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(2) Taxes imposed upon construction contracting shall be reported as follows: (A) Construction contractors shall report on either a progressive billing ("accrual'1 basis orcash receipts basis. (8) Speculative builders shall report the gross income derived from the sale of improved real property at dose of escrow or at transfer of title orpossession, whicheveroccurs earlier. (C) Owner-builders who are not speculative builders shall report taxable amountsas provided in Section

### 417.
Sec. 62-530. When tax due; when delinquent; verification ofreturn; extensions. (a) Exceptas provided elsewhere inthis Section, the taxes shall be due and payable monthly on or before the twentieth (20th) day ofthe month next succeeding the month in which the taxaccrues. (1) Quarterly returns. The Tax Collector may authorize a taxpayer whose reporting history indicates an estimated annual City Privilege and Use Tax liability on taxable gross income in excess of five thousand dollars ($5,000.00) but less than fiftythousand dollars ($50,000.00) tofile returns on a calendar-quarterly basis. The taxes for each calendar quarter shall be due and payable on or before the twentieth (20th) day of the month nextsucceeding the end ofeach calendarquarter. (2) Annual returns. The TaxCollectormay authorize a taxpayerwhose reporting history indicates an estimated annual City Privilege and Use Tax liability on taxable gross income of not more than five thousand dollars ($5,000.00) to file returns forsuch taxes on a calendar-annual basis. The taxes for each calendaryear shall be due and payable on or before the twentieth (20th) dayofJanuaryofthefollowing year. (b) Special requirements oftaxpayers filing quarterly orannual returns. No taxpayer may report on a quarterly or annual basis until he has established, to the Tax Collector's satisfaction, six (6) months reporting history. It is the taxpayer's responsibilityto notify the Tax Collectorand increase his reporting frequency (to quarterly or monthly as applicable) when his taxable income ortax due exceeds the maximum limits for his current reporting frequency. Failure to do so may be deemed negligence or evasion, and penalties may apply. Failure to file returns timely, without good cause shown to the satisfaction of the Tax Collector, is sufficient cause for the Tax Collectorto deny future filings by the taxpayer on a quarterly orannual basis. (c) Delinquency Date. Except as provided in subsection (d) below, all returns and remittances received within the Tax Collector's Office on or before the last business day ofthe month when due shall be regarded as timely filed. The start of business ofthe first business dayfollowing the month when due shall be the delinquencydate. Itshall be the taxpayer's responsibilityto cause his return and remittance to be timely received. Mailing the return or remittance on or before the due date or delinquency date does not relieve the taxpayer of the

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responsibility ofcausing his return or remittance to be timely received by the last business dayofthe month when due. (Editor's note: Returns prior to August 1, 1990, were due on or before the second to the last business dayofthe month, and the delinquency date was the last business dayofthe month.) (d) Jeopardy reporting. IftheTax Collectordeterminesthatthe collection ofanytax due to the City is in jeopardy, the Tax Collector may direct the taxpayer to file his return and remit the tax on a weekly, daily, or transaction-by-transaction basis. Such return and remittance shall be due upon the datefixed bytheTax Collector, and the "delinquencydate" shall be the following day. (e) Extensions. The Tax Collector may extend the time for filing a return, for good cause shown, and only when requested in writing and received by the Tax Collectorpriorto the tax due date. However, the time forfiling such return shall not be extended beyond the last business day ofthe month next succeeding the due date ofsuch return. In such cases. only the penalties for late filing and late payment may be waived, by the Tax Collector for filing and payment within the extension period.**Notwi~standing** the granting of an extension, the interest payablefor late payment'oftaxes shall be paid forthe period commencing upon the original delinquencydate and ending on the date the tax is paid. The interest may notbewaived bytheTax Collector.
Sec. 62-540. Interest and civil penalties. (a) Anytaxpayerwho failed to payany ofthe taxes imposed by this Chapterwhich were due or found to be due before the delinquency date shall be subject to and shall pay interest upon such tax atthe rate of one percent (1%) per month, until paid. effective with taxes due November 20, 1999. Taxes due prior to November20, 1999 shall be subject to and shall pay interest upon such tax at the rate of one and one-half percent (1.5%) per month, until paid. Fractions of a month shall be considered to constitute a full month for the purpose of computing interest Said interest may be neither waived by the Tax Collector nor abated by the Hearing Officer except as it might relate to a tax abated as provided by Section 570. (b) In addition to interest assessed undersubsection (a) above, any taxpayer who failed to pay anyofthe taxes imposed bythis Chapterwhich were due orfound to be due before the delinquency date shall be subject to and shall pay any or all of the following civil penalties, in addition to any other penalties prescribed bythis Chapter: (1) A taxpayer who fails to timely file a return for a tax imposed by this Chapter shall pay a penalty of five percent (5%) of the tax for each month orfraction of a month elapsing between the delinquency date of

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the return and the date on which it is filed, unless the taxpayer shows that the failure to timely file is due to reasonable cause and not due to willful neglect. This penalty shall not exceed twenty-five percent (25%) ofthe taxdue. (2) Ataxpayerwho fails to paythe taxwithin the time prescribed shall pay a penalty of ten percent (10%) of the unpaid tax, unless the taxpayer shows that the failure to timely pay is due to reasonable cause and not due to willful neglect. Ifthe taxpayer is also subject to a penalty under subsection (b)(1) above for the same tax period, the total penalties undersubsection (b)(1) and this subsection shall not exceed twenty-five percent (25%) ofthe taxdue. (3) A taxpayerwho fails or refuses to file a return within thirty (30) days of having received a written notice and demand from the Tax Collector shall pay a penalty of twenty-five percent (25%) of the tax, unless the taxpayershows that the failure is due to reasonable cause and not due towillful neglectorthe tax collectoragrees to a longertime period. (4) Ifthe cause of a tax deficiency is determined by the Tax Collectorto be due to negligence, butwithout regard for intent to defraud, the taxpayer shall pay a penalty often percent (10%) ofthe amount of deficiency. If the taxpayeris also subjectto a penalty undersubsection (b)(1) or (b)(2) above for the same tax period, the total penalties imposed under subsection (b)(1), (b)(2) and this subsection shall not exceed twenty-five percent (25%) ofthe taxdue. (5) Ifthe cause of a tax deficiency is determined by the Tax Collectorto be due to civil fraud or evasion ofthe tax, the taxpayer shall pay a penalty offifty percent (50%) ofthe amountofdeficiency. (c) Penalties and interest imposed bythis section are due and payable upon notice bytheTaxCollector. (d) If, following an audit, penalties attributable to the audit period are to be assessed pursuant to subsection (b)(1) or (b)(2) above, the Tax Collector, before assessing such penalties, must take into consideration any information or explanations provided by the taxpayer as to why the return was not timely filed and/orthe taxwas nottimely paid. Ifsuch information and/orexplanations are provided by the taxpayer, and the Tax Collector nevertheless decides to assess penalties pursuantto subsection (b)(1) or (b)(2) above, then, atthe time the penalties are assessed, the Tax Collector must provide the taxpayerwith a detailed written explanation of the basis for the Tax Collector's determination that the information and/or explanations provided by the taxpayer did not constitute reasonablecause. (e) The assessment of the penalties prescribed by subsections (b)(3) through (b)(5) above must be approved on a case-by-case basis by the Tax Collector prior to such assessment. In addition, any assessment which includes

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penalties based upon subsections (b)(3), (b)(4), or (b)(5) above must be accompanied by a statement signed by the Tax Collector setting forth in detail the basis forthe Tax Collector's determination that the penalties are warranted underthe circumstances. (f) The Tax Collectorshall waive oradjust penalties imposed by subsections (b)(1) and (b)(2) above upon afinding that: (1) in the past, the taxpayer has consistently filed and paid the taxes imposed bythis Chapterin atimely manner; or (2) the amount of the penalty is greatly disproportionate to the amount of the tax; or (3) the failure of a taxpayer to file a return and/or pay any tax by the delinquency date was caused by any of the following circumstances which must occur priorto the delinquency date ofthe return or payment in question: (A) the return was timely filed but was inadvertently forwarded to anothertaxingjurisdiction. (8) erroneous or insufficient information was furnished the taxpayer bythe TaxCollectororhis employee oragent (C) death or serious illness of the taxpayer, member of his immediate family, orthe preparerofthe reports immediately prior to the due date. (D) unavoidable absence of the taxpayer immediately prior to the due date

.. (E) destruction, by fire or other casualty, of the taxpayer's place of business orrecords. (F) prior to the due date, the taxpayer made application for proper forms which could not be furnished in sufficient time to permit a timelyfiling. (G) the taxpayerwas in the process of pursuing an active protest of the tax in question in another taxing jurisdiction at the time the tax and/orreturn was due. (H) the taxpayer establishes through competent evidence that the taxpayer contacted a tax advisor who is competent on the specific tax matter and, after furnishing necessary and relevant information, the taxpayerwas incorrectly advised that no taxwas owed and/orthefiling ofa return was not required. (I) the taxpayer has never been audited by a city for the tax or on the issue in question and relied, in good faith, on a state exemption orinterpretation. (J) the taxpayer can provide some public record (court case, report in a periodical, professional journal or publication, etc.) stating thatthe transaction is notsubjectto tax. (K) the Arizona Department of Revenue, based upon the same facts and circumstances, abated penalties forthe same filing period.

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A taxpayer may also request a waiver or adjustment of penalty for a reason thought to be equally substantive to those reasons itemized above. All requests forwaiveroradjustmentofpenalty must be in writing and shall contain all pertinent facts and other reliable and substantive evidence to support the request. In all cases, the burden ofproofis upon the taxpayer. (g) No request for waiver of penalty under subsection (f) above may be granted unless written request for waiver is received by the Tax Collectorwithin fortyfive (45) days following the imposition of penalty. Any taxpayer aggrieved by the refusal to grant awaiver undersubsection (f) above may appeal under the provisions of Section 570 provided that a petition of appeal or request for an extension is submitted to the Tax Collector within forty-five (45) days of the taxpayers receiptofnotice bythe Citythatwaiverhas been denied. (h) For the purpose of this Section, "reasonable cause" shall mean that the taxpayer' exercised ordinary business care and prudence, Le., had a reasonable basis forbelieving thatthe tax did not apply to the business activity orthe storage oruse ofthe taxpayers tangible personal property in this City. (i) For the purpose of this section, "negligence" shall be characterized chiefly by inadvertence, thoughtlessness, inattention, or the like, rather than an "honest mistake". Examples ofnegligence include: (1) the taxpayer's failure to maintain records in accordance with article iii of this chapter; (2) repeated failures to timelyfile returns; or (3) gross ignorance ofthe law.
Sec. 62-541. Erroneous advice or misleading statements by the Tax Collector; abatement of penalties and interest; definition. (a) Notwithstanding section 540(a), no interest or penalty may be assessed on an amount assessed as a deficiency ifeither: (1) the deficiency assessed is directly attributable to erroneous written advice furnished to the taxpayer by an employee ofthe City acting in an official capacity in response to a specific request from the taxpayer and not from the taxpayers failure to provide adequate or accurate information.

Ch 62tax code 10121199 11789(93101 !.doc) Pg. 55 of 116 (2) all ofthe following are true: (A) A tax return form prepared by the tax collector contains a statement that, if followed by a taxpayer, would cause the taxpayerto misapplythis chapter. (8) the taxpayer reasonably relies on the statement. (C) the taxpayer's underpaymentdirectly results from this reliance.



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(b) Each employee ofthe Tax Collector, at the time any oral advice is given to any person, shall inform the person thatthe Tax Collector is not bound by such oral advice. (c) For purposes ofthis section "tax return form" includes the instructions that the Tax Collectorprepares foruse with the tax return form.

Sec. 62-545. Deficiencies; when inaccurate return is filed; when no return is filed; estimates. (a) If the taxpayer has failed to file a return, or if the Tax Collector is not satisfied with the return and payment ofthe amount of tax required, and additional taxes are determined by the Tax Collector to be due, the Tax Collector shall deliver written notice of his determination of a deficiency to the taxpayer, and such deficiency, plus penalties and interest, shall be due and payable forty-five (45) days after receipt of the notice and demand. Such additional taxes shall bear any applicable civil penalties and interest as provided in Section 540, and every such notice of a determination of an additional amount due shall be assessed within the limitation period provided in Section 550. (1) When a return is filed. Ifthe Tax Colledor is not satisfied with a return and payment of the amount oftax required by this Chapterto be paid to the City, he may examine the return or examine the records ofthe taxpayer, and redetermine the amount oftax, penalties, and interest required to be paid, for any periods available to the Tax Collector under Section 550, based upon the information contained in the return or records or based upon any information within his possession or which comes into his possession. (2) When no return is filed. If any person fails to make a return, the Tax Collector may make an estimate of the amount of tax due under this Chapter and compute any applicable penalties and interest due, based upon any information within his possession or which comes into his possession. (b) Estimates by the Tax Collector. Any estimate made by the Tax Collector is to be made on a reasonable basis. The existence ofanother reasonable basis ofestimation does not, in anyway, invalidate the TaxCollector'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 satisfactorytotheTaxCollector.
Sec. 62-546. Closing agreements in cases ofextensivetaxpayer misunderstanding or misapplication; CityAttorney approval; rules.

