Bill Text: AZ SB1220 | 2011 | Fiftieth Legislature 1st Regular | Introduced
Bill Title: Uniform local sales tax base
Spectrum: Partisan Bill (Republican 8-0)
Status: (Failed) 2011-02-17 - Senate FIN Committee action: Held [SB1220 Detail]
Download: Arizona-2011-SB1220-Introduced.html
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REFERENCE TITLE: uniform local sales tax base |
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State of Arizona Senate Fiftieth Legislature First Regular Session 2011
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SB 1220 |
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Introduced by Senators Pierce S, Allen, Pearce R, Yarbrough; Representative Burges: Senators Biggs, Bundgaard, Nelson
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AN ACT
Amending sections 28-2154.01 and 40‑207, Arizona Revised Statutes; repealing section 41‑3015.06, Arizona Revised Statutes; amending sections 42-2075, 42‑5009, 42‑5069, 42-6001, 42-6002 and 42-6003, Arizona Revised Statutes; repealing sections 42-6004, 42-6005, 42-6006 and 42-6007, Arizona Revised Statutes; amending sections 42‑6008 and 42-6009, Arizona Revised Statutes; repealing section 42‑6207, Arizona Revised Statutes; relating to municipal excise taxes.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 28-2154.01, Arizona Revised Statutes, is amended to read:
28-2154.01. Special ninety day nonresident registration permits; procedures
A. A dealer or an authorized third party that issues a special ninety day nonresident registration permit pursuant to section 28‑2154 shall send an electronic record of the permit to the department through an authorized third party or through the department's authorized third party electronic service provider.
B. The department, an authorized third party or a dealer shall not:
1. Issue, assign or deliver a special ninety day nonresident registration permit to any person unless the person does all of the following:
(a) Obtains the special ninety day nonresident registration permit pursuant to section 28-2154.
(b) Completes an affidavit in a form prescribed by the director pursuant to section 28-2154 or completes a form prescribed by section 42‑5009, subsection I.
(c) Presents to the department, authorized third party or motor vehicle dealer a currently current valid driver license issued by another state indicating an address outside of this state.
(d) Provides any other information reasonably and uniformly required by the department of transportation pursuant to section 28‑2154 or the department of revenue pursuant to section 42‑5009, subsection I.
2. Issue and affix, as prescribed in subsection C of this section, a special ninety day nonresident registration permit unless the permit is recorded in the electronic records of the department.
C. A person who issues a special ninety day nonresident registration permit shall affix or insert, clearly and indelibly, on the face of each permit the dates of issuance and expiration and the make and vehicle identification number of the vehicle. The special ninety day nonresident registration permit shall not bear the name or address of the person who purchased the vehicle in a position that is legible from outside of the vehicle.
D. A dealer or authorized third party who issues a special ninety day nonresident registration permit shall maintain a record, in a form prescribed by the director, of all special ninety day nonresident registration permits issued by the dealer or authorized third party and a record of other information pertaining to the issuance of special ninety day nonresident registration permits that the department of transportation or the department of revenue requires.
E. The dealer or authorized third party shall keep each record for at least three years after the date of entry of the record.
F. A dealer or authorized third party shall allow the director of the department of transportation or the director of the department of revenue full and free access to the records during regular business hours.
G. The electronic record is written notice of the removal of the vehicle from this state for use in the purchaser's state of residence and relieves the dealer or authorized third party of liability in accordance with the requirements of section 42‑5009.
H. If a purchaser registers the vehicle in this state within three hundred sixty‑five days after the issuance of the special ninety day nonresident registration permit, the purchaser is liable in an amount equal to any tax, penalty and interest that the motor vehicle dealer or authorized third party would have been required to pay under title 42, chapter 5 and under articles IV and VI of the model city tax code as defined in section 42‑6051 any applicable municipal tax. At the time of issuing the special ninety day nonresident registration permit, a motor vehicle dealer or authorized third party shall inform the purchaser in writing of the purchaser's liability described in this section. Subsequent registration or use of the vehicle in this state does not create a cause of action against a dealer or authorized third party that complies with section 28-2154, subsection A, this section and section 42‑5009, subsection I.
I. The department of transportation and the department of revenue shall jointly develop and prescribe forms for the motor vehicle dealer, the authorized third party and the purchaser to complete for the proper administration and enforcement of this section.
J. Compliance with this section and section 28‑2154 allows delivery of the vehicle to a nonresident purchaser in this state and retains the applicable deductions pursuant to section 42‑5061, subsection A, paragraph 28, subdivision (a) and subsection U.
Sec. 2. Section 40-207, Arizona Revised Statutes, is amended to read:
40-207. Electricity suppliers; rules
A. An electricity supplier shall obtain a certificate from the commission before offering electricity for sale to retail electric customers in this state.
