or subtraction from any building, highway, road,
excavation, manufactured building or other structure, project, development or
improvement used directly and primarily to prevent, monitor, control or reduce
air, water or land pollution shall be exempt from the tax imposed under this
Section.
(E) Development or impact fees included in a
construction or development contract for payment to the state or local
government to offset governmental costs of providing public infrastructure,
public safety and other public services to a development.
(2) Deductions.
(A) All
amounts subject to the tax shall be allowed a deduction in the amount of
thirty-five percent (35%).
(B) The
gross proceeds of sales or gross income that is derived from a contract entered
into for the installation, assembly, repair or maintenance of income-producing
capital equipment, as defined in Section 16-110, that is deducted from the
retail classification pursuant to Section 16-465 (g), that does not become a
permanent attachment to a building, highway, road, railroad, excavation or
manufactured building or other structure, project, development or improvement
shall be exempt from the tax imposed by this Section. If the ownership of the realty is separate
from the ownership of the income-producing capital equipment, the determination
as to permanent attachment shall be made as if the ownership was the same. The deduction provided in this paragraph does
not include gross proceeds of sales or gross income from that portion of any
contracting activity which consists of the development of, or modification to,
real property in order to facilitate the installation, assembly, repair,
maintenance or removal of the income-producing capital equipment. For purposes of this paragraph,
"permanent attachment" means at least one of the following:
(i) To
be incorporated into real property.
(ii) To become so affixed to real property that
it becomes part of the real property.
(iii) To be so attached to real property that
removal would cause substantial damage to the real property from which it is
removed.
(C) For taxable periods beginning from and after
July 1, 2008 and ending before January 1, 2011, the gross proceeds of sales or
gross income derived from a contract to provide and install a solar energy
device. The contractor shall register
with the Department of Revenue as a solar energy contractor. By registering, the contractor acknowledges
that it will make its books and records relating to sales of solar energy
devices available to the Department of Revenue and the City, as applicable, for
examination.
(3) Tax
Credits.
The
following tax credits are available to owner-builders and speculative builders,
not to exceed the tax liability against which such credits apply, provided such
credits are documented to the satisfaction of the Tax Collector.
(A) A tax credit equal to the amount of City
Privilege or Use Tax, or the equivalent excise tax, paid directly to a taxing
jurisdiction or as a separately itemized charge paid directly to the vendor
with respect to the tangible personal property incorporated into the said
structure or improvement to real property undertaken by the owner-builder or
speculative builder.
(B) A tax credit equal to the amount of
Privilege Taxes paid to this City, or charge separately to the speculative
builder, by a construction contractor, on the gross income derived by said
person from the construction of any improvement to the real property.
(C) No credits provided herein may be claimed
until such time that the gross income against which said credits apply is
reported.
(d) The
limitation period for the assessment of taxes imposed by this Section is
measured based upon when such liability is reportable, that is, in the
reporting period that encompasses the twenty-fifth (25th) month after said unit
or project was substantially complete.
Interest and penalties, as provided in Section 16-540, will be based on
reportable date.
(e) Reserved.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 93.37, 10-14-93; Ord. No. 96.41, 10-24-96;
Ord. No. 99.40, 12-16-99; Ord. No. 2000.37, 9-14-00; Ord. No. 2007.20, 4-19-07;
Ord. No. 2008.26, 8‑14-08)
Sec.
16-418. Reserved.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 99.40, 12-16-99)
Sec.
16-420. Reserved.
(Ord.
No. 87.17, § 1, 4-23-87)
Sec.
16-425. Job printing.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business activity upon every person engaging or
continuing in the business of job printing, which includes engraving of
printing plates, embossing, copying, micrographics, and photo reproduction.
(b) The
tax imposed by this Section shall not apply to:
(1) Job printing purchased for the purpose of resale by the
purchaser in the form supplied by the job printer.
(2) Out-of-city sales.
(3) Out-of-state sales.
(4) Job printing of newspapers, magazines, or
other periodicals or publications for a person who is subject to the tax
imposed by subsection 16-435(a) or an equivalent excise tax; provided further
that said person is properly licensed by the taxing jurisdiction at the
location of publication.
(5) Sales of job printing to a qualifying
hospital, qualifying community health center or a qualifying health care
organization, except when the property sold is for use in activities resulting
in gross income from unrelated business income as that term is defined in 26
U.S.C. Section 512.
(6) Reserved.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 88.32, § 1(8), 4-28-88; Ord. No. 93.37,
10-14-93; Ord. No. 95.03, 1-12-95; Ord. No. 96.41, 10-24-96; Ord. No. 98.37,
06-25-98; Ord. No. 2000.37, 9‑14‑00)
Sec. 16-427. Manufactured buildings.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income, including site preparation, moving to the site, and/or set‑up,
upon every person engaging or continuing in the business activity of selling
manufactured buildings within the City. Such business activity is deemed to
occur at the business location of the seller where the purchaser first entered
into the contract to purchase the manufactured building.
(b) Sales
of used manufactured buildings are not taxable.
(c) The
sale prices of furniture, furnishings, fixtures, appliances, and attachments
that are not incorporated as component parts of or attached to a manufactured
building are exempt from the tax imposed by this Section. Sales of such items are subject to the tax
under Section 16‑460.
(d) Under
this Section, a trade‑in will not be allowed for the purpose of reducing
the tax liability.
(Ord.