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(a) if the Tax Collector determines that noncompliance with tax obligations results from extensive misunderstanding or misapplication of provisions ofthis chapter it may enter into dosing agreements with those taxpayers underthe following terms and conditions: (1) Extensive misunderstanding or misapplication of the tax laws occurs if the tax collector determines that more than sixty percent (60%) of the persons in the affected class have failed to properly account for their taxes owing to the same misunderstanding or misapplication of the tax laws. (2) The Tax Collector shall publicly declare the nature of the possible misapplication and the proposed definition of the class of affected taxpayers and shall conduct a public hearing to hear testimony regarding the extent of the misapplication and the definition of the affected class. (3) If, afterthe public hearing, the Tax Collector determines that a class of affected taxpayers has failed to comply with their tax obligations because ofextensive misunderstanding ormisapplication ofthe tax laws it shall issue a tax ruling announcing that finding and publish the ruling in a newspaper of general circulation in the city and through the next two Model CityTax Code updates. (4) A closing agreement under this section may abate some or all of the penalties, interest and tax that taxpayers have failed to remit, or the agreement may provide forthe prospective treatment ofthe matteras to the class of affected taxpayers. All taxpayers in the class shall be offered the opportunity to enter into a similar agreement for the same tax periods. (5) Taxpayers in the affected class who have properly accounted for their tax obligations forthese tax periods shall be offered the opportunity to enterinto an equivalent closing agreement providing fora pro rata credit orrefund oftheirtaxes previously paid. (6) The closing agreement shall require the taxpayers to properly account forand paysuch taxes in the future. Ifataxpayerfails to adhere to such a requirement, the closing agreement is voidable by the tax collector and he may assess the taxpayer for the delinquent taxes. The tax collector may issue such a proposed assessmentwithin six months after the date that he declares that closing agreement void or within the period prescribed by Section 550 ofthis Chapter. (b) Before entering into closing agreements pursuant to this section, the Tax Collector shall secure such approval as required by charter, ordinance or administrative regulation. (c) After a closing agreement has been signed pursuant to this Section, it is final and conclusive excepton a showing offraud, malfeasance or misrepresentation of a material fact. The case shall not be reopened as to the matters agreed

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upon orthe agreement shall not be modified by any officer, employee or agent of the City. The agreement or any determination, assessment, collection, payment abatement, refund orcredit made pursuantto the agreement shall not be annulled, modified, set aside or disregarded in any suit, action or proceeding. (d) The Tax Collector shall report in writing its activities under this section to the Mayorand City Council on orbefore February 1 ofeach year.

Sec. 62-550. Limitation periods.



## . 

## . (a) Limitation when a return has been filed. (1) Except as provided elsewhere in this Section, the Tax Collector may assess additional taxdue at anytime within four (4) years afterthe date on which the return is required to be filed, orwithin four (4) years after the date on which the return is filed, whicheverperiod expires later. (2) However. if a taxpayer does not report an amount properly reportable which is in excess of twenty-five percent (25%) of the taxable amount stated on the return, the Tax Collector may assess additional tax due at anytirnewithin six (6) years afterthe date on which the return was filed. (3) Any delay in commencement or completion of any examination by the Tax Collector, which is requested oragreed to in writing bythe taxpayer, shall be excluded from the computation of any limitation period prescribed by this Section, and the Tax Collector shall be entitled to make a determination fortaxes due without exclusion of any such time period, and any limitation period shall be extended for a length of time equivalentto the period ofthe agreed upon delay. (4) Any assessment of additional tax due by the Tax Collector shall be deemed to have been made by mailing a copy of a notice of audit assessment by certified mail to the taxpayer's address of record with the Tax Collector or by personal delivery of a copy of a notice of audit assessmentto the taxpayerorhis authorized agent. (b) Suspension of limitation period. The limitation period on assessment shall be suspended forany period: (1) the assets of the taxpayer are in the control or custody of the court in any proceeding before any court ofjurisdiction within the United States of America, and for one hundred and eighty (180) calendar days thereafter; or (2) which the taxpayerand theTax Collectoragree upon in writing. (c) When no return filed; fraudulent return. In the case of a fraudulent return with the intentto evade tax. orthefailure orrefusal to file a return forany month, the Tax Collector may assess the amount of taxes payable for that month at any

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time, without any reliance by the taxpayer upon any time limitation provided elsewhere in this Chapter. (d) Special provisions relating to owner-builders. The limitation for an ownerbuilder subjectto the tax as prescribed in Section 417 shall be based upon the date such tax liability is reportable orwas reported, as provided in Section 417.
Sec. 62-555. 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 underSection 550. (b) In order to perform any examination authorized by this Chapter, the Tax Collector may issue an Administrative Request forthe attendance ofwitnesses orforthe production ofdocuments, as provided by Regulation. (c) If within sixty (60) days of receiving a written request for information in the possession of the taxpayer, the taxpayer fails or refuses to fumish the requested information, the Tax Collector may, in addition to penalties prescribed under Section 540, impose an additional penalty of twenty-five percent (25%) of the amount of any tax deficiency which is attributable to the information which thetaxpayerfailed to provide, unless thetaxpayershows that the failurewas dueto reasonable cause and notdue towillful neglect. (d) The Tax Collector may use any generally accepted auditing procedures, including sampling techniques, to determine the correct tax liability of any taxpayer. The Tax Collector shall ensure that the procedures used are in accordancewith generallyaccepted 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 545(b), concerning estimates, shall apply. (f) The Tax Collectorshall give thetaxpayerwritten notice ofhisdetermination of a deficiency by certified mail to the taxpayer's address of record with the Tax Collector, and the tax deficiency, plus interest and penalties, is final forty-five (45) days from the date of receipt of the notice by the taxpayer, unless an appeal istaken pursuanttothe provisions ofSections 570 through 575.

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Sec. 62-556. No additional audits orproposed assessments; exceptions.
Once theTax Collectorcompletes an examination authorized by Section 555 and a written notice of the determination of a deficiency has been issued to the taxpayer pursuantto Section 545(a) or555(0, the taxpayer's liabilityforthe time penod subjected to the examination is fixed and determined, and no additional auditorexamination may be conducted bythe TaxCollectorwith respectto such time period except underthefollowing circumstances. (1) ifataxpayerfiles a claim for refund underSection 560, the Tax Collector may conductan examination limited to the issues presented in the refund claim. (2) if the taxpayer failed to disclose material information during the initial examination, falsified books or records, orotherwise engageain conduct which prevented the Tax Collector from conducting an accurate examination. The applicability ofthis subsection, and the Tax Collector's rightto proceed thereunder, may be raised and contested**~y** the taxpayer in a subsequent administrative reviewbroughtpursuantto Section 570.
An audit or examination conducted by any other taxing jurisdiction will not precludethe TaxCollectorfrom conducting an audit orexamination forthe same time period. Ifthe Tax Collectorissues a notice ofdeficienq pursuantto eitherSection 545(a) or Section 555(f), the Tax Collector may not Increase the proposed deficiency except in one ormoreofthefollowing circumstances: (1) thetaxpayermade a materiarmisrepresentation offact. (2) thetaxpayerfailed to disclosea material fact. (3) the Tax Collector submitted a written request for information prior to issuance of the assessment, and the taxpayer, despite possessing or having access to such information, failed to provide it within 60 days as required bySection 555(c). (4) after issuing the notice·of determination of deficiency but before the deficiency became final, the Arizona Tax Court, Court of Appeals or Supreme Court issued a decision, the applicability of which causes the deficiencyinitiallyproposed to increase. (Note: This Section was added effectiveJanuary 1, 1997.)
Sec. 62-560. Erroneous payment oftax; credits and refunds; limitations. (a) The Tax Collector may authorize either credits or payments of refunds for any taxes, penalties or interest paid in excess of the amount actually due. Any credit authorized by the Tax Collector shall be canceled from the accounts of the City if no timely filed request for credit or refund is made by the taxpayer claiming same within one (1) year following the date of determination and notice bythe Tax Collectorofthe excess payment. (b) No credit shall be allowed or refund paid except under one of the following conditions:

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(1) as provided in Section 565. (2) upon examination offiled returns forany period not excluded by Section 550, and not to exceed the tax, penalty, or interest actually paid with such returns. (3) upon audit or other examination of the books and records of the taxpayer, but onlyforperiods as provided in Section 550. In the case of an examination performed at the taxpayer's request, credit shall be allowed or refund paid only for any excess taxes, penalties, or interest actually paid within the limitation period provided in Section 550, such period to be calculated from the date of receipt ofthe taxpayer's request by the Tax Collector. Requests by taxpayers for audits to authorize credits shall be honored unless, in the opinion of the Tax Collector, the taxpayerhas made excessive requests foraudits. (4) upon the taxpayer's submission of a written claim for refund of any excess taxes, penalties, or interest paid to the City by the taxpayer. When a written claim for refund is submitted, credit shall be allowed or refund paid onlyforthose excess taxes, penalties, or interest paid within the limitation period provided in Section 550. such period to be calculated from the date the tax collector receives the taxpayer's written refund claim. A refund claim submitted by'a taxpayer pursuant to this subsection must identify the specific grounds upon which the claim is based. the dollar amount of the refund requested, the specific tax periods involved, iand the name, address and tax identification number**~~~~~** . (c) No creditwill be allowed or refund paid where it appears thatthe taxpayer has collected. by separately stated itemization, the amount ofthe tax. exceptthat a credit or refund will bel allowed in such case if the taxpayer can present documentation satisfactory to the Tax Collector identifying each customerfrom whom the excess taxeswere collected and establishing that anytaxes refunded pursuant to this section 

### will be remitted to those customers within sixty (60) days ofreceiptofthe refund. (d) Interest shall be allowed·at the rate set forth in section 540(a) on any credit or refund authorized pursuant to the provisions of this chapter. Interest shall be calculated from the time ofthe claim made to the City bythe taxpayer. (e) The determination of theTax Collectorthat no refund or credit is to be paid or allowed pursuant to this·Section may be appealed by the taxpayer under the provisions ofSection 570.
(f) Any refund paid under the provisions of this Section shall be paid from the PrivilegeTax revenue accounts.

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Sec. 62-565. Payment oftax by the incorrecttaxpayer orto the incorrectArizona city or town. (a) When it is determined thattaxes have been reported and paid to the city by the wrong taxpayer, any taxes erroneously paid shall be transferred by the city to the privilegetax accountofthe person who actually owes and should have paid such taxes, provided thatthe city receives an assignment and waiver signed by both the person who actually paid the tax and the person who should have paid the tax. (b) An assignmentand waiverprovided underthis Section, must: (1) identify the name and City Privilege License number of the person who erroneously paid the taxand the person who should have paid the tax. (2) provide that the person who erroneously paid the tax waives any right such person mayhave to a refund ofthe taxes erroneously paid. (3) authorize the City Treasurerto transfer the erroneously paid tax to the privilege tax accountofthe person who should have paid the tax. (c) When it is determined that taxes have been reported and paid to the wrong Arizona city or town, such taxes shall be remitted to the correct city or town, provided that. the city or town to whom the taxes were erroneously paid receives an assignment and waiver signed by both the person who actually paid the tax and the person who should have paid the tax. Where the person who actually paid the taxand the person who should have paid the tax are one and the same, no assignment and waiver need be provided. 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. (d) This Section in no way limits or restricts the applicability of any remedies which may otherwise be available underA.R.S. Section 42-1452. The limitations and procedures set forth in A.R.S. Section 42-1452 shall apply to all payments underthis section. (e) When reference is made in this section to this city or an Arizona city or town, and payments made to or requested from this city or an Arizona city or town, the provisions shall be applicable to the Arizona Department of Revenue when it is acting fororon behalfofthis cityoran Arizona city ortown.
Sec. 62-567. (Reserved).
Sec. 62-570. Administrative review; petition for hearing orfor redetermination; finality oforder.