B. The commission may adopt, amend and repeal rules reasonably necessary to carry out this section. On or before December 31, 1998, The commission shall adopt rules providing minimum standards of disclosure and complaint procedures applicable to certificated electricity suppliers. The commission may impose conditions on the certification of electricity suppliers to assure ensure their financial stability, including periodic reports, bonds and deposits.
C. As a condition of obtaining a certificate required under subsection A, an electricity supplier shall agree to be subject to the transaction privilege taxes and affiliated excise taxes pursuant to title 42, chapter 5 and the provisions of the model city tax code.
Sec. 3. Repeal
Section 41-3015.06, Arizona Revised Statutes, is repealed.
Sec. 4. Section 42-2075, Arizona Revised Statutes, is amended to read:
42-2075. Audit duration; definition
A. An audit of a taxpayer's return or claim for refund shall not exceed two years from the date of initial audit contact to the issuance of a notice of proposed deficiency assessment or proposed overpayment, except:
1. An audit of a fraudulent tax return.
2. An audit delayed as the result of the taxpayer's bankruptcy proceeding.
3. An audit in which the department has issued a letter to the taxpayer or the taxpayer's representative citing the potential imposition of the penalty described in section 42‑1125, subsection C for the taxpayer's failure or refusal to provide information pursuant to the department's written request.
4. An audit involving proceedings concerning the enforcement or validity of a subpoena or subpoena duces tecum issued pursuant to section 42‑1006, subsection C.
5. An audit involving a proceeding under section 42‑2056.
6. An audit where a taxpayer has filed a petition pursuant to section 43‑1148, but only in relation to the effect of the petition request.
7. An audit in which the taxpayer provides a written request to extend the audit beyond the two‑year period. A request for extension under this paragraph is not a substitute for a waiver of the statute of limitations pursuant to section 42‑1104, subsection B, paragraph 9. However, a waiver of the statute of limitations is considered to be a written request to extend the audit beyond the two‑year period under this paragraph.
B. This section applies to audits conducted by the department and to joint audits conducted by the department and cities and towns pursuant to section 42‑6005.
C. B. For the purposes of this section, "initial audit contact" means:
1. For a field audit, the date of the first meeting between the taxpayer or the taxpayer's representative and a member of the department's audit staff.
2. For a desk or office audit, the date of the first letter to the taxpayer regarding the audit.
Sec. 5. Section 42-5009, Arizona Revised Statutes, is amended to read:
42-5009. Certificates establishing deductions; liability for making false certificate
A. A person who conducts any business classified under article 2 of this chapter may establish entitlement to the allowable deductions from the tax base of that business by both:
1. Marking the invoice for the transaction to indicate that the gross proceeds of sales or gross income derived from the transaction was deducted from the tax base.
2. Obtaining a certificate executed by the purchaser indicating the name and address of the purchaser, the precise nature of the business of the purchaser, the purpose for which the purchase was made, the necessary facts to establish the appropriate deduction and the tax license number of the purchaser to the extent the deduction depends on the purchaser conducting business classified under article 2 of this chapter and a certification that the person executing the certificate is authorized to do so on behalf of the purchaser. The certificate may be disregarded if the seller has reason to believe that the information contained in the certificate is not accurate or complete.
B. A person who does not comply with subsection A of this section may establish entitlement to the deduction by presenting facts necessary to support the entitlement, but the burden of proof is on that person.
C. The department may prescribe a form for the certificate described in subsection A of this section. Under such rules as it may prescribe, the department may also describe transactions with respect to which a person is not entitled to rely solely on the information contained in the certificate provided for in subsection A of this section but must instead obtain such additional information as required by the rules in order to be entitled to the deduction.
D. If a seller is entitled to a deduction by complying with subsection A of this section, the department may require the purchaser which that caused the execution of the certificate to establish the accuracy and completeness of the information required to be contained in the certificate which that would entitle the seller to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest which that the seller would have been required to pay under this article if the seller had not complied with subsection A of this section. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42‑5029.
E. If a seller is entitled to a deduction by complying with subsection B of this section, the department may require the purchaser to establish the accuracy and completeness of the information provided to the seller that entitled the seller to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article if the seller had not complied with subsection B of this section. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42‑5029.
F. The department may prescribe a form for a certificate used to establish entitlement to the deductions described in section 42‑5061, subsection A, paragraph 47 and section 42‑5063, subsection B, paragraph 3. Under rules the department may prescribe, the department may also require additional information for the seller to be entitled to the deduction. If a seller is entitled to the deductions described in section 42‑5061, subsection A, paragraph 47 and section 42‑5063, subsection B, paragraph 3, the department may require the purchaser who executed the certificate to establish the accuracy and completeness of the information contained in the certificate that would entitle the seller to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42‑5029.
