HomeMy WebLinkAboutORD588ORDINANCE NO.588
AN ORDINANCE OF THE MAYOR AND CITY COUNCIL OF THE CITY OF
APACHE JUNCTION,ARIZONA,RELATING TO THE PRIVILEGE LICENSE
TAX;ADOPTING THE "CITY TAX CODE OF THE CITY OF APACHE
JUNCTION,ARIZONA"BY REFERENCE AND FIXING THE EFFECTIVE
DATE THEREOF;REPEALING ARTICLE 8-3 OF THE APACHE JUNCTION
CITY CODE;PRESERVING RIGHTS AND DUTIES THAT HAVE ALREADY
MATURED AND PROCEEDINGS THAT HAVE ALREADY BEGUN THEREUNDER;
REPEALING ANY CONFLICTING PROVISIONS;PROVIDING FOR SEVER-
ABILITY,PROVIDING PENALTIES FOR THE VIOLATION THEREOF;
AND DECLARING AN EMERGENCY.
BE IT ORDAINED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF
APACHE JUNCTION,ARIZONA,AS FOLLOWS:
SECTION I IN GENERAL
That certain document known as "The City Tax Code of the City of Apache
Junction,Arizona,"three copies of which are on file in the office of the
City Clerk of the City of Apache Junction,Arizona,which document was made
a public record by Resolution No.87-46 of the City of Apache Junction,
Arizona,i s hereby referred to,adopted and made a part hereof as i f fully
set out in this ordinance,the provisions thereof to become effective on
the 1st day of September,1987.
SECTION I I REPEAL OF CONFLICTING SECTIONS OF CODE AND PRESERVATION
OF RIGHTS,DUTIES AND PROCEEDINGS
That Article 8-3 of the Apache Junction City Code and all ordinances
and parts of ordinances i n conflict with the provisions of this ordinance
or any part of the Code adopted herein by reference are hereby repealed,
effective as of the 1st day of September,1987.
That the repeal of Article 8-3 of the City Code,effective as of the
1st day of September,1987,does not affect rights and duties matured or
penalties that were incurred,and proceedings that were begun before the
effective date of the repeal.
SECTION III REPEALING CONFLICTING PROVISIONS
All ordinances and parts of ordinances i n conflict with the provisions
of this ordinance or any part of the Code adopted herein by reference are
hereby repealed.
SECTION IV PROVIDING FOR SEVERABILITY
I f any section,subsection,sentence,clause,phrase or portion of this
ordinance or any part ofthe code adopted herein by reference is for any
reason held to be invalid or unconstitutional by the decision of any court
of competent jurisdiction,such decision shall not affect the validity of the
remaining portions thereof.
ORDINANCE NO.588
PAGE ONE OF TWO
SECTION V PROVIDING PENALTIES FOR THE VIOLATION THEREOF
Any person found guilty of violating any provision of this code shall
be guilty of a class one misdemeanor.Each day that a violation continues
shall be a separate offense punishable as herein above described.
SECTION VI DECLARING AN EMERGENCY
WHEREAS,i t i s necessary for the preservation of the peace,health and
safety of the City of Apache Junction,Arizona,an emergency i s declared to
exist,and this ordinance shall become immediately operative and in force
from and after the date of posting hereof.
PASSED AND ADOPTED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF
APACHE JUNCTION,ARIZONA,THIS 1ST DAY OF SEPTEMBER ,1987.
SIGNED AND ATTESTED TO THIS 1ST DAY OF SEPTEMBER,1987.
ATTEST:
KATHLEEN CONNELLY
City Clerk
PPROVED AS TO FORM:
LEX
CitY\Attorney
ORDINANCE NO.588
PAGE TWO OF TWO
NORMAN S.HILL
Mayor
•
Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
11-116 INDEX
ARTICLE I - GENERAL CONDITIONS AND DEFINITIONS
1 1 Words of tense, number and gender; code references.
100 General definitions.
1 Assembler
1 Broker (Reg. 8A-100.0
1 Business
1 Business day
1 Casual activity or sale
Combined taxes
2 Communications channel
2 Construction contracting
2 Construction contractor
2 Delivery (of notice) by the Tax Collector
2 Delivery, installation, or other direct customer
services (Reg. 8A-100.2)
2 Engaging
2 Equivalent excise tax
2 Federal government
2 Food
23 Hotel
Job printing
3 Lessee
3 Lessor
3 License (for use)
3 Lodging (lodging space)
3 Manufacturer
3 Manufacturing
3 Mining and metallurgical supplies
_3 Modifier
4 Nonprofit entity
4 Occupancy (of real property)
.4 Out -of -City sale
4 Out -of -State sale
4 Owner -builder
4 Person
Primary health care facility
5 Prosthetic
5 Receipt (of notice) by the taxpayer
5 Rental equipment
5 Rental supply
5 Repairer
5 Resides within the City
-6 Restaurant
6 Retail sale (sale at retail)
6 Retailer (Reg.8A-100.3)
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE I - GENERAL CONDITIONS AND DEFINITIONS (ctd)
100 (ctd)General definitions (ctd)
6 Sale
6 Speculative builder
6 Supplier
6 Tax Collector
6 Taxpayer
6 Telecommunication service
6 Utility service
110 Definitions:income -producing capital equipment.(Reg. 8A-110.1)
7-8 (a)includes, subject to (d):
(1)manufacturing equipment and job -printing equipment
(Reg. 8A-110.2)
(2)telecommunications equipment
(3)electrical generation and transmission
(4)pipes 4" I.D.
(5)airplanes, etc.
(6)railroad rolling stock
(7)oil/gas drilling equipment
(8)urban mass transit
(9)telecommunication equipment "rented" to customers
(10)mining and metallurgical equipment
(II)(Reserved)
8 (b)ancillary equipment to remove waste products, except (d).
8 (c)repair and replacement parts for (a) or (b).
8 (d)definition does not include:
(I)unit cost less than $250 or capitalized
(2)janitorial equipment and supplies
(3)hand tools
(4)office equipment, furniture, supplies
(5)sales/distribution
(6)research
(7)motor'vehicles licensed for road use
(8)real property
115 Definitions:computer software;custom computer programming
(Reg 8A-115.1)
8 (a)computer software
9 (b)custom computer programming
9 120 (Reserved)
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE II - DETERMINATION OF GROSS INCOME
200 Determination of gross income:in general.
10 (a)Includes:
(1)value from sales of property or service
(2)total sale or lease price
(3)receipts, cash, barter, exchange, reduction of debt, etc.
(4)including deposits and deferred payments
(Reg. 8A-200.1)
10 (b)Barter, exchange, trade -outs, etc.
10 (c)No deduction for cost, losses, etc.
10 210 Determination of gross income:transactions between affiliated
companies or persons.
10 220 Determination of gross income:artificially contrived transactions.
230 Determination of gross income based upon method of reporting.
11 (a)Cash basis
11 (b)Accrual basis
240 Exclusion of cash discounts, returns, refunds, trade-in values,
vendor -issued coupons, and rebates from gross income.
11-12 (a)(1)cash discounts
(2)returns
(3)trade-ins
(4)vendor -issued coupons
(5)rebates
12 (b)subsequent period reduction may still be excluded if
reported as taxable in prior period.
250 Exclusion of combined tax from gross income; itemization; notice;
'limitations.
12 (a)when tax separately collected/charged
(1)remittance of all tax collected/charged (Reg. 8A-250.1).
(2)itemization
12 (b)when tax has not been separately charged/collected.
260 Exclusion of motor vehicle fees and taxes from gross income;
limitations.
13 (a)registration fees, license fees and taxes.
13 (b)F.E.T. on heavy trucks and trailers.
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE II - DETERMINATION OF GROSS INCOME (ctd)
270 Exclusion of gross income of persons deemed not engaged in
business.
13 (a)Definitions
(1)Federally exempt organization
(2)Governmental entity
(3)Non -licensed business
(4)Proprietary club
(5)Public educational entity
14 (b)Governmental entities, non -licensed businesses, and public
educational entities do not have taxable gross income except
"proprietary activities" of municipalities (Reg. 8A-270.1)
14 (c)Federally exempt organizations and proprietary clubs do not
have taxable gross income except:
(1)proprietary clubs 15% rule on revenue (Reg. 8A-270.2)
(2)unrelated business income
(3)(Reserved)
14 (d)Sales or leases to (a) taxable unless licensed and paying a tax
on resales/leases income.
14 (e)Franchisees and concessionaires of such do not share their
exemption.
14 (f)(Reserved)
15 280 (Reserved)
15 285 (Reserved)
15 290 (Reserved)
ARTICLE III - LICENSING AND RECORDKEEPING
300 Licensing requirements.
16 (a)Who must apply (Reg. 8A-300.1)
(1)all subject to Privilege Tax
(2)(Reserved)
(3)Rental occupancy tax
16 (b)Multiple activities at one location
16 (c)Limitation
305 Special licensing requirements.
16 (a)Partnerships
16 (b)Corporations
16 (c)Multiple locations
16 (d)(Reserved)
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE III - LICENSING AND RECORDKEEPING (ctd)
310 Licensing:duration of license; transferability; display.
17 (a)Valid until surrendered/cancelled/revoked.
17 (b)Non -transferable between owners or locations, and must be
publicly displayed at business location.
17 (c)Replacement of license treated as new license for purposes of
application and fee.
17 (d)(Reserved)
320 Licensingi cancellation; revocation.
17 (a)Cancellation if inactive.
17 (b)Revoked for failure to comply.
•17 (c)Notice and Hearing
17 (d)Reinstatement
18 330 Operating without a license.
350 Recordkeeping requirements.(Reg. 8A-350.1, Reg. 8A-350.2,
Reg. 8A-350.3)
18 (a)Must maintain books and records for limitation period and
make available to Tax Collector during any business day.
18 (b)Tax Collector can specify books and records kept after audit
reveals inadequate recordkeeping.
360 Recordkeeping:claim of exclusion, exemption, deduction, or credit;
documentation; liability.(Reg. 8A-360.1, Reg. 8A-360.2)
18 (a)Claim of exemption must be documented.
18 (b)Vendee's claim of exemption shifts tax liability to vendee.
370 Inadequate or unsuitable records.
19 If records inadequate, taxpayer must either:
(1)provide other suitable records, or
(2)correct/reconstruct records.
ARTICLE IV - PRIVILEGE TAXES
400 Imposition of Privilege Taxes; presumption.
20 (a)Taxes imposed:
(1)privilege taxes on gross incomes specified below
(2)privilege taxes on rental occupancy
20 (b)Taxes imposed by this Chapter in addition to others.
20 (c)Presumption.
20 (d)Limitation of exemptions, deductions, and credits.
405 Advertising.(Reg. 8A-405.1, Reg. 8A-405.2)
20-21 (a)Measure of tax; rate; definition of "local advertising".
21 (b)(Reserved)
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE IV - PRIVILEGE TAXES (ctd)
410 Amusements, exhibitions, and similar activities.
21 (a)Measure of tax; rate.
(1)Charges for admission or amusement.
(2)health spas, fitness centers and related activities
21 (b)(Reserved)
415 Construction contracting:prime contractors.(Reg. 8A-415.1,
Reg. 8A-415.2)
21 (a)Measure of tax; rate.
(1)Exclusion of groundwater measuring devices.
(2)(Reserved)
21 (b)Deductions.
(1)Subcontracting
(2)35%
22 (c)Subcontractors.
(1)Working for another contractor.
(2)Working for an owner building for sale.
416 Construction contracting:speculative builders.(Reg. 8A-416.1,
Reg.8A-416.2)
22 (a)Measure of tax; rate.
(1)sales price at close of escrow
(2)improved real property
(3)sale
22 (b)Exclusions
(1)prior value for reconstruction
(2)land not deductible
(3)(Reserved)
22 (c)Deductions & credits per Section 8A-418.
417 Construction contracting:owner -builders who are not speculative
builders.
23 (a)Measure of tax; rate.
(1)payments to subcontractors
(2)purchases of building materials
23 (b)Deductions & credits per Section 8A-413.
23 (c)Reporting; statute of limitations.
23 (d)(Reserved)
418 Construction contracting:deductions and tax credits available to
speculative tiuilders and owner -builders.
23 (a)3596 deduction
/23 (b)Tax credits
1 (1)City taxes paid on materials purchases_
(2)City taxes paid on construction contracting
(3)Tax credits must relate to income reported.
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE IV - PRIVILEGE TAXES (ctd)
24 420 Feed at wholesale
(a)Measure of tax; rate.
(b)Deductions
(1)out -of -City sales
(2)out -of -State sales
425 Job printing.(Reg. 8A-425.1)
24 (a)Measure of tax; rate.
24 (b)Deductions
(1)job printing for resale
(2)out -of -City sales
(3)out -of -State sales
(4)(Reserved)
24 430 Mining, timbering, and other extraction.
(a)Measure of tax; rate.
(1)mining and metallurgy, but not sand and gravel
(2)timbering
(3)oil and gas extraction/refining
24 (b)Tax based on location of activity, not location of sale.
24 (c)If shipped out-of-state unsold, tax based on value at time of
shipment.
435 Publishing and periodicals distribution.(Reg. 8A-435.1)
25 (a)Measure of tax; rate.
(1)publishing in the City
(2)distribution of periodicals not published in the City
25 (b)Location of publication
25 •(c)Subscription income
•25 (d)Circulation
25 (e)Allocation of taxes between cities and towns.
(1)allocation by circulation in taxing municipalities
(2)allocation of balance between locations of publication
25 440 Rental occupancy tax
26
26
)26
26
26
445 Rental, leasing, and licensing for use of real property.(Reg.
8A-445.1, Reg. 8A-445.2, Reg. 8A-445.3)
(a)Measure of tax, rate.
(1)reimbursements for property tax, repairs, improvpments
(2)charges for services
(3)special case telecommunication services
(b)Exemption for utility reimbursement bas,::c1 upon separate
meter
(c)Exemption for primary health care facilities income.
(d)Exemption for joint pole use charges.
(e)(Reserved)
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE IV - PRIVILEGE TAXES (cid)
445 Rental, leasing, and licensing for use of real property.(ctd)
26 (f)(Reserved)
26 (g)(Reserved)
26 (h)(Reserved)
26 (i)(Reserved)
26 447 (Reserved)
450 Rental, leasing or licensing for use of tangible personal property.
(Reg. 8A-450.1, Reg. 8A-4.50.2, Reg. 8A-450.3)
26 (a)Measure of tax; rate.
26 (b)Special provisions relating to long-term motor vehicle leases
26 (c)Exemptions
(1)rent for re -rent
(2)semi -permanently or permanently installed in another
taxing city (Reg. 8A-450.4)
(3)motion picture films, etc. to amusement, etc. businesses
(4)(A)prosthetics
(B)income -producing capital equipment
(C)mining and metallurgical supplies.
(5)to a non-profit primary health care facility
(6)delivery, installation, repair, maintenance charges
(7)joint pole use charges
(8)(Reserved)
(9)(Reserved)
455 Restaurants and bars.
27 . (a)Measure of tax; rate.(Reg. 8A-455.1)
-27 (b)Delivery, set-up, and clean-up charges of off -premises
restaurants
460 Retail sales:measure of tax; burden of proof; exclusions.
28 (a)Measure of tax; rate (Reg. 8A-460.2, Reg. 8A-460.3,
Reg. 8A-460.6)
28 (b)Burden of proof
28 (c)Exclusions
(1)stocks, bonds, etc.