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(a) Infonnal Conference. A taxpayershall have the right to discuss any proposed assessmentwith the auditor priorto the issuance of any assessment, but any such informal conference is not required for the taxpayer to file a petition for administrative review. (b) Administrative Review. (1) Filing a Petition. Other than in the case of a jeopardy assessment, a taxpayer may contest the applicability or amount of tax, penalty, or interestimposed upon orpaid by him pursuant to this Chapterbyfiling a petition for a hearing orfor redetennination with theTax Collectoras set forth below: (A) within forty-five (45) days of receipt by the taxpayerofnotice of a determination bytheTax Collectorthatatax, penalty, or interestamount is due, orthata requestfor refund orcredit has been denied; or (8) by voluntary payment of any contested amount when accompanied by a timely filed return and a petition requesting a refund ofthe protested portion ofsaid payment; or (C) by petition accompanying a timely filed return contesting an amountreported butnotpaid; or (D) by petition requesting review of denial of waiver of penalty as provided in subsection 540(g}. (2) Extension to file a petition. In all cases, the taxpayer may request only one (1) extension from the Tax Collector. Such request must be in writing, state the reasons for the requested delay and time of delay requested, and must be filed with the Tax Collector within the period allowed above for originally filing a petition. The Tax Collector shall allow such extension to file a petition, when such written request has been properlyand timely made bythetaxpayer, butsuch extension shall not exceed forty-five (45) days beyond the time provided for originally filing a petition. (3) Requirements forpetition. (A) The petition shall be in writing and shall set forth the reasons why any correction, abatement, orrefund should be granted, and the amount of reduction or refund requested. The petition may be amended at any time priorto the time the taxpayer rests his case atthe hearing orsuch time as the Hearing Officerallows for submitting of amendments in cases of redeterminations without hearings. The Hearing Officer may require that amendments be in writing, and in that case, he shall provide a reasonable period oftime to file the amendment. The Hearing Officer shall provide a reasonable period of time for the Tax Collector to review and respond to the petition and to anywritten amendments. (8) The taxpayer, as part of the petition, may request a hearing which shall be granted by the Hearing Officer. If no request for hearing is made the petition shall be considered to be submitted

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for decision by the Hearing Officer on the matters contained in the petition and in any replymade bythe Tax Collector. (C) The provisions of this Section are exclusive, and no petition seeking any correction, abatement, or refund shall be considered unless the petition is timely and properlyfiled underthe Section. (4) Transmittal to Hearing Officer. The Tax Collector shall designate a Hearing Officer. who may be other than an employee of the City. The Tax Collector, if designated to receive petitions, shall forward any petition to the Hearing Officer within ten (10) days after receipt, accompanied by documentation as to timeliness. In cases where the Hearing Officerdetermines thatthe petition is not timely or not in proper form, he shall notify both the taxpayer and the Tax Collector; and in cases of petitions not in proper form only, the Hearing Officer shall provide the taxpayer with an extension up to forty-five (45) days to correctthe petition. (5) Hearings shall be conducted by a Hearing Officer and shall be continuous until the Hearing Officer closes the record. The taxpayer may be heard in person or by his authorized representative at such hearing. Hearings shall be conducted informally as to the order of proceeding and presentation of evidence. The Hearing Officer shall admit evidence overhearsay objections where the offered evidence has substantial probative value and reliability.' Further, copies of records and documents prepared in the ordinary course of business may be admitted. without objection as to foundation. but subject to argument as to weight. admissibility, and authenticity. Summary accounting records may be admitted subject to satisfactory proof of the reliability of the

. summaries. In all cases, the decision of the Hearing Officer shall be made solely upon substantial and reliable evidence. All expenses incurred in the hearing shall be paid bythe party incurring the same. (6) Redeterminations upon a "petition for redetermination" shall follow the same conditions, exceptthat no oral hearing shall be held. (7) Hearing Ruling. In eithercase, the Hearing Officer shall issue his ruling not later than forty-five (45) days after the close of the record by the Hearing Officer. (8) Notice of refund or adjusted assessment. Within sixty (60) days of the issuance ofthe Hearing Officers decision, the Tax Collector shall issue to the taxpayer either a notice of refund or an adjusted assessment recalculated to conform to the Hearing Officers decision. (c) Stipulations that future tax is also protested. A taxpayer may enter into a stipulation with the Tax Collectorthat future taxes of similar nature are also at issue in any protest or appeal. However. unless such stipulation is made. it is presumed that the protest or appeal deals solely and exclusively with the tax specifically protested and no other. When a taxpayer enters into such a stipulation with the Tax Collector that future taxes of similar nature will be

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### OrdinanceNo. 3046

included in any redetermination, hearing, orcourtcase, it is the burden of that taxpayer to identify, segregate, and keep record of such income or protested taxable amount in his books and records in the same manneras the taxpayer is required to segregate exempt income. (d) When an assessmentisfinal. (1) If a request for administrative review and petition for hearing or redetermination ofan assessment made bythe Tax Collector is not filed within the period required by subsection (b) above, such person shall be deemed to have waived and abandoned the right to question the amount determined to be due and any tax, interest, or penalty determined to be due shall be final as provided in subsections 545(a) and 555(f). (2) The decision made bythe Hearing Officerupon administrative review by hearing or redetermination shall become final thirty (30) days after the taxpayer receives the notice of refund or adjusted assessment required by subsection (b)(8) above, unless the taxpayer appeals the order or decision in the mannerprovided in Section 575. (e) (Reserved)
Sec. 62-571. Jeopardyassessments. (a) Ifthe Tax Collectorbelieves that the collection of any assessment or deficiency of any amounts imposed by this Chapterwill be jeopardized by delay, he shall deliverto the taxpayera notice of such finding and demand immediate payment of the tax or deficiency declared to be in jeopardy, including interest, penalties, and additions. (b) Jeopardy assessments are immediately due and payable, and the Tax Collector may immediately begin proceedings for collection. The taxpayer, however, may stay collection by filing, within ten (10) days after receipt of notice ofjeopardy assessment, or within such additional time as the Tax Collector may allow, by bond orcollateral in favor ofthe City in the amountTax Collector declared to be injeopardy in his notice. (c) BondorCollateral, as required bythis Section, (1) shall mean either: (A) a bond issued in favor ofthe City by a surety company authorized to transact business in this State and approved by the Director of Insurance as to solvencyand responsibility, or (8) collateral composed ofsecurities orcash which are deposited with, and kept in the custodyof, the TaxCollector. (2) shall be ofsuch form thatitmay, atanytimewithout notice, be applied to any tax, penalties, or interest due and payable forthe purposes ofthis Chapter.

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### OrdinanceNo. 3046

Securities held as collateral by the Tax Collector must be of a nature that they may be sold at publicorprivate salewithout notice to thetaxpayer. (d) If bond or collateral is not filed within the period prescribed by subsection (b) above, the Tax Collector maytreat the assessment as final for purposes of any collection proceedings. The taxpayer nevertheless shall be afforded the appeal rights provided in Sections 570 and 575. The filing of a petition by the taxpayer under Section 570, however, shall not stay the Tax Collector's rights to pursue any collection proceedings. (e) Ifthe taxpayertimelyfiles sufficient bond orcollateral, thejeopardy requirements are deemed satisfied, and the taxpayer may avail himself of the provisions of Section 570, including requests foradditional timetofile apetition.
Sec. 62-572. Expedited review ofjeopardyassessments. (a) Within thirty (30) days after the day on which the Tax Collector furnishes the written notice required by Section 571 (a), the taxpayer, pursuant to Section 570, may request the Tax Collector to review the action taken. Within fifteen (15) days after the request for review, the Tax Collector shall determine whether both the jeopardy determination. and the amount assessed are reasonable. (b) Within thirty (30) days after the Tax Collector notifies the taxpayer of the determination he reached pursuant to subsection (a) above, the taxpayer may bring a civil action in the appropriate Court If the taxpayer so requests, the City shall stipulate to an accelerated and expedited resolution ofthe civil action. If the Court determines that either the jeopardy determination or the amount assessed is unreasonable, the Court may orderthe Tax Collectorto abate the assessment, to redetermine any part of the amount assessed or to take such otheraction as the Courtfinds to be appropriate. A determination made by the Court under this subsection is final except as provided in Arizona Revised Statutes Section 12-170.
Sec. 62-575. Judicial review. (a) A taxpayer may seek judicial review of all or any part of a Hearing Officer's decision by initiating an action against the City in the appropriate Court of this County. A taxpayer is not required to pay any tax, penalty, or interest upheld bythe Hearing Officerbefore seeking such judicial review. (b) The Tax Collector may seek judicial review of all or any part of a Hearing Officer's decision by initiating an action in the appropriate Courtofthis County.

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(c) An action forjudicial review cannot be commenced by eitherthe taxpayerorthe Tax Collector more than thirty (30) days after receipt by the taxpayer of notice of any refund orassessment recalculated or reduced to conform to the Hearing Officer's decision, unless the time to commence such an action is extended in writing signed by both the taxpayerand the Tax Collector. Failure to bring the action within thirty (30) days or such other time as is agreed upon in writing shall constitute a waiver of any right to judicial review, except as provided in subsection (f) below. (d) The Court shall hearand determine the appeal as a trial de novo; however, the Tax Collector cannot raise in the Court any grounds or basis for the assessment not asserted before the Hearing Officer. Nothing in this subsection, however, shall preclude the Tax Collector from responding to any arguments which are raised bythe taxpayer in the appeal. (e) The city hasthe burden ofproofbya preponderance ofthe evidence in any court proceeding regarding anyfactual issue relevantto ascertaining the tax liability of a taxpayer. this subsection does not abrogate any requirement of this chapter that requires a taxpayer to substantiate an item of gross income, exclusion, exemption, deduction, or credit This subsection applies to a factual issue if a preponderance ofthe evidence demonstratesthat (1) thetaxpayer'asserts a reasonable dispute regarding the issue. (2) the taxpayer has fully cooperated with the tax collector regarding the issue, including providing within a reasonable period of time, access to and inspection of all witnesses, information and documents within the taxpayer's control, as reasonably requested bythetaxcollector. (3) thetaxpayerhas keptand maintained records as required bythe city. (f) The issuance ofan adjusted orcorrected assessment ornotice of refund due to the taxpayer, where made by the Tax Collector pursuantto the decision of the Hearing Officer, shall not be deemed an acquiescence by the City orthe 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 itbyvirtue ofthe original assessment. (g) 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 ofCivil Procedure.
Sec. 62-577. Refunds oftaxes paid underprotest.
In the event the Hearing Officer's decision orafinal judgment by the Court is rendered in favor ofthe taxpayerto recover protested taxes, itshall 

### bethe dutyofthe Tax Collector, upon receipt of such decision orof a certified copy of such final judgment, to authorize awarrant in favor of the taxpayer in an amount equal to the amountofthe taxfound by such decision or bythe final judgmentto have been paid underprotest, and such warrantshall include the amount ofinterest

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orothercostthat mayhave been recovered againstthe Citybythefinal judgmentin such action in the courts, to be paid from the privilege tax revenue accounts.
Sec. 62-578. Reimbursementoffees and othercosts; definitions. (a) A taxpayer who is a prevailing party may be reimbursed for reasonable fees and other costs related to any administrative proceeding brought by the taxpayerpursuantto Section 570(b). Forpurposes ofthis section, a taxpayer is considered to bethe prevailing partyonly ifboth ofthe following are true: (1) theTaxCollector's position was notsubstantiallyjustified. (2) the taxpayerprevails as to the mostsignificant issue orset of issues. (b) Reimbursement under this section may be denied if any of the following circumstances apply: (1) during the course of the proceeding the taxpayer unduly and unreasonablyprotracted the final resolution ofthe matter. (2) the reason thatthe taxpayerprevailed is due to an intervening change in the applicable law. (c) The taxpayer shall present an itemization of the reasonable fees and other costs to the Taxpayer Problem Resolution Officerwithin thirty (30) days after receipt bythe taxpayerof a notice of refund or recalculated assessment issued by the Tax Collector pursuant to Section 570(b)(8). The Taxpayer Problem Resolution Officershall detennine the validity ofthe fees and othercosts within thirty (30) days after receiving the itemization. The Taxpayer Problem Resolution Officer's decision is considered a final decision. Eitherthe taxpayer or the Tax Collector may seek judicial review of the Taxpayer Problem Resolution Officer's Decision. An action forjudicial review, however, shall not be commenced more than thirty (30) days after receipt of the Resolution Officer's decision. (d) In the eventjudicial review is not sought pursuant to subsection (c) above, the City shall pay the fees and other costs awarded as provided in this section within thirty days after :demand by a person who has received an award pursuantto this section. (e) Reimbursement to a taxpayer under this section shall not exceed twenty thousand dollars ($20,000) or actual monies spent, whichever is less. The reimbursable attorney or representative fees shall not exceed one hundred dollars ($100) per hour or actual monies spent, whichever is less, unless the Taxpayer Problem Resolution Officerdetennines that an increase in the cost of living ora special factorsuch as the limited availability of qualified attorneys or representatives forthe proceeding involvedjustifies a higherfee.