G. If a seller claims a deduction under section 42‑5061, subsection A, paragraph 25 and establishes entitlement to the deduction with an exemption letter that the purchaser received from the department and the exemption letter was based on a contingent event, the department may require the purchaser that received the exemption letter to establish the satisfaction of the contingent event within a reasonable time. If the purchaser cannot establish the satisfaction of the event, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article if the seller had not been furnished the exemption letter. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42‑5029. For the purposes of this subsection, "reasonable time" means a time limitation that the department determines and that does not exceed the time limitations pursuant to section 42‑1104.
H. From and after December 31, 2005 through December 31, 2010, the department shall prescribe a form for a certificate used to establish entitlement to the deductions described in section 42‑5061, subsection B, paragraph 23, section 42-5066, subsection B, paragraph 5, section 42‑5070, subsection C, paragraph 2, section 42‑5074, subsection B, paragraph 10, section 42‑5075, subsection B, paragraph 20 and section 42‑5159, subsection B, paragraph 23 relating to motion picture production. The certificate is effective for twelve consecutive calendar months from and after the date of issuance and is subject to the following requirements and conditions:
1. A motion picture production company as defined in section 41‑1517 may use a certificate issued pursuant to this subsection only with respect to production costs described in section 41‑1517, subsection A, paragraph 2 that are subject to taxation under article 2 or 4 of this chapter.
2. The department shall issue the certificate to a motion picture production company on receiving the company's letter of qualification from the department of commerce, except as otherwise provided in this subsection.
3. The department shall not issue a certificate to a motion picture production company that has a delinquent tax balance owing to the department under this title or title 43.
4. If the department determines that a motion picture production company no longer qualifies for a certificate or has used the certificate for unauthorized purposes, the department shall revoke the certificate and the motion picture production company is liable for an amount equal to the transaction privilege and use taxes that would have been due on taxable transactions during the time the company did not qualify for or improperly used the certificate, with interest and penalties as provided by law.
5. The department shall maintain annual data on the total amount of monies exempted through the use of certificates issued pursuant to this subsection and shall provide those data to the department of commerce on request.
6. The department of revenue, with the cooperation of the department of commerce, shall adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purposes of this subsection.
7. If, after audit, the department determines that a motion picture production company failed to meet any of the requirements prescribed by this subsection, any deductions from taxation from the use of the certificate are subject to recapture and payment by the motion picture production company to the department.
I. The department shall prescribe forms for certificates used to establish the satisfaction of the criteria necessary to qualify the sale of a motor vehicle for the deductions described in section 42-5061, subsection A, paragraph 14, paragraph 28, subdivision (a) and paragraph 45 and subsection U. To establish entitlement to these deductions, a motor vehicle dealer shall retain:
1. A valid certificate as prescribed by this subsection completed by the purchaser and obtained prior to the issuance of the nonresident registration permit authorized by section 28-2154.
2. A copy of the nonresident registration permit authorized by section 28-2154.
3. A legible copy of a current valid driver license issued to the purchaser by another state or foreign country that indicates an address outside of this state. For the sale of a motor vehicle to a nonresident entity, the entity's representative must have a current valid driver license issued by the same jurisdiction as that in which the entity is located.
4. For the purposes of the deduction provided by section 42-5061, subsection A, paragraph 14, a certificate documenting the delivery of the motor vehicle to an out‑of‑state location.
J. Notwithstanding subsection A, paragraph 2 of this section, if a motor vehicle dealer has established entitlement to a deduction by complying with subsection I of this section, the department may require the purchaser who executed the certificate to establish the accuracy and completeness of the information contained in the certificate that entitled the motor vehicle dealer to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the motor vehicle dealer would have been required to pay under this article and under articles IV and V of the model city tax code as defined in section 42-6051 any applicable municipal tax. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter and any tax imposed under article VI of the model city tax code as defined in section 42‑6051 applicable municipal taxes. The amount shall be treated as tax revenues collected from the motor vehicle dealer in order to designate the distribution base for purposes of section 42-5029.
K. Notwithstanding any other law, compliance with subsection I of this section by a motor vehicle dealer entitles the motor vehicle dealer to the exemption provided in section 42-6004, subsection A, paragraph 4.
Sec. 6. Section 42-5069, Arizona Revised Statutes, is amended to read:
42-5069. Commercial lease classification; definitions
A. The commercial lease classification is comprised of the business of leasing for a consideration the use or occupancy of real property.