(2)lottery tickets
(3)bullion and monitized bullion (Reg. 8A-460.5)
(4)taxable elsewhere in this Chapter (Reg. 8A-460..1)
(5)professional services (Reg. 8A-460.4)
28 (d)(Reserved)
28 (e)Seller's business location takes precedence between cities
28 (f)Tax liability based upon seller's location
-18-
Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE IV - PRIVILEGE TAXES (ctd)
465 Retail sales:exemptions.
28 (a)sales for resale (Reg. 8A-465.3)
28 (b)out -of -City sales and out -of -State sales
28 (c)delivery, installation, or other direct customer services
28 (d)repair labor (Reg. 8A-465.1)
29 (e)(Reserved)
29 (f)prosthetics
29 (g)income -producing capital equipment
29 (h)rental equipment and rental supplies
29 (i)mining and metallurgical supplies
29 (j)fuels subject to Arizona fuel use tax
29 (k)sales to a licensed construction contractor
29 (1)(Reserved)
29 (m)component or ingredient parts sold to job printers,
manufacturers, or publishers
29 (n)sales to the Federal government:
(I)100% by assembler, manufacturer, modifier, repairer
(2)_ 50% otherwise
29 (o)food to restaurants
29 (p)sales to non-profit primary health care facilities
29 (q)(Reserved)
30 (r)(Reserved)
(1)(Reserved)
(2)(Reserved)
(3)(Reserved)
(4)(Reserved)
30 (s)groundwater measuring devices
30 (t)(Reserved)
30 (u)(Reserved)
30 (v)(Reserved)
30 (w)(Reserved)'
.30 (x)(Reserved)
30 (y)(Reserved)
30 (z)(Reserved)
470 Telecommunication services. (Reg. 8A-470.1)
30 (a)Measure of tax; rate
(1)telecommunication services definition
(2)gross income definition
31 (b)Resale telecommunication services
31 (c)Interstate transmissions
31 (d)Tax credit for franchise and license fees paid
31 (e)Cable TV income
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE IV - PRIVILEGE TAXES (ctd)
475 Transporting for hire.(Reg. 8A-475.1)
31 (a)Railroads
31 (b)Pipelines
31 (c)Aircraft (freight only)
31 (d)Motor vehicles, except:
(1)income subject to the State Ton -Mile Tax
(2)governmentally adopted urban mass transit
(3)(Reserved)
(4)(Reserved)
480 Utility services.
31 (a)Measure of tax; rate.
(1)services to in -City residents
(2)(Reserved)
32 (b)Sales of natural gas for generation of electricity deemed retail
sales
32 (c)Resale utility services
32 (d)Tax credit for franchise fees paid
ARTICLE V - ADMINISTRATION
500 Administration of this Chapter; rule making.
33 (a)Administration vested in the Tax Collector
33 (b)Tax Collector shall prescribe forms and procedures
33 (c)City Council approves Regulations
510 Divulging of information prohibited; exceptions.
33 (a)Divulging information prohibited except as provided here
33 .(b)City Council authorized examination by another U.S.
jurisdiction
33 (c)Tax Collector can provide information to another Arizona
privilege tax administration
33 (d)Successors, receivers, trustees, etc.
33 (e)City Attorney authorized to collection agencies
3 3 (f)Other Arizona City when tax paid to wrong city
34 (g)Others involved in allocation of publishing tax
34 (h)By agreement approved by City Council with another
jurisdiction.
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE V - ADMINISTRATION (ctd)
520 Reporting and payment of tax.
34 (a)Returns (Reg. 8A-520.0
34 (b)Payment
34 (c)Requirement of security
34 (d)Method of reporting:"cash basis" or "accrual basis" (Reg.
8A-520.2)
(I)all income to be reported by same method
(2)special considerations for construction contractors:
(A)prime contractors
(B)speculative builders
(C)other owner -builders
530 When tax due; when delinquent; verification of return; extensions.
34 (a)Report on same date as state sales tax.
35 (b)(Reserved)
35 (c)(Reserved)
35 (d)(Reserved)
35 (e)Extensions
540 Interest and civil penalties.
35 (a)(Reserved)
35 (b)(Reserved)
35 (c)(Reserved)
35 (d)(Reserved)
35 (e)(Reserved)
35 (f)(Reserved)
545 Deficiencies; when inaccurate return is filed; when no return is
filed; estimates.
35 (a)Tax Collector may recompute or estimate
(I)(Reserved)
(2)(Reserved)
35 (b)Estimates; Presumption
550 Limitation periods.
35 (a)Deficiency assessments
36 (b)(Reserved)
36 (c)No limitation if no return filed, fraud, operating without
license
36 (d)Special provisions relating to owner -builders
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE V - ADMINISTRATION (ctd)
555 Tax Collector may examine books and other records; failure to
provide records.
36 (a)Tax Collector can examine books and records
36 (b)(Reserved)
36 (c)(Reserved)
36 (d)Tax Collector may use any generally accepted auditing
standards or procedures
36 (e)Failure to keep or provide adequate records allows Tax
Collector can estimate
36 (f)(Reserved)
560 Erroneous payment of tax; credits and refunds; limitations.
36 (a)Tax Collector may authorize credits and refunds.Credits
cancelled within 1 year after issuance
36 (b)(Reserved)
36 (c)(Reserved)
36 (d)(Reserved)
36 (e)(Reserved)
36 (f)Allowance/denial of credit is subject to appeal per Section
8A-570.
37 (g)Refunds made from Privilege Tax revenue accounts
565 Payment of tax to the incorrect Arizona city or town.
37 (a)Tax paid to wrong city will be refunded/assessed to correct
city for the period 48 months from date of request.Only
penalty or interest actually paid to other city relating to tax
requested
37 (b)A.R.S. Section 42-1452 will govern.
37 (c)"Other city" means State Department of Revenue if city in
State Collection Program.
567 Allocation of tax on retail sales when more than one city or town
has nexus.
.37 (a)Conditions for allocation -- tax to be shared equally
37 (b)Mobile equipment
37-38 (c)Shared equally
38 (d)Allocation follows rules of 8A-565
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE V - ADMINISTRATION (ctd)
570 Administrative review; petition for hearing or for redetermination;
hearing or redetermination; finality of order.
38 (a)Informal conference with auditor prior to assessment
38 (b)Payment of tax under protest
38 (c)Administrative review
(1)filing a petition
(2)(Reserved)
(3)(Reserved)
(4)(Reserved)
(5)hearings
(6)(Reserved)
(7)(Reserved)
38 (d)(Reserved)
38 (e)(Reserved)
571 Jeopardy assessments.(Reg. 8A-571.1)
38 (a)If jeopardy assessment, Tax Collector will notify taxpayer at
time of assessment, and demand immediate payment
38 (b)Taxpayer must file request for administrative review together
with posting bond or collateral within 10 days
38 (c)(Reserved)
38 (d)(Reserved)
38 (e)(Reserved)
575 Judicial review.
39 (a)Taxpayer's appeal
39 (b)(Reserved)
39 (c)(Reserved)
39 (d)(Reserved)
39 (e)No estoppel
39 . (f)Counterclaims
39 577 (Reserved)
580 Criminal penalties
39 (a)It is unlawful to knowingly or willfully:
(1)fail/refuse to file a return
(2)fail/refuse to pay tax when due
(3)make false/fraudulent return
(4)make false/fraudulent statement to claim tax exemption
(5)fail/refuse to permit lawful examination of books or
records
(6)fail/refuse to remit taxes collected from customer
(7)advertise that tax is not a consideration of price
(8)fail/refuse to obtain a Privilege License
(9)falsify/forge document to obtain an exemption
39 (b)Such acts constitute a Class One Misdemeanor
40 (c)In addition, knowingly swearing to a false statement subject to
laws of perjury
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Index to Apache Junction Tax Code
PAGES SECTION DESCRIPTION
ARTICLE V - ADMINISTRATION (ctd)
590 Civil actions.
40 (a)Liens
(1)City can file a lien for tax, penalty or interest due
(2)Lien recording and filing
(3)Filing a lien does not preclude any other collection
methods
(4)Liens can be released in whole or in part upon payment
40 (b)Actions to recover tax
595 Collection of taxes when there is succession in and/or cessation of
business..
40 (a)This is in addition to any other provisions in the City Code
41 (b)Taxes due are lien on property
41 (c)Foreclosure or similar transfer of improved real property
41 (d)Back taxes due are liability of:
(1)seller if received Certificate at time of sale
(2)buyer otherwise
ARTICLE VI - (Reserved)
42 600 (Reserved)
42 610 (Reserved)
42 620 (Reserved)
42 630 (Reserved)
42 640 (Reserved)
42 650 (Reserved)
42 660 (Reserved)
REGULATIONS
RI 100.1 Brokers.
R I -R2 100.2 Delivery, installation, or other direct customer services.
R3 100.3 Retailers.
R3 110.1 Income -producing capital equipment:in general.
R3 -R5 110.2 Income -producing capital equipment:manufacturing equipment; job
printing equipment.
R5 -R8 115.1 Computer hardware, software, and data services.
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PAGES SECTION DESCRIPTION
REGULATIONS (ctd)
R8 120.1 (Reserved)
R8 200.1 When refundable deposits are included in gross income.
R8 250.1 Excess tax collected.
R8 270.1 Proprietary activities of municipalities are not deemed activities of
a governmental entity.
R9 270.2 Proprietary clubs.
R9 -R10 300.1 Who must apply for a license.
RIO -R11 350.1 Recordkeeping:income.
R11 -R12 350.2 Recordkeeping:expenditures.
R12 350.3 Recordkeeping:out -of -City and out -of -State sales.
R12 360.1 Proof of exemption:sale for resale; sale, rental, lease, or license
of rental equipment.
R13 -R14 360.2 Proof of exemption:exemption certificate.
R15 405.1 Local advertising examples.
R15 405.2 Advertising activity within the City.
R15 -R16 415.1 Distinction between the categories of construction contracting..
R16 -R17 415.2 "Distinction between construction contracting and certain related
activities.
•R17 -R18 416.1 Speculative builders: homeowner's bona fide non -business sale of a
family residence.
R18 -R19 416.2 Reconstruction contracting.
R19 425.1 Distinction between job printing and certain related activities.
R19 435.1 Distinction between publication of periodicals and certain related
activities.
R20 445.1 (Reserved)
)R20 445.2 Rental, leasing, and licensing of real property as lodging:
refundable and non-refundable deposits.
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PAGES SECTION DESCRIPTION
REGULATIONS (ctd)
R20 445.3 Rental, leasing, and licensing of real property as lodging:room and
board; furnished lodging.
R20 447.1 (Reserved)
R20 -R21 450.1 Distinction between rental, leasing, and licensing for use of tangible
personal property and certain related activities.
R21 450.2 Rental, leasing, and licensing for use of tangible personal property:
membership fees; other charges.
R21 450.3 Rental, leasing, and licensing for use of equipment with operator.
R21 -R22 450.4 Rental, leasing, and licensing for use of tangible personal property:
semi -permanently or permanently installed tangible personal
property.
R22 455.1 Gratuities related to restaurant activity.
R22 -R23 460.1 Distinction between retail sales and certain other transfers of
tangible personal property.
R23 460.2 Retail sales:trading stamp company transactions.
R24 460.3 Retail sales:membership fees of retailers.
R24 -R25 460.4 Retail sales:professional services.
R25 460.5 Retail sales:monitized bullion; numismatic value of coins.
R25 460.6 Retail sales:consignment sales.
R26 465.1 Retail sales:repair services.
R26 465.2 (Reserved)
R26 -R27 465.3 Retail sales:sale of containers, paper products, and labels.
R27 465.4 (Reserved)
R27 470.1 Telecommunication services.
R27 475.1 Distinction between transporting for hire and certain related
activities.
R28 520.1 (Reserved)
R28 520.2 Change of method of reporting.
R28 555.1 (Reserved)
R28 571.1 Collection of tax in jeopardy.
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CHAPTER 8A - PRIVILEGE AND EXCISE TAXES
Article I - General Conditions and Definitions
Sec. 8A -I.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.
Sec. 8A -I00.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.
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"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.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.
"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 Arizona, pursuant to
A.R.S.Section 42-1387.Under no circumstances shall "food" include alcoholicbeverages or tobacco, or food items purchased for use in conversion to any form of
alcohol by distillation, fermentation, brewing, or other process.
"Hotel"means any public or private hotel,inn,hostelry,tourist home,house,
motel,rooming house, 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.
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"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.
"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.
"Manufacturing."
(1)For the purposes of this Chapter,an activity shall be considered
"manufacturing" only if such activity is not defined as something else in
this Chapter and if it involves the physical combining (but not merely
mixing),separating (but not merely sorting or sifting),or otherwise
physically changing of tangible personal property ("raw materials") into
another form of tangible personal property available for sale ("finished
goods").
(2)The activity of manufacturing shall be deemed to begin when the first
act of physically combining (but not merely mixing), separating (but not
merely sorting or sifting),or otherwise physically changing tangible
personal.property ("raw materials") occurs; the activity will be deemed
to end when the last act of physically combining,separating,or
otherwise physically changing the tangible personal property ends.
"Mining and Metallurgical Supplies"means all tangible personal property acquired
by persons engaged in activities defined in subsection 8A -430(a)(1)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.
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"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 Arizona; and
(2)the order is placed by other than a resident of the State to be
determined in a manner similar to "resides within the City"; and
(3)the property is delivered to the buyer at a location outside the State;
and
(4)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.
"Primary Health Care Facility"means any hospital or any licensed nursing care
institution or licensed residential care institution,licensed pursuant to Chapter 4,
Title 36, Arizona Revised Statutes, or any licensed kidney dialysis center.
-4-
"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, 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 and insulin syringes, 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.
"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.
"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)such rental, lease, or license by the vendee to another is subject to the
tax imposed by this Chapter or an equivalent excise tax; and
(2)the vendee is regularly engaged in the business of renting,leasing, or
licensing such property for a consideration,and is properly licensed
therefor; 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.
"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 is properly licensed
therefor; 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.
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"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.
"Sale"means any transfer of title or possession,or both,exchange,barter,
conditional or otherwise,in any manner or by any means whatsoever,including
consignment transactions and auctions,of property for a consideration."Sale"
includes any transaction whereby the possession of such property is transferred but
the seller retains the title as security for the payment of the price."Sale" also
includes the fabrication of tangible personal property for consumers who, in whole
or in part,furnish either directly or indirectly the materials used in such
fabrication work.
"Speculative Builder"means an owner -builder who sells or contracts to sell
improved real property on or before the expiration of twenty-four (24)months
after the improvements of the real property sold are substantially complete and
the construction or reconstruction has passed final inspection and the permit holder
has been issued a Certificate of Occupancy by the City; provided, however, that in
cases where no permit for construction or Certificate of Occupancy was issued by
the City, "substantially complete" shall mean "ready for immediate occupancy."
"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 Revenue Officer/City Clerk or their designee or agent
for all purposes under this Chapter.
"Taxpayer "means any person liable for any tax under this Chapter.
"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.
"Utility Service"means the producing,providing,or furnishing of electricity,
electric lights, current, power, gas (natural or artificial), or water to consumers or
ratepayers.
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Sec. 8A-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 which is purchased or leased for use
primarily during the activity of manufacturing or job printing.
Machinery or equipment having multiple uses shall be included
only if such machinery and equipment is not used by the vendee
for any purpose other than during the activity of manufacturing or
job printing to an extent greater than fifteen percent (1596) of its
actual use.