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(f) Forpurposes ofthis Section "reasonable fees and othercosts" means fees and othercoststhat are based on prevailing market rates forthe kind and quality of the furnished services, but not exceeding the amounts actually spentforexpert witnesses, the cost ofany study, analysis, report, test orprojectthatis found to be necessary to prepare the party's case and necessary fees for attorneys or otherrepresentatives.
Sec. 62-580. Criminal penalties. (a) It is unlawful forany person to knowinglyorwillfully: (1) fail orrefuse to make any return required bythis Chapter. (2) fail to remit as and when due the full amount of any 

### tax or additional tax or penaltyand interestthereon. (3) make orcause to be madeafalse orfraudulent 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

. apportionmentorreceipts subjectto

### tax. (5) fail or refuse to permit any lawful examination of any book, account, record, orothermemorandum bytheTaxCollector. (6) fail or refuse to remit any

### tax collected by such person from his customer to theTaxCollectorbeforethe delinquencydate nextfollowing 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 priceto the consumer. (8) fail or refuse to obtain a Privilege License orto 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 orsecure, oraid orabet another in anyattemptto reproduce, forge, falsify, orfraudulentlyobtain orsecure, an exemption from taxes imposed bythis Chapter. (b) The violation of any provision of subsection (a) above shall constitute a Class One Misdemeanor. (c) In addition to the foregoing penalties, any person who shall knowingly swear to or verify any false orfraudulent statement, with the intent aforesaid, shall be guilty of the offense of**pe~ury** and on conviction thereof shall be punished in the mannerprovided by law.
Sec. 62-590. Civil actions

.



## ...

- (a) Liens. (1)

Ch 62tax code 10121/99 11789(931011.doc) Pg. 69 of 116 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

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periods for which the same is due, and the date of accrual thereof, the amount of the recording costs by the county recorder in any county in which the taxpayer owns real property and the documentation and lien processing fees imposed by the city council and further, stating that the Cityclaims a lien therefore. (2) The notice of claim of lien shall be signed by the Tax Collector 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. Afterthe notice and claim of lien is recorded orfiled, the taxes, penalties, interestand recording costs and lien processing fees referred to above in the amounts specified therein shall be a lien on all real property of the taxpayerlocated in such countywhere recorded, and all tangible personal property of the taxpayer within the State, superior to all other liens and assessments recorded orfiled subsequentto the recording orfiling ofthe notice and claim oflien. (3) Every tax and any increases, interest, penalties, and recording costs and lien processing fees referred to above, 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 maybe collected in the mannersetforth in subsection (b) below. (4) Any lien perfected pursuant to this Section shall, upon payment of the taxes, penalties, interest, recording costs and lien processing fees referred to above and lien release fees imposed bythe county recorder in any county in which the lien was recorded, 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 duethe City. (b) Actions to recovertax. An action may be brought by the City Attorney or other legal advisorto the City designated bythe City Council, atthe request ofthe Tax Collector, in the name ofthe City, to recoverthe amount of any taxes, penalties, interest, recording costs, lien processing fees and lien release fees due under this Chapter; provided that: (1) no action or proceeding may be taken orcommenced to collect any taxes levied by this Chapter until the amount thereof has been established by assessment, correction, orreassessment; and (2) such collection effortis made orthe proceedings begun: (A) within six (6) years afterthe assessment ofthe tax; or (B) prior to the expiration of any period of collection agreed upon in writing bythe Tax Collectorand the taxpayerbefore the expiration ofsuch six (6) yearperiod, oranyextensionsthereof; or (C) at any time for the collection of tax arising by reason of a tax lien perfected, recorded, orpossessed bythe City underthis Section.

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Sec. 62-595. 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 Colledor may apply the provisions ofsubsections (b) through (d) below concerning the colledion oftaxes when there is succession in and/or cessation ofbusiness. (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, ifthe person fails to make afinal return and payment ofthe tax within fifteen (15) days afterselling orquitting his business. (c) Any person who purchases, orwho acquires byforeclosure, by undertrust deed or warranty deed in lieu of foredosure, 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 416 and 417.

. (d) A person's successors or assignees shall withhold from the purchase money an amountsufficientto coverthe taxes required to be paid, and interestorpenalties 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. The Tax Colledorshall respond to a requestfrom the sellerfor a certificate within fifteen (15) days by either providing the certificate or a written notice stating why the certificate cannot be issued. (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 buyerwho has received a certificate from theTax Collector. (2) Ifthe purchaserofabusiness orstockofgoods fails to obtain acertificate as provided by this Section, he is personally liable for payment of the amount of taxes required to be paid by the fanner owner on account of the business so purchased, with interest and penalties accrued by the fannerownerorassignees.
Sec. 62-596. Agreementfor installment payments oftax. (a) The City may enter into an agreement with ataxpayerto allow the taxpayer to satisfy a liability for any tax imposed by this Chapter by means of installment payments. The Tax Collector may require a taxpayer who requests an installment payment agreementto complete afinancial report in such fonn and manneras the Tax Colledormayprescribe.

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(b) The Tax Collector, without notice, may alter, modify orterminate an installment paymentagreement ifthe taxpayer:

. (1) fails to pay an installment at the time the installment payment is due underthe agreement. (2) fails to payany othertax liabilityatthe timethe liability is due. (3) fails to file any tax report orreturn atthe time the reportorreturn is due. (4) fails to furnish any information requested by the Tax Collector within thirty days afterreceiving awritten requestforsuch information. (5) fails to notify the Tax Collector of a material improvement in the taxpayer's financial condition above the income previously reported in the most recent income statement within thirty days after the material improvement. (6) provides inaccurate, false 

### qr incomplete information to the Tax Collector. (c) Notwithstanding any installment payment agreement, the Tax Collector may offset any tax refunds against the liabilities provided for in the installment payment agreement, may file and perfect any tax liens and, in the event the taxpayerbreaches any term orprovision .ofthe installmentpaymentagreement, mayengage in collection activities. (d) The Tax Collector, without notice, may terminate an installment payment agreement if the Tax Collector believes that the collection of tax to which the paymentagreementpertains is injeopardy. (e) If the Tax Collector determines that the financial condition of a taxpayer has improved, the Tax Collector may alter,modify or terminate the agreement by providing notice to the taxpayer at least thirty days before the effective date of the action. The notice shall include the reasons whythe Tax Collectorbelieves the alteration, modification ortermination is appropriate.
(f) An installment payment agreement shall remain in effect for the term of the agreement exceptas otherwise provided in this Section. (g) A taxpayer who is aggrieved by a decision of the Tax Collector to refuse to enterinto an installment payment agreement orto alter, modify orterminate an agreement entered into pursuant to'this section may petition the Taxpayer Problem Resolution Officer to review that determination. The Taxpayer Problem Resolution Officer may stay such alteration, modification or termination pending its reviewand may modify ornullifythe determination. (h) The City and the taxpayer may modify any installment payment agreement at anytime by entering into anewor modified agreement.
Sec. 62-597. Private TaxpayerRulings; request; revocation or modification; definition.

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(a) The Tax Collector shall issue Private Taxpayer Rulings to taxpayers and potential taxpayers on request. Each requestshall be in writing and shall: (1) state the name, address and, if applicable, taxpayer identifying number ofthe taxpayerorpotential taxpayerwho requests the ruling. (2) describe all facts thatare relevant to the requested ruling. (3) state whether, to the best knowledge of the taxpayer or potential taxpayer, the issue or related issues are being considered by the tax collector or any other taxing jurisdiction in connection with an active audit, protest or appeal that involves the taxpayer or potential taxpayer and whether the same request has been or is being submitted to anothertaxing jurisdiction fora ruling. (4) be signed by the taxpayeror potential taxpayerwho makes the request orbyan authorized representative ofthe taxpayerorpotential taxpayer. (b) A PrivateTaxpayer Raling may be revoked ormodified by either: (1) a change or clarification in the law that was applicable at the time the ruling was issued, including changes or clarifications caused by regulations and courtdecisions. (2) actual written notice by the Tax Collector to the last known address of the taxpayer or potential taxpayer of the revocation or modification of the private taxpayer ruling. (c) With respect to the taxpayer or prospective taxpayer to whom a Private Taxpayer Ruling is issued, the revocation or modification of a Private Taxpayer Ruling shall not be applied retroactively to tax periods or tax years before the effective date of the revocation or modification and the Tax Collector shall not assess any penalty or tax attributable to erroneous advice that is furnished to the taxpayerorpotential taxpayerin the privatetaxpayer ruling if: (1) the taxpayerreasonably relied on the Private Taxpayer Ruling. (2) the penalty ortax did not result eitherfrom a failure by the taxpayer to provide adequate or accurate information or from a change in the information. (d) A Private Taxpayer Ruling may not be relied upon, cited nor introduced into evidence in any proceeding by any taxpayer other than the taxpayer who received the ruling. (e) A taxpayer may appeal the proprietyofa retroactive application ofa revoked or modified Private Taxpayer Ruling by filing a written petition with the Tax Collector pursuant to Section 570 within forty-five (45) days after receiving written notice of the intent to retroactively apply a revoked or modified Private Taxpayer Ruling.

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(f) A Private Taxpayer Ruling constitutes the Tax Collector's interpretation of the Sections of this Chapter only as they apply to the taxpayer making, and the particularfacts contained in, the request. (g) A Private Taxpayer Ruling which addresses a taxpayer's ongoing business activities will apply only to transactions that occur or tax liabilities that accrue from and afterthe date ofthetaxpayer's ruling request. (h) The Tax Collector shall attemptto issue Private Taxpayer Rulings within fOrtyfive (45) days after receiving the written request and on receiving the facts that are relevant to the ruling. If the Ruling is expected to be delayed beyond the forty-five (45) days, the Tax Collectorshall notifythe requester ofthe delay and the proposed date ofissuance. (i) Within thirty (30) days after being issued, the Tax Collector shall maintain the Private Taxpayer Ruling as a public record and make it available at a reasonable costforpublic inspection and copying. The text of Private Taxpayer Rulings are open to public inspection subjectto tl)e confidentiality requirements prescribed bySection 510. 0) In this Section, "Private Taxpayer Ruling" means a written determination by the Tax Collector issued pursuantto this Section that interprets and applies one or more Sections contained in this Chapterand anyapplicable Regulations. (k) A Private Taxpayer Ruling issued by the Arizona Department of Revenue pursuant to A.R.S. Section 42-139.21 may be relied upon by the taxpayer to whom the ruling was issued and must be recognized and followed byany city in
I which such taxpayerhas obtained a Privilege License ifthe city.has not issued a Ruling addressing the,facts described in the Taxpayer's Ruling request and the statute at issue in the Taxpayer's Ruling request is, in essence, worded and written the same as the applicable section hereunder.

Article VI

- USE TAX
Sec. 62-600. Definitions.
For the purposes of this Article only, the following definitions shall apply, in addition to the definitions provided in Article I: Acquire (forStorage orUse) means purchase, rent, lease, orlicenseforstorage oruse. Retaileralso means any person selling, renting, licensing for use, or leasing tangible personal property under circumstances which would render such transactions subject to the taxes imposed in Article IV, ifsuch transactions had occurredwithin this City.

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Storage (within the City) means the keeping orretaining oftangible personal property ata place within the City for any purpose. except for those items acquired specifically and solely for the purpose of sale, rental, lease, or license for use in the regular course of business or for the purpose ofsubsequent use solelyoutside the City.
Use (ofTangible PersonalProperty) means consumption orexercise ofany other right orpower overtangible personal property incidentto the ownership thereof exceptthe holding forthe sale. rental, lease, or license for use ofsuch property in the regularcourse of business.
Sec. 62-601. (Reserved)
Sec. 62-602. (Reserved)
Sec. 62-610. Use tax: imposition oftax; presumption. (a) There is hereby levied and imposed. subject to all other provisions of this Chapter. an excise tax on the storage or use in the City of tangible personal property. 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.

cost of tangible personal property. except jet fuel acquired from a retailer. upon every person storing orusing such property in this City. gross income from the business activity upon every person meeting the requirements of subsection 620 (b) or (c) who is engaged or continuing in the business activity of sales. rentals. leases. or licenses of tangible personal propertyto persons within the Cityforstorage or usewithin the City. to the extentthattax has been collected upon such transaction. cost ofthe tangible personal property provided underthe conditions of a warranty, maintenance, orservice contract. cost ofcomplimentary items provided to patrons without itemized charge by a restaurant, hotel, orotherbusiness. cost of food consumed by the owner or by employees or agents of the owner of a restaurant or bar subject to the provisions of Section 455 of this Chapter. (2) The tax rate shall be at an amount equal to one and one-half percent (1.5%) of the: (1)

(3) 

### (4) (5) (b)

(c) It shall be presumed that all tangible personal property acquired by any person who at the time ofsuch acquisition resides in the City is acquired forstorage or use in this City, until the contrary is established by the taxpayer.

