transaction privilege in Arizona

2005Id. ¶ 13 Although the use tax is complementary to the transaction privilege tax, their objectives differ.

1999Because the transaction privilege and use taxes are complementary, see People of Faith, Inc. v. Arizona Dep’t of Revenue, 161 Ariz. 514, 517 , 779 P.2d 829, 832 (Tax 1989), we treat the definition of “sale” in the statutory provisions governing transaction privilege taxation as applicable to the use tax absent any indication that this would be contrary to the Legislature's intent. 6 .

2023Co., 113 Ariz. 467, 468 (1976)).

2008Co., 113 Ariz. 467, 468 , 556 P.2d 1129, 1130 (1976).

2020Capitol Castings Test for Determining Exemptions. ¶10 In Capitol Castings, our supreme court addressed the "machinery or equipment" exemptions and held that "silica sand, chemical binders, exothermic sleeves, mold cores, mold wash, and hot topping" are exempt from the transaction privilege tax when used directly in a "qualifying process." 207 Ariz. at 451, ¶ 26 .

2015Id. at 451, ¶ 25 , 88 P.3d 159 (citing Duval Sierrita Corp. v. Ariz. Dep’t of Revenue, 116 Ariz. 200, 205-07 , 568 P.2d 1098 (App.1977)). 6 The supreme court explained that whether an item is exempt from the transaction privilege tax should be determined not by the material it is made from (metal or non-metal) but rather by the function it performs.

2020If a statute is unambiguous, "we apply it without further analysis." Glazer v. State, 237 Ariz. 160, 163, ¶ 12 (2015). ¶9 When this Court first addressed the mining and processing exemptions we found that "the legislative purpose for the exemption statute is to encourage mining in this state so that the end product of that mining and metallurgical activity (sales of copper) is itself subject to taxation under the transaction privilege tax." Duval Sierrita Corp. v. Ariz. Dep't of Revenue, 116 Ariz. 200, 204 (App. 1977).

2018As this court has previously explained, the legislative purpose of this exemption was "to encourage mining in this state so that the end product of that mining and metallurgical activity (sales of copper ) is itself subject to taxation under the transaction privilege tax." Duval Sierrita Corp. v. Ariz. Dep't of Revenue , 116 Ariz. 200 , 204, 568 P.2d 1098 , 1102 (App. 1977) (citations omitted).

2015Legislative Intent ¶ 9 This Court’s primary goal in “interpreting a statute is to discern and give effect to legislative intent.” People’s Choice TV Carp, v. City of Tucson, 202 Ariz. 401, 403, ¶ 7 , 46 P.3d 412 (2002). “[BJecause a statute’s plain language provides the best evidence of intent,” Martineau v. Maricopa Cty., 207 Ariz. 332, 334, ¶ 9 , 86 P.3d 912 (App.2004), we begin our analysis with the plain language of A.R.S. § 42-5061. ¶ 10 Section 42-5061(B)(2) exempts from the transaction privilege tax proceeds from the sale of: Mining machinery, or equipment, used directly in the process

2015Legislative Intent ¶ 9 This Court’s primary goal in “interpreting a statute is to discern and give effect to legislative intent.” People’s Choice TV Carp, v. City of Tucson, 202 Ariz. 401, 403, ¶ 7 , 46 P.3d 412 (2002). “[BJecause a statute’s plain language provides the best evidence of intent,” Martineau v. Maricopa Cty., 207 Ariz. 332, 334, ¶ 9 , 86 P.3d 912 (App.2004), we begin our analysis with the plain language of A.R.S. § 42-5061. ¶ 10 Section 42-5061(B)(2) exempts from the transaction privilege tax proceeds from the sale of: Mining machinery, or equipment, used directly in the process

2015See A.R.S. § 42-5155.A. (defining the use tax); Ariz. Dep’t of Revenue v. Care Computer Sys., Inc., 197 Ariz. 414, 420, ¶ 25 , 4 P.3d 469, 475 (App. 2000) (Fidel, J., dissenting) (explaining that transaction privilege taxes and use taxes are complementary).

2003R15-5-2307 certainly says that a taxpayer who maintains a place of business in Arizona will be subject to the transaction privilege tax, it does not purport to exclude a taxpayer who does not maintain a place of business from the tax.” Id. at ¶ 21, 4 P.3d 469 . ¶ 21 Alternatively, Interlott contends that, because A.A.C.