(2)central office switching equipment; switchboards;private branch
exchange equipment;microwave,radio,and other
electromagnetic carrier wave transmission equipment;coaxial
cable;when so used by persons engaged in the business of
providing telecommunication services.
(3)machinery,equipment,or transmission lines used directly in the
production or transmission of electrical power,but not including
items used for distribution or transformers and control equipment
used at transmission substation sites.For the purposes of this
Chapter, all machinery, equipment, or transmission lines rated for
power of less than sixty thousand (60,000)volts or actually used
for power of less than 60,000 volts shall be considered to be used
for distribution.
(4)pipes,or valves for such pipes,four inches (4")in interior
diameter or larger,used for transporting oil,natural gas,
artificial gas, water, or coal slurry.
(5)airplanes,navigational and communication instruments, and other
accessories and related equipment used by airlines holding a
federal or state certificate of public convenience and necessity
or foreign air carrier permit for air transportation; provided that
such tangible personal property is used in conjunction with or
become part of aircraft to be used in transportation of persons,
property,or U.S.Mail in intrastate,interstate,or foreign air
transportation for hire.
(6)rolling stock,rails,ties,or signal control equipment used by
railroads directly in the transportation of persons or property in
intrastate or interstate transportation for hire.
(7)machinery or equipment used directly by oil or gas drilling or
extracting companies in the drilling for or in the process of
extracting oil or gas from the earth for commercial purposes.
(8)tangible personal property actually and directly used or consumed
by the business of operating any bus company or other urban mass
transit system,when such system is operated by a governmental
entity or by any person contracting with such a governmental
entity as part of a governmentally adopted and controlled
program to provide urban mass transportation.
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(9)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.
(10)machinery and equipment used directly in mining and
metallurgical activity,as prescribed by Subsection 8A -430(a)(1),
by persons engaging or continuing in the business of such activity.
(11)(Reserved)
(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 items.Any item having a net unit cost to the vendee
of less than two hundred fifty dollars ($250.00)shall be deemed
"expendable";unless such item is treated in the vendee's books
and records as a capital asset and the vendee supplies the vendor
with a certificate of proof of exemption at the time of the
transaction,as provided by Regulation.
(2)janitorial equipment and supplies.
(3)hand tools.
(4)office equipment, furniture, and supplies.
(5)tangible personal property used in selling or distributing
activities.
(6)tangible personal property used in research.
(7)motor vehicles required to be licensed by the State of Arizona,.
without regard to the use of such motor vehicles,but not
including buses and similar vehicles used to transport passengers
as part of an urban mass transportation system described in
subsection (a)(8) above.
(8)shops,buildings,docks,depots,or other alterations of real
property.
Sec. 8A-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.
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I .
(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.
Sec. 8A-120.(Reserved)
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Article II - Determination of Gross Income
Sec. 8A-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 iuch 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.
Sec. 8A-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.
Sec. 8A-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.
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Sec. 8A-230.Determination of gross income based upon method of reporting.
The method of reporting chosen by a taxpayer,as provided in Section 8A-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.
(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.
Sec. 8A-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
aniount 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.
(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.
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(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.
(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.
Sec. 8A-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 and/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 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.
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Sec. 8A-260.Exclusion of motor vehicle 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.
Sec. 8A-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","non -licensed
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.
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(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)(Reserved).
(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 income 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)(Reserved)
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Sec. 8A-280.(Reserved)
Sec. 8A-285.(Reserved)
Sec. 8A-290.(Reserved)
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Article III - Licensing and Recordkeeping
Sec. 8A-300.Licensing requirements.
(a)The following persons shall make application to the Tax Collector for a
Privilege License,accompanied by a nonrefundable fee of two dollars
($2.00), 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)(Reserved)
(3)every person required to report and pay a tax upon Rental
Occupancy, as imposed by Section 8A-440.
(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 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.
Sec. 8A-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.A person engaged in or conducting one or more
businesses at two (2) or more locations shall procure a license for each
such location.A "location"is a place of a separate business
establishment.
(d)(Reserved)
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Sec. 8A-310.Licensing:duration of license; transferability; display.
(a)Except as provided in Section 8A-320,the Privilege License shall be
valid until request for cancellation and/or surrender of the license by
the licensee or expiration through cessation by the licensee of the
business activity for which it was issued.
(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 8A-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)(Reserved)
Sec. 8A-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.
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Sec. 8A-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.
Sec. 8A-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.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.
Sec. 8A-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 under A.R.S. Section 42-1328 or 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.
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Sec. 8A-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:
(1)to provide such other records required by this Chapter or
Regulation; or
(2)to correct or to reconstruct his records, to the satisfaction of the
Tax Collector.
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Article IV - Privilege Taxes
Sec. 8A-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)a Privilege Tax upon certain persons for the privilege of
occupancy of real property, in accordance with the provisions of
Section 8A-440.
(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.
Sec. 8A-405.Advertising.
(a)The tax'rate shall be at an amount equal to two percent (2%)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:
(I)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 the State,and in which the
advertisement names either no "commonly designated business
entity"within the State or more than one "commonly designatedbusiness 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.
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(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 United States Presidential and Vice
Presidential candidates only.
(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)
Sec. 8A-410.Amusements, exhibitions, and similar activities.
(a)The tax rate shall be at an amount equal to two percent (2%)of the
gross income from the business activity upon every person engaging or
continuing in the following 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,
dancehalls,sports events,jukeboxes,batting and driving ranges,
animal rides,or any other business charging admission for
exhibition, amusement, entertainment, or instruction.
(2)health spas,fitness centers, or other persons who charge for the
use of premises for sports,athletic,or other health -related
activities,whether on a per -event use,or for long-term usage,
such as membership fees.
(b)(Reserved)
Sec.8A-415.Construction contracting:prime contractors.
(a)The tax rate shall be at an amount equal to two percent (2%) 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)
(b)Deductions.
(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%).
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(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 both his Arizona
Transaction Privilege License number and 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 both his
Arizona Transaction Privilege License number and his City
Privilege License number.
Sec. 8A416.Construction contracting:speculative builders.
(a)The tax shall be equal to two percent (2%) 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.
(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)
(c)Tax liability for speculative builders occurs at close of escrow or
transfer of title,whichever occurs earlier,and is subject to the
provisions of Section 8A-418, relating to deductions and tax credits.
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Sec. 8A-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 two
percent (296) 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 8A -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)The tax liability of this Section is subject to the provisions of Section
8A-418, relating to deductions and tax credits.
(c)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 8A-540,will be based on
reportable date.
(d)(Reserved)
Sec. 8A-418.Construction contracting:deductions and tax credits available
to speculative builders and owner -builders.
The following deductions and tax credits are available to amounts subject to the
taxes imposed by Sections 8A-416 and 8A-417:
(a)All amounts subject to the tax shall be allowed a deduction in the
amount of thirty-five percent (35%).
(b)The following tax credits are available to owner -builders and specula-
tive builders, not to exceed the tax liability against which such credits
apply, ptovided such credits are documented to the satisfaction of the
Tax Collector:
(1)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 in
respect of the tangible personal property incorporated into the
said structure or improvement to real property undertaken by the
speculative builder or owner -builder.
(2)A tax credit equal to the amount of Privilege Taxes paid to this
City, or charged separately to the customer,by the construction
contractor,speculative builder,or owner -builder on the gross
income derived by said person from the construction of any
improvement to the real property.
(3)No credits provided herein may be claimed until such time that
the gross income against which said credits apply is reported.
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Sec. 8A-420.Feed at wholesale.
(a)The tax rate shall be at an amount equal to two percent (2%) of the
gross income from the business activity upon every person engaging or
continuing in the business of the sale of feed, salt, vitamins, and other
additives to feed,to persons engaged in the raising or feeding of
livestock or poultry purchased or raised for slaughter, with no deduction
for the income derived from the "resale" of such feed.
(b)The tax imposed by this Section shall not apply to:
(1)out -of -City sales.
(2)out -of -State sales.
Sec. 8A-425.Job printing.
(a)The tax rate shall be at an amount equal to two percent (2%)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)(Reserved)
Sec. 8A-430.Mining, timbering, and other extraction.
(a)The tax rate shall be at an amount equal to two percent (2%)of the
gross income from the business activity upon every person engaging or
continuing in the following businesses:
(1)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.
(2)felling,producing,or preparing timber or any product of the
forest for sale, profit, or commercial use.
(3)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 mined,smelted, 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.
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Sec. 8A-435.Publishing and periodicals distribution.
(a)The tax rate shall be at an amount equal to two percent (2%)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 SA -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 United States [nails shall be considered to
have occurred at the location of publication.
(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.
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Sec. 8A-440.Rental occupancy.
(a)For the purposes of this Section only,the following definitions shall
apply:
(.1)"Landlord"means any lessor of real property under a pre-existing
lease.
(2)"Pre-existing Lease"means any written lease, license for use,or
rental agreement entered into prior to December 1,1967; except
for the following:
(A)any bilateral amendment to such written agreement which
was entered into subsequent to December 1,1967,wherein
the length of the term or the size of the premises affected
is changed or both.
(B)any such agreement for lodging or lodging space.
(3)"Rent"means all consideration paid by the tenant to his landlord
or to another in payment of or diminution of his own or his
landlord's obligation in connection with the real property occupied
by the tenant, whether or not such occupancy is designated as a
rent, lease or license for use of real property.
(4)"Tenant"means any lessee of real property under a pre-existing
lease.
(b)The tax rate shall be at an amount of percent (_%) of the gross
rent paid by a tenant, to the extent of his occupancy of real property in
this City under a pre-existing lease, upon such tenant, for the privilege
of such occupancy, subject to the provisions of this Section.
(c)Exclusions.The tax imposed by this Section shall not apply to:
(1)occupancy by a tenant which the Constitution or laws of the
United States or of the State of Arizona prohibit the City from
taxing.
(2)occupancy by a tenant of a landlord which the Constitution or
laws of the United States or of the State of Arizona prohibit the
City from taxing.
(3)occupancy of lodging or lodging space.
(4)occupancy of real property under other than a pre-existing lease.
(d)Duty of landlords.Every landlord of a tenant subject to the tax:
(1)shall collect the tai imposed by this Section from the tenant
liable for the tax at the same time as and together with the
tenant's periodic or other payment of rent.The tax required to
be collected shall constitute a debt owed by the landlord to the
City.
(2)shall be considered a taxpayer subject to all licensing,
recordkeeping, and reporting requirements of this Chapter.
(e)Duty of tenants.Every tenant liable for the tax:
(1)shall,in any instance in which the tax has not been collected by
his landlord,remit such tax to the Tax Collector,and in such
case, be subject to all licensing and reporting requirements of this
Chapter.
(2)shall maintain,and provide upon request,books and records
sufficient for the Tax Collector to determine the tax liability of
such tenant.
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(f)Interest and civil penalties shall be the liability of the landlord
collecting and remitting the tax; provided, however, that if the landlord
can present clear and convincing evidence that the delinquency was
caused by the tenant,then said interest and penalties shall be the
liability of the tenant.
(g)Extension of rights of appeal to include tenants and landlords.
(1)Any landlord or tenant may avail himself of the provisions of
Sections 8A-570 through 8A-575,relating to appeals, and, except
as modified hereunder, all provisions of said Sections shall apply.
(2)For the purposes of preserving appeal rights,an assessment
against a landlord may be protested and appealed by any tenant
paying or liable to pay the tax for the occupancy included in such
assessment.
(3)Payment of the tax herein imposed to a landlord by a tenant shall
be deemed payment of the tax for the tenant for the purposes of
allowing a protest to be initiated under Sections 8A-570 through
8A-575.
(4)The filing of a protest petition by a tenant shall not relieve the
landlord of his obligation to report and remit the protested tax; or
any subsequent periodic payments of tax governed by the initial
protest.
(h)Refunds.Any refunds of taxes authorized by this Chapter shall be
made to the tenant.Any refunds of interest and civil penalties
authorized by this Chapter shall be made to the person liable for such,
as provided in subsection (f) above.
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Sec. 8A-445.Rental, leasing, and licensing for use of real property.
(a)The tax rate shall be at an amount equal to two percent (2%)of the
gross income from the business activity upon every person engaging or
continuing in the business of leasing,licensing for use, or renting real
property located within the City for a consideration,to the tenant in
actual possession,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 8A-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 primary health care facilities 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)(Reserved)
(Reserved)
(g)(Reserved)
(h)(Reserved)
(i)(Reserved)
Sec. 8A-447.(Reserved)
Sec. 8A-450.Rental, leasing, and licensing for use of tangible personal
property.
(a)The tax rate shall be at an amount equal to two percent (2%) 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.
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(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 8A-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.
(5)rental,leasing,or licensing for use of tangible personal property
to any nonprofit primary health care facility,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.
(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
angther person engaged in the business of providing or furnishing
utility or telecommunication services.
(8)(Reserved)
(9)(Reserved)
Sec. 8A-455.Restaurants and Bars.
(a)The tax rate shall be at an amount equal to two percent (2%)of thegross 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.
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Sec. 8A-460.Retail sales:measure of tax; burden of proof; exclusions.
(a)The tax rate shall be at an amount equal to two percent (2%) 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 1, 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)Except as provided in Section 8A-567,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 sale where the order is
received A t a permanent business location of the seller located in this
City or in an Arizona city or town that levies an equivalent excise tax
shall be at the tax rate of the city or town of such seller's location.
Sec. 8A-465.Retail sales:exemptions.
Income derived from the following sources is exempt from the tax imposed by
Section 8A-460:
(a)sales of tangible personal property to a person regularly engaged in the
business of selling such property.
•(b)out -of -City sales and 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.
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1
1
(e)(Reserved)
(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.
sales of motor vehicle fuel and use fuel which are subject to a tax
imposed under the provisions of Aricle I or II,Chapter 9,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 28-1559.
(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.
(1)(Reserved)
(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 (5096) 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 8A-445 or the equivalent excise tax upon such income.
(p)sales of tangible personal property to any nonprofit primary health care
facility, 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.
(q)(Reserved)
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•as—
sir
(r)(Reserved)
(I)(Reserved)
(2)(Reserved)
(3)(Reserved)
(4)(Reserved)
(s)sales of groundwater measuring devices required by A.R.S.Section
45-604.
(t)(Reserved)
(u)(Reserved)
(v)(Reserved)
(w)(Reserved)
(x)(Reserved)
(y)(Reserved)
(z)(Reserved)
Sec. 8A-470.Telecommunication services.
(a)The tax rate shall be at an amount equal to zero percent (0%) 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.
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(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)Tax credit offset for franchise fees.There shall be allowed as an
offset, up to the amount of tax due, any amounts paid to the City for
license fees or franchise fees,but such offset shall not be allowed
against taxes imposed by any other Section of this Chapter.Such
offset shall not be deemed in conflict with or violation of subsection
8A -400(b).
(e)However,gross income from the providing of telecommunication
services by a cable television system,as such system is defined in
A.R.S.Section 9-505,shall be exempt from the tax imposed by this
Section.
Sec. 8A-475.Transporting for hire.
The tax rate shall be at an amount equal to two percent (2%) 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.
(b)transporting of oil or natural or artificial gas through pipe or conduit.
(c)transporting of property by aircraft.
(d)transporting of persons or property by motor vehicle, including towing
and the operation of private car lines, as such are defined in Article III,
Chapter 4, Title 42, Arizona Revised Statutes; provided, however, that
the tax imposed by this subsection shall not apply to:
(1)gross income subject to the tax imposed by Article VI, Chapter 9,
Title 28, Arizona Revised Statutes.
