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In transactions between affiliated companies or persons, or in other circumstances where the relationship between the parties is such that the gross income from the transaction is not indicative of the market value of the subject matter of the transaction, the tax collector shall determine the "market value" upon which the city privilege and use taxes shall be levied. "Market value" shall correspond as nearly as possible to the gross income from similar transactions of like quality or character by other taxpayers where no common interest exists between the parties, but otherwise under similar circumstances and conditions.
(Ord. No. 6674, § 3, 3-23-87)
The tax collector may examine any transaction, reported or unreported, if, in his opinion, there has been or may be an evasion of the taxes imposed by this article and to estimate the amount subject to tax in cases where such evasion has occurred. The tax collector shall disregard any transaction which has been undertaken in an artificial manner in order to evade the taxes imposed by this article.
(Ord. No. 6674, § 3, 3-23-87)
The method of reporting chosen by a taxpayer, as provided in section 19-520, necessitates the following adjustments to gross income for all purposes under this article:
(1) Cash basis. When a person elects to report and pay taxes on a cash basis, gross income for the reporting period shall include:
a. The total amounts received on "paid in full" transactions, against which are allowed all applicable deductions and exclusions; and
b. All amounts received on accounts receivable, conditional sales contract, or other similar transactions, against which no deductions and no exclusions from gross income are allowed. Interest on finance contracts may be deducted if separately itemized on all books and records.
(2) Accrual basis. When a person elects to report and pay taxes on an accrual basis, gross income shall include all gross income for the applicable period regardless of whether receipts are for cash, credit, conditional, or partially deferred transactions, and regardless of whether or not any security document or instrument is sold, assigned, or otherwise transferred to another. Persons reporting on the accrual basis may deduct bad debts, provided that:
a. The amount deducted for the bad debt must be deducted from gross income of the month in which the actual charge-off was made, and only to the extent that such amount was actually charged off, and also only to the extent that such amount is or was included as taxable gross income; and
b. If any amount is subsequently collected on such charged-off account, it shall be included in gross income for the month in which it was collected, without deduction for expense of collection.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8784, § 2, 12-2-96)
(a) The following items are not included in gross income:
(1) Cash discounts allowed by the vendor for timely payment, but only discounts allowed against taxable gross income.
(2) The value of property returned by customers to the extent of the amount actually refunded either in cash or by credit and the amount refunded was included in taxable gross income.
(3) The trade-in allowance for tangible personal property accepted as payment, not to exceed the full sales price for any tangible personal property sold, when the full sales price is included in taxable gross income. Trade-in allowances are not allowed for manufactured buildings taxable under section 19-427.
(4) When coupons issued by a vendor are later accepted by the vendor as a discount against the transaction, the discount may be excluded from gross income as a cash discount. Amounts credited or refunded by a vendor for redemption of coupons issued by any person other than the vendor may not be excluded from gross income.
(5) Rebates issued by the vendor to a customer as a discount against the transaction may be excluded from gross income as a cash discount. Rebates issued by a person other than the vendor may not be excluded from gross income, even when the vendee assigns his right to the rebate to the vendor.
(6) In computing the tax base, gross proceeds of sales or gross income does not include a manufacturer's cash rebate on the sales price of a motor vehicle if the buyer assigns the buyer's right in the rebate to the retailer.
(b) If the amount specified in subsection (a) above is credited by a vendor subsequent to the reporting period in which the original transaction occurs, such amount may be excluded from the taxable gross income of that subsequent reporting period, but only to the extent that the excludable amount was reported as taxable gross income in that prior reporting period.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8440, § 4, 1-23-95; Ord. No. 8784, § 3, 12-2-96)
(a) When Tax Is Separately Charged and/or Collected. The total amount of gross income shall be exclusive of combined taxes only when the person upon whom the tax is imposed shall establish to the satisfaction of the tax collector that such tax has been added to the total price of the transaction. The taxpayer must provide to his customer and also keep a reliable record of the actual tax charged or collected, shown by cash register tapes, sales tickets or other accurate record, separating net transaction price and combined tax. If at any time the tax collector cannot ascertain from the records kept by the taxpayer the total or amounts billed or collected on account of combined taxes, the claimed taxes collected may not be excluded from gross income unless such records are completed and/or clarified to the satisfaction of the tax collector.
