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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

RANDA DRIVER, Plaintiff/Appellant,

v.

ARIZONA DEPARTMENT OF REVENUE, Defendant/Appellee.

No. 1 CA-TX 18-0006

Appeal from the Arizona Tax Court

No. TX2017-000183

Maricopa County Superior Court

No. LC2016-000509-001

The Honorable Christopher T. Whitten, Judge

AFFIRMED

COUNSEL

Randa Driver, Scottsdale

Plaintiff/Appellant

Arizona Attorney General’s Office, Phoenix

By Benjamin H. Updike

Counsel for Defendant/Appellee

FILED 6-11-2019
DRIVER v. ADOR

Decision of the Court

2

MEMORANDUM DECISION

Judge Maria Elena Cruz delivered the decision of the Court, in which 

Presiding Judge Jennifer B. Campbell and Judge James B. Morse Jr. joined.

C R U Z, Judge:

¶1 Randa Driver appeals from the grant of summary judgment 

in favor of the Arizona Department of Revenue (the “Department”) finding 

Driver liable for luxury and use tax on the cigarettes she purchased over a 

three-year period. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 Between January 1, 2007 and November 30, 2009 (the 

“Assessment Period”), Driver purchased cigarettes from Chavez, Inc. 

(“Chavez”), a company that sold cigarettes by phone and over the Internet. 

In 2010, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) 

investigated Chavez for the unlawful diversion of tobacco products. 

Chavez pled guilty to wire fraud and admitted to running “an illegal retail 

cigarette trafficking business” and selling unstamped cigarettes on which 

no tax was paid.

¶3 During the investigation, ATF identified the Arizona 

customers to whom Chavez had sold and shipped cigarettes and provided 

their names and purchase information to the Department. Using that 

information, the Department issued Driver a Notice of Proposed 

Assessment (“Notice”) reflecting that she owed $4,473.89 in luxury and use 

tax, plus interest.

¶4 Driver protested the assessment. At a hearing before the 

Office of Administrative Hearings, the Administrative Law Judge (“ALJ”)

deducted five invoices from the assessment, concluding that Driver’s sister 

had made those purchases, but upheld the remaining assessment. Driver 

appealed the ALJ’s decision to the Department Director, who affirmed. She 

then appealed to the Board of Tax Appeals (“BOTA”), who also affirmed.

¶5 After exhausting her administrative remedies, Driver

appealed to tax court. The parties filed cross-motions for summary 

judgment. The court granted the Department’s motion and denied 

Driver’s. After entry of final judgment, Driver appealed. We have 
DRIVER v. ADOR

Decision of the Court

3

jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”) section 12-

2101(A)(1) (2019).

DISCUSSION

¶6 We review the tax court’s grant of summary judgment de novo.

See Wilderness World, Inc. v. Dep’t of Revenue State of Ariz., 182 Ariz. 196, 198 

(1995). In doing so, we view the facts in the light most favorable to Driver, 

the party against whom judgment was entered. See Valencia Energy Co. v. 

Ariz. Dep’t of Revenue, 191 Ariz. 565, 568, ¶ 2 (1998).

I. Luxury and Use Tax

¶7 Driver first argues the tax court erred in granting summary 

judgment because Chavez “legally owed all taxes on cigarettes sold into 

this state” and, therefore, Driver is not liable for the tax.

¶8 Arizona imposes a luxury privilege tax on all cigarette 

purchases. See A.R.S. § 42-3051 (2019). Under Arizona law, cigarettes 

cannot be sold unless the luxury tax has been paid and an official tax stamp 

is affixed. See A.R.S. § 42-3452 (2019), formerly A.R.S. § 42-3202 (2006). A

tax stamp is evidence that luxury tax was paid, and the law presumes that 

unstamped cigarettes “are intended for first sale by the person and are 

subject to the taxes imposed by this chapter.” A.R.S. § 42-3453 (2019), 

formerly A.R.S. § 42-3202.01 (2006); see also A.R.S. § 42-3452 (2019), formerly 

A.R.S. § 42-3202 (2006). “First sale” means either “the initial sale or 

distribution in intrastate commerce” or “the initial use or consumption of 

cigarettes.” A.R.S. § 42-3001(10) (2019), formerly A.R.S. § 42-3001(12) (2006).

