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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.
There shall be excluded from gross income the gross proceeds of sale or gross income derived from any of the following:
(a) A motor carrier's use on the public highways in this State if the motor carrier is subject to a fee prescribed in A.R.S. Title 28, Chapter 15, Article 4 or A.R.S. Title 28, Chapter 16, Article 4.
(b) Leasing, renting, or licensing a motor vehicle, subject to and upon which the fee has been paid under A.R.S. Title 28, Chapter 16.
(c) The sale of a motor vehicle and any repair and replacement parts and tangible personal property becoming a part of such motor vehicle, to a motor carrier who is subject to a fee prescribed in A.R.S. Title 28, Chapter 16 and who is engaged in the business of leasing, renting, or licensing such property.
(d) For the purposes of these exclusions, "motor carrier" includes a motor vehicle weighing twenty-six thousand (26,000) pounds or more, a lightweight motor vehicle which weighs twelve thousand one (12,001) pounds to twenty-six thousand (26,000) pounds and a light motor vehicle weighing twelve thousand (12,000) pounds or less, which pay the fee prescribed in A.R.S. Title 28, Chapter 15, Article 4 or A.R.S. Title 28, Chapter 16.
(Ord. No. 8958, § 6, 9-22-97; Ord. No. 9069, § 1(4), 6-15-98; Ord. No. 10361, § 2, 12-19-06)
(a) For the purposes of this section, the following definitions shall apply:
(1) Federally exempt organization means an organization which has received a determination of exemption, or qualifies for such exemption, under 26 U.S.C. section 501(c) and rules and regulations of the commissioner of internal revenue pertaining to same, but not including a "governmental entity," "nonlicensed business" or "public educational entity" as defined in paragraphs (2), (3) and (5) of this subsection.
(2) Governmental entity means the federal government, the State of Arizona, any other state, or any political subdivision, department or agency of any of the foregoing. Persons contracting with such a governmental entity to operate any part of a governmentally adopted and controlled program to provide urban mass transportation shall be deemed a governmental entity in all activities such person performs when engaged in such contract.
(3) Nonlicensed business means any person conducting any business activity for gain or profit, whether or not actually realized, which person is not required to be licensed for the conduct or transaction of activities subject to the tax imposed under this article.
(4) Proprietary club means any club which has qualified or would otherwise qualify as an exempt club under the provisions of 26 U.S.C. section 501(c)(7), (8) and (9), notwithstanding the fact that some or all of the members may own a proprietary interest in the property and assets of the club.
(5) Public educational entity means any educational entity operated pursuant to any provisions of A.R.S. title 15.
(b) Transactions which, if conducted by any other person, would produce gross income subject to tax under this article shall not be subject to the imposition of such tax if conducted entirely by a public educational entity; governmental entity, except "proprietary activities" of municipalities as provided by regulation; or nonlicensed business. (Reg. 270.1)
(c) Transactions which, if conducted by any other person, would produce gross income subject to the tax under this article shall not be subject to the imposition of such tax if conducted entirely by a federally exempt organization or proprietary club with the following exceptions:
(1) Transactions involving proprietary clubs and organizations exempt under 26 U.S.C. section 501(c)(7), (8) and (9), where the gross revenue of the activity received from persons other than members and bona fide guests of members is in an amount in excess of fifteen (15) percent of total gross revenue, as prescribed by regulation. In the event this fifteen (15) percent limit is exceeded, the entire gross income of such entity shall be subject to the applicable tax. (Reg. 270.2)
(2) Gross income from "unrelated business income" as that term is defined in 26 U.S.C. section 512, including all statutory definitions and determinations, the rules and regulations of the commissioner of internal revenue, and his administrative interpretations and guidelines.
(3) Reserved.
(d) Except as may be provided elsewhere in this article, transactions where customers are exempt organizations, proprietary clubs, public educational entities, governmental entities, or nonlicensed businesses shall be deemed taxable transactions for the purpose of the imposition of taxes under this article, notwithstanding that property so acquired may in fact be resold or leased by the acquiring person to others. In the case of sales, rentals, leases or licenses to proprietary clubs or exempt organizations, the vendor may be relieved from the responsibility for reporting and paying tax on such income only by obtaining from its vendee a verified statement that includes:
(1) A statement that when the property so acquired is resold, rented, leased or licensed, that the otherwise exempt vendee chooses, or is required, to pay city privilege tax or an equivalent excise tax on its gross income from such transactions and does in fact file returns on same; and
(2) The privilege license number of the otherwise exempt vendee; and
(3) Such other information as the tax collector may require.
(e) Franchisees or concessionaires operating businesses for or on behalf of any exempt organization, governmental entity, public educational entity, proprietary club, or nonlicensed business shall not be considered to be such an exempt organization, club, entity or nonlicensed business, but shall be deemed to be a taxpayer subject to the provisions of this article, except as provided in the definition of governmental entity, regarding urban mass transit.
(f) In any case, if a federally exempt organization, proprietary club, or non-licensed business rents, leases, licenses, or purchases any tangible personal property for its own storage or use, and no city privilege or use tax or equivalent excise tax has been paid on such transaction, said organization, club, or business shall be liable for the use tax upon such acquisitions or use of such property.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 9840, § 1, 5-5-03)
(a) A Moratorium period of "X" years means that consecutive passage of time commencing upon the date when real property first qualifies for the provisions of this section and ending at midnight (12:00 p.m.) of that same month and day "X" years thereafter.
(b) Gross income derived from construction contracting upon real property not owned by a governmental entity shall be exempt from the taxes imposed by sections 19-415 through 19-418 for a moratorium period of three (3) years from the date upon which such real property shall have been annexed to and become a part of the city provided the real property is annexed prior to July 2, 2001. Gross income derived from construction contracting upon real property annexed into the city pursuant to an annexation agreement with the city prior to October 24, 1988, shall be exempt from the taxes imposed by sections 19-415 through 19-418 for a moratorium period of seven (7) years from the date upon which such real property shall have been annexed to and become a part of the city.
(c) Gross income derived from the following activities shall be exempt from the taxes imposed by this article for a moratorium period of twenty (20) years, when such activities occur upon real property which, pursuant to state law, possesses appurtenant water rights which are based upon a history of agricultural irrigation, and such rights have been contractually or otherwise irrevocably committed to be surrendered, assigned or transferred to the city prior to the expiration of the moratorium period.
(2) Rental, leasing or licensing for use of real property for any purpose other than for lodging or lodging space as provided by section 19-445.
(d) The provisions of this section shall be irrevocably vested in any real property that qualifies under this section after the adoption of this section as part of the City Code, or upon the adoption of any substantially similar ordinance previously adopted, whichever occurs earlier.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 7082, § 1, 12-12-88; Ord. No. 9579, § 1, 7-2-01)
Notwithstanding provisions contained elsewhere in this article, gross income derived from the following transactions and activities that would be considered taxable, occurring elsewhere in the city, shall be deemed exempt from the taxes imposed by this article when the transaction or activity occurs on Davis Monthan Air Force Base:
(1) Construction contracting on the base.
(2) Providing telecommunication or utility service to customers on the base.
(3) Retail sales and restaurant activity at locations on the base.
(4) Storage or use of tangible personal property by persons residing on the base.*
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 7446, § 2.3, 7-2-90; Ord. No. 10040, § 1, 9-20-04)
*Note-- Section 5 of Ord. No. 10040 states that § 19-290(4) is effective retroactively to July 1, 2003.
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