(2)gross income derived from the operation of a governmentally
adopted and controlled program to provide urban mass
transportation.
(3)(Reserved)
(4)(Reserved)
Sec.8A-480.Utility services.
(a)The tax rate shall be at an amount equal to three percent (3%) 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)(Reserved)
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(b)Exclusion of certain sales of natural gas t o 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 t o be transferred by the utility t o its
ratepayers shall be considered a retail sale of tangible personal
property subject t o Sections 8A-460 and 8A-465,and not considered
gross income taxable eunder 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 t o another properly licensed utility provider or directly
t o such purchaser's customers or ratepayers shall be exempt and
deductible from the gross income subject t o the tax imposed by this
Section,provided that the purchaser is properly licensed by all
applicable taxing jurisdictions t o engage or continue in the business of
providing utility services, and further provided that the seller maintains
proper documentation,in a manner similar t o that for sales for resale,
of such transactions.
(d)Tax credit offset for franchise fees.There shall be allowed as an offset
any franchise fees paid to the City pursuant to the terms of a franchise
agreement,when such franchise fees are based on gross income realized
from utility services provided t o a specified class of customers within
the City.However,such offset shall not be allowed against taxes
imposed by any other Section of this Chapter.Such offsets shall not be
deemed in conflict with or violation of subsection 8A -400(b).
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Article V - Administration
Sec. 8A-500.Administration of this Chapter; rule making.
(a)The administration of this Chapter is vested in and exercised by the
City of Apache Junction,and except as otherwise provided,and all
payments shall be made to the City of Apache Junction.The City may,
pursuant to an intergovernmental agreement, contract with the State of
Arizona Department of Revenue for the administration of the tax.In
such cases, "Tax Collector" shall also mean the Arizona Department of
Revenue, when acting as agent in administering this tax.
(b)The Tax Collector shall prescribe the forms and procedures necessary
for the administration of the taxes imposed by this Chapter.
(c)Except where such Regulations would conflict with administrative
regulations adopted by the City Council or with provisions of this
Chapter,all regulations on the Transaction Privilege Tax adopted by
the Arizona Department of Revenue under the authority of A.R.S.
Section 42-105 shall be considered Regulations of this Chapter and
enforceable as such.
Sec. 8A-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 Arizona,or any
political subdivisions.
(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 may provide information to appropriate
representatives of any Arizona city or town to comply with the
provisions of A.R.S.Section 42-1452 relating to the assessment and
collection of intermunicipal taxes.
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(g)The Tax Collector may provide information to authorized agents of any
other Arizona governmental agency involving the allocation of taxes
imposed by Section 8A-435 upon publishing and distribution of
periodicals.
(h)The Tax Collector may provide information regarding the enforcement
and collection of taxes imposed by this Chapter to any governmental
agency with which the City has an agreement.
Sec. 8A-520.Reporting and payment of tax.
(a)The taxpayer shall be required to use the report form authorized by the
Tax Collector and shall mail or deliver the same,together with
remittance for the amount of tax due,payable to the City of Apache
Junction,to the Tax Collector or any City representative or agent
authorized to receive such payment.The tax return shall be signed by
the taxpayer or his authorized agent,and such signature shall be
evidence that the person signing the return verifies the accuracy of the
information supplied in the return.
(b)Payment.If payment is made in any form other than United States
legal tender, the tax obligation shall not be satisfied until the payment
has been honored in funds.
(c)Requirement of Security.If a taxpayer has remitted payment in the
form of a check or other form of draw upon a bank or third party and
such remittance has not been honored in funds, the Tax Collector may
demand security for future payments.
(d)Method of Reporting.Each taxpayer shall elect to report on either a
cash receipts basis or an accrual basis and shall indicate the choice on
the Privilege License application.A taxpayer shall not change his
reporting method without receiving prior written approval by the Tax
Collector.
(1)Taxpayers must report all gross income subject to the tax using
the same basis of reporting.
(2)Taxes imposed upon construction contracting shall be reported as
follows:
(A)Construction contractors shall report on either a progressive
billing ("accrual") basis or cash receipts basis.
(B)Speculative builders shall report the gross income derived
from sale of improved real property at close of escrow or attransfer of title or possession, whichever occurs earlier.
(C)Owner -builders who are not speculative builders shall report
taxable amounts as provided in Section 8A-417.
Sec. 8A-530.When tax due; when delinquent; verification of return;
extensions.
(a)Except as otherwise specified in this Section,the taxes levied under
this Chapter shall be due, payable, and delinquent on the dates specified
for the State Transaction Privilege Taxes in A.R.S.Section 42-1322.
The taxpayer shall report on the taxes imposed by this Chapter at such
frequency to be identical to the taxpayer's reporting frequency for the
reporting of State Transaction Privilege Taxes.
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(b)(Reserved)
(c)(Reserved)
(d)(Reserved)
(e)The Tax Collector may for good cause extend the date for making any
return required under the provisions of this Section as prescribed by
A.R.S.Section 42-116.
Sec. 8A-540.Interest and civil penalties.
Any taxpayer who shall have failed to timely pay any taxes imposed by this
Chapter, or file a report for the same in a timely manner, or fail or refuse to
allow examination of records by the Tax Collector,shall be subject to any
interest or civil penalties on such tax in like manner as such interest and
penalties are provided in A.R.S.Sections 42-134 and 42-136 for the State
Transaction Privilege Tax.
(a)(Reserved)
(b)(Reserved)
(c)(Reserved)
(d)(Reserved)
(e)(Reserved)
(f)(Reserved)
Sec. 8A-545.Deficiencies; when inaccurate return is filed; when no return is
filed; estimates.
(a)If a taxpayer has failed to file a return or if the Tax Collector is not
satisfied with the return or payment of tax required, the Tax Collector
may redetermine the tax due, plus penalties and interest, and notify the
taxpayer, as provided and prescribed by A.R.S. Sections 42-117 and 42-
118.
(1)(Reserved)
(2)(Reserved)
(b)Estimates by the Tax Collector.Any estimate made by the Tax
Collector is to be made on a reasonable basis.The existence of another
reasonable basis of estimation does not, in any way, invalidate the Tax
Collector's estimate.It is the responsibility of the taxpayer to prove
that the Tax Collector's estimate is not reasonable and correct,by
providing sufficient documentation of the type and form required by
this Chapter or satisfactory to the Tax Collector.
Sec.SA -550.Limitation periods.
(a)Except as provided elsewhere in this Chapter,deficiency assessments
for the taxes imposed by this Chapter must be issued within the
limitation periods prescribed in A.R.S.Section 42-113, and must meet
the provisions of A.R.S.Section 42-117.
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(b)(Reserved)
(c)In cases of failure to file a return or a false or fraudulent return,the
limitation period shall be as prescribed in A.R.S. Section 42-118.
(d)Special provisions relating to owner -builders.The limitation for an
owner -builder subject to the tax as prescribed in Section 8A-417 shall
be based upon the date such tax liability is reportable or was reported,
as provided in Section 8A-417.
Sec. 8A-555.Tax Collector may examine books and other records; failure
to provide records.
(a)The Tax Collector may require the taxpayer to provide and may
examine any books,records, or other documents of any person who, in
the opinion of the Tax Collector, might be liable for any tax under this
Chapter, for any periods available to him under Section 8A-550.
(b)(Reserved)
(c)(Reserved)
(d)The Tax Collector may use any generally accepted auditing procedures,
including sampling techniques, to determine the correct tax liability of
any taxpayer.The only responsibility of the Tax Collector is that the
procedures used are in accordance with generally accepted auditing
standards.The taxpayer must prove by clear and convincing evidence
that the methods chosen do not comply with generally accepted
auditing standards.
(e)The fact that the taxpayer has not maintained or provided such books
and records which the Tax Collector considers necessary to determine
the tax liability of any person does not preclude the Tax Collector from
making any assessment.In such cases,the Tax Collector is authorized
to use estimates,projections,or samplings,to determine the correct
tax.The provisions of Section 8A -545(b),concerning estimates,shall
apply.
(f)(Reserved)
Sec. 8A-560.Erroneous payment of tax; credits and refunds; limitations.
(a)Except as provided in Section 8A-565,the period within which a claim
for credit may be filed, or refund allowed or made if no claim is filed,
shall be as provided in A.R.S. Sections 42-115 and 42-129.
(b)(Reserved)
(c)(Reserved)
(d)(Reserved)
(e)(Reserved)
(f)The denial of a refund by the Tax Collector is subject to the provisions
of A.R.S. Section 42-130.
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(g)Any refund paid under the provisions of this Section shall be paid from
the Privilege Tax revenue accounts.
Sec. 8A-565.Payment of tax to the incorrect Arizona city or town.
(a)When it is determined that taxes have been reported and paid to the
wrong Arizona city or town, a refund or assessment shall be made to
the correct city or town.The refund or assessment period shall be
limited to the forty-eight (48) month period prior to the date the City
receives or gives written request of the taxes due.The City shall
neither pay nor charge any interest or penalty on any overpayment or
underpayment except such interest and penalty actually paid by the
taxpayer relating to such tax.
(b)The limitations and procedures set forth in A.R.S. Section 42-1452 shall
apply to all payments under this Section.
(c)When reference is made in this Section to an Arizona city or town, and
payments made to or requested from such city or town,the provisions
shall be applicable to the Arizona Department of Revenue when it is
acting for or on behalf of an Arizona city or town.
Sec. 8A-567.Allocation of tax on retail sales when more than one Arizona city
or town has nexus.
(a)In cases of retail sales where the tangible personal property sold was
delivered from stock located at a point without the state of Arizona,
the tax imposed upon the retail sale in question shall be shared equally
between this City and the other city or town involved; provided that the
tangible personal property is not "mobile equipment" and either:
(1)transfer of title and possession occurred within the City, but the
order was received at a permanent business location of the seller
located in another Arizona city or town that imposes and
equivalent excise tax upon the transaction; or
(2)transfer of title and possession occurred in another Arizona city .
•or town that imposes an equivalent excise tax upon the
•transaction,but the order was received at a permanent business
location of the seller located within the City.
(b)"Mobile Equipment,"for the purposes of subsection (a) above,includes
any automobile,bicycle,motorcycle,truck,aircraft,boat,tractor,
forklift, or any other equipment that can move under its own power or
is designed as a method of transportation.
(c)"Shared Equally,"for the purposes of subsection (a) above, shall mean:
(1)in cases where tax was collected as a separate charge from the
customer,that each city or town shall have the right to half of
the actual tax collected, even if the rate at which such tax was
collected differs from the appropriate tax rate of either city.
(2)in cases where the tax was not separately charged to the
customer but was reported and paid to one of the cities or towns
in question,that each city or town shall have the right to half of
the actual tax so paid,even if the rate at which such tax was
reported and paid differs from the appropriate tax rate of either
city.
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(3)in all other cases, each city or town shall have the right to half of
the tax liability on such a sale,to be determined by the tax rate
of the city or town of the seller's permanent business location.
(d)Claim,payment,and collection of taxes allocated between Arizona
cities and towns by the provisions of this Section shall be made in the
same manner as provided in Section 8A-565 relating to tax paid to the
incorrect city or town.
Sec. 8A-570.Administrative review; petition for hearing or for
redetermination; hearing or redetermination; finality of order.
(a)Closing agreements between the Tax Collector and a taxpayer have no
force of law unless made in accordance with the provisions of A.R.S.
Section 42-126.
(b)Payment of tax under protest.Payment under protest of tax, penalty
or interest due or assessed under this Chapter shall be deemed as
normal,unprotested payment of such unless the provisions of A.R.S.
Section 42-126 have been met.
(c)Administrative review.
(1)Petitions of appeal shall be made to,and hearings shall be
conducted by, the Arizona Department of Revenue, in accordance
with the provisions of A.R.S.Section 42-122,as modified by
Section 8A-571.
(2)(Reserved)
(3)(Reserved)
(4)(Reserved)
(5)Hearings shall be held by the Arizona Department of Revenue in
accordance with the provisions of A.R.S.Section 42-122.The
Department's decision may be appealed to the State Board of Tax
Appeals,in accordance with the provisions of A.R.S.
Section 42-124.
(6)(Reserved)
(7)(Reserved)
(d)(Reserved)
(e)(Reserved)
Sec. 8A-571.Jeopardy assessments.
(a)If the Tax Collector believes that collection of any amounts imposed by
this Chapter will be jeopardized by delay, he shall issue notice to the
taxpayer in accordance with the provisions of A.R.S. Section 42-120.
(b)In cases where such jeopardy notice has been issued,the taxpayer must
meet the provisions of A.R.S.Section 42-120,concerning appeals of
jeopardy assessments,before any request for administrative review
shall be honored.Any bond or collateral that may be required shall
meet the provisions of A.R.S. Section 42-112.
(d)(Reserved)
(d)(Reserved)
(e)(Reserved)
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Sec. 8A-575.Judicial review.
(a)Appeal of a State Board of Tax Appeals decision to the courts is valid
only if all the provisions of A.R.S. Section 42-124 are met.
(b)(Reserved)
(c)(Reserved)
(d)(Reserved)
(e)The issuance of an adjusted or corrected assessment or notice of refund
due to the taxpayer, where made by the Tax Collector pursuant to the
decision of the Hearing Officer, shall not be deemed an acquiescence by
the City or the Tax Collector in said decision, nor shall it constitute a
bar or estoppel to the institution of an action or counterclaim by the
City to recover any amounts claimed to be due to it by virtue of the
original assessment.
(f)After the initiation of any action in the appropriate court by either
party,the opposite party may file such counterclaim as would be
allowed pursuant to the Arizona Rules of Civil Procedure.
Sec. 8A-577.(Reserved)
Sec. 8A-580.Criminal penalties.
(a)It is unlawful for any person to knowingly or willfully:
(1)fail or refuse to make any return required by this Chapter.
(2)fail to remit as and when due the full amount of any tax or
additional tax or penalty and interest thereon.
(3)make or cause to be made a false or fraudulent return.
(4)make or cause to be made a false or fraudulent statement in a
return,in written support of a return,or to demonstrate or
support entitlement to a deduction,exclusion,or credit or to
entitle the person to an allocation or apportionment or receipts
subject to tax.
(5)fail or refuse to permit any lawful examination of any book,
account, record, or other memorandum by the Tax Collector.
(6)fail or refuse to remit any tax collected by such person from his
customer to the Tax Collector before the delinquency date next
following such collection.
(7)advertise or hold out to the public in any manner,directly or
indirectly,that any tax imposed by this Chapter, as provided in
this Chapter, is not considered as an element in the price to the
consumer.
(8)fail or refuse to obtain a Privilege License or to aid or abet
another in any attempt to intentionally refuse to obtain such.a
license or evade the license fee.
(9)reproduce, forge, falsify, fraudulently obtain or secure, or aid or
abet another in any attempt to reproduce,forge,falsify,or
fraudulently obtain or secure, an exemption from taxes imposed
by this Chapter.
(b)The violation of any provision of subsection (a) above shall constitute a
Class One Misdemeanor.
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(c)In addition to the foregoing penalties,any person who shall knowingly
swear to or verify any false or fraudulent statement,with the intent
aforesaid,shall be guilty of the offense of perjury and on conviction
thereof shall be punished in the manner provided by law.
Sec. 8A-590.Civil actions.
(a)Liens.