No. 95.03, 1-12-95; Ord. No. 96.41, 10-24-96; Ord. No. 2000.37, 9-14-00)
Sec.
16-430. Timbering and other extraction.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business activity upon every person engaging or
continuing in the following businesses:
(1) Felling, producing, or preparing timber or
any product of the forest for sale, profit, or commercial use.
(2) Extracting, refining, or producing any oil
or natural gas for sale, profit, or commercial use.
(b) The
rate specified in subsection (a) above shall be applied to the value of the
entire product extracted, refined, produced, or prepared for sale, profit, or
commercial use, when such activity occurs within the City, regardless of the
place of sale of the product or the fact that delivery may be made to a point
without the City or without the State.
(c) If
any person engaging in any business classified in this Section ships or
transports products, or any part thereof, out of the State without making sale
of such products, or ships his products outside of the State in an unfinished
condition, the value of the products or articles in the condition or form in
which they existed when transported out-of-state and before they enter
interstate commerce shall be the basis for assessment of the tax imposed by
this Section.
(d) Reserved.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 93.37, 10-14-93; Ord. No. 95.03, 1-12-95;
Ord. No. 96.41, 10-24-96; Ord. No. 2000.37, 9-14-00)
Sec. 16-432. Mining.
(a) The
tax rate shall be at an amount equal to one tenth of one percent (.1%), not to
exceed one tenth of one percent, of the gross income from the business activity
upon every person engaging or continuing in the business of mining, smelting,
or producing for sale, profit, or commercial use any copper, gold, silver, or
other mineral product, compound, or combination of mineral products; but not
including the extraction, removal, or production of sand, gravel, or rock from
the ground for sale, profit, or commercial use.
(b) The
rate specified in subsection (a) above shall be applied to the value of the
entire product mined, smelted or produced for sale, profit, or commercial use,
when such activity occurs within the City, regardless of the place of sale of
the product or the fact that delivery may be made to a point without the City
or without the State.
(c) If
any person engaging in any business classified in this Section ships or
transports products, or any part thereof, out of the State without making sale
of such products, or ships his products outside of the State in an unfinished
condition, the value of the products or articles in the condition or form in
which they existed when transported out-of-state and before they enter
interstate commerce shall be the basis for assessment of the tax imposed by
this Section.
(Ord.
No. 95.03, 1-12-95)
Sec.
16-435. Publishing and periodicals
distribution.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business activity upon every person engaging or
continuing in the business activity of:
(1) Publication of newspapers, magazines, or
other periodicals when published within the City, measured by the gross income
derived from notices, subscriptions, and local advertising as defined in
Section 16-405. In cases where the
location of publication is both within and without this State, gross income
subject to the tax shall refer only to gross income derived from residents of this
State or generated by permanent business locations within this State.
(2) Distribution or delivery within the City of
newspapers, magazines, or other periodicals not published within the City,
measured by the gross income derived from subscriptions.
(b) "Location
of publication" is determined by:
(1) Location of the editorial offices of the
publisher, when the physical printing is not performed by the publisher; or
(2) Location of either the editorial offices or
the printing facilities, if the publisher performs his own physical printing.
(c) "Subscription
income" shall include all circulation revenue of the publisher except
amounts retained by or credited to carriers or other vendors as compensation
for delivery within the State by such carriers or vendors, and further except
sales of published items, directly or through distributors, for the purpose of
resale, to retailers subject to the Privilege Tax on such resale.
(d) "Circulation",
for the purpose of measurement of gross income subject to the tax, shall be
considered to occur at the place of delivery of the published items to the
subscriber or intended reader irrespective of the location of the physical
facilities or personnel of the publisher. However, delivery by the
(e) Allocation of taxes between cities and
towns. In cases where publication or distribution occurs in more than one
city or town, the measurement of gross income subject to tax by the City shall
include:
(1) That portion of the gross income from
publication which reflects the ratio of circulation within this City to
circulation in all incorporated cities and towns in this State having
substantially similar provisions; plus
(2) Only when publication occurs within the City, that portion of
the remaining gross income from publication which reflects the ratio of
circulation within this City to the total circulation of all incorporated
cities or towns in this State within which cities the taxpayer maintains a
location of publication.
(f) The
tax imposed by this Section shall not apply to sales of newspapers, magazines
or other periodicals to a qualifying hospital, qualifying community health
center or a qualifying health care organization, except when the property sold
is for use in activities resulting in gross income from unrelated business
income as that term is defined in 26 U.S.C. Section 512.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 88.32, 1(9), 4-28-88; Ord. No. 93.37,
10-14-93; Ord. No. 96.41, 10-24-96; Ord. No. 98.37, 06-25-98; Ord. No. 2000.37,
9-14-00)
Sec.
16-440. Reserved.
(Ord.
No. 87.17, § 1, 4-23-87)
Sec.
16-444. Hotels.
The tax rate shall be at an amount equal
to one and eight-tenths percent (1.8%) of the gross income from the business
activity upon every person engaging or continuing in the business of operating
a hotel charging for lodging and/or lodging space furnished to any:
(a) Person.
(b) Exclusions. The tax imposed by this Section shall not
include:
(1) Income derived from incarcerating or
detaining prisoners who are under the jurisdiction of the
(2) Gross proceeds of sales or gross income that is properly included in another business activity under this article and that is taxable to the person engaged in that business activity, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.