¶9 Current Arizona law prohibits the purchase of cigarettes by 

telephone, Internet, or mail. See A.R.S. § 36-798.06 (2019); 2012 Ariz. Sess. 

Laws, ch. 311, § 2 (2nd Reg. Sess.). Under current law, an individual cannot 

possess unstamped cigarettes unless that person is a licensed cigarette 

manufacturer, importer or distributor, or has a proper bill of lading. See

A.R.S. § 42-3457(A) (2019). During the Assessment Period, however, phone 

and Internet cigarette sales were permitted and were governed by the 

“Delivery Sales” statutes. See A.R.S. §§ 42-3221 to -3230 (2006), repealed by 

2012 Ariz. Sess. Laws, ch. 3, § 20 (2nd Reg. Sess.).

¶10 At the time Driver was purchasing cigarettes from Chavez, an 

individual could possess unstamped cigarettes for his or her own use and 

consumption if the person complied with certain requirements. See A.R.S. 

§ 42-3205(A) (2006). To legally possess unstamped cigarettes, the 

individual had to register with the Department “on a form and in a manner 
DRIVER v. ADOR

Decision of the Court

4

prescribed” by the Department and remit luxury tax within ten days after 

receipt of the unstamped cigarettes. See A.R.S. § 42-3201(C) (2006). The 

prescribed registration form was Arizona Form 800DS, entitled the 

“Cigarette Tax Return” required for “unstamped cigarettes imported into 

Arizona.”

¶11 Driver purchased cigarettes from Chavez for her own use or 

consumption in Arizona. No tax was paid on those cigarettes. Although 

required under law to file a Form 800DS and remit taxes to the Department, 

Driver did neither. Therefore, she is liable for the unpaid luxury tax.

¶12 In addition to luxury tax, Arizona also imposes a tax on the 

use or consumption of tangible personal property purchased from an outof-state retailer. See A.R.S. § 42-5155(A) (2019). A purchaser is personally 

liable for use tax. See A.R.S. § 42-5155(F) (2019), formerly A.R.S. § 42-5155(E) 

(2006). This court has previously explained the distinction between the 

transaction privilege tax and the use tax: “In contrast to the transaction 

privilege tax, which is imposed on transactions consummated within 

Arizona, a use tax is designed to reach out-of-state sales of tangible personal 

property to Arizona purchasers.” See Ariz. Elec. Power Coop., Inc. v. Ariz. 

Dep’t of Revenue, 242 Ariz. 85, 87, ¶ 7 (App. 2017).

¶13 The record reflects that, over the course of three years, Driver 

purchased cigarettes from Chavez, an out-of-state retailer, and used or 

consumed the cigarettes in Arizona. Thus, Driver is liable for use tax.

¶14 Driver’s complaint alleged that “[t]he remote tobacco seller 

[Chavez], NOT the buyer, was legally required to collect and remit all 

Arizona taxes owed at the time of taking the internet order.” Driver is 

correct that under the Delivery Sales statutes, “[e]ach person accepting a 

purchase order for a delivery sale” was required to “collect and remit to the 

[D]epartment all taxes imposed on tobacco products by this state.” A.R.S. 

§ 42-3227 (2006). Chavez failed to comply with the Delivery Sales statutes. 

Its failure, however, does not relieve Driver of tax liability. As a purchaser 

of unstamped cigarettes, Driver was still liable for payment of luxury and 

use tax. See A.R.S. §§ 42-3201(C) (2006); -5155 (2006).

¶15 Because the tax court properly determined that Driver was 

liable for luxury and use tax on her cigarette purchases, we affirm the entry 

of summary judgment.
DRIVER v. ADOR

Decision of the Court

5

II. Statute of Limitations

¶16 Driver next argues the assessment is barred by the four-year 

statute of limitations set forth in § 42-1104. This statute authorizes the 

Department to make a deficiency assessment within four years after a 

return is either filed or required to be filed, whichever date comes later. See

A.R.S. § 42-1104(A) (2019). The assessment here reached back more than 

four years.