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(d) Exclusions. Forthe purposes ofthisArticle, the acquisition ofthe following shall not be deemed to be the purchase, rental, lease, or license oftangible personal property forstorage orusewithin the City: (1) stocks, bonds, options, orothersimilarmaterials. (2) lottery tickets or shares sold pursuant to Article I, Chapter 5, Title 5, Arizona Revised Statutes. (3) platinum, bullion, or monitized bullion, except minted or manufactured coins transferred or acquired primarily for their numismatic value as prescribed by Regulation. (e) (Reserved) (f) Additional Imposition. The tax rate shall be at an amount equal to 2.3 cents ($.023) pergallon ofjetfuel upon every person storing orusing such property in this City. (Editor's note: The usetaxandjetfuel use

### tax rates increased from 1% and $.018, respectively effective May 1, 1994.)
Sec. 62-620. Usetax: liabilityfortax.
The following persons shall be deemed liable for the tax imposed by this Article; and such liability shall not be extinguished until the tax has been paid to this City, exceptthat a receipt from a retailer separately charging the tax imposed by this Chapter is sufficient to relieve the person acquiring such propertyfrom furtherliabilityforthe taxtowhich the receipt refers: (a) Any person who acquires tangible personal property from a retailer, whether or not such retailer is located in this City, when such person stores or uses said propertywithin the City. (b) Any retailer not located within the City, selling, renting, leasing, or licensing tangible personal property for storage or use of such property within the City, may obtain a License from the Tax Collector and collect the Use Tax on such transactions. Such retailer shall be liable for the Use Tax to the extent such UseTax is collected from his customers. (c) Every agent within the City of any retailer not maintaining an office or place of business in this City, when such person sells, rents, leases, or licenses tangible personal property for storage or use in this City shall, at the time of such transaction, collect and be liable for the tax imposed by this Article upon the storage or use of the property so transferred, unless such retailer or agent is liable foran equivalent excise tax upon the transaction. (d) Any person who acquires tangible personal property from a retailer located in the Cityand such person claims to be exemptfrom the City Privilege or Use tax

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at the time of the transaction, and upon which no City Privilege Tax was charged orpaid, when such claim is notsustainable. (e) Every person storing orusing tangible personal property underthe conditions of awarranty, maintenance, orservice contract.
Sec. 62-630. Usetax: recordkeeping requirements.
All deductions, exclusions, exemptions, and credits provided in this Article are conditional upon adequate proofofdocumentation as required byArticle 11/ orelsewhere in this Chapter.
Sec. 62-640. Usetax: creditforequivalentexcisetaxes paid anotherjurisdiction.
In the event that an equivalent excise tax has been levied and paid upon tangible personal property which is acquired to be stored or used within this City, full credit for any and all such taxes so paid shall be allowed by the Tax Collector but only to the extent Use Tax is imposed upon thattransaction bythisArticle.
Sec. 62-650. Use Tax: exclusion when acquisition subjectto Use Tax istaxed ortaxable elsewhere in this Chapter; limitation.

.. The tax levied by this Article does not apply to the storage or use in this City of tangible personal property acquired in this City, the gross income from the sale, rental, lease, or license ofwhich were included in the measure ofthe

### taximposed byArticle IVofthis Chapter, provided, however, thatany person who has acquired tangible personal propertyfrom avendorin this City without paying the City PrivilegeTaxbecause ofa representation to the vendorthatthe property was not subject to such 

### tax, when such claim is not sustainable, may not claim the exclusion from such UseTaxprovided bythis Section.
Sec. 62-660. Use tax: exemptions.
The storage or use in this City of the following tangible personal property is exempt from the Use Tax imposed bythis Article: (a) tangible personal property brought into the City by an individual who was not a resident of the City at the time the property was acquired for his own use, if the first actual use of such property was outside the City, unless such property is used in conducting a business in this City. (b) tangible personal property, the value of which does not exceed the amount of one thousand dollars ($1,000) per item, acquired by an individual outside the limits ofthe Cityforhis personal use and enjoyment. (c) charges for delivery, installation, or other customer services, as prescribed by Regulation. (d) chargesforrepairservices, as prescribed by Regulation.

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(e) separately itemized chargesforwarranty, maintenance, and service contracts. (Note: This subsectionwas added effectiveJanuary 1, 1997.)
(f) prosthetics. (g) income-producing capital equipment (h) rental equipmentand rental supplies. (i) mining and metallurgical supplies. (j) motorvehicle fuel and use fuel which are used upon the highways of this State and upon which a 

### tax has been imposed under the provisions of Article I or II, Chapter 16, Title 28, Arizona Revised Statutes. (k) tangible personal property purchased by a construction contractor, but not an owner-builder, when such person holds avalid Privilege License for engaging or continuing in the business of construction contracting, and where the property acquired is incorporated into any structure or improvement to real property in fulfillmentofaconstruction contract. (I) sales of motorvehicles to nonresidents of this State for use outside this State if the vendorships ordeliversthe motorvehicleto adestination outside this state. (m) 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 ofjob 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, orproduction process is not an ingredient orcomponent partofa product. (n) rental, leasing, or licensing for use of film, tape, or slides by a theater or other person taxed under Section 410, or by a radio station, television station, or subscription television system. (0) food served to patrons fora consideration by any person engaged in a business properly licensed and taxed under Section 455, but not food consumed by owners, agents, oremployees ofsuch business. (p) tangible personal propertyacquired byaqualifying hospital, qualifying community health center or a qualifying health care organization, except when the property is in fact used in activities resulting in gross income from unrelated business incomeas thattenn is defined in 26 U.S.C. Section 512.

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(q) food purchased with food stamps provided through the food stamp program established by the Food Stamp Act of 1977 (P.L. 95-113; 91 Stat. 958.7 U.S.C. Section 2011 et seq.) or purchased with food instruments issued under Section 17 of the Child Nutrition Act (P.L. 95-627; 92 Stat. 3603; and P.L. 99- 669; Section 4302; 42 UNITED STATES CODE SECTION 1786). (r) the following tangible personal property purchased by persons engaging or continuing in the business of farming, ranching, or feeding livestock, poultry or ratites. (1 ) (2) (3) 

### (4) seed, fertilizer, fungicides, seed treating chemicals, and other similar chemicals. feed for livestock, poultry or ratites, including salt, vitamins, and other additives to such feed. livestock, poultry or ratites purchased or raised for slaughter, but not including livestoCkpurchasedorraised forproduction oruse, such as milk cows, breeding bulls, laying hens, riding orworkhorses.

. (Reserved)
This exemption shall not be construed to include machinery, equipment, fuels, lubricants, pharmaceuticals, repairand replacement parts, orotheritems used or consumed in the running, maintenance, or repair of machinery, equipment, buildings, or structures used or consumed in the business of farming, ranching, orfeeding of livestock, poultryor ratites.
sales ofgroundwatermeasuring devices required byA.R.S. Section 45-604. (Reserved) (s) (t) (u)

(v) sales of aircraft acquired for use outside the state, asprescribed by Regulation. (Note: This subsection was added effectiveJuly 1,1995.)
sales offood products by producers as provided forbyA.R.S. Sections 3-561, 3- 562 and 3-563. (Note: This subsection was added effective January 1, 1997.) (w) (x) (y) 

### (z) (aa)

(bb) (Reserved) (Reserved) (Reserved) (Reserved)
the sale oftangiblepersonal propel1Y used in remediation contracting as defined in Section 

### 100 and Regulation 

### 100.5.
sales of materials that are purchased by orfor publicly funded libraries including school districtlibraries, charterschool libraries, community college libraries, state

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(dd)

(ee)

(ff)

(gg)

(hh)

(ii)

(jj)

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### OrdinanceNo. 3046

university libraries or federal, state, county or municipal libraries for use by the public as follows: (1) printed orphotographic materials. (2) electronicordigital media materials.
sales offood, beverages, condiments and accessories used for serving food and beverages to a commercial airline\ as defined in A.R.S. 

### § 42-5061(A)(50), that servesthe food and beverages to Its passengers, without additional charge, for consumption in flight for the pureoses of this Subsection, accessories means paper plates, plastic eating utensils, napkins, paper cups, drinking straws, paper sacks or other disposaole containers, or other items whicti facilitate the consumption ofthe food.
In computing the tax base in the case of the sale or transfer of wireless telecommUnIcation equipment as an inducement to a customer to enter into or continue a contract for telecommunication services that are taxable under Section 470, gross proceeds ofsales orgross income does notinclude any sales commissions or other compensation received by the retailer as a result of the customer entering into or continuing a contract for the telecommunications services.
forthe purposes of this Section, a sale ofwireless telecommunication equipment to a person who holds the equipment for sale or transfer to a customer as an inducement to enter into or continue a contract for telecommunication services that are taxable under Section 470 is considered to be a sale for resale in the regUlarcourse of business.
sales of alternative fuel as defined in A.R.S. 

### § 1-215, to a used oil fuel burner who has received a Departmentof Environmental Quality permitto bum used oil or used oil fuel underA.R.S. 

### § 49-426 or

### § 49-480.
sales of food, beverages, condiments and accessories to a public educational entity, pursuantto any ofthe provisions of Title 15, Arizona Revised Statutes; to the extentsuch items areto be prepared orserved to individuals for consumption on the premises of a public educational entity during school hours. For the purposes of this Subsection, accessories means paper plates, plastic eating utensils, napkins, paper cups, drinking straws, paper sacks or other disposable containers, orotheritemswhich facilitate the consumption ofthe food.
sales of personal hygiene items to a person engaged in the business of and subject to tax under Section 444 of this code if the tangible personal property is furnished without additional charge to and intended to be consumed by the person during his occupancy.
The diversion of gas from a pipeline by a person engaged in the business of operating a natural or artificial gas pipeline, for the sole purpose of fueling compressor equipment to pressurize the pipeline, is not a sale of the gas to the operator.ofthe pipeline. Food, beverages, condiments and accessories purchased by or for a nonprofit charitable organization that has qualified as an exempt organization under 26 U.S.C. Section 501 (c)(3) and regularly serves meals to the needy and indigent on a continuing basis at no cost. For the purposes of this subsection,



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### OrdinanceNo. 3046

"accessories" means paper plates, plastic eating utensils, napkins, paper cups, drinking straws, papersacks orotherdisposable containers, orotheritemswhich facilitate the consumption ofthe food. (kk) Sales of motorvehicles that use alternative fuel as defined in A.R.S. section 43- 1086 on oraftermay5, 1999.
(Editor's Note: Subsections (aa) through (hh) were added effective July 11, 1998.)

REGULATIONS

- PRJVILEGE AND EXCISE TAXES

Reg. 62-100.1. Brokers (a) Forthe purposes of proper administration of this Chapterand 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 behalfofthe principal. No deduction shall be allowedforanycommissions orfees retained bysuch broker, exceptas provided in Section 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 ofthe activity being deemed a "casual" one. Forexample:

(1) An auctioneerorothersales agentoftangible personal property is subject to the tax imposed upon retail sales, even ifsuch saleswould be deemed "casual" ifhis principal had sold such items himself. (2) A property manager is subjectto the 

### tax imposed upon rental, leasing, or licensing of real property, even if such rental, leasing, or licensing would be deemed "casual" ifhis principal managed such real property himself. (c) Brokers forvendees. A broker acting solely for a buyer, lessee, tenant, orother similar person who is a party to a transaction which may be subject to the tax, shall be liable for such 

### tax and forfiling a retum in connection with such tax only to the extenthis 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 Collectorof proof of payment of the 

### tax, and only to the extent ofthe 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. (e) (Reserved)

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(f) Location of Business. Retail sales by brokers acting for another person shall be deemed to have occurred at the regular business location of the broker, in a manner similar to that used to determine "out-of-city sales"; provided, however, that an auctioneer is deemed to be engaged in business at the site of each auction. Reg. 62-100.2. Delivery, installation, orotherdirect customerservices. (a) "DeliveryCharges"exist onlywhen 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" orothersimilar expression is insufficient to show the delivery as a separate charge. Only the separately stated charge for the deliveryshall 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 orjobbers or other middlemen are deemed ''freight-in'' and are notconsidered delivery. (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 ofa boat; installing cabinets, carpeting, or"built-in appliances" to a camperor motorized recreational vehicle. (c) Repair of tangible personal property is not included in this definition. See Regulation 465.1. (d) Direct CustomerSeNices 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 bythe words "identify" or"identification." (1) A retailer sells a customera $100 "plug-in" appliance, with a $25 delivery and installation charge. If the retailer identifies the $25 delivery and installation charge, itis acharge fordirectcustomerservices. (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 propeny identified, onlythe $300for set up and cleanup is a chargefordirectcustomerservices, and the $1,500forfood and service is restaurantgross income.

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(3) Persons engaged in engraving on wood, metal, stone, etc. or persons engaged in retouching photographs or paintings may consider such chargesforlaboras directcustomerservices. (4) All charges by a photographer resulting in the sale of a photograph (sitting charges, developing, making enlargements, retouching, etc.) for services that occur priorto transfer of tangible personal property are not directcustomerservices. (5) An equipment rental company charging $25 for delivery may consider such delivery charge as a charge for direct customerservice 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 Oewelry, artwork, tailoring, draperies, etc.) are not included in this definition, as such labor occurs priorto thetransferof property. (e) Recordkeeping requirements. (1) Any person who engages in transactions involving these services must: (A) Separately bill, invoice, orcharge the customerforsuch services in a manner bywhich the customeror consumer may readily identify the specificdollaramountofthe service charge; and (8) Maintain business books and records in a manner in which the separate charge for such services can be clearly identified, to the satisfaction oftheTaxCollector. (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 notsatisfythe requirements ofthis subsection. Reg. 62-100.3. 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, oremployer underwhom he operates orfrom whom he obtains tangible personal propertyfor sale, rental, lease, or license as a retailerforthe purposes ofthis 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, oremployeras a retailerforthe purposes ofthis Chapter. Reg. 62-100.4. 