(3) Gross proceeds of sales or gross income from transactions or activities that are not limited to transients that would not be taxable if engaged in by a person not subject to tax under this article.
(4) Gross proceeds of sales or gross income from transactions or activities that are not limited to transients and that would not be taxable if engaged in by a person subject to taxation under Section 16-410 or Section 16-475 due to an exclusion, exemption or deduction.
(5) Gross proceeds of sales or gross income from commissions received from a person providing services or property to the customers of the hotel. However, such commissions may be subject to tax under Section 16-445 or Section 16-450 as rental, leasing or licensing for use of real or tangible personal property.
(6) Income from providing telephone, fax or internet services to customers at an additional charge, that is separately stated to the customer and is separately maintained in the hotel’s books and records. However, such gross proceeds of sales or gross income may be subject to tax under Section 16-470 as telecommunication services.
(Ord.
No. 90.25, 7-12-90; Ord. No. 93.37, 10-14-93; Ord. No. 96.41, 10-24-96; Ord.
No. 99.40, 12-16-99; Ord. No. 2000.37, 9-14-00; Ord. No. 2007.20, 4-19-07)
Sec.
16-445. Rental, leasing, and licensing
for use of real property.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business activity upon every person engaging or
continuing in the business of leasing, or renting real property located within
the City for a consideration, to the tenant in actual possession, or the
licensing for use of real property to the final licensee located within the
City for a consideration, including any improvements, rights, or interest in
such property; provided further that:
(1) Payments made by the lessee to, or on
behalf of, the lessor for property taxes, repairs, or improvements are
considered to be part of the taxable gross income.
(2) Charges for such items as
telecommunications, utilities, pet fees, or maintenance are considered to be
part of the taxable gross income.
(3) However, if the lessor engages in
telecommunication activity, as evidenced by installing individual metering
equipment and by billing each tenant based upon actual usage, such activity is
taxable under Section 16-470.
(b) If
individual utility meters have been installed for each tenant and the lessor
separately charges each single tenant for the exact billing from the utility
company, such charges are exempt.
(c) Charges
by a qualifying hospital, qualifying community health center or a qualifying
health care organization to patients of such facilities for use of rooms or
other real property during the course of their treatment by such facilities are
exempt.
(d) Charges
for joint pole usage by a person engaged in the business of providing or
furnishing utility or telecommunication services to another person engaged in
the business of providing or furnishing utility or telecommunication services
are exempt from the tax imposed by this Section.
(e) Exempt from the tax imposed by this Section
is gross income derived from the rental, leasing, or licensing for use of real
property to a qualifying hospital, qualifying community health center or a
qualifying health care organization, except when the property so rented,
leased, or licensed is for use in activities resulting in gross income from
unrelated business income as that term is defined in 26 U.S.C. Section 512.
(f) Reserved.
(g) Reserved.
(h) Reserved.
(i) Reserved.
(j) Exempt
from the tax imposed by this Section is gross income derived from the
activities taxable under Section 16-444 of this code.
(k) Reserved.
(l) Reserved.
(m) Reserved.
(n) Notwithstanding
the provisions of Section 16-200(b), the fair market value of one (1)
apartment, in an apartment complex provided rent free to an employee of the
apartment complex is not subject to the tax imposed by this Section. For an apartment complex with more than fifty
(50) units, an additional apartment provided rent free to an employee for every
additional fifty (50) units is not subject to the tax imposed by this Section.
(o) Income
derived from incarcerating or detaining prisoners who are under the
jurisdiction of the
(p) Charges by any hospital, any licensed nursing care institution,
or any kidney dialysis facility to patients of such facilities for the use of
rooms or other real property during the course of their treatment by such
facilities are exempt.
(q)
Charges
to patients receiving "personal care" or "directed care", by any licensed assisted living facility,
licensed assisted living center or licensed assisted living home as defined and
licensed pursuant to Chapter 4, Title 36, Arizona Revised Statutes and Title 9
of the Arizona Administrative Code are exempt.
(r)
Income
received from the rental of any "low-income unit" as
established under Section 42 of the Internal Revenue Code, including the
low-income housing credit provided by IRC Section 42, to the extent that the
collection of tax on rental income causes the "gross
rent" defined by IRC Section 42 to exceed the
income limitation for the low-income unit is exempt. This exemption also applies to income
received from the rental of individual rental units subject to statutory or
regulatory "low-income unit" rent
restrictions similar to IRC Section 42 to the extent that the collection of tax
from the tenant causes the rental receipts to exceed a rent restriction for the
low-income unit. This subsection also
applies to rent received by a person other than the owner or lessor of the
low-income unit, including a broker. This
subsection does not apply unless a taxpayer maintains the documentation to
support the qualification of a unit as a low-income unit, the "gross rent" limitation for the unit and the rent
received from that unit.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 90.25, 7-12-90; Ord. No. 93.37, 10-14-93;
Ord. No. 95.03, 1-12-95; Ord. No. 96.41, 10-24-96; Ord. No. 98.37, 06-25-98;
Ord. No. 99.40, 12-16-99; Ord. No. 2000.37, 9-14-00; Ord. No. 2006.44, 6-15-06;
Ord. No. 2007.20, 4-19-07)
Sec.
16-446. Reserved.
(Ord.
No. 88.32, § 1(10), 4-28-88)
Sec.
16-447. Rental, leasing, and
licensing for use of real property—Additional tax upon transient lodging.