2002Hellerstein & Walter Heller-stein, State Taxation ¶ 18.08[5], at 18-65 to - 66 (3d ed.1998) (footnote omitted). 4 In our view, Jefferson Lines compels the view that gross receipts taxes like the transaction privilege tax imposed by A.R.S. § 42-5062(A) must be apportioned to comply with the dormant Commerce Clause. ¶ 31 Because of the sharp distinction that Jefferson Lines has drawn between state sales and gross receipts taxes, ADOR’s reliance on Centric-Jones Co. v. Town of Marana, 188 Ariz. 464 , 937 P.2d 654 (App.1996), is misplaced.

2002Hellerstein & Walter Heller-stein, State Taxation ¶ 18.08[5], at 18-65 to - 66 (3d ed.1998) (footnote omitted). 4 In our view, Jefferson Lines compels the view that gross receipts taxes like the transaction privilege tax imposed by A.R.S. § 42-5062(A) must be apportioned to comply with the dormant Commerce Clause. ¶ 31 Because of the sharp distinction that Jefferson Lines has drawn between state sales and gross receipts taxes, ADOR’s reliance on Centric-Jones Co. v. Town of Marana, 188 Ariz. 464 , 937 P.2d 654 (App.1996), is misplaced.

2004See Ariz. Dep’t of Revenue v. Blue Line Distrib., Inc., 202 Ariz. 266, 268, ¶ 11 , 43 P.3d 214, 216 (App.2002) (describing the policy supporting the “machinery or equipment” exemption from the transaction privilege tax and citing 71 Am.Jur.2d State and Local Taxation § 288 (2001)); Duval Sierrita Corp. v. Ariz. Dep’t of Revenue, 116 Ariz. 200, 204 , 568 P.2d 1098, 1102 (App. 1977) (same).

2004See Ariz. Dep’t of Revenue v. Blue Line Distrib., Inc., 202 Ariz. 266, 268, ¶ 11 , 43 P.3d 214, 216 (App.2002) (describing the policy supporting the “machinery or equipment” exemption from the transaction privilege tax and citing 71 Am.Jur.2d State and Local Taxation § 288 (2001)); Duval Sierrita Corp. v. Ariz. Dep’t of Revenue, 116 Ariz. 200, 204 , 568 P.2d 1098, 1102 (App. 1977) (same).

2020Power Coop., Inc. v. Ariz. Dep't of Revenue, 242 Ariz. 85, 87, ¶ 7 (App. 2017); see A.R.S. § 42-5155(A).

2019Power 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.

2017Qwest Dex, Inc. v. Ariz. Dep’t of Revenue, 210 Ariz. 223, 225, ¶ 12 , 109 P.3d 118, 120 (App. 2005) (citing People of Faith Inc. v. Ariz. Dep’t of Revenue, 161 Ariz. 514, 519 , 779 P.2d 829, 834 (Tax Ct. 1989); Nathaniel T.

2017Qwest Dex, Inc. v. Ariz. Dep’t of Revenue, 210 Ariz. 223, 225, ¶ 12 , 109 P.3d 118, 120 (App. 2005) (citing People of Faith Inc. v. Ariz. Dep’t of Revenue, 161 Ariz. 514, 519 , 779 P.2d 829, 834 (Tax Ct. 1989); Nathaniel T.

2015Corp., 5 Ariz.App. at 601 , 429 P.2d at 488 (holding that if the Legislature had intended to extend the transaction privilege to property owners on whose property the business is conducted it “could have easily spelled it out in the Statute”).

2015Corp., 5 Ariz.App. at 601 , 429 P.2d at 488 (holding that if the Legislature had intended to extend the transaction privilege to property owners on whose property the business is conducted it “could have easily spelled it out in the Statute”).

1994“The fact that one taxpayer is subjected to an audit and assessment and that another might have been but was not, cannot establish a denial of equal protection absent a showing that the state’s action was based upon an unjustifiable standard, such as race, religion or some other arbitrary classification.” Radiofone Corp. of New Jersey v. Director, 4 N.J.Tax 420, 431 (NJ Tax Ct.1982) (citations omitted). 175 Ariz. at 182 , 854 P.2d at 1168 .

1992“The fact that one taxpayer is subjected to an audit and assessment and that another might have been but was not, cannot establish a denial of equal protection absent a showing that the State’s action was based upon an unjustifiable standard, such as race, religion or some other arbitrary classification.” Radiofone Corp. of New Jersey v. Director, 4 N.J.Tax 420, 431 (N.J.Tax Ct.1982) (citations omitted).