B. A person who, as a lessor, leases or rents for a consideration under one or more leases or rental agreements the use or occupancy of real property that is used by the lessee for commercial purposes is deemed to be engaged in business and subject to the tax imposed by article 1 of this chapter, but this subsection does not include leases or rentals of real property used for residential or agricultural purposes.
C. The commercial lease classification does not include:
1. Any business activities that are classified under the transient lodging classification.
2. Activities engaged in by the Arizona exposition and state fair board or county fair commissions in connection with events sponsored by those entities.
3. Leasing real property to a lessee who subleases the property if the lessee is engaged in business classified under the commercial lease classification or the transient lodging classification or under the municipal residential lease classification under chapter 6, article 2 of this title.
4. Leasing real property pursuant to a written lease agreement entered into before December 1, 1967. This exclusion does not apply to the businesses of hotels, guest houses, dude ranches and resorts, rooming houses, apartment houses, office buildings, automobile storage garages, parking lots or tourist camps, or to the extension or renewal of any such written lease agreement.
5. Leasing real property by a corporation to an affiliated corporation. For the purposes of this paragraph, "affiliated corporation" means a corporation that owns or controls at least eighty per cent of the lessor, that is at least eighty per cent owned or controlled by the lessor or that is at least eighty per cent owned or controlled by a corporation that also owns or controls at least eighty per cent of the lessor. Ownership and control are determined by reference to the voting shares of a corporation.
6. Leasing real property for boarding horses.
7. Leasing or renting real property or the right to use real property at exhibition events in this state sponsored, operated or conducted by a nonprofit organization that is exempt from taxation under section 501(c)(3), 501(c)(4) or 501(c)(6) of the internal revenue code if the organization is associated with major league baseball teams or a national touring professional golfing association and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.
8. Leasing or renting real property or the right to use real property for use as a rodeo featuring primarily farm and ranch animals in this state sponsored, operated or conducted by a nonprofit organization that is exempt from taxation under section 501(c)(3), 501(c)(4), 501(c)(6), 501(c)(7) or 501(c)(8) of the internal revenue code and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.
9. Leasing or renting dwelling units, lodging facilities or trailer or mobile home spaces if the units, facilities or spaces are intended to serve as the principal or permanent place of residence for the lessee or renter or if the unit, facility or space is leased or rented to a single tenant thirty or more consecutive days.
10. Leasing or renting real property and improvements for use primarily for religious worship by a nonprofit organization that is exempt from taxation under section 501(c)(3) of the internal revenue code and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.
11. Leasing or renting real property used for agricultural purposes under either of the following circumstances:
(a) The lease or rental is between family members, trusts, estates, corporations, partnerships, joint venturers or similar entities, or any combination thereof, if the individuals or at least eighty per cent of the beneficiaries, shareholders, partners or joint venturers share a family relationship as parents or ancestors of parents, children or descendants of children, siblings, cousins of the first degree, aunts, uncles, nieces or nephews of the first degree, spouses of any of the listed relatives and listed relatives by the half-blood or by adoption.
(b) The lessor leases or rents real property used for agricultural purposes under no more than three leases or rental agreements.
12. Leasing, renting or granting the right to use real property to vendors or exhibitors by a trade or industry association that is a qualifying organization pursuant to section 513(d)(3)(C) of the internal revenue code for a period not to exceed twenty-one days in connection with an event that meets all of the following conditions:
(a) The majority of such vending or exhibition activities relate to the nature of the trade or business sponsoring the event.
(b) The event is held in conjunction with a formal business meeting of the trade or industry association.
(c) The event is organized by the persons engaged in the particular trade or industry.
13. Leasing, renting or granting the right to use real property for a period not to exceed twenty-one days by a coliseum, civic center, civic plaza, convention center, auditorium or arena owned by this state or any of its political subdivisions.
14. Leasing or subleasing real property used by a nursing care institution as defined in section 36-401 that is licensed pursuant to title 36, chapter 4.
15. Leasing or renting an eligible facility as defined in section 28‑7701.
16. Granting or providing rights to real property that constitute a profit à prendre for the severance of minerals, including all rights to use the surface or subsurface of the property as is necessary or convenient to the right to sever the minerals. This paragraph does not exclude from the commercial lease classification leasehold rights to the real property that are granted in addition to and not included within the right of profit à prendre, but the tax base for the grant of such a leasehold right, if the gross income derived from the grant is not separately stated from the gross income derived from the grant of the profit à prendre, shall not exceed the fair market value of the leasehold rights computed after excluding the value of all rights under the profit à prendre. For the purposes of this paragraph, "profit à prendre" means a right to use the land of another to mine minerals, and carries with it the right of entry and the right to remove and take the minerals from the land and also includes the right to use the surface of the land as is necessary and convenient for exercise of the profit.