In addition to the taxes levied as
provided in Section 16-444, there is hereby levied and shall be collected an
additional tax in an amount equal to three percent (3%) of the gross income
from the business activity of any hotel engaging or continuing within the City
in the business of charging for lodging and/or lodging space furnished to any
transient.
(Ord.
No. 88.33, § 1, 4-28-88; Ord. No. 90.25, 7-12-90; Ord. No. 2002.46, 11-21-02;
Ord. No. 2007.20, 4-19-07)
Sec.
16-450. Rental, leasing, and licensing
for use of tangible personal property.
(a) The tax rate shall be at an amount equal to
one and eight-tenths percent (1.8%) of the gross income from the business
activity upon every person engaging or continuing in the business of leasing,
licensing for use, or renting tangible personal property for a consideration,
including that which is semi‑permanently or permanently installed within
the City as provided by Regulation.
(b) Special provisions relating to long term
motor vehicle leases. A lease transaction involving a motor vehicle for a
minimum period of twenty-four (24) months shall be considered to have occurred
at the location of the motor vehicle dealership, rather than the location of
the place of business of the lessor, even if the lessor's interest in the lease
and its proceeds are sold, transferred, or otherwise assigned to a lease
financing institution; provided further that the city or town where such motor
vehicle dealership is located levies a Privilege Tax or an equivalent excise
tax upon the transaction.
(c) Gross
income derived from the following transactions shall be exempt from Privilege
Taxes imposed by this Section:
(1) Rental, leasing, or licensing for use of
tangible personal property to persons engaged or continuing in the business of
leasing, licensing for use, or rental of such property.
(2) Rental, leasing, or licensing for use of
tangible personal property that is semi‑permanently or permanently
installed within another city or town that levies an equivalent excise tax on
the transaction.
(3) Rental, leasing, or licensing for use of
film, tape, or slides to a theater or other person taxed under Section 16-410,
or to a radio station, television station, or subscription television system.
(4) Rental, leasing, or licensing for use of
the following:
(A) Prosthetics.
(B) Income-producing capital equipment.
(C) Mining and metallurgical supplies.
These
exemptions include the rental, leasing, or licensing for use of tangible
personal property which, if it had been purchased instead of leased, rented, or
licensed by the lessee or licensee, would qualify as income-producing capital
equipment or mining and metallurgical supplies.
(5) Rental, leasing, or licensing for use of tangible personal
property to a qualifying hospital, qualifying community health center or a
qualifying health care organization, except when the property so rented,
leased, or licensed is for use in activities resulting in gross income from
unrelated business income as that term is defined in 26 U.S.C. Section 512 or
rental, leasing, or licensing for use of tangible personal property in this
State by a nonprofit charitable organization that has qualified under Section
501(c)(3) of the United States Internal Revenue Code and that engages in and
uses such property exclusively for training, job placement or rehabilitation
programs or testing for mentally or physically handicapped persons.
(6) Separately billed charges for delivery,
installation, repair, and/or maintenance as provided by Regulation.
(7) Charges for joint pole usage by a person
engaged in the business of providing or furnishing utility or telecommunication
services to another person engaged in the business of providing or furnishing
utility or telecommunication services.
(8) Reserved.
(9) Rental, leasing, or licensing of aircraft
that would qualify as aircraft acquired for use outside the State, as
prescribed by Regulation, if such rental, leasing, or licensing had been a
sale.
(10) Rental, leasing or licensing for use of an alternative
fuel vehicle if such vehicle was manufactured as a diesel fuel vehicle and
converted to operate on alternative fuel and equipment that is installed in a
conventional diesel fuel motor vehicle to convert the vehicle to operate on an
alternative fuel, as defined in A.R.S. Section 1-215.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 93.37, 10-14-93; Ord. No. 95.03, 1-12-95:
Ord. No. 96.41, 10-24-96; Ord. No. 98.37, 6-25-98; Ord. No. 99.40, 12-16-99;
Ord. No. 2000.37, 9‑14‑00; Ord. No. 2001.16, 7-26-01; Ord. No.
2007.20, 4-19-07)
Sec. 16-452. Reserved.
(Ord.
No. 90.25, 7-12-90)
Sec.
16-455. Restaurants and bars.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business activity upon every person engaging or
continuing in the business of preparing or serving food or beverage in a bar,
cocktail lounge, restaurant, or similar establishment where articles of food or
drink are prepared or served for consumption on or off the premises, including
also the activity of catering. Cover
charges and minimum charges must be included in the gross income of this
business activity.
(b) Caterers
and other taxpayers subject to the tax who deliver food and/or serve such food
off premises shall also be allowed to exclude separately charged delivery,
set-up, and clean-up charges, provided that the charges are also maintained
separately in the books and records. When a taxpayer delivers food and/or serves
such food off premises, his regular business location shall still be deemed the
location of the transaction for the purposes of the tax imposed by this
Section.
(c) The
tax imposed by this Section shall not apply to sales to a qualifying hospital,
qualifying community health center or a qualifying health care organization,
except when sold for use in activities resulting in gross income from unrelated
business income as that term is defined in 26 U.S.C. Section 512.
(d) The
tax imposed by this Section shall not apply to sales of food, beverages,
condiments and accessories used for serving food and beverages to a commercial
airline, as defined in A.R.S. Section 42-5061(A)(49), that serves the food and beverages to its
passengers, without additional charge, for consumption in flight.