2010Ltd. v. DeWitt, 109 Ariz. 248, 250 , 508 P.2d 324, 326 (1973) (the transaction privilege tax is imposed on gross revenues instead of on individual transactions); Ariz. Dep’t of Revenue v. Action Marine, Inc., 218 Ariz. *68 141, 142, ¶ 7, 181 P.3d 188, 189 (2008) (“The liability for TPT falls on the taxpayer, not on the taxpayer’s customers.”) (citing AR.S. § 42-5024 (2006)). ¶ 13 In this case, the Department assessed the transaction privilege tax pursuant to the retail classification, AR.S. § 42-5061(A) (2006), which provides in relevant part: The retail classification is comprised of the busi

2010Ltd. v. DeWitt, 109 Ariz. 248, 250 , 508 P.2d 324, 326 (1973) (the transaction privilege tax is imposed on gross revenues instead of on individual transactions); Ariz. Dep’t of Revenue v. Action Marine, Inc., 218 Ariz. *68 141, 142, ¶ 7, 181 P.3d 188, 189 (2008) (“The liability for TPT falls on the taxpayer, not on the taxpayer’s customers.”) (citing AR.S. § 42-5024 (2006)). ¶ 13 In this case, the Department assessed the transaction privilege tax pursuant to the retail classification, AR.S. § 42-5061(A) (2006), which provides in relevant part: The retail classification is comprised of the busi

2001The court concluded from A.R.S. section 42-5002(A)(1), from Arizona State Tax Comm’n v. Garrett Corp., 79 Ariz. 389 , 291 P.2d 208 (1955), and from the current and historical statutory schemes, that the law discouraged *142 taxpayers from shifting the transaction privilege tax burden to their customers, and that taxpayers were not entitled to refunds of such taxes unless they could show that the refunds would go back to the customers who had borne the economic burden.

2001The court concluded from A.R.S. section 42-5002(A)(1), from Arizona State Tax Comm’n v. Garrett Corp., 79 Ariz. 389 , 291 P.2d 208 (1955), and from the current and historical statutory schemes, that the law discouraged *142 taxpayers from shifting the transaction privilege tax burden to their customers, and that taxpayers were not entitled to refunds of such taxes unless they could show that the refunds would go back to the customers who had borne the economic burden.

2023BACKGROUND ¶2 The transaction privilege tax (“TPT”) “is an excise tax on the privilege or right to engage in an occupation or business.” Action Marine, 218 Ariz. at 142 ¶ 6 (quoting Ariz. Dep’t of Revenue v. Mountain States Tel. & Tel.

2019As a threshold matter, we note that § 444 is a transaction privilege tax because it levies “an excise tax on the privilege or right to engage in an occupation or business . . . . [It] is not a sales tax, but rather is a tax on the gross receipts of a person or entity engaged in business activities.” See Ariz. Dep’t of Revenue v. Action Marine, Inc., 218 Ariz. 141 , 142 ¶ 6 (2008) (internal quotations and citations omitted); see also MCTC § 400 (broadly imposing privilege taxes); Rigel Corp. v. State, 225 Ariz. 65 , 67 ¶ 12 (App. 2010) (noting that transaction privilege taxes, as compared to sa

2024Transaction Privilege Tax ¶12 Arizona can impose a transaction privilege tax only when the tax (1) “is applied to an activity with a substantial nexus with the taxing State”; (2) “is fairly apportioned”; (3) “does not discriminate against interstate commerce”; and (4) “is fairly related to the services provided by the State.” Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977).

2010Goldberg applies Complete Auto , which construed Mississippi's tax on "`the privilege of doing business' within the State." Complete Auto, 430 U.S. at 274 , 97 S.Ct. 1076 . [6] That a comma precedes the "which include" clause drives home the legislature's intent that telecommunications services allocable by federal law as interstate services simply are among those services to which the exclusion applies.

2015Penney Co. v. Ariz. Dep’t of Revenue, 125 Ariz. 469, 472 , 610 P.2d 471, 474 (App.1980) (“The legal incidence of the transaction privilege tax is on the sellerf.]”). ¶ 10 There are a number of statutory exemptions to the transaction privilege tax, including an exemption for gross income derived from the sale of machinery or equipment “used directly in manufacturing.” A.R.S. § 42-5061(B)(1).

2015Penney Co. v. Ariz. Dep’t of Revenue, 125 Ariz. 469, 472 , 610 P.2d 471, 474 (App.1980) (“The legal incidence of the transaction privilege tax is on the sellerf.]”). ¶ 10 There are a number of statutory exemptions to the transaction privilege tax, including an exemption for gross income derived from the sale of machinery or equipment “used directly in manufacturing.” A.R.S. § 42-5061(B)(1).