D. For municipal tax purposes under chapter 6, article 2 of this title, the commercial lease classification does not include leasing real property to a lessee who licenses the property if all of the following apply:
1. The lessee is engaged in business classified under the commercial license classification.
2. Licensing the real property comprises all or part of the lessee’s business.
3. The lessee is subject to tax under chapter 6, article 2 of this title by engaging in the commercial license classification.
D. e. The tax base for the commercial lease classification is the gross proceeds of sales or gross income derived from the business, but reimbursements to the lessor for utility service shall be deducted from the tax base.
E. F. Notwithstanding section 42‑1104, subsection B, paragraph 1, subdivision (b) and paragraph 2, the failure to file tax returns for the commercial lease classification that report gross income derived from any agreement that constitutes, in whole or in part, a grant of a right of profit à prendre for the severance of minerals does not constitute an exception to the general rule for the statute of limitations.
F. G. For the purposes of this section:
1. "Leasing" includes renting.
2. "Real property" includes any improvements, rights or interest in such property.
Sec. 7. Section 42-6001, Arizona Revised Statutes, is amended to read:
42-6001. Collection and administration of transaction privilege tax and affiliated excise taxes; coordinated licensing, collection and audit functions
A. The department may shall collect and administer any transaction privilege and affiliated excise taxes, including use tax, severance tax, jet fuel excise and use tax, and rental occupancy tax, imposed by any city or town, and the department and any city or town may shall enter into intergovernmental contracts or agreements to provide a uniform method of administration, collection, audit and licensing of transaction privilege and affiliated excise taxes imposed by the state or cities or towns pursuant to title 11, chapter 7, article 3.
B. The director may shall enter into agreements with cities and towns of this state that levy transaction privilege and affiliated excise taxes to provide for unified or coordinated licensing, collection and auditing programs for such taxes levied by cities and towns and taxes levied pursuant to chapter 5 of this title or article 2 of this chapter. Such cities and towns may shall enter into agreements with the department to provide for unified or coordinated licensing, collection and auditing programs for such transaction privilege and affiliated excise taxes levied by such cities and towns and for taxes levied pursuant to chapter 5 of this title or article 2 of this chapter.
C. A city or town that does not enter into an agreement with the department for the collection of municipal transaction privilege and affiliated excise taxes shall report to the department on or before September 1 of each year the total amount of those taxes collected by the city or town in the preceding fiscal year.
D. The director shall establish with such cities and towns a uniform licensing, collection and audit committee to direct such unified or coordinated functions.
Sec. 8. Section 42-6002, Arizona Revised Statutes, is amended to read:
42-6002. Procedures for levy, collection and enforcement applicable to cities and towns
The procedures for levy, collection and enforcement of payment of transaction privilege and affiliated excise taxes, including use tax, severance tax, jet fuel excise and use tax, and rental occupancy tax, levied by a city or town by such city or town shall be in the same manner as authorized by chapter 5 of this title unless otherwise provided by the ordinance of such city or town. The department, when acting on behalf of a city or town in levying and collecting transaction privilege and affiliated taxes for such city or town, shall utilize the procedures for levying, collecting and enforcing the payment of such taxes on behalf of a the city or town.
Sec. 9. Section 42-6003, Arizona Revised Statutes, is amended to read:
42-6003. Multi-municipal taxes; determination of municipality entitled to levy and collect taxes; appeal; definitions
A. Except as otherwise provided in this section, a taxpayer who has paid transaction privilege taxes on a transaction to an appropriate city or town, or qualified for an exemption from transaction privilege taxes under the ordinance of an appropriate city or town, is not required to pay transaction privilege taxes on the same transaction to any other city or town.
B. If a city or town asserts, in whole or in part, the right to a tax which that was paid to an appropriate city or town, the cities and towns claiming the tax shall attempt to resolve allocation of the tax among themselves. Except as otherwise provided in this section, the taxpayer shall not be a party to the dispute but may be compelled to give evidence or produce books and records.
C. If a city or town asserts the right to tax a transaction which that is exempt from transaction privilege taxes under the ordinance of an appropriate city or town, the city or town asserting the right to tax and the city or town which the taxpayer asserts is an appropriate city or town shall attempt to resolve which city or town has the superior jurisdictional claim. Except as otherwise provided in this section, the taxpayer shall not be a party to the dispute but may be compelled to give evidence or produce books and records.
D. If the cities or towns involved cannot resolve the dispute arising under subsection B or C, any city or town which that is a party to the dispute may submit the issue to the municipal tax code commission state board of tax appeals for resolution. The taxpayer may intervene in any proceeding before the commission state board to assist in resolving the dispute. The commission state board shall determine which city or town has the superior jurisdictional claim, based upon on its respective ordinances and common law principles related to transaction privilege taxation, and, if the taxpayer paid tax on the transaction, shall award the entire tax to the prevailing city or town.