(e) The
tax imposed by this Section shall not apply to sales of prepared food,
beverages, condiments or accessories to a public educational entity, pursuant
to any of the provisions of Title 15, Arizona Revised Statutes, to the extent
such items are to be prepared or served to individuals for consumption on the
premises of a public educational entity during school hours.
(f) For
the purposes of this Section, "accessories" means paper plates,
plastic eating utensils, napkins, paper cups, drinking straws, paper sacks or
other disposable containers, or other items which facilitate the consumption of
the food.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 88.32, § 1(11), 4-28-88; Ord. No. 93.37,
10-14-93; Ord. No. 96.41, 10-24-96; Ord. No. 98.37, 6-25-98; Ord. No. 2000.37,
9-14-00; Ord. No. 2007.20, 4‑19-07)
Sec.
16-460. Retail sales—Measure of tax;
burden of proof; exclusions.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business activity upon every person engaging or
continuing in the business of selling tangible personal property at retail.
(b) The
burden of proving that a sale of tangible personal property is not a taxable
retail sale shall be upon the person who made the sale.
(c) Exclusions. For the purposes of this Chapter, sales of
tangible personal property shall not include:
(1) Sales of stocks, bonds, options, or other
similar materials.
(2) Sales of lottery tickets or shares pursuant
to Article I, Chapter 5, Title 5, Arizona Revised Statutes.
(3) Sales of platinum, bullion, or monetized
bullion, except minted or manufactured coins transferred or acquired primarily
for their numismatic value as prescribed by Regulation.
(4) Gross income derived from the transfer of
tangible personal property which is specifically included as the gross income
of a business activity upon which another Section of this Article imposes a
tax, shall be considered gross income of that business activity, and are not
includable as gross income subject to the tax imposed by this Section.
(5) Sales by professional or personal service
occupations where such sales are inconsequential elements of the service
provided.
(d) Reserved.
(e) When
this City and another Arizona city or town with an equivalent excise tax could
claim nexus for taxing a retail sale, the city or town where the permanent
business location of the seller at which the order was received shall be deemed
to have precedence, and for the purposes of this Chapter such city or town has
sole and exclusive right to such tax.
(f) The
appropriate tax liability for any retail sales where the order is received at a
permanent business location of the seller located in this City or in an
(g) Retail
sales of prepaid calling cards or prepaid authorization numbers for
telecommunications services, including sales of reauthorization of a prepaid
card or authorization number, are subject to tax under this Section.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 93.37, 10-14-93; Ord. No. 96.41, 10-24-96;
Ord. No. 96.43, 12-12-96; Ord. No. 99.40, 12-16-99; Ord. No. 2000.37, 9-14-00)
Sec.
16-465. Retail sales—Exemptions.
Income
derived from the following sources is exempt from the tax imposed by Section 16‑460:
(a) Sales of tangible personal property to a
person regularly engaged in the business of selling such property.
(b) Out-of-city sales or out-of-state sales.
(c) Charges for delivery, installation, or
other direct customer services as prescribed by Regulation.
(d) Charges for repair services as prescribed by
Regulation, when separately charged and separately maintained in the books and
records of the taxpayer.
(e) Sales of warranty, maintenance, and service
contracts, when separately charged and separately maintained in the books and
records of the taxpayer.
(f) Sales of prosthetics.
(g) Sales of income-producing capital
equipment.
(h) Sales of rental equipment and rental
supplies.
(i) Sales of mining and metallurgical supplies.
(j) Sales of motor vehicle fuel and use fuel
which are subject to a tax imposed under the provisions of Article I or II,
Chapter 16, Title 28, Arizona Revised Statutes; or sales of use fuel to a
holder of a valid single trip use fuel tax permit issued under A.R.S. Section
28‑5739, or sales of natural gas or liquefied petroleum gas used to
propel a motor vehicle.
(k) Sales of tangible personal property to a
construction contractor who holds a valid Privilege Tax License for engaging or
continuing in the business of construction contracting where the tangible
personal property sold is incorporated into any structure or improvement to
real property as part of construction contracting activity.
(l) Sales of motor vehicles to nonresidents of
this State for use outside this State if the vendor ships or delivers the motor
vehicle to a destination outside this State.
(m) Sales
of tangible personal property which directly enters into and becomes an
ingredient or component part of a product sold in the regular course of the
business of job printing, manufacturing, or publication of newspapers,
magazines, or other periodicals. Tangible personal property which is consumed
or used up in a manufacturing, job printing, publishing, or production process
is not an ingredient nor component part of a product.
(n) Sales made directly to the Federal
government to the extent of:
(1) One hundred percent (100%) of the gross
income derived from retail sales made by a manufacturer, modifier, assembler,
or repairer.
(2) Fifty percent (50%) of the gross income
derived from retail sales made by any other person.
(o) Sales to hotels, bars, restaurants, dining
cars, lunchrooms, boarding houses, or similar establishments of articles
consumed as food, drink, or condiment, whether simple, mixed, or compounded,
where such articles are customarily prepared or served to patrons for
consumption on or off the premises, where the purchaser is properly licensed
and paying a tax under Section 16-455 or the equivalent excise tax upon such
income.
(p) Sales of tangible personal property to a
qualifying hospital, qualifying community health center or a qualifying health
care organization, except when the property sold is for use in activities
resulting in gross income from unrelated business income as that term is
defined in 26 U.S.C. Section 512 or sales of tangible personal property
purchased in this State by a nonprofit charitable organization that has
qualified under Section 501(c)(3) of the United States Internal Revenue Code
and that engages in and uses such property exclusively for training, job
placement or rehabilitation programs or testing for mentally or physically
handicapped persons.