(1)Any tax,penalty,or interest imposed under this Chapter which
has become final, as provided in this Chapter, shall become a lien
when the City perfects a notice and claim of lien setting forth the
name of the taxpayer,the amount of the tax,penalty,and
interest,the period or periods for which due, the date of accrual
thereof and stating that the City claims a lien therefor.
(2)The notice of claim of lien shall be signed by the Revenue
Officer/City Clerk under his official seal or the official seal of
the City, and,with respect to real property,shall be recorded in
the office of the County Recorder of any county in which the
taxpayer owns real property,and,with respect to personal
property shall be filed in the office of the Secretary of State.
After the notice and claim of lien is recorded or filed, the taxes,
penalties, and interest in the amounts specified therein shall be a
lien on all real property of the taxpayer located in such county
where recorded, and all tangible personal property of the taxpayer
within the State,superior to all other liens and assessments
recorded or filed subsequent to the recording or filing of the
notice and claim of lien.
(3)Every tax imposed by this Chapter, and all increases, interest, and
penalties thereon, shall become from the time the same is due and
payable a personal debt from the person liable to the City,but
shall be payable to and recoverable by the Tax Collector and
which may be collected in the manner set forth in subsection (b)
below.
(4)Any lien perfected pursuant to this Section shall, upon payment of
the taxes, penalties, and interest affected thereby, be released by
the Tax Collector in the same manner as -mortgages and
judgments are released.The Tax Collector may,at his sole
discretion,release a lien in part,that is, against only specified
property, for partial payment of moneys due the City.
(b)Actions to recover tax.The Arizona Department of Revenue, or any
agent or representative authorized by that Department,may bring
action, in the name of the City, to recover taxes as provided in A.R.S.
Section 42-125.
Sec. 8A-595.Collection of taxes when there is succession in and/or cessation
of business.
(a)In addition to any remedy provided elsewhere in this City Code that
may apply, the Tax Collector may apply the provisions of subsections
(b)through (d)below concerning the collection of taxes when there is
succession in and/or cessation of business.
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1
(b)The taxes imposed by this Chapter are a lien on the property of any
person subject to this Chapter who sells his business or stock of goods,
or quits his business,if the person fails to make a final return and
payment of the tax within fifteen (15) days after selling or quitting his
business.
(c)Any person who purchases,or who acquires by foreclosure,by sale
under trust deed or warranty deed in lieu of foreclosure, or by any other
method,improved real property or a portion of improved real property
for which the Privilege Tax imposed by this Chapter has not been paid
shall be responsible for payment of such tax as a speculative builder or
owner builder, as provided in Sections 8A-416 and 8A-417.
(d)A person's successors or assignees shall withhold from the purchase
money an amount sufficient to cover the taxes required to be paid, and
interest or penalties due and payable, until the former owner produces a
receipt from the Tax Collector showing that all City tax has been paid
or a certificate stating that no amount is due as then shown by the
records of the Tax Collector.
(1)If a subsequent audit shows a deficiency arising before the sale of
the business, the deficiency is an obligation of the seller and does
not constitute a liability against a buyer who has received a
certificate from the Tax Collector.
(2)If the purchaser of a business or stock of goods fails to obtain a
certificate as provided by this Section,he is personally liable for
payment of the amount of taxes required to be paid by the former
owner on account of the business so purchased,with interest and
penalties accrued by the former owner or assignees.
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7 Article VI - (Reserved)
'..,
Sec. 8A-600.(Reserved)
Sec. 8A-610.(Reserved)
Sec. 8A-620.(Reserved)
Sec. 8A-630.(Reserved)
Sec. 8A-640.(Reserved)
Sec. 8A-650.(Reserved)
Sec. 8A-660.(Reserved)
_•••
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REGULATIONS - PRIVILEGE AND EXCISE TAXES
Reg. 8A-100.1.Brokers
(a)For the purposes of proper administration of this Chapter and to
prevent evasion of taxes imposed,brokers shall be wherever necessary
treated as taxpayers for all purposes, and shall file a return and remit
the tax imposed on the activity on behalf of the principal.No
deduction shall be allowed for any commissions or fees retained by such
broker, except as provided in Section 8A-405,relating to advertising
commissions.
(b)Brokers for vendors.A broker acting for a seller,lessor,or other
similar person deriving gross income in a category upon which this
Chapter imposes a tax shall be liable for such tax, even if his principal
would not be subject to the tax if he conducted such activity in his own
behalf,by reason of the activity being deemed a "casual"one.For
example:
(1)An auctioneer or other sales agent of tangible personal property is
subject to the tax imposed upon retail sales,even if such sales
would be deemed "casual"if his principal had sold such items
himself.
(2)A property manager is subject to the tax imposed upon rental,
leasing, or licensing of real property, even if such rental,leasing,
or licensing would be deemed "casual"if his principal managed
such real property himself.
(c)Brokers for vendees.A .broker acting solely for a buyer, lessee, tenant,
or other similar person who is a party to a transaction which may be
subject to the tax, shall be liable for such tax and for filing a return in
connection with such tax only to the extent his principal is subject to
the tax.
(d)The liability of a broker does not relieve the principal of liability
except upon presentation to the Tax Collector of proof of payment of
the tax,and only to the extent of the correct payment.The broker
shall be relieved of the responsibility to file and pay taxes upon the
filing and correct payment of such taxes by the principal.
Reg. 8A-100.2.Delivery, installation, or other direct customer services.
(a)"Delivery Charges"exist only when the total charges to the ultimate
customer or consumer include,as separately charged to the ultimate
customer,charges for delivery to the ultimate consumer,whether the
place of delivery is within or without the City, and when the taxpayer's
books and records show the separate delivery charges.
(1)Identification to the customer or consumer that the listed price
has "delivery included" or other similar expression is insufficient
to show the delivery as a separate charge.Only the separately
stated charge for the delivery shall be deemed a "delivery
charge".
(2)Freight in.Charges for delivery from place of production or the
manufacturer to the vendor either directly or through a chain of
wholesalers or jobbers or other middlemen are deemed "freight-
in" and are not considered delivery.
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(b)"Installation",as used in this definition,relates only to tangible
personal property.Installation to real property is deemed construction
contracting in this Chapter.Examples of installation relating to
tangible personal property are:installing a radio in an automobile;
applying sun screens on the windows of a boat;installing cabinets,
carpeting,or "built-in appliances"to a camper or motorized
recreational vehicle.
(c)Repair of tangible personal property is not included in this definition.
See Regulation 8A-465.1.
(d)"Direct Customer Services"means services other than repair rendered
directly to the customer.Services or labor provided by any person prior
to the transfer of tangible personal property to the customer or
consumer are not included in this definition.In the following examples,
the requirements of subsection (e)below are referred to by the words
"identify" or "identification."
(1)A retailer sells a customer a $100 "plug-in" appliance, with a $25
delivery and installation charge.If the retailer identifies the $25
delivery and installation charge, it is a charge for direct customer
services.
(2)A caterer charges his customer $1,000 for the food and drink
served,$300 for setup and site cleanup,and $500 for bartender
and waiters.If all charges are properly identified, only the $300
for set up and cleanup is a charge for direct customer services,
and the $1,500 for food and service is restauranting gross income.
(3)Persons engaged in engraving on wood,metal,stone,etc.or
persons engaged in retouching photographs or paintings may
consider such charges for labor as direct customer services.
(4)All charges by •a photographer resulting in the sale of a
photograph (sitting charges,developing,making enlargements,
retouching,etc.)for services that occur prior to transfer of
tangible personal property are not direct customer services.
(5)An equipment rental company charging $25 for delivery may
consider such delivery charge as a charge for direct customer
service only if such charge is properly identified.
(6)Even if identified, charges for labor incurred in the production of
any manufactured article or of a custom-made article (jewelry,
artwork,tailoring,draperies,etc.)are not included in this
definition, as such labor occurs prior to the transfer of property.
(e)Recordkeeping requirements.
(1)Any person who engages in transactions involving these services
must:
(A)Separately bill,invoice,or charge the customer for such
services in a manner by which the customer or consumer
may readily identify the specific dollar amount of the
service charge; and
(B)Maintain business books and records in a manner in which
the separate charge for such services can be clearly
identified, to the satisfaction of the Tax Collector.
(2)Rendering a statement to a customer for a transaction involving
such services and the transfer of tangible personal property which
only indicates the total amount of the charges with words such as
"services included" or "charge includes labor and parts" or similar
a expression does not satisfy the requirements of this subsection.
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Reg. 8A-100.3.Retailers.
When in the opinion of the Tax Collector it is necessary for efficient
administration of this Chapter,he may regard any salesman,representative,
peddler,canvasser,or agent of any dealer,distributor,supervisor,or employer
under whom he operates or from whom he obtains tangible personal property for
sale,rental,lease,or license as a retailer for the purposes of this Chapter,
irrespective of whether he is making sales,rentals,leases,or licenses on his own
behalf or on behalf of others.The Tax Collector may also regard such dealer,
distributor, supervisor, or employer as a retailer for the purposes of this Chapter.
Reg. 8A-110.1.Income -producing capital equipment:in general.
(a)The term "income -producing capital equipment" applies only when the
purchaser or lessor is directly using,such equipment primarily for the
purpose of directly producing income in his normal course of business.
For example:
(1)Rental of a printing press to a job printer would qualify.Rental
of the same equipment to a trade school or an airline company
would not qualify.
(2)A lease of an electric generator rated at 75KV to an electric
utility company or a manufacturer or job printer would qualify.
The same lease to a telecommunications company or an irrigation
district would not qualify.
(b)Note the "two -pronged test" this definition requires:
(1)the purchaser or lessor must be engaged in a business that directly
uses the item to produce income; and
(2)the item is to be directly used in the production of income.
Ancillary equipment for backup power,removal of wastes,
storage,transport of materials,etc.do not qualify unless the
definition allows it for that specific business activity.
Reg. 8A-110.2.Income -producing capital equipment:manufacturing equipment;
job printing equipment.
(a)Manufacturing involves the change of tangible personal property into a
new form of tangible personal property.This may involve activities
often called "processing"or "fabricating",for example:making
electronic parts in quantity,refining crude oil,pasteurizing milk,
fabricating a mobile home,producing syrup for soft drinks from other
ingredients.Therefore, there are four reasons why an activity is not
considered manufacturing, as follows, with examples.
(1)The activity is specifically defined elsewhere in this Chapter.For
example:publishing; construction contracting;baking or cooking
food (defined as restaurant activity).
(2)The activity does not begin with a physical product ("raw
materials").For example:word processing;electronic data
processing;photography;video or sound recording by a recording
studio.•
(3)The activity does not physically change the raw materials into
another form of tangible personal property.For example:sorting
or "screening"sand,gravel,or rock;picking cotton;stuffing
envelopes; chilling (but not freezing) water; cooling or heating air.
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(4)The "finished product" is not tangible personal property available
for sale.For example:broadcasting by radio or television waves;
cooling or heating air; electronic data processing.
(b)Manufacturing is limited to those activities involving the actual
changing of tangible personal property into another form,and not to
include any other activities of persons involved in the business of
manufacturing.Therefore,
(I)Items typically called "work in process" are often produced from
"raw materials"or other "work in process"and then stockpiled
until needed at a later stage in production (or perhaps sold in this
form).For the purposes of this Chapter,the activity of
manufacturing is deemed to cease when the last act of physically
combining,separating,or otherwise changing of this "work in
process" ceases, and does not resume until such "work in process"
is again used in the production process as "raw material" for such
process.
(2)"In -line" inspection procedures (between the 5th and 6th steps of
an assembly process,for example)shall be deemed part of the
activity of manufacturing, provided that the material so inspected
is not physically removed from the location of the production
process (removal to the Quality Assurance labs or the stockroom,
for example, would be deemed to be removal from the physical
location of the production process).Therefore,activities that
occur in the Quality Assurance labs,stockroom,or other such
locations are by definition not part of the activity of
manufacturing.
(3)Packaging shall be deemed part of the manufacturing activity if:
(A)the packaging process is an integral part of the production
process, and
(B)the goods so packaged have come directly from the
production process (or from an "in -line"inspection as
defined above).
(4)Only "in -line"materials handling shall be deemed as part of the
activity of manufacturing,in a manner similar to "in -line"
inspection procedures.Therefore delivery or the moving of
materials up to and including delivery to the first stage of the
production process (or the first stage of separate phase of
production, when in reference to "work in process") is not part of
the manufacturing activity.In like manner,delivery to the
stockroom,Quality 'Assurance labs,or other such place not
deemed part of the production process,and that and all
subsequent movement of such materials until they have once
again entered the production process, are deemed not to be part
o f the activity of manufacturing.
(c)The activity of job printing shall be determined in a manner similar to
that provided above relating to "manufacturing".
(d)The following items are specifically not included as machinery :or
equipment which is acquired for use primarily during the activity of
manufacturing or job printing:
(I)equipment used primarily for the storage of materials when not
being physically changed (for example,storage vats or bins,
holding tanks).
(2)materials handling equipment (for example,dollies,fork lifts,
hand trucks) not used directly "in -line".
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(3)ancillary testing equipment of all kinds (for example,testing
equipment in the Quality Assurance area or in the stockroom).
(4)ancillary packaging equipment of all kinds (for example,
packaging equipment in the stockroom or mailroom).
(5)ancillary equipment used for the treatment or removal of waste
products of the activity (for example,air -scrubbing equipment,
wastewater treatment equipment).
(6)any structural changes to real property (for example, plumbing or
electrical changes to a structure, loading docks).
Reg. 8A-115.1.Computer hardware, software, and data services.
(a)Definitions.
(1)"Computer Hardware"(also called "computer equipment"or
"peripherals") is the components and accessories which constitute
the physical computer assembly,including but not limited to:
central processing unit, keyboard, console, monitor, memory unit,
disk drive,tape drive or reader,terminal,printer,plotter,
modem,document sorter,optical reader and/or digitizer,
network.
(2)"Computer Software"(also called "computer program") is tangible
personal property, and includes:
(A)"Operating Program (Software)"(also called "executive
program (software)"),which is the programming system or
technical language upon which or by means of which the
basic operating procedures of the computer are recorded.
The operating program serves as an interface with user
applied programs and allows the user to access the
computer's processing capabilities.
(B)"Applied Program (Software)",which is the programming
system or technical language (including the tape,disk,
cards,or other medium upon which such language or
program is recorded)designed either for application in a
specialized use,or upon which or by means of which a plan
for the solution of a particular problem is based.Typically,
applied programs can be transferred from one computer to
another via storage media.Examples of applied programs
include:payroll processing,general ledger,sales data,
spreadsheet,word processing,and data management
programs.
(3)"Storage Medium"is any hard disk,compact disk,floppy disk,
diskette, diskpack, magnetic tape, cards, or other medium used
for storage of information in a form readable by a computer, but
not including the memory of the computer itself.
(4)A "Terminal Arrangement"(also called "on-line' arrangement") is
any agreement allowing access to a remote central processing
unit through telecommunications via hardware.
(5)A "Computer Services Agreement"(also called "data services
agreement")is an agreement allowing access to a computer
through a third -party operator.
(b)For the purposes of this Chapter, transfer of title and possession of the
following are deemed sales of tangible personal property and any other
transfer of title,possession,or right to use for a consideration of the
following is deemed rental,leasing,or licensing of tangible personal
property:
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(1)Computer hardware or storage media.Rental,leasing,or
licensing for use of computer hardware or storage media includes
the lessee's use of such hardware or storage media on the lessor's
premises.