### Out-of-City/Out-of-State

### Sales: Sales to NativeAmericans


### Sales to Native Americans ortribal councils by vendors located within the City shall be deemed saleswithin the City, unless all ofthe following conditions exist: (1) The vendor has properly accounted for such sales, in a manner similar to the recordkeeping requirements forout-of-Citysales; and, (2) All ofthefollowing elements ofthe sale exist:

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### (a) solicitation and placement of the order occurs on the reservation; and (b) delivery is made to the reservation; and (c) payment originatesfrom the reservation. Reg. 62-100.5. Remediation contracting.
The following activities are considered remediation contracting and are exempt (1) excavation, transportation, treatment, and/or disposal of contaminated soil for purposes ofsite remediation (ratherthan characterization); (2) installation of groundwater extraction and/or injection wells for purposes of groundwaterremediation; (3) installation ofpumps and piping into groundwaterextraction wells for remediation purposes; (4) installation of vapor extraction wells for the purpose of soil or groundwater remediation; (5) construction of remediation systems, such as groundwater treatment plants, vapor extraction systems, orairinjection systems; (6) connection ofremediation systems to utilities; (7) abandonmentofgroundwaterorvaporextraction wells; (8) removal/demolition ofremediation systems; (9) capping/closure construction activities;·and (10) service orhandling chargesforsubcontracted remediation contracting activities.

Note: Reg. 110.1 is repealedeffectiveJuly

### 1, 1995. Reg. 62-110.1 Income-producing capital equipment: in general. (a) The term "income-producing capital equipment" applies onlywhen the purchaser or lessee is directly using, such equipment primarily for the purpose of directly producing income in his normal course ofbusiness. Forexample: (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 manufacturerorjob printerwould qualify. The same lease to a telecommunications company or an irrigation district would not qualify. (b) Notethe "two-pronged test" this definition requires: (1) the purchaseror lessormust 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

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### OrdinanceNo. 3046

materials, etc. do not qualify unless the definition allows itforthat specific business activity.
Note: Reg. 110.2/srepealedeffectiveJuly

### 1,1995. Reg. 62-110.2 Income-producing capital equipment: manufacturing equipment; job printing equipment. (a) Manufacturing involves the change oftangible personal property into a newform 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 notconsidered manufacturing, asfollows, with examples. (1) The activity is specifically defined elsewhere in this Chapter. For example: publishing; construction contracting; baking or cooking food (defined as restaurantactivity). (2) The activity does not begin with a physical product ("raw materials"). For example: word processing; electronic data processing; photography; video orsound recording bya recording studio. (3) The activity does not physically change the raw materials into another form of tangible personal property. Forexample: sorting or "screening" sand,

.gravel, or rock; picking cotton; stuffing envelopes; chilling (but not freezing) water, cooling orheating air. (4) The ''finished product" is nottangible personal property available forsale. For example: broadcasting by radio or television waves; cooling or heating air; electronicdata 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 ofpersons involved in the business ofmanufacturing. Therefore,

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(2) Items typically called ''work in process" are often produced from "raw materials" orother''work in process" and then stockpiled until needed at a laterstage in production (or perhaps sold in this form). Forthe 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. "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 QualityAssurance labs orthe stockroom, for example, would be deemed to be removal from the physical location of the production process). Therefore, activities that occur in the QualityAssurance labs, stockroom,



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### OrdinanceNo. 3046

or other such locations are by definition not part of the activity of manufacturing. (3) Packaging shall be deemed partofthe manufacturing activityif: (A) The packaging process is an integral part of the production process, and (8) The goods so packaged have come directly from the production process (orfrom an "in-line" inspection as defined above). (4) Only "in-line" materials handling shall be deemed as part ofthe activity of manufacturing, in a manner similar to "in-line" inspection procedures. Therefore delivery orthe moving of materials up to and including delivery to the first stage ofthe production process (orthe first stage of separate phase ofproduction, 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 all subsequent movement of such materials until they have once again entered the production process, are deemed notto be partofthe activityofmanufacturing. (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 orjob printing: (1)

. Equipment used primarily for the storage of materials when not being physicallychanged (forexample, storage vats orbins, holding tanks). (2) Materials handling equipment (forexample, dollies, fork lifts, hand trucks) notused directly"in-line". (3) .Ancillarytesting equipment ofall kinds (forexample, testing equipment in the QualityAssurance areaorin the stockroom). (4) Ancillary packaging equipment of all kinds (for example, packaging equipment in the stockroom ormailroom). (5) (Reserved) (6) Any structural changes to real property (for example, plumbing or electrical changes to astructure, loading docks). Reg. 62-115.1 Computerhardware, software, and data services. (a) Definitions. (1) ComputerHardware (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) ComputerSoftware (also called "computerprogram") is tangible personal property, and includes:

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### OrdinanceNo. 3046
(A) Operating Program (Software) (also called "executive program (software)j, 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 userto accessthe computer's processing capabilities. (8) 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 eitherfor application in a specialized use, or upon which orby means ofwhich a plan forthe solution ofa particularproblem 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, spread sheet, word processing, and data managementprograms. (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 memoryofthe computeritself. (4) A Terminal Arrangement (also called u'on-Iine' arrangement") is any agreement allowing access to a remote central processing unit through telecommunications via hardware. (5) A ComputerServicesAgreement(also called "data services agreement") is an

.agreement allowing access to a computer through a third-party operator. (b) Forthe purposes ofthis Chapter, transferoftitle and possession of the following are deemed sales oftangible personal property and any other transfer of title, possession, or right to use fora consideration ofthe following is deemed rental, leasing, orlicensing oftangible personal property: (1) Computer hardware or storage media. Rental, leasing, or licensing for use ofcomputer hardware orstorage media includes ttle lessee's use of such hardwareorstorage 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, orpunched.

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(8) 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, whetherfor a period of minimum use or of use for extended periods, relating to the use ofa prewritten program. (0) The entire amount charged for transfer of a prewritten ("canned") program by remote telecommunications from the transferor's place ofbusiness to orthrough the customer's computer. (E) Any charge for the purchase of a maintenance contract which entitles the customerto receive storage media on which prewritten program improvements orerrorcorrections have been recorded or to receive telephone or on-site consultation services, provided that: (i) if such maintenance contract is not optional with the customer, then the charges for the maintenance contract, induding the consultation services, are deemed gross incomefrom the transferofthe prewritten program. (ii) if such maintenance contract is optional with the customer butthe customerdoes 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 transferofthe 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 incomefrom the transferofa prewritten program and charges for consultation are deemed to be charges for professional services. (c) Producing the following by means of computer hardware is deemed to be the activity ofjob printing forthe purposes ofthis Chapter. (1) Statistical reports, graphs, diagrams, microfilm, microfiche, photorecordings, or any other information produced or compiled by a computer; exceptas 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, orbyothermeans.

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(d) Charges for the use of communications channel in conjunction with a terminal arrangement or data services agreement are deemed gross income from the activityofprovidingtelecommunication 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 100.2(e): (1) Custom (Computer) Programmingwhich is any computersoftware 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. (8) Custom programming includes such programming performed in connection with the sale, rental, lease, or license for use of computer hardware, provided that the charges for such are separately stated from the chargesforthe 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, provided furtherthat (A) The provider of such training services is deemed the ultimate consumerof all tangible personal property used in training others or provided to such trainees without separately itemized charge forthe materials provided. (8) Training deemed adirectcustomerservice does notinclude: (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 orsoftware, oras part of a terminal arrangement ordata services agreement. (3) The use ofcomputertime through the use of aterminal 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 unitoveratelephone line). (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 rawdata used to create such reports.

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(f) The purchase, rental, lease, or license for use of computer hardware, storage media, or computer software which is not deemed custom programming is deemed the use or storage oftangible personal property for the purpose of this Chapter, and the amountwhich may be subject to Use Tax shall be determined in the same manner as 'the determination of the gross income from the sale, rental, lease, orlicense for use ofsuch. Reg. 62-120.1 (Reserved) Reg. 62-200.1. When refundable deposits are includable in gross income. (a) Refundable deposits shall be includable as gross income ofthe taxpayerfor the month in which the deposits areforfeited bythe lessee. (b) Nonrefundable deposits for cleaning, keys, pet fees, maintenance, or for any other purpose are deemed gross income upon receipt. Reg. 62-250.1 Excesstax collected.
Ifa taxpayercollects taxes in excess ofthe combined taxfrom any customerin anytransaction, all such excess tax shall be paid to the taxing jurisdictions in proportion to their effective rates. The right ofthe taxpayer to charge his customerfor his own liability fortax does not allow the taxpayerto enrich himselfatthe costofhis customers.

J Reg. 62-270.1 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 forthe purposes ofthis Chapter, and not excludable by reason of Section 270: (a) rental, leasing, or licensing for use of real property to other than another departmentoragencyofthe municipality. (b) producing, providing, orfurnishing electricity, electric lights, current, power, gas (natural orartificial), orwaterto consumers orratepayers. (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. Reg. 62-270.2 Proprietary clubs. (a) Equity requirements. In order to qualify for exclusion under Section 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 at least eighty-five

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percent (85%) ofthe equity ofthe total amount ofdub-owned property is owned by bona fide individual members whose membership is represented in the form of shares, certificates, bonds, orother indicia of capital interest. A corporation may be considered an individual owner provided that it owns a membership solely forthe benefitofone ormore ofits employees and itis not engaged in any business activityconnected with the operation ofthe dub. (b) Gross revenue requirements. In computing gross revenue forthe computation of this fifteen percent (15%) rule ofsubsection 270(b)(1), (1) The following shall be excluded: (A) membership dues. (8) membership fees which relatetothe general admission to the club on a periodic (orperpetual) basis. (C) assessments. (0) special fund raising events, raffles, etc. (E) donations, gifts, orbequests. (F) gate receipts, admissions, and program advertising for not more than one tournament in anycalendaryear. (2) The following mustbe included: (A) Green fees, court use fees, and similarcharges forthe actual use ofafacility orpartthereof. (8) Pro shop sales ifthe shop is owned bythe club. (C) Golfcart rental ifthe carts areowned bythe club. (0) Rentals, percentages, or commissions received for permitting the use of the premises or any portion thereof by a caterer, concessionaire, professional, orany otherperson forsales, 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) Lockerand lockerroom fees and attendants charges if paid to the club. (G) Tournament entry fees other than entry fees for the one annual toumament exempt undersubsection (b)(1)(F) above. Reg. 62-300.1 Who must applyfora license. (a) Forthe purposes ofdeterminingwhethera license is required underSection 300, a person shall be deemed to be "engaged in orcontinuing in business" within the City, ifhe meets anyofthe following conditions: (1) He is engaged in any activity subject to the City's Privilege Taxes as principal orbroker. (2) He has or maintains within the City directly, or if a corporation, by a subsidiary, an office, distribution house, sales house, warehouse orother place of business, or any agent or other representative operating within this City under the authority of such person or if a corporation, its

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### OrdinanceNo. 3046

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 Stateorthis City. (3) He is soliciting sales, orders, contracts, leases, and othersimilarforms 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 acceptedwithin orwithoutthis City. (4) He is regularly engaged in any activity subject to the City's Use Tax; provided, however, that individuals are not normally required to obtain a license because they acquire items outside the City for their own or their family's personal use and enjoyment. (5) (Reserved) (b) (Reserved) Reg. 62-300.2 (Reserved) Reg. 62-310.1 (Reserved) Reg. 62-310.2 "Casual" exemption of activities from the licensing requirements of Section 310. Individuals, otherthan those engaging in rental ofreal property, may be considered as engaged in "casual" activities, and not subject to the annual license fee imposed under section 310, provided that they are engaged in activities such as the private sale of personal automobiles, garage sales, and the sale of homemade artifacts, on no more than three separate occasions during anycalendaryear. :

Reg. 62-310.3 Annual license fee for persons engaged in providing transient and nontransient lodging. (a) Forthe purposes of payment ofthe annual license fee imposed by Section 310, and this regulation, "primarily used fortransient lodging" shall mean actual use of that particularlodging unitas transient lodging at orexceeding eighty-five percent (85%) oftotal use. (b) Forthe purposes of Subsections 310 (d) and 

### (f) only, it shall be presumed that each lodging unitis not primarily fortransient lodging and is therefore subjectto the two dollar ($2.00) perunitannual fee up to a maximum oftwenty-five dollars ($25.00) per license, until the contrary is established by the licensee to the satisfaction ofthetaxcollector.