(q) Food purchased with food stamps provided
through the Food Stamp Program established by the Food Stamp Act of 1977 (P.L.
95-113; 91 Stat. 958.7 U.S.C. Section 2011 et seq.) or purchased with food
instruments issued under Section 17 of the Child Nutrition Act (P.L. 95-627; 92
Stat. 3603; and P.L. 99-669; Section 4302; 42 United States Code Section 1786)
but only to the extent that food stamps or food instruments were actually used
to purchase such food.
(r) Reserved.
(1) Reserved.
(2) Reserved.
(3) Reserved.
(4) Reserved.
(s) Sales of groundwater measuring devices required
by A.R.S. Section 45-604.
(t) Sales of paintings, sculptures or similar
works of fine art, provided that such works of fine art are sold by the
original artist; and provided further that sales of "art creations",
such as jewelry, macrame, glasswork, pottery, woodwork, metalwork, furniture,
and clothing, when such "art creations" have a dual purpose, both
aesthetic and utilitarian, are not exempt, whether sold by the artist or by
another.
(u) Sales of aircraft acquired for use outside
the State, as prescribed by Regulation.
(v) Sales of food products by producers as
provided for by A.R.S. Sections 3-561, 3-562 and 3-563.
(w) Reserved.
(x) Reserved.
(y) Reserved.
(z) Reserved.
(aa) The sale of tangible personal property
used in remediation contracting as defined in Section 16-100 and Regulation
16-100.5.
(bb) Sales of materials that are purchased by or
for publicly funded libraries including school district libraries, charter
school libraries, community college libraries, state university libraries or
federal, state, county or municipal libraries for use by the public as follows:
(1)
Printed
or photographic materials.
(2) Electronic or digital media materials.
(cc) Sales
of food, beverages, condiments and accessories used for serving food and
beverages to a commercial airline, as defined in A.R.S. Section 42-5061(A)(49),
that serves the food and beverages to its passengers, without additional
charge, for consumption in flight. For
the purposes of this subsection, "accessories" means paper plates,
plastic eating utensils, napkins, paper cups, drinking straws, paper sacks or
other disposable containers, or other items which facilitate the consumption of
the food.
(dd) In computing the tax base in the case of the
sale or transfer of wireless telecommunication equipment as an inducement to a
customer to enter into or continue a contract for telecommunication services
that are taxable under Section 16‑470, gross proceeds of sales or gross
income does not include any sales commissions or other compensation received by
the retailer as a result of the customer entering into or continuing a contract
for the telecommunications services.
(ee) For the purposes of this Section, a sale of
wireless telecommunication equipment to a person who holds the equipment for
sale or transfer to a customer as an inducement to enter into or continue a
contract for telecommunication services that are taxable under Section 16-470
is considered to be a sale for resale in the regular course of business.
(ff) Sales of alternative fuel as defined in
A.R.S. Section 1-215, to a used oil fuel burner who has received a Department
of Environmental Quality permit to burn used oil or used oil fuel under A.R.S.
Section 49-426 or Section 49-480.
(gg) Sales of food, beverages, condiments and
accessories to a public educational entity, pursuant to any of the provisions
of Title 15, Arizona Revised Statues; to the extent such items are to be
prepared or served to individuals for consumption on the premises of a public
educational entity during school hours.
For the purposes of this subsection, "accessories" means paper
plates, plastic eating utensils, napkins, paper cups, drinking straws, paper
sacks or other disposable containers, or other items which facilitate the
consumption of the food.
(hh) Sales of personal hygiene items to a person
engaged in the business of and subject to tax under Section 16-444 of this code
if the tangible personal property is furnished without additional charge to and
intended to be consumed by the person during his occupancy.
(ii) For the purposes of this Section, the
diversion of gas from a pipeline by a person engaged in the business of
operating a natural or artificial gas pipeline, for the sole purpose of fueling
compressor equipment to pressurize the pipeline, is not a sale of the gas to
the operator of the pipeline.
(jj)
Sales
of food, beverages, condiments and accessories to a nonprofit charitable
organization that has qualified as an exempt organization under 26 U.S.C.
Section 501(c)(3) and regularly serves meals to the needy and indigent on a
continuing basis at no cost. For the
purposes of this subsection, "accessories" means paper plates,
plastic eating utensils, napkins, paper cups, drinking straws, paper sacks or
other disposable containers, or other items which facilitate the consumption of
the food.
(kk) Sales of motor vehicles that use alternative
fuel if such vehicle was manufactured as a diesel fuel vehicle and converted to
operate on alternative fuel and sales of equipment that is installed in a
conventional diesel fuel motor vehicle to convert the vehicle to operate on an
alternative fuel, as defined in A.R.S. Section 1-215.
(ll) Sales
of solar energy devices, for taxable periods beginning from and after July 1,
2008. The retailer shall register with
the Department of Revenue as a solar energy retailer. By registering, the
retailer acknowledges that it will make its books and records relating to sales
of solar energy devices available to the Department of Revenue and City, as
applicable, for examination.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 88.32, 1(12), 4-28-88; Ord. No. 95.03,
1-12-95; Ord. No. 96.43, 12-12-96; Ord. No. 98.12, 3-12-98; Ord. No. 98.37,
06-25-98; Ord. No. 99.40, 12‑16‑99; Ord. No. 2001.16, 7-26-01; Ord.