E. If it is determined that the taxpayer should have paid taxes to a city or town with a higher tax rate than the city or town to which the tax was actually paid, the taxpayer is liable for the tax at the higher rate only on transactions occurring after the taxable month of the written notification requirement provided in subsection H.
F. If a city or town with a higher tax rate asserts a claim to transaction privilege taxes paid to an appropriate city or town with a lower tax rate, the taxpayer may submit the issue to the municipal tax code commission state board of tax appeals for resolution and may intervene as a party in a proceeding before the commission state board to resolve the dispute.
G. Any party aggrieved by an order or decision of the municipal tax code commission may appeal to the state board of tax appeals within thirty days after notice of the order or decision of the commission has been received by the party. Any party aggrieved by an order or decision of the state board of tax appeals under this section may appeal the order or decision to tax court but must commence such action within thirty days after notice of the order or decision of the state board has been received by the party.
H. Following an agreement among the cities or towns involved as to which city or town has jurisdiction over transaction privilege taxation on a transaction or following a final determination by the municipal tax code commission, the state board of tax appeals or the tax court that a city or town is entitled to collect such taxes, and following written notification to the taxpayer, the taxpayer shall thereafter pay transaction privilege taxes on similar transactions to that city or town.
I. In For the purposes of this section:
1. "Appropriate city or town" means a city or town in this state either:
(a) In which the business sales office which that generated the taxable transaction is located.
(b) In which the purchaser resides, is located or is situated at the time of the transaction.
(c) Which That imposes or claims the right to impose a transaction privilege tax on the transaction in question under its ordinance.
2. "Transaction privilege tax" means a municipal transaction privilege license tax, use tax or similar tax and includes for purposes of this section any penalty assessed by a city or town for nonpayment, delinquent payment or failure to timely report or file a return, and any interest assessed because of late payment of taxes.
Sec. 10. Repeal
Sections 42-6004, 42-6005, 42-6006 and 42-6007, Arizona Revised Statutes, are repealed.
Sec. 11. Section 42-6008, Arizona Revised Statutes, is amended to read:
42-6008. Municipal interest rates
A city or town that levies and collects a tax under the model city tax code shall compute interest on a deficiency assessment or a claim for refund or credit at the rate and in the manner prescribed by section 42‑1123, subsection A.
Sec. 12. Section 42-6009, Arizona Revised Statutes, is amended to read:
42-6009. Municipal refunds; valid claim; notice of denial; limitations period; conditions or requirements; interest; recovery of fees; definitions
A. A claim for credit or refund of municipal transaction privilege tax filed with the tax collector is valid for purposes of filing if the claim is in writing, identifies the claimant by name, address and tax identification number and provides the amount of credit or refund requested, the specific tax period involved and the specific grounds for the claim.
B. If a credit or refund claim is valid under subsection A of this section, the tax collector shall not refuse to process the claim or require the claimant to refile the credit or refund claim. If the tax collector refuses to process or requires refiling of a credit or refund claim that is valid under subsection A of this section:
1. For purposes of the limitation period, the credit or refund claim shall be deemed received on the date the original filing was received by the tax collector notwithstanding the tax collector's refusal to process or requirement to refile the claim.
2. The claimant may treat the tax collector's refusal to process or requirement to refile as a denial of the credit or refund claim by filing a petition for hearing regarding the refusal to process or requirement to refile under the administrative review provisions of the model city tax code or state law, as applicable. The claimant may file a petition for hearing at any time after the refusal to process or requirement to refile the claim.
C. No denial of the credit or refund claim occurs until the tax collector notifies the claimant in writing that states:
1. The claim for credit or refund has been denied and the reasoning for the denial.
2. The notice constitutes a denial of the credit or refund claim that triggers the deadline for filing a petition for hearing under the administrative review provisions of the model city tax code or state law, as applicable. No time limitation for filing an administrative appeal begins until the tax collector issues such notifications.
D. Any request by the tax collector for additional information to process the credit or refund claim shall be reasonably related to the credit or refund claim. The tax collector shall not require a claimant to provide any report or information that is not required to be maintained in the normal course of business under the record keeping requirements of the model city tax code. Except for information reasonably necessary to substantiate a customer's exemption claim, the tax collector shall not require a claimant to provide any information relating to the claimant's specific customers, whether or not the claimant collected the tax from customers by separately stated itemization. The tax collector shall not impose unreasonable time limits for a claimant to respond to any valid request for a report or information. The tax collector shall grant a claimant's reasonable request for one or more extensions to provide any requested report or information. Any denial of the request shall state in writing that:
1. The claim for credit or refund has been denied and the reason for the denial.
2. The notice constitutes a denial of the credit or refund claim that triggers the deadline for filing a petition for hearing under the administrative review provisions of the model city tax code or state law, as applicable.
