NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL

AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

STATE OF ARIZONA, ex rel., ARIZONA DEPARTMENT OF REVENUE, 

Plaintiff/Appellee,

v.

PETER A. TUNKEY, et al., Defendants/Appellants.

No. 1 CA-TX 21-0006 

Appeal from the Arizona Tax Court

No. TX2019-000451

The Honorable Danielle J. Viola, Judge

AFFIRMED

COUNSEL

Arizona Attorney General’s Office, Phoenix

By Penny Taylor Moore

Counsel for Plaintiff/Appellee

Quarles & Brady LLP, Phoenix

By Paul Valentine, Jared W. Miller

Counsel for Defendants/Appellants

FILED 4-19-2022
STATE v. TUNKEY, et al.

Decision of the Court

2

MEMORANDUM DECISION

Presiding Judge Cynthia J. Bailey delivered the decision of the Court, in 

which Judge Peter B. Swann and Judge D. Steven Williams joined.

B A I L E Y, Judge:

¶1 Appellants Peter A. Tunkey and Carrie A. Carney

(collectively, “the Tunkeys”) appeal the tax court’s denial of their motion 

for summary judgment and grant of summary judgment to the Arizona 

Department of Revenue (“ADOR”) on ADOR’s claim that the Tunkeys were 

personally liable for the unpaid transaction privilege taxes (“TPT”) of KT 

McClintock, LLC (“KT”). For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 From 2005 through 2015, Peter Tunkey was a manager of KT, 

which did business as Silver Mine Subs in Arizona. KT charged customers 

to cover its TPT as permitted by statute. See State ex rel. Ariz. Dep’t of Revenue 

v. Tunberg, 249 Ariz. 5, 7, ¶¶ 5-6 (App. 2020) (stating that entities may bill 

and collect TPT from customers and remit any additional charge collected 

to ADOR). As relevant here, KT filed TPT returns for March through June

and August 2010; and February, May, and June 2012. KT self-assessed the 

owed TPT for those returns but did not pay ADOR the amounts it agreed 

were due.

¶3 In 2019, ADOR filed a complaint against KT, the Tunkeys, and 

the marital community of another KT manager in tax court, alleging KT’s 

tax liability and the Tunkeys’ personal liability for the same pursuant to

Arizona Revised Statutes (“A.R.S.”) section 42-5028. The tax court entered 

default judgments against KT and the other manager.

¶4 ADOR and the Tunkeys filed separate motions for summary 

judgment, each asking the court to determine whether the Tunkeys were

jointly and severally liable for the unpaid TPT. The parties agreed on the 

material facts, including: 1) KT filed the returns in question, 2) these returns 

showed TPT amounts due to ADOR, 3) KT did not pay these amounts, 4)

Peter Tunkey was a KT officer when the tax returns were filed, 5) he 

communicated with ADOR about KT’s TPT, set up payment arrangements,

and made payments to ADOR on behalf of KT, 6) the Tunkeys were married 
STATE v. TUNKEY, et al.

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3

when the returns were filed, and 7) ADOR had never issued an assessment 

against them personally.

¶5 In denying the Tunkeys’ motion, the tax court ruled that 

under A.R.S. § 42-1114(A), ADOR may bring an action to recover unpaid 

TPT without making a formal deficiency assessment when a taxpayer

admits that additional tax is due. The court agreed that ADOR had ten 

years from the date the amount owed becomes final to bring an action and 

was not limited to the four-year statute of limitations for a notice of 

additional tax due, as the Tunkeys argued. Compare A.R.S. § 42-1114(C) 

(allowing ADOR to pursue collection within ten years of the date the 

amount due becomes final), with § 42-1104(A) (requiring that ADOR mail a 

notice of additional tax due within four years of a tax return deadline). The 

court found no notice of additional tax due was required because ADOR 

brought the action based on responsible-party liability arising from Peter 

Tunkey’s status as a KT officer at the relevant time, not on the Tunkeys’

personal tax return deficiency. Because KT had filed tax returns that 

admitted TPT was due, no assessment for any party was required.

¶6 The tax court granted ADOR’s motion and concluded that 

ADOR was not required to separately obtain a formal deficiency 

assessment against the Tunkeys “or for that matter KT,” and the Tunkeys 

were jointly and severally liable as responsible parties for KT’s unpaid TPT.