(2)Computer software which is not custom computer programming.
Such prewritten ("canned")programs may be transferred to a
customer in the form of punched cards, magnetic tape, or other
storage medium, or by listing the program instructions on coding
sheets.Transfer is deemed to have occurred whether title to the
storage medium upon which the program is recorded,coded,or
punched passes to the customer or the program is recorded,
coded, or punched on storage medium furnished by the customer.
Gross income from the transfer of such prewritten programs
includes:
(A)the entire amount charged to the customer for the sale,
rental, lease, or license for use of the storage medium or
coding sheets on which or into which the prewritten program
has been recorded, coded, or punched.
(B)the entire amount charged for the temporary transfer or
possession of a prewritten program to be directly used or to
be recorded,coded,or punched by the customer on the
customer's premises.
(C)license fees,royalty fees, or program design fees; any fee
present or future, whether for a period of minimum use or
of use for extended periods,relating to the use of a
prewritten program.
(D)the entire amount charged for transfer of a prewritten
("canned") program by remote telecommunications from the
transferor's place of business to or through the customer's
computer.
(E)any charge for the purchase of a maintenance contract
which entitles the customer to receive storage media on
which prewritten program improvements or error
corrections have been recorded or to receive telephone or
on -site consultation services, provided that:
(1)if such maintenance contract is not optional with the
customer,then the charges for the maintenance
contract,including the consultation services,are
deemed gross income from the transfer of the
prewritten program.
(ii)if such Maintenance contract is optional with the
customer but the customer does not have the option to
purchase the consultation services separately from the
storage media containing the improvements or error
corrections,then the charges for the maintenance
contract,including the consultation services,are
deemed gross income from the transfer of the
prewritten program.
(iii)if such maintenance contract is optional with the
customer and the customer may purchase the
consultation services separately from the storage
media containing the improvements or error
corrections,then only the charges for such
improvements or error corrections are deemed gross
income from the transfer of a prewritten program and
charges for consultation are deemed to be charges for
professional services.
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(c)Producing the following by means of computer hardware is deemed to
be the activity of job printing for the purposes of this Chapter:
(1)statistical reports,graphs,diagrams,microfilm,microfiche,
photorecordings,or any other information produced or compiled
by a computer; except as provided in subsection (e) below.
(2)additional copies of records,reports,manuals,tabulations,etc.
"Additional Copies"are any copies in excess to those produced
simultaneously with the production of the original and on the
same printer,whether such copies are prepared by running the
same program, by using multiple printers, by looping the program,
by using different programs to produce the same output,or by
other means.
(d)Charges for the use of communications channel in conjunction with a
terminal arrangement or data services agreement are deemed gross
income from the activity of providing telecommunication services.
(e)The following transactions are deemed direct customer services,
provided that charges for such services are separately stated and
maintained as provided by Regulation 8A -100.2(e):
(1)"Custom (Computer)ProgramminR",which is any computer
software which is written or prepared for a single customer,
including those services represented by separately stated charges
for the modification of existing prewritten programs.
(A)Customer computer programming is deemed a professional
service regardless of the form in which the programming is
transferred.
(B)Custom programming includes such programming performed
in connection with the sale, rental, lease,or license for use
4C.of computer hardware,provided that the charges for such
are separately stated from the charges for the hardware.
(C)Custom computer programming includes a program prepared
to the special order of a customer who will use the program
to produce copies of the program for sale,rental,lease,or
license.The subsequent sale,rental,lease,or license of
such a program is deemed the sale, rental, lease, or license
of a prewritten program.
(2)Training services related to computer hardware or software,
prbvided further that:
(A)the provider of such training services is deemed the
ultimate consumer of all tangible personal property used in
training others or provided to such trainees without
separately itemized charge for the materials provided.
(B)training deemed a direct customer service does not include:
(i)training materials,books,manuals,etc.furnished to
customers for a charge separate from the charge for
training services.
(ii)training provided to customers without separate
charge as part of the sale, rental, lease, or license of
computer hardware or software,or as part of a
terminal arrangement or data services agreement.
(3)The use of computer time through the use of a terminal
arrangement or a data service agreement,but not charges for
computer hardware located at the customer's place of business
(for example,the terminal,a printer attached to the terminal,a
modem used to communicate with the remote central processing
unit over a telephone line).
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(4)Compiling and producing,as part of a terminal arrangement or
computer services agreement,original copies of statistical
reports,graphs,diagrams,microfilm,microfiche,
photorecordings,or other information for the same person who
supplied the raw data used to create such reports.
(f)(Reserved)
Reg. 8A-120.1.(Reserved)
Reg. 8A-200.1.When refundable deposits are includable in gross income.
Refundable deposits shall be includable as gross income of the taxpayer for the
month in which received, and will be allowed as deductible refunds for the month in
which actually paid back, unless the taxpayer:
(1)maintains all such deposits in a separate investment account
which is not subject to use or expenditure by the taxpayer; and
(2)pays interest at at least one-half of one percent (1/2%) per month
from the date of deposit to the depositor,payable upon refund
which shall not be later than thirty (30)days subsequent to the
return of the equipment or other end of period of possession
involved; and
(3)includes forfeited deposits in gross income at time of forfeiture.
Reg. 8A-250.1.Excess tax collected.
If a taxpayer collects taxes in excess of the combined tax from any customer in
any transaction,all such excess tax shall be paid to the taxing jurisdictions in
proportion to their effective rates.The right of the taxpayer to charge his
customer for his own liability for tax does not allow the taxpayer to enrich himself
at the cost of his customers.
Reg. 8A-270.1.Proprietary activities of municipalities are not considered
activities of a governmental entity.
The following activities,when performed by a municipality, are considered to be
activities of a person engaged in business for the purposes of this Chapter, and not
excludable by reason of Section 8A-270:
(a)rental,leasing,or licensing for use of real property to other than
another department or agency of the municipality.
(b)producing, providing, or furnishing electricity, electric lights, current,
power, gas (natural or artificial), or water to consumers or ratepayers.
(c)sale of tangible personal property to the public,when similar tangible
personal property is available for sale by other persons, as, for example,at police or surplus auctions.
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Reg. 8A-270.2.Proprietary dubs.
(a)Equity requirements.In order to qualify for exclusion under Section
8A-270,a proprietary club must actually be owned by the members.
For the purposes of qualification, a club will be deemed to be member-
owned if at least eighty-five percent (85%)of the equity of the total
amount of club -owned property is owned by bona fide individual
members whose membership is represented in the form of shares,
certificates,bonds, or other indicia of capital interest.A corporation
may be considered an individual owner provided that it owns a
membership solely for the benefit of one or more of its employees and
it is not engaged in any business activity connected with the operation
of the club.
(b)Gross revenue requirements.In computing gross revenue for the
computation of this fifteen percent (15%)rule of subsection 8A-
270(c)(1),
(I)the following shall be excluded:
(A)membership dues.
(B)membership fees which relate to the general admission to
the club on a periodic (or perpetual) basis.
(C)assessments.
(D)special fund raising events, raffles, etc.
(E)donations, gifts, or bequests.
(F)gate receipts,admissions,and program advertising for not
more than one tournament in any calendar year.
(2)the following must be included:
(A)green fees,court use fees,and similar charges for the
actual use of a facility or part thereof.
(B)pro shop sales if the shop is owned by the club.
(C)golf cart rental if the carts are owned by the club.
(D)rentals,percentages,or commissions received for
permitting the use of the premises or any portion thereof
by a caterer,concessionaire,professional,or any other
person for sales, rental, leasing,licensing, catering,food or
beverage service, or instruction.
(E)all receipts from food or beverage sales, room use or rental
charge, corkage and catering charges, and similar receipts.
(F)locker and locker room fees and attendants charges if paid
to the club.
(G)tournament entry fees other than entry fees for the one
annual tournament exempt under subsection (b)(1)(F) above.
Reg. 8A-300.1.Who must apply for a license.
(a)For the purposes of determining whether a license is required under
Section 8A-300,a person shall be deemed to be "engaged in or
continuing in business"within the City, if he meets any of the following
conditions:
(1)He is engaged in any activity subject to the City's Privilege Taxes
as principal or broker.
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(2)He has or maintains within the City directly, or if a corporation
by a subsidiary,an office,distribution house,sales house,
warehouse or other place of business,or any agent or other
representative operating within this City under the authority of
such person or if a corporation its subsidiary,irrespective of
whether such place of business or agent or other representative is
located here permanently or temporarily or whether such person
or subsidiary is authorized or licensed to do business in this State
or this City.
(3)He is soliciting sales, orders, contracts,leases, and other similar
forms of business relationships,within the City from customers,
consumers,or users located within the City,by means of
salesmen,solicitors,agents,representatives,brokers,and other
similar agents or by means of catalogs or other advertising,
whether such orders are received or accepted within or without
this City.
(4)(Reserved)
(5)He is required to report and pay the tax upon Rental Occupancy
imposed by Section 8A-440.
(b)(Reserved)
Reg. SA -350.1.Recordkeeping:income.
The minimum records required for persons having gross income subject to,or
exempt or excluded from, tax by this Chapter must show:
(a)the gross income of the taxpayer attributable to any activity occurring
in whole or in part in the City.
(b)the gross income taxable under this Chapter, divided into categories as
stated in the official City tax return.
(c)the gross income subject to Arizona Transaction Privilege Taxes,
divided into categories as stated in the official State tax return.
(d)the gross income claimed to be exempt,and with respect to each
activity or transaction so claimed:
(1)if the transaction is claimed to be exempt as a sale for resale or
as a sale, rental, lease, or license for use of rental equipment:
(A)the City Privilege License number and State Transaction
Privilege Tax License number of the customer (or the
equivalent city,if applicable,and state tax numbers of the
city and state where the customer resides), and
(B)the name,business address,and business activity of the
customer, and
(C)evidence sufficient to persuade a reasonably prudent
businessman that the transaction is believed to be in good
faith a purchase for resale, or a purchase, rental, lease, or
license for use of rental equipment,by the vendee in the
ordinary and regular course of his business activity,as
provided by Regulation.
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1
(2)if the transaction is claimed to be exempt for any other reason:
(A)the name,business address,and business activity of the
customer, and
(B)evidence which would establish the applicability of the
exemption to a reasonably prudent businessman acting in
good faith.Ordinary business documentation which would
reasonably indicate the applicability of an exemption shall
be sufficient to relieve the person on whom the tax would
otherwise be imposed from liability therein,if he acts in
good faith as provided by Regulation.
(e)with respect to those allowed deductions or exclusions for tax collected
or charges for delivery or other direct customer services,where
applicable,evidence that the deductible income has been separately
stated and shown on the records of the taxpayer and on invoices or
receipts provided to the customer.All other deductions, exemptions,
and exclusions shall be separately shown and substantiated.
(f)with respect to special classes and activities, such other books, records,
and documentation as the Tax Collector,by regulation,shall deem
necessary for specific classes of taxpayer by reason of the specialized
business activity of any such class.
(g)In all cases,the books and records of the taxpayer shall indicate both
individual transaction amounts and totals for each reporting period for
each category of taxable, exempt, and excluded income defined by this
Chapter.
Reg. 8A-350.2.Recordkeeping:expenditures.
The minimum records required for persons having expenditures,costs,purchases
and rental or lease or license expenses subject to, or exempt or excluded from, tax
by this Chapter are:
(a)the total price of all goods acquired for use or storage in the City.
(b)the date'of acquisition and the name and business address of the seller
or lessor of all goods acquired for use or storage in the City.
(c)documentation of taxes,freight,and direct customer service labor
separately charged and paid for each purchase, rental, lease, or license.
(d)the gross price of each acquisition claimed as exempt from tax,and
with respect to each transaction so claimed,sufficient evidence to
satisfy the Tax Collector that the exemption claimed is applicable.
(e)as applicable to each taxpayer,documentation sufficient to the Tax
Collector, so that he may ascertain:
(1)all construction expenditures and all Privilege and Use Taxes
claimed paid, relating to owner -builders and speculative builders.
(2)disbursement of collected gratuities and related payroll
information required of restaurants.
(3)franchise and license fee payments and computations thereto
which relate to:
(A)utility service
(B)telecommunication service.
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(f)
(g)
(4)the validity of any claims of proof of exemption, as provided by
Regulation.
(5)a claimed alternative prior value for reconstruction.
(6)(Reserved)
(7)(Reserved)
(8)payments of tax to the Arizona Department of Transportation and
computations therefor,when a motor -vehicle transporter claims
such the exemption.
(9)payments by tenants subject to the tax upon Rental Occupancy
imposed by Section 8A-440.
any additional documentation as the Tax Collector, by Regulation, shall
deem necessary for any specific class of taxpayer by reason of the
specialized business activity of specific exemptions afforded to that
class of taxpayer.
In all cases,the books and records of the taxpayer shall indicate both
individual transaction amounts and totals for each reporting period for
each category of taxable, exempt, and excluded expenditures as defined
by this Chapter.
Reg. 8A-350.3.Recordkeeping:out -of -City and out -of -State sales.
(a)Out -of -City Sales.Any person engaging or continuing in a business who
claims out -of -City sales shall maintain and keep accounting records or
books indicating separately the gross income from the sales of tangible
personal property from such out -of -City branches or locations.
(b)Out -of -State sales.Persons engaged in a business claiming out -of -State
sales shall maintain accounting records or books indicating for each
out -of -State sale the following documentation:
(1)documentation of location of the buyer at the time of order
placement; and
(2)documentation of residency of the buyer,determined in the
manner one determines if a person "resides within the City"; and
(3)shipping,delivery, or freight documents showing where the buyer
took delivery; and
(4)documentation of intended location of use or storage of the
tangible personal property sold to such buyer.
Reg. 8A-360.1.Proof of exemption:sale for resale; sale, rental, lease, or
license of rental equipment.
A claim of purchase for resale or of purchase,rental,lease,or license for rent,
lease, or license is valid only if the evidence is sufficient to persuade a reasonably
prudent businessman that the particular item is being acquired for resale or for
rental,lease,or license in the ordinary course of business.The fact that the
acquiring person possesses a Privilege License number, and makes a verbal claim of
"sale for resale or lease" or "lease for re -lease" does not meet this burden and is
insufficient to justify an exemption.The "reasonable evidence"must be evidence
which exists objectively,and not merely in the mind of the vendor,that the
property being acquired is normally sold,rented,leased,or licensed by the
acquiring person in the ordinary course of business.Failure to obtain such
reasonable evidence at the time of the transaction will be a basis for disallowance
of any claimed deduction on returns filed for such transactions.
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••••
Reg. 8A-360.2.Proof of exemption:exemption certificate.
For the purpose of proof of exemption, in transactions other than those in which
the proof is set by standard documentation as detailed in Regulations 8A-350.1 and
8A-360.1,the minimum acceptable proof and documentation for each transaction
shall be the completion,at the time of the transaction,in all material respects, of
a certificate containing all the information set forth below.For the purpose of
validating the vendor's claim of exemption,such certificate is sufficient if
executed by any person with apparent authority to act for the customer,and the
information provided validates the claim.
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41,
INVALID UNLESS COMPLETED IN FULL
VENDOR'S NAME Sales Invoice No.
Customer's Exemption Claim
City of Apache Junction Privilege License (Sales) Tax
Customer's Business Name:
Customer's Business Address:
Specific Business Activity:
(e.g., if retailer, lessor, or
manufacturer, specify items
leased, sold or made, i.e.,
cars, computers, clothes, etc.)