E. The tax collector shall not condition a credit or refund on the claimant's remittance of the credit or refund to customers, whether or not the tax was collected by separately stated itemization. Tax paid on an activity that is not subject to tax or that qualifies for an exemption, deduction, exclusion or credit is not excess collected tax.
F. Interest on a credit or refund for overpaid municipal transaction privilege tax shall be paid to the claimant at the rate and in the manner prescribed by section 42‑1123, subsection A. Interest on a refund or credit claim shall be computed from the date the claim is filed.
G. A claimant that is ultimately determined to be entitled to a credit or refund of municipal transaction privilege tax may be awarded, by order of a court, board or hearing officer, reasonable fees and other costs relating to the administrative processing or administrative appeal of the credit or refund claim, if the tax collector's position was not substantially justified or was brought for the purpose of harassing the claimant, frustrating the credit or refund process or delaying the credit or refund.
H. If a discrepancy occurs between this section and any provision of the model city tax code, this section shall apply.
I. H. For the purposes of this section:
1. "Claimant" means a taxpayer that has paid the municipal transaction privilege tax that is the subject of the credit or refund claim. Except where the taxpayer has granted a customer a power of attorney to pursue a credit or refund claim on the taxpayer's behalf, claimant does not include any customer of such taxpayer, whether or not the claimant collected the tax from customers by separately stated itemization.
2. "Model city tax code" means the model city tax code as defined in section 42-6051, its appendices and regulations, as adopted in the city or town and includes the specific state law incorporated in the model city tax code and the interpretation of state law.
3. 2. "Municipal transaction privilege tax" means a municipal transaction privilege tax, municipal privilege license tax or municipal transaction privilege license tax, municipal use tax or similar excise tax that is imposed by the tax collector.
4. 3. "Reasonable fees and other costs" means fees and other costs that are based on prevailing market rates for the kind and quality of the furnished services, not to exceed the amounts actually paid for expert witnesses, the cost of any study, analysis, report, test, project or computer program that is found to be necessary to prepare the claimant's case and necessary fees for attorneys or other representatives.
5. 4. "Tax collector" means the municipal tax collector or the department when it is acting as the tax collector for those cities and towns in the state collection program, as applicable under the model city tax code and its appendices.
Sec. 13. Repeal
Title 42, chapter 6, article 2, Arizona Revised Statutes, is repealed.
Sec. 14. Title 42, chapter 6, Arizona Revised Statutes, is amended by adding a new article 2, to read:
ARTICLE 2. MUNICIPAL EXCISE TAXES
42-6051. Municipal transaction privilege and use taxes; limitations and conditions; rules
A. Notwithstanding any municipal charter or ordinance, a city or town may:
1. Levy a tax on the privilege of engaging or continuing in only those businesses that are classified in chapter 5, article 2 of this title and this article.
2. Compute the tax base of those businesses only as prescribed by chapter 5, article 2 of this title and this article.
B. A city or town shall not levy a tax or assessment on sales, on services or otherwise on the privilege of doing business, however denominated, except as provided by this section.
C. This section shall not be construed to require a municipal tax on any business or to prohibit exemptions from municipal taxes in addition to those provided by chapter 5, article 2 of this title and by this article.
D. Notwithstanding any municipal charter or ordinance, a city or town may levy an excise tax on the storage, use or consumption of tangible personal property only as provided by sections 42‑5155 through 42‑5158 and subject to:
1. The exemptions prescribed by section 42‑5159.
2. The following conditions for the purposes of such a municipal tax:
(a) The retailer under section 42-5155, subsection A shall not be subject to a tax, computed on the sales price, imposed by the city or town on the privilege of engaging in business as a retailer.
(b) The city or town shall provide a credit against its tax in the amount of any excise taxes imposed on the sale or use of the property under the laws of another state, of a political subdivision of another state or of the United States, to the extent that the aggregate rate of the other tax exceeds the state tax rate.
E. For the purposes of subsection D of this section, "storage" means keeping or retaining tangible personal property purchased from a retailer for any purpose except sale in the regular course of business or subsequent use solely outside the municipality.
F. The department may adopt rules relating to the scope of all taxes by municipalities in order to ensure uniformity in application of taxes among the various municipalities and with this state. The department may issue rulings and guidelines it considers necessary to ensure uniformity of audit policy among the various municipalities and with this state.