¶7 The tax court entered judgment against the Tunkeys for 

$25,941.08. The Tunkeys appeal the denial of their summary judgment 

motion and the court’s grant of ADOR’s motion. We have jurisdiction over 

the Tunkeys’ timely appeal under Article 6, Section 9, of the Arizona 

Constitution and A.R.S. §§ 12-120.21(A)(1) and -2101(A)(1).

DISCUSSION

I. Standard of Review

¶8 We review the grant of a motion for summary judgment de 

novo. Strojnik v. Gen. Ins. Co. of Am., 201 Ariz. 430, 433, ¶ 10 (App. 2001). 

Generally, a denial of a motion for summary judgment is not reviewable 

even after judgment, id. at ¶ 11 (citing Bothell v. Two Point Acres, Inc., 192 

Ariz. 313, 316, ¶ 7 (App. 1998)), but we may review the denial if the tax 

court denied it on a point of law, id. (citing Hauskins v. McGillicuddy, 175 

Ariz. 42, 49 (App. 1992)). We are persuaded to review this denial “because 

the issue presented in [the Tunkeys’] motion is identical to the one tendered 

in [ADOR’s] successful motion.” Id. We will affirm a grant of summary 

judgment only if there is no genuine issue as to any material fact and the 
STATE v. TUNKEY, et al.

Decision of the Court

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party seeking judgment is entitled to prevail as a matter of law. Williamson 

v. PVOrbit, Inc., 228 Ariz. 69, 71, ¶ 11 (App. 2011).

II. Summary Judgment

¶9 The Tunkeys argue that ADOR had to assess them personally 

before it could bring a collection action against them. We disagree.

¶10 Section 42-1114(A) allows ADOR to bring an action “to 

recover the amount of any taxes, penalties, interest or other amounts owed 

by the taxpayer to [ADOR] that are due and unpaid.” An “additional 

charge” for which a “person” is accountable is the total charged to a 

customer to cover the TPT. Ariz. Dep’t of Revenue v. Action Marine, Inc., 218 

Ariz. 141, 145-46, ¶¶ 22-23 (2008) (citation omitted). Under A.R.S. § 42-5028, 

“[a] person who fails to remit any additional charge made to cover the [TPT] 

or truthfully account for and pay over any such amount is . . . personally 

liable for the total amount of the additional charge so made and not 

accounted for or paid over.” And the “person” in § 42-5028 includes 

corporate officers and directors, in addition to the taxpaying entity. Action 

Marine, 218 Ariz. at 144-45, ¶ 18.

¶11 The Tunkeys assert that the deficiency assessment under

A.R.S. § 42-1108 is required before ADOR initiates a collection action. But

the statute authorizing a suit for due and unpaid taxes imposes no such 

requirement. See A.R.S. § 42-1114(A). Contrary to the Tunkeys’ argument, 

§ 42-1104(A) is not superfluous if not applied here; instead, it applies to

deficiency assessments or audits performed before ADOR determines 

whether to assess an additional tax liability. See A.R.S. § 42-1108. Here, an 

audit was unnecessary: KT self-assessed its tax liability, and ADOR 

accepted that assessment. KT simply did not pay the amount it admitted 

had been collected and therefore was owed. The tax court properly denied 

the Tunkeys’ motion.

¶12 The Tunkeys also argue that because the Arizona Supreme 

Court in Action Marine described liability under A.R.S. § 42-5028 as “nonderivative personal liability,” an action to recover TPT from them 

constitutes a separate tax requiring an assessment. We disagree. We read 

Action Marine to say that § 42-5028 creates TPT liability for “persons” 

concurrent with the business entity’s liability, rather than creating a 

separate tax. Our supreme court in Action Marine sought to distinguish 

between liability that would be subject to additional penalties (the business 

entity’s underlying TPT liability) from the responsible party’s liability that 

would remain static even if the business entity’s penalties increased. See
STATE v. TUNKEY, et al.

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218 Ariz. at 146-47, ¶ 28. Liability under § 42-5028 is not a separate tax and 

therefore no separate assessment was required.

¶13 Notwithstanding their arguments based on statutory 

interpretation, the Tunkeys did not dispute the material facts that the tax 

court relied on to enter judgment on their joint and several liability for KT’s 

unpaid TPT. With no genuine issues of material fact, the court properly 

granted summary judgment for ADOR. See Orme Sch. v. Reeves, 166 Ariz. 

301, 305 (1990).

CONCLUSION

¶14 We affirm.