Customer's License Nos.City:State:
ITEMS CLAIMED AS EXEMPT FROM TAX
:All Items on This Invoice or Purchase Order.
or
:Only Those Items marked with An "E".
REASON FOR CLAIMED EXEMPTION:
:The items claimed as exempt are sold, rented, leased, or licensed
by the above named customer in the normal course of its business activity.
or
:The items claimed as exempt are exempt from the City of Apache
Junction Privilege Tax for the following specific reason(s):
CUSTOMER'S CERTIFICATE
I certify that the above information is accurate to the best of my information and
belief,and that I am authorized by the Customer above to acquire the items
claimed as exempt on a tax-free basis on its behalf.I further understand that the
making of a false or fraudulent claim to obtain a tax exemption is a Class One
Misdemeanor under City Code Section 8A-580.
Name Date
Title
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Reg. 8A-405.1.Local advertising examples.
For the purposes of illustration only,and not by way of limitation,the following
are provided as examples of local advertising subject to the tax:
(1)retail sales and rental establishments doing business within the
State when only one commonly designated business entity is
identified by name in the advertisement.
(2)financial institutions doing business within the State whether part
of a national chain or local business only.
(3)sales of real estate located within the State.
(4)health care facilities located within the State.
(5)hotels,motels, and apartments,whether a national chain or local
so long as the advertisement identifies any location within the
State.
(6)brokers doing business within the State whether stockbrokers, real
estate brokers, insurance brokers, etc.
(7)nonprofit organizations,which even though tax exempt,have an
office, whether national, local, or branch, within the State.
(8)political activity,except United States Presidential and Vice
Presidential candidates.
(9)restaurants or food service establishments which have one or
more branches, outlets, or franchises within the State even though
the local franchisee or licensee may not be responsible for the
placement of the advertisement.
(10)services provided by individuals or entities within the State such
as doctors,lawyers,architects,hairdressers,auto repair shops,
counseling services, utilities, contractors, auction houses, etc.
(11)coupons redeemable only at a single commonly designated
business entity within the State.
(12)theater,sports, and other entertainment events held at locations
within the State.
Reg. 8A-405.2.Advertising activity within the City.
A person engaged in advertising activity shall be considered to be doing business
entirely within the City if all or a major portion of the dissemination facilities such
as broadcasting studios,printing plants, or distribution centers are located within
the City limits.Billboard and other outdoor advertising companies shall be
considered to be doing business within the City to the extent they have billboards
or similar displays within the City.Remote studios patched to an in -City studio
and subject to engineering modulation or control at the in -City studio are
considered studios doing business in the City.
Reg. 8A415.1.Distinction between the categories of construction
contracting.
For the purposes of this Chapter,transactions involving improvements to, or sales
of,real property are designated into one of the following categories,and these
categorizations shall apply,whether or not a person designates himself as a
contractor, construction manager, developer, or otherwise:
(a)A person performing improvements to real property is one of the
following:
(1)an "Owner -Builder"when the work is performed by the owner or
lessor or lessee -in -possession.An "owner -builder"may also be a
"speculative builder".
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(2)a "Prime Contractor"when performing work for the owner or
lessor or lessee -in -possession of the real property,unless that
person has provided a written declaration stating 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 both his
Arizona Transaction Privilege Tax License number and his
City Privilege License number.
(3)a "Subcontractor"when performing work for either:
(A)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 both his Arizona Transaction Privilege
License number and his City Privilege License number.
(B)an owner -builder who has provided the subcontractor with a
written declaration as provided in subsections (a)(2)(A)
through (a)(2)(C) above.
(b)An owner or lessor ("owner -builder") of improved real property is one
of the following:
(1)a "Speculative Builder"if he sells such property within twenty-
four (24)months after the improvement is "substantially
completed".
(2)an "owner builder who is not a speculative builder"in all other
cases.
s -(c)The terms "owner", "lessor", and "lessee -in -possession" shall be deemed
to include any authorized agent for such person.
Reg. 8A-415.2.Distinction between construction contracting and certain
related activities.
(a)Certain rentals,leases,and licenses for use in connection with
construction contracting.Rental,leasing,or licensing of earthmoving
equipment with an operator shall be deemed construction contracting
activity.Rental,leasing,or licensing of any other tangible personal
property (with or without an operator)or of earthmoving equipment
without .an operator shall be deemed rental,leasing,or licensing of
tangible personal property.For example:
(1)Rental of a backhoe,'bulldozer, or similar earthmoving equipment
with operator is construction contracting.Rental of these items
without an operator is rental of tangible personal property.
(2)Rental of scaffolding, temporary fences, or barricades is rental of
tangible personal property.
(3)Rental of pumps or cranes is rental of tangible personal property,
whether or not an operator is provided with the equipment rented.
(b)Distinction between construction contracting, retail, and certain direct
Customer service activities.
(1)When an item is attached or installed on real property,it is a
construction contracting activity and any subsequent repair,
removal, or replacement of that item is construction contracting.
(2)Items attached or installed on tangible personal property are
retail sales.
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(3)Transactions where no tangible personal property is attached or
installed are considered direct customer service activities (for
example:carpet cleaning,lawn mowing,landscaping
maintenance).
(4)Demolition, earth moving, and wrecking activities are considered
construction contracting.
(c)Prefabricated buildings; manufactured housing.
(I)Any prefabricated building or manufactured housing with respect
to which an affidavit of affixture has been recorded pursuant to
A.R.S.Section 42-641.01 shall be deemed an improvement of real
property,and any improvement or alteration of such
prefabricated building or manufactured housing shall be deemed
construction contracting activity.
(2)Any prefabricated building or manufactured housing with respect
to which an affidavit of affixture has not been recorded shall be
deemed tangible personal property for all purposes of this
Chapter.
(3)A "mobile home"shall qualify for this definition only to the
extent that such affidavit of affixture has been recorded at the
time of sale.
(d)Sale of consumable goods incorporated into or applied to real property
is considered a retail sale and not construction contracting.Examples
of consumable goods are lubricants,faucet washers,and air
conditioning coolant, but not paint.
(e)Installation or removal of tangible personal property which has
independent functional utility is considered a retail activity.
(1)"Tangible personal property which has independent functional
utility"must be able to substantially perform its function(s)
without attachment to real property."Attachment to real
property"must include more than connection to water,power,
gas, communication, or other service.
(2)Examples of tangible personal property which has independent
functional utility include artwork,furnishings,"plug-in"kitchen
equipment,or similar items installed by bolts or similar
fastenings.
(3)Examples of tangible "personal property which does not have
independent functional utility include wall-to-wall carpeting,
flooring, wallpaper, kitchen cabinets, or "built-in" dishwashers or
ranges.
(4)The installation of window coverings (drapes, mini -blinds, etc.) is
always a retail activity.
Reg. 8A-416.1.Speculative builders:homeowner's bona fide non -business sale
of a family residence.
(a)A sale of real property which has been improved within twenty-four (24)
months prior to the sale shall be considered a "homeowner's bona fide
non -business sale" and not subject to the tax on speculative builders if:
(1)the property was actually used as the principal place of family
residence or vacation residence by the immediate family of the
seller for the six (6) months next prior to the offer for sale; and
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(2)the seller has not sold more than two (2)such residences (or, if
the residence is a vacation residence,two (2)such vacation
residences) within the thirty-six (36) months immediately prior to
the offer for sale; and
(3)the seller has not licensed, leased, or rented the sold premises for
any period within the twenty-four (24) month period prior to the
offer for sale.
(b)In the event that a homeowner of a family residence contracts with a
licensed construction contractor for improvements to a residence,all
construction contractors shall be considered prime contractors for the
imposition of the tax.Construction contracting on a family residence
shall be presumed to be for an owner's bona fide non -business purpose
and all construction contractors shall be required to report and pay the
tax imposed on all such improvements.
(c)Purchases by a homeowner of tangible personal property for inclusion in
any construction, alteration, or repair of his residence shall be subject
to tax as retail sales to the ultimate consumer.
(d)"Owner"and "Homeowner"as used in this Regulation shall only mean an
individual,and no other entity,association,or representative shall
qualify;except that an administrator,executor,personal
representative, or guardian in guardianship or probate proceedings, for
the estate of a deceased or incompetent person or a minor, may claim
"homeowner" status for such person if such person would have otherwise
qualified with respect to the specific property involved.
Reg. 8A-416.2.Reconstruction contracting.
(a)"Reconstruction (of Real Property)"shall mean the subdividing of real
property and,in addition,all construction contracting activities
performed upon said real property; provided, however, that each of the
following conditions are met:
(1)a structure existed on said real property prior to the
reconstruction activity; and
(2)the "prior value" of said structure exceeds fifteen percent (15%)
of the "prior value"of the integrated property (land,
improvements, and structure); and
(3)the total cost of all construction contracting activities performed
on said real property in the twenty-four (24) month period prior to
the sale of any part ,of the real property exceeds fifteen percent
(15%) of the "prior value" of the real property; and
(4)the structure which existed on the real property prior to the
reconstruction activity still exists in some form upon the
property, and is included, in whole or in part, in the property sold.
(b)Except as provided in subsection (c)below,"prior value"means the
value of the total integrated property,with improvements, as existing
immediately prior to any reconstruction activity.Such value shall be
the full cash value of the property for secondary taxes as determined by
the County Assessor, as such statement of value includes both the land
and improvements,without any deduction or diminution.The value
shall be as set in the year which is immediately preceding the year in
which the reconstruction improvements are or could have been included
in the County Assessor's valuation.If the County Assessor's valuation is
contested or appealed,the final determination at either the
administrative or judicial level shall apply.
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(c)"Alternative Prior Value"shall mean that as an alternative to the "prior
value"defined above,the taxpayer may use his actual cost of the
reconstructed property prior to reconstruction, provided that evidence
of such cost is presented to the Tax Collector and is determined by the
Tax Collector,in his sole discretion, to be satisfactory.Such evidence
shall consist,as a minimum,of proof of the actual,arms -length
acquisition price,accompanied by a full appraisal of all property
involved which appraisal shall have been performed by a real estate
broker or MAI appraiser specifically for the purpose of assisting in the
acquisition and further shall have been performed on behalf of the
seller or a lending institution which has lent at least sixty-five (65%)
percent of the acquisition price.(Only long term lending - not interim
or construction financing will be considered.)This alternative value
shall be used only if the property was acquired by the reconstruction
taxpayer not more than thirty-six (36)months prior to a "sale"as
defined below.
(d)A "sale"for the purpose of determining "alternative prior value"or
"reconstruction" only shall be deemed to have occurred as of the date
of the execution of a contract of sale or a deed (joint tenancy or
warranty) whichever is earlier, to a purchaser or grantee of any single
residential or other occupancy unit.In addition to the foregoing,a
lease with option to purchase a single residential unit shall be
considered a "sale" at the date of execution of such lease if said option
is exercisable by the lessee in not later than nine (9) months.Further in
the case of cooperative apartments,the sale date shall be the date of
execution of the contract selling (subject or not to encumbrances, liens
or security interests) of a share, or a sufficient number of shares which
entitle the purchaser to the occupancy of a residential unit.In all cases
a person shall include a husband and wife as a community, or any co-
occupants of a single unit as joint tenants.
Reg. 8A-425.1.Distinction between job printing and certain related
activities.
(a)Computerized Printing.Computerized versions of all items which
would be taxable under Section 8A-425 if performed without
computerized assistance are considered taxable under that Section, and
therefore, are not exempt services.
(b)Book publishing.The printing of books shall be deemed job printing.
Sales of books shall be deemed retail sales.
(c)Publication of newspapers, magazines, or other periodicals shall not be
considered job printing for the purposes of this Chapter.
Reg. 8A -435.I.Distinction between publishing of periodicals and certain
related activities.
(a)Book publishing shall not be considered publication of newspapers,
magazines, or other periodicals for purposes of this Chapter.Sales of
books shall be deemed retail sales.The printing of books shall be
deemed job printing.
-)(b)Publication of newspapers,magazines,or other periodicals shall not be
considered job printing for the purposes of this Chapter.
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•••••
Reg. 8A-445.1.(Reserved)
Reg. 8A-445.2.Rental, leasing, and licensing of real property as lodging:
refundable and non-refundable deposits.
(a)Nonrefundable deposits for cleaning, keys, pet fees, maintenance, or for
any other purpose are deemed gross income upon receipt.
(b)"Security deposits"and other refundable deposits are deemed gross
income at the time siich deposits become forfeit, provided that they are
maintained in the manner required for security deposits by the Arizona
Residential Landlord and Tenant Act,Chapter 10,Title 33,Arizona
Revised Statutes.Failure to comply with such provisions with regard to
refundable deposits makes such deposits gross income at the time of
receipt.
Reg. 8A-445.3.Rental, leasing, and licensing of real property as lodging:
room and board; furnished lodging.
(a)Room and board.
(1)Rooming houses,lodges,or other establishments providing both
lodging and meals, shall maintain a record of the separate charges
made for the lodging and the meals.
(2)The charge for lodging shall be subject to the tax imposed by
Section 8A-445.The charge for meals is subject to the tax upon
restaurants and bars prescribed by Section 8A-455.
(b)Furnished lodging.A person who provides lodging with furnishings shall
be deemed to be only in the business of rental, leasing, and licensing of
lodging, and not in the business of rental, leasing, and licensing of such
furnishings as tangible personal property, unless:
(1)Any tenant of any lodging space may choose to rent,lease,or
license such lodging space either furnished or unfurnished; and
(2)The lessor separately charges tenants for lodging and for
furnishings; and
(3)The lessor separately maintains his gross income from lodging and
from furnishings separately in his accounting books and records.
If all of the above conditions are met,such person shall report both sources of
income separately to the City.
Reg. 8A-447.1.(Reserved)
Reg. 8A -450.l.Distinction between rental, leasing, and licensing for use of
tangible personal property and certain related activities.
(a)Certain rentals,leases,and licenses for use in connection with
construction contracting.Rental,leasing, or licensing of earthmoving
equipment with an operator shall be deemed construction contracting
activity.Rental,leasing,or licensing of any other tangible personal
property (with or without an operator)or of earthmoving equipment
without an operator shall be deemed rental,leasing,or licensing of
tangible personal property.For example:
(1)Rental of a backhoe, bulldozer, or similar earthmoving equipment
with operator is construction contracting.Rental of these items
without an operator is rental of tangible personal property.
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(2)Rental of scaffolding, temporary fences, or barricades is rental of
tangible personal property.
(3)Rental of pumps or cranes is rental of tangible personal property,
regardless of whether or not an operator is included with the
equipment rented.
(b)Distinction between equipment rental,leasing,or licensing for use and
transporting for hire.The hiring of mobile equipment (cranes,
airplanes,limousines, etc.)is considered rental, leasing, or licensing of
tangible personal property whenever the charge is for a fixed sum or
hourly rate.By comparison,the activity of a common carrier
conveying goods or persons for a fee based upon distance, and not time,
shall be considered transporting for hire.
Reg. 8A-450.2.Rental, leasing, and licensing for use of tangible personal
property:membership fees; other charges.
(a)Membership,admission,or other fees charged by any rental club or
limited access lessor are considered part of taxable gross income.
(b)Gross income from rental,leasing,or licensing for use of tangible
personal property must include all charges by the lessor to the lessee
for repair,maintenance,or other service upon the tangible personal
property rented, leased, or licensed.
(c)(Reserved)
Reg. 8A-450.3.Rental, leasing, and licensing for use of equipment with
operator.