2000See Carriage Trade Management Corp. v. Arizona State Tax Comm’n, 27 Ariz.App. 584 , 557 P.2d 183 (1976) (holding that taxpayer who sold free-meal coupons was in the business of advertising, and its receipts were subject to the transaction privilege tax). ¶20 We do not discuss the unpublished Tennessee case relied on by Walden-books; we instead discuss Rule 28(c), Arizona Rules of Civil Appellate Procedure, which provides: (c) Dispositions as Precedent.

2000See Carriage Trade Management Corp. v. Arizona State Tax Comm’n, 27 Ariz.App. 584 , 557 P.2d 183 (1976) (holding that taxpayer who sold free-meal coupons was in the business of advertising, and its receipts were subject to the transaction privilege tax). ¶20 We do not discuss the unpublished Tennessee case relied on by Walden-books; we instead discuss Rule 28(c), Arizona Rules of Civil Appellate Procedure, which provides: (c) Dispositions as Precedent.

1999In Centric-Jones , a building contractor contended that the concrete piping and other items it purchased to build a pumping plant and switch yard under contract with the Central Arizona Project were entitled to Town of Maraña deductions or exemptions from the town’s transaction privilege tax for gross proceeds of certain qualifying “sales.” We rejected the contractor’s arguments, and concluded that the underlying construction contract was not a “contract to sell property” under the town ordinances and based on the Arizona Supreme Court’s reasoning in Du-hame v. State Tax Comm’n, 65 Ariz. 268,

1999In Centric-Jones , a building contractor contended that the concrete piping and other items it purchased to build a pumping plant and switch yard under contract with the Central Arizona Project were entitled to Town of Maraña deductions or exemptions from the town’s transaction privilege tax for gross proceeds of certain qualifying “sales.” We rejected the contractor’s arguments, and concluded that the underlying construction contract was not a “contract to sell property” under the town ordinances and based on the Arizona Supreme Court’s reasoning in Du-hame v. State Tax Comm’n, 65 Ariz. 268,

1996Our pre-Quill decision in City of Phoenix v. West Publishing Co., 148 Ariz. 31 , 712 P.2d 944 (App. 1985), is distinguishable on its facts.

1996Our pre-Quill decision in City of Phoenix v. West Publishing Co., 148 Ariz. 31 , 712 P.2d 944 (App. 1985), is distinguishable on its facts.

1974Although Arizona’s general rules of construction that a revenue statute is to be liberally construed in favor of the taxpayer and strictly against the State and should not be extended to include something not specifically covered by the language of the statute itself, Alvord v. State Tax Commission, 69 Ariz. 287 , 213 P.2d 363 (1950); Ebasco Services, Inc. v. Arizona State Tax Com’n, 105 Ariz. 94 , 459 P.2d 719 (1969), we do not feel that § 42-1310 is so ambiguous as to bring this rule of construction into play. § 42-1310 is one of several sections specified by § 42-1309 as a transaction privi

1974Although Arizona’s general rules of construction that a revenue statute is to be liberally construed in favor of the taxpayer and strictly against the State and should not be extended to include something not specifically covered by the language of the statute itself, Alvord v. State Tax Commission, 69 Ariz. 287 , 213 P.2d 363 (1950); Ebasco Services, Inc. v. Arizona State Tax Com’n, 105 Ariz. 94 , 459 P.2d 719 (1969), we do not feel that § 42-1310 is so ambiguous as to bring this rule of construction into play. § 42-1310 is one of several sections specified by § 42-1309 as a transaction privi

2024Though “[i]t is both a long-standing rule and a fundamental principle of our system of government that all people of sound mind are presumed to know the law,” Delmastro & Eells v. Taco Bell Corp., 228 Ariz. 134, 143, ¶ 29 (App. 2011), the City cannot rely on a legal presumption to entice its voters to adopt a new tax disguised as a tax reduction, see A.R.S. § 19-125(D) (“In the case of a referendum, a ‘yes’ vote shall have the effect of approving the legislative enactment that is being referred.”). ¶24 Additionally, unlike Quality Education, the “NO” provision here is misleading.

2024See Scripto, 362 U.S. at 211–12 (“The test is simply the nature and extent of the [in-state] activities of the [taxpayer].”). ¶34 Thus, RockAuto had a physical presence in Arizona during the audit period, and ADOR could assess a transaction privilege tax on RockAuto’s sales to Arizona customers.

2020Fund v. Superior Court (EnerGCorp, Inc.), 190 Ariz. 371, 375-76 (App. 1997)); see also Pima County v. Heinfeld, 134 Ariz. 133, 134 (1982) ("A well established rule of statutory construction provides that the expression of one or more items of a class indicates an intent to exclude all items of the same class which are not expressed."). ¶20 Separate from the transaction privilege tax, Arizona imposes a per-gallon excise tax on motor fuels, including non-dyed diesel.