No. 2007.20, 4-19-07; Ord. No. 2008.26, 8-14-08)
Sec.
16-470. Telecommunication services.
(a) The tax rate shall be at an amount equal to
one and eight-tenths percent (1.8%) of the gross income from the business
activity upon every person engaging or continuing in the business of providing
telecommunication services to consumers within this City.
(1) Telecommunication
services shall include:
(A) Two-way voice, sound, and/or video
communication over a communications channel.
(B) One-way
voice, sound, and/or video transmission or relay over a communications channel.
(C) Facsimile transmissions.
(D) Providing
relay or repeater service.
(E) Providing
computer interface services over a communications channel.
(F) Time-sharing
activities with a computer accomplished through the use of a communications
channel.
(2) Gross income from the business activity of
providing telecommunication services to consumers within this City shall include:
(A) All fees for connection to a
telecommunication system.
(B) Toll charges, charges for transmissions, and
charges for other telecommunications services; provided that such charges
relate to transmissions originating in the City and terminating in this State.
(C) Fees charged for access to or subscription
to or membership in a telecommunication system or network.
(D) Charges
for monitoring services relating to a security or burglar alarm system located
within the City where such system transmits or receives signals or data over a
communications channel.
(E) Charges for telephone, fax or internet
access services provided at an additional charge by a hotel business subject to
taxation under Section 16‑444.
(b) Resale telecommunication services. Gross income from sales of telecommunication
services to another provider of telecommunication services for the purpose of
providing the purchaser's customers with such service shall be exempt from the
tax imposed by this Section; provided, however, that such purchaser is properly
licensed by the City to engage in such business.
(c) Interstate transmissions. Charges by a
provider of telecommunication services for transmissions originating in the
City and terminating outside the State are exempt from the tax imposed by this
Section.
(d) Reserved.
(e) Reserved.
(f)
Prepaid calling cards.
Telecommunications services purchased with a prepaid calling card that
are taxable under Section 16-460 are exempt from the tax imposed under this
Section.
(g)
Internet access services.
The gross income subject to tax under this Section shall not include
sales of internet access services to the person’s subscribers and
customers. For the purposes of this
subsection:
(1) "Internet" means the computer
and telecommunications facilities that comprise the interconnected worldwide
network of networks that employ the transmission control protocol or internet
protocol, or any predecessor or successor protocol, to communicate information
of all kinds by wire or radio.
(2) "Internet
access" means a service that enables users to access content,
information, electronic mail or other services over the internet. Internet access does not include
telecommunication services provided by a common carrier.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 93.37, 10-14-93; Ord. No. 96.41, 10-24-96;
Ord. No. 99.40, 12-16-99; Ord. No. 2000.37, 9-14-00; Ord. No. 2007.20, 4-19-07)
Sec.
16-475. Transporting for hire.
The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business activity upon every person engaging or
continuing in the business of providing the following forms of transportation
for hire from this City to another point within the State:
(a) Transporting of persons or property by
railroad; provided, however, that the tax imposed by this subsection shall not
apply to transporting freight or property for hire by a railroad operating
exclusively in this State if the transportation comprises a portion of a single
shipment of freight or property, involving more than one railroad, either from
a point in this State to a point outside this State or from a point outside
this State to a point in this State. For
purposes of this paragraph, "a single shipment" means the
transportation that begins at the point at which one of the railroads first
takes possession of the freight or property and continues until the point at
which one of the railroads relinquishes possession of the freight or property
to a party other than one of the railroads.
(b) Transporting of oil or natural or
artificial gas through pipe or conduit.
(c) Transporting of property by aircraft.
(d) Reserved.
(1) Reserved.
(2) Reserved.
(3) Reserved.
(4)
Reserved.
(e)
Reserved.
(f) Deductions
or exemptions. The gross proceeds of
sales or gross income derived from the following sources is exempt from the tax
imposed by this Section:
(1) Income that is specifically included as the
gross income of a business activity upon which another section of Article IV
imposes a tax, that is separately stated to the customer and is taxable to the
person engaged in that classification not to exceed consideration paid to the
person conducting the activity.
(2)
Income
from arranging amusement or transportation when the amusement or transportation
is conducted by another person not to exceed consideration paid to the
amusement or transportation business.
(g) The tax imposed by this Section shall not
include arranging transportation as a convenience to a person’s customers if
that person is not otherwise engaged in the business of transporting persons,
freight or property for hire. This
exception does not apply to businesses that dispatch vehicles pursuant to
customer orders and send the billings and receive the payments associated with
that activity, including when the transportation is performed by third party
independent contractors. For the
purposes of this paragraph, "arranging" includes billing for or
collecting transportation charges from a person’s customers on behalf of the
persons providing the transportation.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 93.37, 10-14-93; Ord. No. 96.41, 10-24-96;
Ord. No. 99.40, 12-16-99; Ord. No. 2000.37, 9-14-00; Ord. No. 2007.20, 4-19-07)
Sec.
16-480. Utility services.
(a) The
tax rate shall be at an amount equal to one and eight-tenths percent (1.8%) of
the gross income from the business activity upon every person engaging or
continuing in the business of producing, providing, or furnishing utility
services, including electricity, electric lights, current, power, gas (natural
or artificial), or water, to:
(1) Consumers or ratepayers who reside within the City.