42-6052. Municipal residential lease classification
A. The residential lease classification is composed of the business of leasing or renting for a consideration dwelling units, lodging facilities or trailer or mobile home spaces if the units, facilities or spaces are intended to serve as the principal or permanent place of residence for the lessee or renter. The residential lease classification does not include:
1. Any business activity that is classified under the transient lodging classification under section 42-5070.
2. The operation of a convalescent home or facility, home for the aged, hospital, jail, military installation or fraternity or sorority house or the operation of any structure exclusively by an association, institution, governmental agency or corporation for religious, charitable or educational purposes, if no part of the net earnings of the association, corporation or other entity inures to the benefit of any private shareholder or individual.
B. For the purposes of subsection A of this section, "principal or permanent place of residence" means a unit, facility or space that is leased or rented to a single tenant for twenty-eight or more consecutive days.
C. The tax base for the residential lease classification is the gross proceeds of sales or gross income derived from the business, but reimbursements to the lessor for utility service shall be deducted from the tax base if the lessor has installed utility meters for each tenant and separately charges each tenant for utility service based on the readings of each meter.
42-6053. Municipal commercial license classification; definition
A. The commercial license classification is composed of the business of licensing for a consideration the use or occupancy of real property. The commercial license classification does not include:
1. Any business activities that are classified under the transient lodging classification under section 42-5070.
2. Activities engaged in by the Arizona exposition and state fair board or county fair commissions in connection with events sponsored by any of those entities.
3. The joint use of utility poles by persons engaged in the businesses classified under the utilities classification and the telecommunications classification under chapter 5, article 2 of this title.
4. The licensing of real property by a licensor to an affiliated person. For the purposes of this paragraph, "affiliated person" means an individual or group of individuals, corporations or partnerships that owns or controls at least eighty per cent of the licensor and that is at least eighty per cent owned or controlled by a person that also owns or controls at least eighty per cent of the licensor. Ownership and control are determined by the reference to the voting share of a corporation and by reference to the percentage interest in profits of a partnership.
5. The operation of a convalescent home or facility, home for the aged, hospital, jail, military installation or fraternity or sorority house or the operation of any structure exclusively by an association, institution, governmental agency or corporation for religious, charitable or educational purposes, if no part of the net earnings of the association, corporation or other entity inures to the benefit of any private shareholder or individual.
B. The tax base for the commercial license classification is the gross proceeds of sales or gross income derived from the business, but the tax base does not include:
1. Reimbursements to the licensor for utility service if the licensor has installed individual utility meters for each licensee and separately charges each licensee for utility service based on the readings of each meter.
2. The periodic membership fees or dues collected from members by businesses operating timeshare facilities or clubs, if these memberships are for periods of at least one year and provide for essentially free use of the facilities for more than one consecutive time period or for the entire membership period.
C. For the purposes of this section, "real property" includes any improvements, rights and interests in such property.
42-6054. Municipal food sale classification; definition
A. The food sale classification is composed of the business of selling food at retail by those persons described in section 42‑5102, subsection A.
B. The tax base for the food sale classification is the gross proceeds of sales or gross income derived from the business. The gross proceeds of sales or gross income derived from sales described in section 42‑5061, subsection A, paragraphs 5, 18 and 19 shall be deducted from the tax base.
C. For the purposes of this section, "food" has the meaning prescribed by rule adopted by the department pursuant to section 42-5106.
42-6055. Municipal local advertising classification; definition
A. The local advertising classification is composed of the business of local advertising by billboards, direct mail, radio, television or any other means.
B. The tax base for the local advertising classification is the gross proceeds of sales or gross income derived from the business but does not include commissions and fees retained by an advertising agency.
C. For the purposes of this section, "local advertising" means the delivery or dissemination of information directly to any portion of the public for any consideration, but does not include:
1. Advertising a product or service that is sold or provided both in and outside of this state by more than one commonly designated business entity in this state, and in which the advertisement means either no commonly designated business entity in this state or more than one commonly designated business entity. For the purposes of this paragraph, "commonly designated business entity" means a person selling or providing a product or service to its customers under a common business name or style, even though there may be more than one legal entity conducting business functions using the same or substantially the same business name or style by virtue of a franchise, license or similar agreement.
2. Advertising a facility or a service or activity in which neither the facility nor a business site carrying on the service or activity is located in this state.
3. Advertising a product that may only be purchased from an out‑of‑state supplier.
4. Political advertising for United States presidential and vice‑presidential candidates only.
5. Advertising by means of product purchase coupons redeemable at a retail establishment carrying the product but not product coupons redeemable only at a single commonly designated business entity.
6. Advertising transportation services if a substantial portion of the transportation activity of the business entity advertised involves interstate or foreign carriage.
Sec. 15. Repeal
Section 42-6207, Arizona Revised Statutes, is repealed.
Sec. 16. Effective date
This act is effective from and after June 30, 2012.