¶17 Section 42-1104(B), however, provides exceptions to the fouryear limitation period and authorizes the Department to assess a tax 

deficiency “at any time” if the taxpayer fails to file a return. See A.R.S. § 42-

1104(B)(1)(b) (2019). We review the application of § 42-1104 de novo. See 

Ader v. Estate of Felger, 240 Ariz. 32, 36, ¶ 9 (App. 2016) (applying de novo

review to the interpretation of statutory time limitations).

¶18 Driver does not contend that she filed a Form 800DS, the 

cigarette tax return. Therefore, the Department’s assessment falls within 

the exception to the four-year statute of limitations applying when a 

taxpayer fails to file a return. See A.R.S. § 42-1104(B)(1)(b) (2019). Because 

the Department’s assessment is not time barred, we affirm the entry of 

summary judgment.

III. Due Process of Law

¶19 Finally, Driver argues that the tax court deprived her of due 

process of law in violation of the Fourteenth Amendment of the United 

States Constitution. This court reviews Driver’s constitutional claim de 

novo. See In re Estate of Snure, 234 Ariz. 203, 204, ¶ 5 (App. 2014).

¶20 “Due process requires notice and an opportunity to be heard 

at a meaningful time and in a meaningful manner.” Huck v. Haralambie, 122 

Ariz. 63, 65 (1979). The Department provided Driver with the Notice, as 

required by law, and she had an opportunity to be heard in the 

administrative proceedings. Driver protested the Notice in a hearing before 

the Office of Administrative Hearings, where the ALJ reduced the amount 

of the assessment. Driver then appealed the ALJ’s decision to the 

Department Director. After the Director affirmed the ALJ’s decision, Driver 

appealed to the BOTA where she was given a second hearing. From there, 

she appealed to tax court. Driver was provided notice and ample 

opportunity to be heard.

¶21 Driver also argues that “the opportunity to defend on statute 

of limitations grounds is a vested right protected by due process.” As the 
DRIVER v. ADOR

Decision of the Court

6

United States Supreme Court has explained, however, the right to shelter 

from a statute of limitations is not a “fundamental” or “natural right.” See 

Chase Sec. Corp. v. Donaldson, 325 U.S. 304, 314 (1945).

Statutes of limitation find their justification in necessity and 

convenience rather than in logic. They represent expedients, 

rather than principles. They are practical and pragmatic 

devices to spare the courts from litigation of stale claims, and 

the citizen from being put to his defense after memories have 

faded, witnesses have died or disappeared, and evidence has 

been lost. . . . Their shelter has never been regarded as what 

now is called a ‘fundamental’ right or what used to be called 

a ‘natural’ right of the individual. He may, of course, have 

the protection of the policy while it exists, but the history of 

pleas of limitation shows them to be good only by legislative 

grace and to be subject to a relatively large degree of 

legislative control.

Id. (citation omitted); see also Lucia v. United States, 474 F.2d 565, 569-70 (5th 

Cir. 1973) (“[T]here is no substantive or fundamental right to the shelter of 

a period of limitations.”).

¶22 The Arizona legislature has provided a four-year statute of 

limitations to taxpayers but has declined to extend that protection to 

taxpayers who fail to file their returns. See A.R.S. § 42-1104 (2019). Other 

states have established similar limitations. See, e.g., Zignego Co., Inc. v. 

Wisconsin Dep’t of Revenue, 565 N.W.2d 590, 593 (Wis. Ct. App. 1997) 

(holding that “if a sales and use tax return is never filed,” the statute of 

limitations “never begins to run”); Dye Constr. Co. v. Dolan, 589 P.2d 497, 

498 (Colo. Ct. App. 1978) (holding that if a taxpayer fails to file a return, the 

taxing authority is not bound by the statute of limitations).

¶23 Driver had no fundamental right to the statutory four-year 

statute of limitations, and there was no violation of her due process rights.
DRIVER v. ADOR

Decision of the Court

7

CONCLUSION

¶24 For the foregoing reasons, we affirm the tax court’s decision. 

We award costs to the Department upon compliance with Arizona Rule of 

Civil Appellate Procedure 21.