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### OrdinanceNo. 3046

(c) A person who is engaged in providing both transient and nontransient lodging shall pay: (1) the two dollar ($2.00) per unit annual license fee for each unit not primarily usedfortransient lodging; plus (2) the ten dollar ($10.00) per location annual license fee for each location where he is providing units primarily used for transient lodging provided thatthetotal annual license fees paid shall notexceed twenty-five dollars ($25.00) perlicense. (d) ''Transient'' shall havethe meaning setforth in Section 447. Reg. 62-350.1 Recordkeeping: income.
The minimum records required for persons having gross income subject to, or exempt or excluded from, tax bythis Chaptermustshow: (a) The gross income ofthe taxpayerattributableto any activity occurring in whole or in part in the City. (b) The gross incometaxable underthis Chapter, divided into categories as stated in the official Citytax 

### 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) Ifthetransaction is claimed to be exemptas asale for resale or as a sale, rental, lease, orlicenseforuseofrental equipment (A) The City Privilege License numberand 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 customerresides), and (8) 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 purchaseforresale, ora purchase, rental, lease, orlicense for use of rental equipment, by the vendee in the ordinary and regUlar course of his business activity, as provided by Regulation.

Ch 62taxcode 10121199 11789(93101I.doc) Pg. 93 of 116 (2) Ifthetransaction is claimed to be exemptforanyotherreason: (A) The name, business address, and business activity of the customer, and (8) Evidence which would establish the applicability of the exemption to a reasonably prudent businessman acting in good faith.

93i 

### OrdinanceNo. 3046

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 ofthe taxpayerand on invoices or receipts provided to the customer. All otherdeductions, 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 oftaxpayer by reason ofthe specialized business activity of any such class. (g) In all cases, the books and records ofthe taxpayer shall indicate both individual transaction amounts and totals for each reporting period for each category of taxable, exempt, and excluded income defined bythis Chapter. Reg. 62-350.2 Recordkeeping: expenditures.
The minimum records required forpersons having expenditures, costs, purchases and rental or lease orlicense expenses subjectto, orexemptorexcluded from, tax bythis Chapterare: (a) The totalprice ofall goods acquired foruse orstorage in the City. (b) The date of acquisition and the name and business address of the seller or lessorofall goods acquired foruse orstorage in the City. (c) Documentation of taxes, freight, and direct customer service labor separately charged and paid foreach purchase, rental, lease, orlicense. (d) The gross price ofeach acquisition claimed as exemptfrom tax, and with respect to each transaction so claimed, sufficient evidence to satisfy the Tax Collector thatthe exemption claimed is applicable. (e) As applicable to each taxpayer, documentation sufficientto the Tax Collector, so that he mayascertain: (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 ofrestaurants. (3) (Reserved)

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### (7) (8) (9) 

### OrdinanceNo. 3046

The validity of any claims of proof of exemption, as provided by Regulation. A claimed alternative priorvalue for reconstruction. All claimed exemptions to the Use Tax imposed by Article VI of this Chapter. (Reserved) (Reserved) (Reserved) (f) Any additional documentation as the Tax Collector, by Regulation, shall deem necessary for any specific class of taxpayer by reason of the specialized business activityofspecificexemptions afforded tothatclass oftaxpayer. (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 expenditures as defined bythis Chapter. Reg. 62-350.3 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-citybranches orlocations. (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 ofthe buyer, determined in the manner one determines ifa 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. 62-360.1 Proofofexemption: sale for resale; sale, rental, lease, or license of rental equipment.
A claim of purchase for resale orofpurchase, rental, lease, or license for rent, lease, or license is valid only ifthe evidence is sufficientto persuade a reasonably prudent businessman thatthe particular item is being acquired for resale orfor 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 insufficienttojustifyan exemption. The "reasonable evidence" mustbe evidence which exists objectively, and not merely in the mind of the vendor, that the property being acqUired is nonnally sold, rented, leased, or licensed by the acquiring person in the ordinary

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### OrdinanceNo. 3046

course of business. Failure to obtain such reasonable evidence at the time of the transaction will be abasis fordisallowanceofany claimed deduction on returns filed forsuch transactions. Reg. 62-360.2 Proofofexemption: exemption certificate.
Forthe purpose ofproofofexemption, in transactions otherthan those in which the proof is set by standard documentation as detailed in Regulations 350.1 and 360.1, the minimum acceptable proofand documentation foreach transaction shall be the completion, atthe 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 validatesthe claim.

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### OrdinanceNo. 3046

INVALID UNLESS COMPLETED IN FULL

VENDOR'S NAME, Sales Invoice No:,

_

CustQmer's ExemptiQn Claim City ofChandler Privilege license (Sales) Tax

CustQmer's Business Name:

_
CustQmer's BusinessAddr.

_ Specific BusinessActivity:

_ (e.g., ifretailer, lessQr Qr manufacturer, specify items leased, sold ormade l.e.,cars,cQmputers,etc.)

CustQmer's License No's. CIly: State:

_

ITEMS CLAIMED AS EXEMPT FROM TAX

All Items On This InvQice or Purchase Order

or OnlyThose Items MarkedWith An "E".

REASON FOR CLAIMED EXEMPTION:

___: The items claimed as exempt are SQld, rented, leased, orlicensed by the above named customer in the normal CQurse of its business activity. Qr

___: The items claimed as exempt are exempt frQm the CityofChandler PrivilegeTax fQrthe fQIIQwing specific reason{s):

CUSTOMER'S CERTIFICATE

I certify that the above infQrmatiQn Is accurate tQ the best Qf my information and belief, and that I am authQrized by the CustQmer above tQ acquire the items claimed as exempt Qn a tax-free baais on its behalf. I further understand that the making Qf a false Qr fraudulent claim tQ Qbtain atax exemptiQn Is aClass One MisdemeanorunderChandlerCity CQde SectiQn 15-1.

Name

Ch 62taxcQde 10/21199 11789{931011.doc) Pg. 97 of 116 97 Date

### OrdinanceNo. 3046 Reg. 62405.1 Local advertising examples.
Forthe purposes of illustration only, and not byway of limitation, the following are provided as examples of local advertising subject to the

### tax: (1) Retail sales and rental establishmentsdoing businesswithin 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 orlocal business only. (3) Sales of real estate locatedwithin the State. (4) Health carefacilities locatedwithin the State. (5) Hotels, motels, and apartments, whether a national d1ain or local so long as the advertisement identifies any locationwithin 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 brand1, 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 frand1isee or licensee may notbe responsible forthe placementofthe 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. 62-405.2 Advertising activitywithin the City. (a) In General. Except as provided elsewhere in this regulation, a person engaged in advertising activity shall be considered to be doing business entirelywithin 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. Remote studios patched to an in-City studio and SUbject to engineering modulation or control atthe in-City studio are considered studios doing business in the City. (b) Billboards and other outdoor advertising companies shall be considered to be doing business within the City to the extent they have billboards or similar displayswithin the City. (c) Publishers and distributors ofnewspaperand otherperiodicals shall be subjectto the tax upon advertising imposed by Section 405 and such tax shall be allocated in the mannerprescribed by subsection (e) ofSection 435.

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### OrdinanceNo. 3046

Reg. 62-407.1 (Reserved) Reg. 62-415.1 Distinction between the categories ofconstruction 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, orotherwise: (a) A person performing improvementsto real propertyis one ofthefollowing: (1) An "Owner-Builder" when thework is performed bythe owneror lessoror lessee-in-possession. An "owner-builder" may also be a "speculative builder". (2) A "Construction Contractor"when performing workforthe ownerorlessor or lessee-in-possession of the real property, unless that person has provided awritten declaration stating that (A) The owner-builderis improving the propertyforsale; and (B) The owner-builder is liable for the tax for such construction contracting activity; and (C) The owner-builder has provided the contractor-his City Privilege License number. (3) A "Subcontractor" as provided in Section415(c). (b) An owner or lessor ("owner-builder") of improved real property is one of the following: (1) A "Speculative Builder" as provided in Section 100; or (2) An "owner-builderwho is notaspeculative builder" in all othercases. (c) The terms "owner", "lessor", and "Iessee-in-possession" shall be deemed to include anyauthorized agentforsuch person. Reg. 62-415.2 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 ofany othertangible personal property (with orwithout an operator) or ofearthmoving equipmentwithoutan operatorshall be deemed rental, leasing, or licensing oftangible personal property. Forexample: (1) Rental of a backhoe, bulldozer, or similar earthmoving equipment with operator is construction contracting. Rental of these items without an operatoris rental oftangible personal property. (2) Rental ofscaffolding, temporaryfences, orbarricades is rental oftangible personal property. (3) Rental ofpumps orcranes is rental oftangible personal property, whether ornotan operatoris providedwith the equipment rented.

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### OrdinanceNo. 3046 (b) Distinction between construction contracting, retail, and certain direct customer service activities. (1) When an item is attached orinstalled on real property, itis a construction contracting activity and any subsequent repair, removal, or replacement ofthat item is construction contracting. (2) Items attached orinstalled on tangible personal propertyare retail sales. (3) Transactions where notangible 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.
Note: The following subsection (c) was repealedeffective February 

### 1, 1995. Subsections (d) and(e) were subsequentlyre-enurneratedas (c) and(d), respectively. 

### (c) Prefabricated buildings; manufactured housing. (1) Any prefabricated building or manufactured housing with respect to which an affidavitofaffixture has been recorded pursuantto

### 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 deemedtangible personal propertyforall purposes ofthis Chapter. (3) A "mobile home" shall qualify for this definition only to the extent that such affidavitofaffixture has been recorded atthetime ofsale. (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 notpaint (e) Installation or removal of tangible personal property which has independent functional utility is considered a retail activity. (1) ''Tangible personal propertywhich has independentfunctional utility" must be able to substantially perform its function(s) without attachment to real property. "Attachment to real property" must include more than connection towater, power, gas, communication, orotherservice. (2) Examples oftangible personal propertywhich has independentfunctional utility include art'NOrk, furnishings, "plug-in" kitchen equipment, or similar items installed by boltsorsimilarfastenings. (3) Examples oftangible personal propertywhich does nothave independent functional utility include wall-ta-wall carpeting, flooring, wallpaper, kitchen cabinets, or"built-in" dishwashers orranges.

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### OrdinanceNo. 3046

(4) The installation ofwindowcoverings (drapes, mini-blinds, etc.) is always a retail activity. Reg. 62-416.1 Speculative builders: homeowner's bona fide non-business sale of a family residence. (a) A sale of a custom home, regardless of the stage of completion of such home shall be considered a "homeowner's bona fide non-business sale" and not subjectto thetaxon speculative builders if: (1) The propertywas actually used as the principal place offamily residence orvacation residence by the immediate family of the sellerfor the six (6) months nextpriortothe offerforsale; and (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 thethirty-six (36) months immediatelypriorto the offerforsale; and (3) The seller has not licensed, leased, or rented the sold premises for any periodwithin thetwenty-four(24) months priorto the offerforsale. (b) In the event that a homeowner of a family residence contracts with a licensed construction contractor for improvements to a residence the 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 reportand paythetax imposed on all such improvements. (c)

- Purchases by a homeowner of tangible personal property for inclusion in any construction, alteration, or repairofhis residence shall be subject to 

### tax as retail sales to the ultimate consumer. (d) Ownerand Homeowneras 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, mayclaim "homeowner" status forsuch person ifsuch person would have otherwise qualifiedwith respectto the specificproperty involved. Reg. 62-416.2 Reconstruction contracting. (a) Reconstruction (ofReal Property) shall mean the subdividing of real property and, in addition, all construction contracting activities performed upon said real property; provided, however, that eachofthefollowing conditions are met (1) A structure existed on said real property priorto the reconstruction activity; and (2) The "priorvalue" ofsaid structure exceedsfifteen percent (15%) ofthe "priorvalue" ofthe 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 priorto the sale ofany

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### OrdinanceNo. 3046

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, oranyco-occupants ofasingle unitasjointtenants. Reg. 62-425.1 Distinction betweenjob printing and certain related activities. (a) Computerized Printing. Computerized versions of all items which would be taxable under Section 425 if performed without computerized 

### assistance are considered taxable underthatSection, and therefore, are notexemptservices. (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 consideredjob printing forthe purposes ofthis Chapter. Reg. 62-435.1 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 ofbooks shall 

### be deemedjob printing. (b) Publication of newspapers, magazines, or other periodicals shall not be consideredjob printingforthe purposes ofthis Chapter.