(2) Consumers or ratepayers of this City,
whether within the City or without, to the extent that this City provides such
persons utility services, excluding consumers or ratepayers who are residents
of another city or town which levies an equivalent excise tax upon this City
for providing such utility services to such persons.
(b) Exclusion of certain sales of natural gas
to a public utility. Notwithstanding the provisions of subsection (a)
above, the gross income derived from the sale of natural gas to a public
utility for the purpose of generation of power to be transferred by the utility
to its ratepayers shall be considered a retail sale of tangible personal
property subject to Sections 16‑460 and 16-465, and not considered gross
income taxable under this Section.
(c) Resale utility services. Sales of
utility services to another provider of the same utility services for the
purpose of providing such utility services either to another properly licensed
utility provider or directly to such purchaser's customers or ratepayers shall
be exempt and the deductible from the gross income subject to the tax imposed
by this Section, provided that the purchaser is properly licensed by all
applicable taxing jurisdictions to engage or continue in the business of
providing utility services, and further provided that the seller maintains
proper documentation, in a manner similar to that for sales for resale, of such
transactions.
(d) Reserved.
(e) The
tax imposed by this Section shall not apply to sales of utility services to a
qualifying hospital, qualifying community health center or a qualifying health
care organization, except when sold for use in activities resulting in gross
income from unrelated business income as that term is defined in 26 U.S.C.
Section 512.
(f) The
tax imposed by this Section shall not apply to sales of natural gas or
liquefied petroleum gas used to propel a motor vehicle.
(g) The
tax imposed by this Section shall not apply to:
(1) Revenues received by a municipally owned
utility in the form of fees charged to persons constructing residential,
commercial or industrial developments or connecting residential, commercial or
industrial developments to a municipal utility system or systems if the fees
are segregated and used only for capital expansion, system enlargement or debt
service of the utility system or systems.
(2) Revenues received by any person or persons
owning a utility system in the form of reimbursement or contribution
compensation for property and equipment installed to provide utility access to,
on or across the land of an actual utility consumer if the property and
equipment become the property of the utility.
This exclusion shall not exceed the value of such property and
equipment.
(h) The
tax imposed by this Section shall not apply to sales of alternative fuel as
defined in A.R.S. Section 1-215, to a used oil fuel burner who has received a
Department of Environmental Quality permit to burn used oil or used oil fuel
under A.R.S. Section 49-426 or Section 49-480.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 88.32, § 1(13), 4-28-88; Ord. No. 90.16,
3-29-90; Ord. No. 93.37, 10-14-93; Ord. No. 96.41, 10-24-96; Ord. No. 96.43,
12-12-96; Ord. No. 98.37, 06‑25-98; Ord. No. 2000.37, 9-14-00)
Sec. 16-485. Reserved.
(Ord.
No. 90.25, 7-12-90)
ARTICLE
V. ADMINISTRATION
Sec.
16-500. Administration of this chapter;
rule making.
(a) The
administration of this Chapter is vested in the Tax Collector, except as
otherwise specifically provided, and all payments shall be made to the Tax
Collector.
(b) The
Tax Collector shall prescribe the forms and procedures necessary for the
administration of the taxes imposed by this Chapter.
(c) Except
as provided in this Section, no rule or regulation shall be adopted until
approved by formal action of the City Council.
(d)
Reserved.
(e)
The
Unified Audit Committee shall publish uniform guidelines that interpret the
Model City Tax Code and that apply to all cities and towns that have adopted
the Model City Tax Code as provided by A.R.S. Section 42-6005.
(1) Prior
to finalization of uniform guidelines that interpret the Model City Tax Code,
the Unified Audit Committee shall disseminate draft guidelines for public
comment.
(2) Pursuant
to A.R.S. Section 42-6005(D), when the state statutes and the Model City Tax
Code are the same and where the Arizona Department of Revenue has issued
written guidance, the department’s interpretation is binding on cities and
towns.
(Ord.
No. 87.17, § 1, 4-23-87; Ord. No. 96.43, 12-12-96; Ord. No. 2007.20, 4-19-07)
Sec.
16-510. Divulging of information
prohibited; exceptions allowing disclosure.
(a) Except as specifically provided, it shall
be unlawful for any official or employee of the City to make known information
obtained pursuant to this Chapter concerning the business financial affairs or
operations of any person.
(b) The
City Council may authorize an examination of any return or audit of a specific
taxpayer made pursuant to this Chapter by authorized agents of the Federal
Government, the State of
(c) The
Tax Collector may provide to an Arizona county, city, or town any information
concerning any taxes imposed in this Chapter relative to the taxing ordinances
of that county, city, or town.
(d) Successors,
receivers, trustees, personal representatives, executors, guardians,
administrators, and assignees, if directly interested, may be given information
by the Tax Collector as to the items included in the measure and amounts of any
unpaid tax, interest, and penalties required to be paid.
(e) Upon
a written direction by the City Attorney or other legal advisor to the City
designated by the City Council, officials or employees of the City may divulge
the amount and source of income, profits, leases, or expenditures disclosed in
any return or report, and the amount of such delinquent and unpaid tax,
penalty, or interest, to a private collection agency having a written
collection agreement with the city.
(f) The
Tax Collector shall provide information to appropriate representatives of any
(g) The
Tax Collector may provide information to authorized agents of any other