In cases where the tangible personal property is rented, leased, or licensed with an
operator provided by the lessor, the charge for the operator shall not be includable
in the gross income from the rental,lease,or license of such tangible personal
property if the charge for the operator and the charge for the use of the equipment
are separately itemized to the lessee and separately maintained on the books and
records of the lessor.
Reg. 8A-450.4.Rental, leasing, and licensing for use of tangible personal
property:semi -permanently or permanently installed tangible personal
property.
(a)The term "semi -permanently or permanently installed" means that the
item of tangible personal property has and is expected to have at the
time of installation a permanent location at the site installed, as under
a long-term lease agreement, except that the person using or applying
said property may eventually replace it because it has become worn out
or has become obsolete or the person ceases to have the right to
possession of said property.
(b)An item of tangible personal property is deemed permanently installed
if its installation requires alterations to the premises.
(c)Examples of "semi -permanently or permanently installed tangible
personal property"include,but are not limited to:computers,
duplicating machines,furniture not of portable design,major
appliances, store fixtures.
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_
(d)The term does not include mobile transportation equipment or tangible
personal property designed for regular use at different locations or
customarily used at different locations, as under numerous short-term
rental, lease, or license agreements, whether or not such property is in
fact so used.
(1)For example,use of a mobile crane,trencher,automobile,or
other similar equipment shall be considered a rental,lease,or
license transaction subject to taxation only by the city or town in
which such business office of the lessor is based.
(2)Other similar examples include,but are not limited to: camping
equipment, contracting equipment, chain saw,forklift,household
items,invalid needs,janitorial equipment,reducing equipment,
furniture of portable design,trucks or trailers,tools,towbars,
sump pumps, arc welders.
(e)A rental, lease, or license agreement which specifies that the item in
question shall remain, under the terms of the agreement, located within
the same city or town for more than one hundred eighty (180)
consecutive days shall be sufficient evidence that such rented,leased,
or licensed item is "permanently or semi -permanently installed" in said
city or town, except when the item is mobile transportation equipment
or one of the other types of portable equipment or property described in
subsection (d) above.
Reg. 8A-455.1.Gratuities related to restaurant activity.
Gratuities charged by or collected by persons subject to the tax imposed by Section
8A-455 may be excluded from gross income if:
(1)such charge is separately stated upon the bill,invoice,etc.
provided the customer,and such amounts are maintained
separately in the books and records of the taxpayer; and
(2)such gratuities are distributed in total to employees of the
taxpayer in addition to customary and regular wages.
Reg. 8A-460.1.Distinction between retail sales and certain other transfers
of tangible personal property.
(a)Charges for transfer of tangible personal property included in the gross
income of the business activity of persons engaged in the following
business activities shall be deemed only as gross income from such
business activity and not sales at retail taxed by Section 8A-460:
(1)tangible personal property incorporated into real property as part
of reconstruction or construction contracting,per Sections 8A-
415 through 8A-418.
(2)Sales of feed at wholesale, per Section 8A-420.
(3)job printing, per Section 8A-425.
(4)mining,timbering,and other extraction,but not sales of sand,
gravel, or rock extracted from the ground, per Section 8A-430.
(5)publication of newspapers,magazines, and other periodicals, per
Section 8A-435.
(6)rental, leasing, and licensing of real or tangible personal property,
per Sections 8A-445 or 8A-450.
(7)restaurants and bars, per Section 8A-455.
(8)telecommunications services, per Section 8A-470.
(9)utility services,per Section 8A-480.
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(b)Distinction between construction contracting, retail, and certain direct
customer service activities.
(I)When an item is attached or installed on real property,it is a
construction contracting activity and any subsequent repair,
removal, or replacement of that item is construction contracting.
(2)Items attached or installed on tangible personal property are
retail sales.
(3)Transactions where no tangible personal property is attached or
installed are considered direct customer service activities (for
example:carpet cleaning, lawn mowing, landscape maintenance).
(4)Demolition, earth moving,and wrecking activities are considered
construction contracting.
(c)The sale of sand,rock,and gravel extracted from the ground shall be
deemed a sale of tangible personal property and not mining or
metallurgical activity.
(d)Sale of consumable goods incorporated into or applied to real property
is considered a retail sale and not construction contracting.Examples
of consumable goods are lubricants,faucet washers,and air
conditioning coolant, but not paint.
(e)Installation or removal of tangible personal property which has
independent functional utility is considered a retail activity.
(I)"Tangible personal property which has independent functional
utility"must be able to substantially perform its function(s)
without attachment to real property."Attachment to real
property"must include more than connection to water,power,
gas, communication, or other service.
(2)Examples of tangible personal property which has independent
functional utility include artwork,furnishings,"plug-in"kitchen
equipment,or similar items installed by bolts or similar
fastenings.
(3)Examples of tangible personal property which does not have
independent functional utility include wall-to-wall carpeting,
flooring,wallpaper,kitchen cabinets,or "built-in" dishwashers or
ranges.
(4)The installation of window coverings (drapes, mini -blinds, etc.) is
always a retail activity. -
Reg. 8A-460.2.Retail sales:trading stamp company transactions.
A trading stamp transaction is defined as follows:the trading stamp company
issues stamps to a vendor; the vendor then provides them to its customers; and the
customer then exchanges the stamps for merchandise from the trading stamp
company.
The exchange transaction for the merchandise shall be deemed a retail sale and the
trading stamp company a retailer.All taxes imposed by this Chapter applicable to
retail transactions are therefore applicable to such exchange transactions.
The rate of tax shall be the retail rate based upon the retail dollar value of the
redeemed merchandise as expressed in the redemption dollar value per book of
stamps or portion thereof.The tax imposition described herein is in lieu of any
Privilege or Use Tax upon the business of issuing stamps,redeeming the same, or
using or storing property redeemed.
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Reg. 8A-460.3.Retail sales:membership fees of retailers.
Membership,admission,or other fees charged by limited access retailers are
considered part of taxable gross income of the business activity of selling tangible
personal property.
Reg. 8A-460.4.Retail sales:professional services.
(a)"Professional Services"refer to services rendered by such persons as
doctors,lawyers, accountants, architects, etc.for their customers or
clients where the services meet particular needs of a specific client and
only apply in the factual context of the client and the final product has
no retail value in itself.For example,opinion letters,workpapers,
reports, etc. are not in a form which would be subject to retail sales to
customers.However,transfer of items in a form which would be
subject to retail sales (e.g., artwork, forms, manuals, etc.) would not be
considered professional services.The issue is one of fact which must be
resolved in each situation.
(b)Creative ("idea")labor and design labor that do not result in tangible
personal property that will be or can be sold are deemed professional
services and,if charged separately and maintained separately in the
taxpayer's books and records, are not includable in gross income.
(c)"Professional services"shall be deemed to include those items of
tangible personal property which are incidental to the services
rendered, provided such tangible personal property is "inconsequential."
(1)Incidental transfers of tangible personal property shall be
regarded as "inconsequential" if,
(A)the purchase price of the tangible personal property to the
person rendering the professional services represents less
than fifteen percent (15%)of the charge,billing,or
statement rendered to the purchaser in connection with the
transaction, and
(B)the tangible personal property transferred is not itself in a
form which is subject to retail sale.
(2)In cases where the tangible personal property transferred is
deemed inconsequential,the provider of the tangible personal
property so transferred is deemed the ultimate consumer of such
tangible personal property,and subject to all applicable taxes
imposed by this Chapter upon such transfer.
(d)Examples:
(1)The transfer of paper embodying the result or work product of the
services rendered by an attorney or certified public accountant is
regarded as inconsequential to the charges for professional
services.
(2)An appraisal report issued by an appraiser,reflecting such
appraiser's efforts to appraise real estate,is regarded
inconsequential.
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(3)Use of a hair care product on a client's hair by a barber or
beautician in connection with performing professional services is
usually inconsequential.On the other hand,if the barber or
beautician supplies the customer with a bottle of the product for
the client's use thereafter and without the professional's
assistance,the transfer of the bottle of hair care product is
deemed not inconsequential.
(4)If a mortician properly segregates his professional services from
other taxable activities on his bill (invoice,contract),his gross
income would include only the income derived from the sale of
tangible personal property (casket,cards,flowers,etc.)and
rental, leasing, or licensing of real and tangible personal property.
His charges for professional services (embalming, cosmetic work,
etc.) would not be includable in gross income.
Reg. 8A-460.5.Retail sales:monitized bullion; numismatic value of coins.
(a)"Monetized Bullion"means coins or other forms of money manufactured
or minted from precious metals or other metals and issued as legal
tender or a medium of exchange by or for any government authorized to
do so.
(b)Any coin shall be considered to have been transferred or acquired
primarily for its "Numismatic value"if the sale or acquisition price:
(1)is equal to or greater than twice (2 times)the value of the
metallic content of the coin as of the date of transfer or
acquisition; and
(2)is equal to or greater than twice (2 times)its face value, in the
case of a coin which, at the time of transfer or acquisition,was
legal tender or a medium of exchange of the government issuing
or authorizing its issuance.
Reg. 8A-460.6.Retail sales:consignment sales.
Sales of merchandise acquired on consignment are taxable as retail sales.In cases
where the merchant is acting as an agent on behalf of another dealer, sales of the
consigned merchandise are taxable to the principal,provided the merchant makes
full disclosure to customers that he is acting only as an agent for the named
principal.However.;when the principal is not deemed to be a dealer,such sales
are considered to be those of the merchant and are taxable to him.
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Reg. 8A-465.1.Retail sales:repair services.
(a)Fair market value of parts and labor charges.The Tax Collector may
examine the reporting of all transactions covered by this Section to
determine if an "arms -length"price is charged for the parts and
materials.The applicable tax may not be avoided by pricing a part,
which ordinarily sells to the customer at $10,at $5 and including the
difference as "service"or "labor".In the absence of satisfactory
evidence supplied by the taxpayer as to industry or business practice,
the Tax Collector may use the cost of the part or materials to the
taxpayer marked up by a reasonable profit,to estimate the gross
income subject to tax.
(b)(Reserved)
(I)(Reserved)
(2)(Reserved)
Reg. 8A-465.2.(Reserved)
Reg. 8A-465.3.Retail sales:sale of containers, paper products,and labels.
(a)The sale of a "primary container"to a retailer or manufacturer is
exempt."Primary Container"means packaging material or a container
such as a bottle,can,cup,bag,box,etc.,which contains personal
property prior to such property's sale and which is necessarily
transferred with the tangible personal property it contains at the time
of sale.Examples of such exempt primary containers include but are
not limited to:
(1)packaging materials sold to a manufacturer of video equipment
for containment of the product during shipment.
(2)cellophane -type wrap sold to a meat department or butcher for
containment of the individually wrapped or contained meat.
(3)bags used to contain loose fungible goods such as fruits,
vegetables,and other products sold in bulk,where such bags or
containers are necessary to contain and measure the amount
purchased by the customer.
(b)Sales of containers other than primary containers as defined above, are
not exempt and are thus subject to tax.Examples of such taxable
containers include but not limited to:
(1)shopping bags sold to grocery stores, department stores, or other
retailers.
(2)gift wrapping and gift boxes provided to the customer without
charge.
(3)paper bags and similar containers sold to restaurants for
containment of individually wrapped or contained food for
consumption off the premises (including food which was originally
sold for consumption on the premises but a portion of which is
removed thereafter).
(c)Where a retailer imposes a charge for gift wrapping and the charge
includes the container,paper,and other appropriate materials,the
wrapping charge shall be considered a direct customer service and not a
sale.Such gift paper,boxes,tissue paper,ribbons,etc.,shall be
subject to tax when sold to the retailer.
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(d)Restaurants are not retailers,and are taxed under Section 8A-455.
Paper (and similar products,such as plastic or styrofoam)cups,lids,
plates, bags, napkins, straws, knives, forks, etc., sold to restaurants and
others taxable under Section 8A-455 are taxable to the purchaser at the
time of purchase as products consumed by the business.
(e)Charges for returnable containers,where the charges are imposed on
the customer,are subject to tax at the time of the transaction.A
credit may be taken for the amount of refund after such refund is
made.
(f)The sale of labels to a purchaser who affixes them to a primary
container is a sale for resale and not taxable.Directional or
instructional material included with products sold are considered to be
part of the product and a sale for resale.However,the sale of items
such as price tags,shipping tags,and advertising matter delivered to
the customer in connection with the retail sale is taxable to the retailer
as a retail sale to it, and is not exempt as a sale for resale.
Reg. 8A-465.4.(Reserved)
Reg. 8A-470.1.Telecommunication services.
(a)Gross income from the business activity of providing
telecommunication services to consumers within this City shall not
include:
(1)charges for installation,maintenance,and repair of
telecommunication equipment which are subject to the provisions
of Sections 8A-415, 8A-416, or 8A-417 (construction contracting);
8A-445 (real property rental); 8A-450 (tangible personal property
rental);or 8A-460 (retail sales); depending upon the nature of the
work performed.
(2)separately billed advertising charges which are subject to the
provisions of Section 8A-405 or 8A-435.
(b)Mobile equipment.In cases where the customer is being provided
telecommunication services to receiving/transmission equipment
designed to be mobile in nature (for example,mobile telephones,
portable-hand-held two-way radios,paging devices,etc.),the provider
shall,for the purposes of the tax imposed by this Section, determine
whether such provider's cu8tomers are "within this City" as follows:
(1)by the billing address of the customer, provided that such address
is a permanent residence or business location of the consumer
within the State.
(2)in all other cases, the business location of the telecommunications
provider.
Reg. 8A-475.1.Distinction between transporting for hire and certain related
activities.
The hiring of mobile equipment (cranes,airplanes,limousines,etc.)is deemed
rental,leasing,or licensing for use of tangible personal property whenever the
charge is for a fixed sum or hourly rate.By comparison, the activity of a common
carrier conveying goods or persons for a fee based upon distance,and not time,
)shall be considered transporting for hire.
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Reg. 8A-520.1.(Reserved)
Reg. 8A-520.2.Change of method of reporting.
(a)Any taxpayer electing to change his reporting method shall be
permitted to do so only upon filing a written request to the Tax
Collector and after receiving written approval of the Tax Collector.
The approval shall state the effective date of the change.
(b)The Tax Collector may postpone such approval to allow for examination
of the records of the taxpayer and may further require that all tax
liability be satisfied up to the effective date of the change.
(c)Failure of the taxpayer to notify the Tax Collector and await approval
before changing the method of reporting will subject the taxpayer to
interest and penalties if his original method of reporting would produce
higher taxes due the City.When a person makes such change without
the consent of the Tax Collector, the Tax Collector may audit his books
and records to verify the tax liability as of the date of the change.
(d)Any taxpayer who has failed to indicate a choice of reporting method
upon the application for a Privilege License shall be deemed to have
chosen the accrual method of reporting.
Reg. 8A-555.1.(Reserved)
Reg. 8A-571.1.Collection of tax in jeopardy.
Evidence that collection of tax due is in jeopardy shall include documentation that:
(a)the taxpayer is going out of business.
(b)the taxpayer has no City Privilege License or has no permanent business
location in the State.
(c)the taxpayer has failed to timely pay any tax (or penalties and interest
thereon)due to the City on three (3)or more occasions within the
previous thirty-six (36) calendar months.
(d)the taxpayer has remitted payment by check, which has been
dishonored.
(e)the taxpayer has failed to comply with a formal written request of the
Tax Collector made pursuant to Regulation 8A-555.1.
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