Reg. 62-435.2 Advertising income of publishers and distributors of newspapers and otherperiodicals.
Publishers and distributors ofnewspapers and otherperiodicals shall be subjectto the tax upon advertising imposed by Section 405 such tax shall be allocated in the manner prescribed by subsection (e) ofSection 435. Reg. 62-445.1 (Reserved) Reg. 62-445.2 (Reserved) (Note: Reg 445.2 as listed belowwas repealed effective2/1/95.) Reg. 62-445.2 Rental, leasing, and licensing of real propertyas lodging: refundable and non-refundable deposits. (a) Nonrefundable deposits for cleaning, keys, pet fees, maintenance, or for any otherpurpose are deemed gross income upon receipt.

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### OrdinanceNo. 3046

part ofthe real property exceeds fifteen percent (15%) ofthe "priorvalue" ofthe 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 orin part, in the propertysold. (b) Except as provided in subsection (c) below, priorvalue means the value of the total integrated property, with improvements, as existing immediately priorto any reconstruction activity. VVhere, according to Title 42 of the Arizona Revised Statutes, a property's full cash value for Secondary Tax purposes is intended to represent the property's Fair Market Value, "PriorValue" shall be the property's Full Cash Value for Secondary Property Tax purposes as determined by the County Assessor in the year immediately preceding the year in which the reconstruction improvement(s) are or could have been included in the County Assessors valuation. If the County Assessors valuation is contested or appealed, the final determination ateitherthe administrative orjudicial level shall apply. Where, according to Title 42 ofthe Arizona Revised Statutes, a property's Full Cash Value for Secondary Property Tax purposes is not intended to represent the property's Fair Market Value, Prior Value shall be the property's FairMarketValue priortothe reconstruction improvement(s). (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 the reconstruction, provided that evidence of such cost is presented to the TaxCollectorand is determined bythe TaxCollector, in his sole discretion, to be satisfactory. Such evidence shall consist, at a minimum, of proofofthe actual, anns-length acquisition price, accompanied bya full appraisal of all property involved which appraisal shall have been performed by a real estate broker or MAl 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 percent (65%) of the acquisition price. (Only long term lending not interim or construction financing will be considered.) This·alternative value shall be used only ifthe property was acquired bythe reconstruction taxpayer not more than thirty-six (36) months prior to a "sale" as defined below. (d) A sale forthe purpose of determining "alternative priorvalue" or "reconstruction" only shall be deemed to have occurred as of the date of the execution of a contract of sale or deed Ooint 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 leasewith 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 bythe lessee in not laterthan nine (9) months. Furtherin the case of cooperative apartments, the sale date shall be the date of execution of the contract selling (subject or notto encumbrances, liens or security interests) of a

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### OrdinanceNo. 3046
(b) "Security deposits" and other refundable deposits are deemed gross income at the time such deposits become forfeit, provided that they are maintained in the manner required for seaJrity deposits both by Regulation 200.1 and by the Arizona Residential Landlord and Tenant Ad, Chapter 10, Title 33, Arizona Revised Statutes. If there is a conflid between these two provisions, the more stringent of the two shall apply in that case. Failure to comply with such provisions with regard to refundable deposits makes such deposits gross income atthe time of receipt Reg. 62-445.3 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 ofthe separate charges made for the lodging and the meals. (2) The chargeforlodging shall be subjectto the tax imposed by Section 444 or445. The charge for meals is subjed to the 

### tax upon restaurants and bars prescribed bySection455.

(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 fumishings as tangible personal property, unless: (1) Any tenant of any lodging space may choose to rent, lease, or license such lodging space eitherfurnished orunfurnished; and (2) The lessorseparatelychargestenantsforlodging and forfurnishings; and (3) The lessorseparately 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 separatelyto the City. Reg. 62-447.1 Gross income from rental, leasing, and licensing for use of real property as lodging orlodging spacetotransients. (a) Ifthe charge made by a hotel to atransient includes any charge for services or accommodations in addition to that of lodging and/or the use of lodging space, then such portion ofthetotal charge as represents only the charge forthe use of the room and/or lodging space shall be distinctly set out and billed to such transient by such hotel as a separate item, orthe entire charge shall be deemed chargeforuseoflodging spacesubjedto thetax imposed bySection 447. (b) A separately itemized charge for use of the furnishings contained in lodging or lodging space rented, leased, or licensed to a transient shall be deemed gross income from the business of renting, leasing, and licensing lodging to atransient.

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### OrdinanceNo. 3046

Furthermore, in regard to such tangible personal property, such person is deemed not in the business of rental, leasing, and licensing oftangible personal propertyforall purposes ofthis Chapter. (c) Complimentary food and drink. Persons engaged in the business of rental, leasing, and licensing of lodging to transients shall include charges for complimentary food and drink as gross income from the business of rental, leasing, and licensing of lodging to transients, and shall not be deemed in the restaurant businessforall purposesofthis Chapter, unless such charges: (1) Are made only at the request of the transient, or as a separate, optional charge for consuming specificfood or drink (for example, "room service" charges); and (2) Are commensurate with charges for like quantity and type of food consumed bypatrons ofpersons engaged in the restaurant business.

I Reg. 62-450.1 Distinction between rental, leasing, and licensing for use of tangible personal propertyand 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 ofany othertangible personal property (with orwithout an operator) or ofearthmoving equipmentwithoutan operatorshall be deemed rental, leasing, or licensing oftangible personal property. Forexample: (1) Rental of a backhoe, bulldozer, or similar earthmoving equipment with operator is construction contracting. Rental of these items without an operatoris rental oftangible personal property. (2) Rental ofscaffolding, temporaryfences, orbarricades is rental oftangible 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 wheneverthe charge is forafIXed sum or hourly rate. By comparison, the activity of a common carrier conveying goods or persons for a fee based upon distance, and nottime, shall 

### be considered transporting forhire. Reg. 62-450.2 Rental, leasing, and' licensing for use of tangible personal property: membershipfees; othercharges. (a) Membership, admission, or other fees charged by any rental club or limited access lessorare considered partoftaxable gross income.

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(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, orlicensed. (c) (Reserved) Reg. 62-450.3 Rental, leasing, and licensingforuse ofequipmentwith operator.
In cases where the tangible personal property is rented, leased, or licensed with an operator provided by the lessor, the charge forthe operator shall not be includable in the gross income from the rental, lease, orlicense ofsuch tangible personal property ifthe charge forthe operator and the charge for the use of the equipment are separately itemized to the lessee and separately maintained on the books and recordsofthe lessor. Reg. 62-450.4 Rental, leasing, and licensingfor use oftangible personal property: semipermanentlyorpennanently installed tangible personal property. (a) The tenn "semi-pennanently or pennanently installed" means that the item of tangible personal property has and is expected to have atthe time of installation a pennanent location atthe site installed, as undera long-tenn lease agreement, except thatthe person using orapplying said property may eventually replace it because it has become worn out or has become obsolete orthe person ceases to havethe rightto possession ofsaid property. (b) An item of tangible personal property is deemed pennanently installed 

### if its installation requires alterationstothe premises. (c) Examples of "semi-pennanently or pennanently installed tangible personal property" include, but are not limited to: computers, duplicating machines, furniture notofportabledesign, majorappliances, store fixtures. (d) The tenn does not include mobile transportation equipment ortangible personal property designed for regular use at different locations or customarily used at different locations, as under numerous short-tenn rental, lease, or license agreements, whetherornotsuch property is in factso used. (1) Forexample, use ofa mobile crane, trencher, automobile, orothersimilar equipment shall be considered a rental, lease, or license transaction subject to taxation only by the city in which such business office of the lessoris 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.

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(e) A rental, lease, or license agreement which specifies that the item in question shall remain, underthe tenns ofthe 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 "pennanently or semipermanently installed" in said city or town, except when the item is mobile transportation equipment or one of the other types of portable equipment or propertydescribed in subsection (d) above. Reg. 62-450.5 Rental, leasing, and licensing foruse oftangible personal property: delivery, installation, repair, and maintenance charges. (a) Delivery and installation charges in connection with the rental, leasing, and licensing of tangible personal property are exempt from the tax imposed by Section 450; provided thatthe provisions of Regulation 100.2 have been met. (b) Gross income from the sale of a warranty, maintenance, or similar service contract in connection with the rental, leasing, and licensing oftangible personal propertyshall be exempt. (c) Separately stated charges for repair not included as part of a warranty, maintenance, or similar service contract relating to the rental, leasing, or licensing of tangible personal property are exempt from the tax imposed by Section 450; however, such income is subject to the provisions of Sections 460 and 465, and the provisionsof Regulation 465.1. Reg. 62-455.1 Gratuities related to restaurant activity.
Gratuities charged byorcollected bypersons subjectto thetax imposed bySection 455 may be excluded from gross income 

### it (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 ofthe taxpayer; and (2) Such gratuities are distributed in total to employees ofthe taxpayer in addition to customary and regularwages. Reg. 62-460.1 Distinction between retail sales and certain other transfers of tangible personal property. (a) Chargesfortransferoftangible personal property included in the gross income of the business activityofpersons engaged in the following business activities shall be deemed only as gross income from such business activity and not sales at retail taxed bySection 460:

- (1) Tangible personal property incorporated into real property as part of reconstruction orconstruction contracting, perSections415 through 418. (2) (Reserved) (3) Job printing, perSection 425.

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Mining, timbering, and other extraction, but not sales of sand, gravel, or rock extracted from the ground, perSection 430. Publication ofnewspapers, magazines, and otherperiodicals, perSection 435. Rental, leasing, and licensing of real or tangible personal property, per Sections445 or450. Restaurants and bars, perSection 455. Telecommunications services, perSection 470. Utilityservices, perSection 480. (b) Distinction between construction contracting, retail, and certain direct customer service activities. (1) When an item is attached orinstalled on real property, itis a construction contracting activity and any subsequent repair, removal, or replacement ofthat item is construction contracting. (2) Items attached orinstalled on tangible personal propertyare 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 ofsand, rock, and gravel extracted from the ground shall be deemed a sale oftangible personal propertyand notmining ormetallurgical 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 notpaint. (e) Installation or removal of tangible personal property which has independent functional utility is considered a retail activity. (1) ''Tangible personal propertywhich has independentfunctional utility" must be able to substantially perform its function(s) without attachment to real property. "Attachment to real property" must include more than connection towater, power, gas, communication, orotherservice. (2) Examples oftangible personal propertywhich has independentfunctional utility include artwork, furnishings, "plug-in" kitchen equipment, or similar items installed by bolts orsimilarfastenings. (3) Examples oftangible personal propertywhich does nothave independent functional utility include wall-to-wall carpeting, flooring, wallpaper, kitchen cabinets, or"built-in" dishwashers orranges. (4) The installation ofwindowcoverings (drapes, mini-blinds, etc.) is always a retail activity. Reg. 62-460.2 Retail sales: trading stamp companytransactions.

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A trading stamp transaction is defined as follows: the trading stamp company issues stamps to avendor; thevendorthen provides them to its customers; and the customerthen eXchanges the stamps formerchandisefrom thetrading 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 dollarvalue perbookofstamps orportion thereof. The tax imposition described herein is in lieu ofany Privilege or Use Tax upon the business of issuing stamps, redeeming the same, orusing orstoring property redeemed. Reg. 62-460.3 Retail sales: membership fees ofretailers. Membership, admission, orotherfees charged by limited access retailers are considered partof taxable gross income ofthe businessactivityofselling tangible personal property. Reg. 62-460.4 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 ofa 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, work papers, reports, etc. are notin aform 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 offactwhich must be resolved in each situation. (b) Creative ("ideaj 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 notincludable 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 ofthe tangible personal propertyto the person rendering the professional services represents less than fifteen percent (15%) ofthe charge, billing, or statement rendered to the purchaserin connection with thetransaction, and (8) The tangible personal property transferred is not itself in a form which is subjectto retail sale.

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(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 inconsequentialto the charges forprofessional services. (2) An appraisal report issued by an appraiser, reflecting such appraiser's effortsto appraise real estate, is regarded inconsequential. (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, ifthe barber or beautician supplies the customerwith abottleofthe productforthe client's usethereafterand withoutthe professional's assistance, thetransferofthe bottle of haircare product is deemed notinconsequential. (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 forprofessional services (embalming, cosmetic work, etc.) would not be includable in gross income. Reg. 62-460.5 Retail sales: monetized bullion; numismaticvalue ofcoins. (a) MonetizedBullion means coins orotherforms of money manufactured or minted from precious metals orother metals and issued as legal tenderora medium of exchange byorforanygovernmentauthorizedto do so. (b) Any coin shall be considered to have been transferred oracquired primarilyfor its "Numismaticvalue" ifthe sale oracquisition price: (1) Is equal to orgreaterthan twice (2 times) the value ofthe metalliccontent ofthe coin as ofthe date oftransferoracquisition; and (2) Is equal to orgreaterthan 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.62-460.6 Retail sales: consignmentsales.
Sales of merchandise acquired on consignment are taxable as retail sales. In caseswhere the merchant is acting asan agenton behalfofanotherdealer, sales ofthe consigned merchandise are taxable to the principal, provided the merchant makesfull disclosureto customers that he is

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