(1) Remittance of all tax charged and/or collected. When an added charge is made to cover city (or combined) privilege and use taxes, the person upon whom the tax is imposed shall pay the full amount of the city taxes due, whether collected by him or not; and in the event he collects more than the amount due, he shall remit the excess to the tax collector. In the event the tax collector cannot ascertain from the records kept by the taxpayer the total or amounts of taxes collected by him, and the tax collector is satisfied that the taxpayer has collected taxes in an amount in excess of the tax assessed under this article, the tax collector may determine the amount collected and collect the tax so determined in the manner provided in this article. (Reg. 250.1)
(2) Itemization. A taxpayer, in order to be entitled to exclude from his gross income any amounts paid to him by customers for combined taxes passed on to the customer, must prove that he has provided his customer with a written record of the transaction showing at a minimum the price before the tax, the combined taxes, and the total cost. This shall be in addition to the record required to be kept under subsection (a) above.
(b) When Tax Has Been Neither Separately Charged nor Separately Collected. When the person upon whom the tax is imposed shall establish, by means of invoices, sales tickets or other reliable evidence, that no added charge was made to cover combined taxes, the taxpayer may exclude tax collected from such income by dividing such taxable gross income by 1.00 plus a decimal figure representing the effective combined tax rate expressed as a fraction of 1.00.
(Ord. No. 6674, § 3, 3-23-87)
(a) There shall be excluded from gross income of vendors of motor vehicles those motor vehicle registration fees, license fees and taxes, and lieu taxes imposed pursuant to A.R.S. title 28 in connection with the initial purchase of a motor vehicle, but only to the extent that such taxes or fees or both have been separately itemized and collected from the purchaser of the motor vehicle by the vendor, actually remitted to the proper registering, licensing and taxing authorities, and the provisions of division 3, regarding recordkeeping, are met. For the purpose of the exclusion provided by this subsection only, the terms "vendor" and "vendee" shall also apply to a lessor and lessee respectively of a motor vehicle if, in addition to all other requirements of this subsection, the lease agreement specifically requires the lessee to pay such fees or taxes, and such amounts are separately itemized in the documentation provided to the lessee.
(b) There shall be excluded from gross income of vendors at retail of heavy trucks and trailers the amount attributable to Federal excise taxes imposed by 26 U.S.C. section 4051, but only to the extent that the provisions of division 3, relating to recordkeeping, have been met.
(c) There shall be excluded from gross income the following fees, taxes, and lieu taxes, but only to the extent that such taxes or fees or both have been separately itemized and collected from the purchaser by the vendor, actually remitted to the proper registering, licensing, and taxing authorities, and the provisions of Article III, regarding recordkeeping, are met:
(1) Emergency telecommunication services excise tax imposed pursuant to A.R.S. § 42-5252. "Emergency telecommunication services" means telecommunication services or systems that use number 911 or a similarly designated telephone number for emergency calls;
(2) The telecommunication devices for the deaf and the severely hearing and speech impaired excise tax imposed pursuant to A.R.S. § 42-5252;
(3) Federal excise taxes on communications services as imposed by 26 U.S.C. § 4251;
(4) Car rental surcharge imposed pursuant to A.R.S. § 48-4234;
(5) Federal excise taxes on passenger vehicles as imposed by 26 U.S.C. § 4001(.01);
(6) Waste tire disposal fees, imposed pursuant to A.R.S. § 44-1302.
(d) There shall be excluded from gross income of vendors of motor vehicles dealer documentation fees, but only to the extent that such fees have been separately itemized and collected from the purchaser of the motor vehicle by the vendor.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8784, § 4, 12-2-96; Ord. No. 9841, § 2, 5-12-03)
Editors Note: Ordinance No. 8440, § 5, adopted January 23, 1995, amended the city tax code by the addition of § 19-265 as a reserved section.
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