Loading...
(a) The tax rate shall be at an amount equal to two and six-tenths (2.6) percent of the gross income from the business activity upon every person engaging or continuing in the business of leasing or renting real property located within the city for a consideration, to
the tenant in actual possession, or the licensing for use of real property to the final licensee located within the city for a consideration including any improvements, rights, or interest in such property; provided further that:
(1) Payments made by the lessee to, or on behalf of, the lessor for property taxes, repairs, or improvements are considered to be part of the taxable gross income.
(2) Charges for such items as telecommunications, utilities, pet fees, or maintenance are considered to be part of the taxable gross income.
(3) However, if the lessor engages in telecommunication activity, as evidenced by installing individual metering equipment and by billing each tenant based upon actual usage, such activity is taxable under section 19-470.
(b) If individual utility meters have been installed for each tenant and the lessor separately charges each single tenant for the exact billing from the utility company, such charges are exempt.
(c) Charges by a qualifying hospital, qualifying community health center or a qualifying health care organization to patients of such facilities for use of rooms or other real property during the course of their treatment by such facilities are exempt.
(d) Charges for joint pole usage by a person engaged in the business of providing or furnishing utility or telecommunication services or that is a cable operator, or charges for joint pole usage to a person engaged in the business of providing or furnishing utility or telecommunication services or that is a cable operator are exempt from the tax imposed by this section. "Cable operator" has the same meaning as prescribed by A.R.S. Section 9-505.
(e) Exempt from the tax imposed by this section is gross income derived from the rental, leasing, or licensing for use of real property to a qualifying hospital, qualifying community health center or a qualifying health care organization, except when the property so rented, leased, or licensed is for use in activities resulting in gross income from unrelated business income as that term is defined in 26 U.S.C. Section 512.
(f) A person who has less than three (3) apartments, houses, trailer spaces, or other lodging spaces rented, leased or licensed or available for rent, lease, or license within the state and no units of commercial property for rent, lease, or license within the state, is not deemed to be in the rental business, and is therefore exempt from the tax imposed by this section on such income. However, a person who has one (1) or more units of commercial property is subject to the tax imposed by this section on rental, lease and license income from all such lodging spaces and commercial units of real estate even though said person may have fewer than three (3) lodging spaces.
(g) (Reserved).
(h) The tax prescribed by this section shall not include gross income from the rental, leasing, or licensing of lodging or lodging space to an individual who resides therein.
(i) Exempt from the tax imposed by this section is the gross income from payments made pursuant to a life care contract by a resident to a provider that holds a permit to enter into life care contracts issued by the Arizona Department of Insurance. For the purposes of this paragraph, "life care contract," "provider," and "resident" have the same meanings prescribed in A.R.S. Section 20-1801.
(j) Exempt from the tax imposed by this section is gross income derived from the activities taxable under section 19-444 of this Code.
(k) 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. This paragraph does not apply to an organization that is owned, managed or controlled, in whole or in part, by a major league baseball team, or its owners, officers, employees or agents, or by a major league baseball association or professional golfing association, or its owners, officers, employees or agents, unless the organization conducted or operated exhibition events in this state before January 1, 2018 that were exempt from taxation under A.R.S. Section 42-5073.
(l) (Reserved).
(m) (Reserved).
(n) Notwithstanding the provisions of section 19-200(b), the fair market value of one (1) apartment, in an apartment complex provided rent free to an employee of the apartment complex is not subject to the tax imposed by this section. For an apartment complex with more than fifty (50) units, an additional apartment provided rent free to an employee for every additional fifty (50) units is not subject to the tax imposed by this section.
(o) Income derived from incarcerating or detaining prisoners who are under the jurisdiction of the United States, this state or any other state or a political subdivision of this state or of any other state in a privately operated prison, jail or detention facility is exempt from the tax imposed by this section.
(p) Charges by any hospital, any licensed nursing care institution, or any kidney dialysis facility to patients of such facilities for the use of rooms or other real property during the course of their treatment by such facilities are exempt.
(q) Charges to patients receiving “personal care” or “directed care”, by any licensed assisted living facility, licensed assisted living center or licensed assisted living home as defined and licensed pursuant to Chapter 4 Title 36 Arizona Revised Statutes and Title 9 of the Arizona Administrative Code are exempt.
(r) Income received from the rental of any “low-income unit” as established under Section 42 of the Internal Revenue Code (IRC), including the low-income housing credit provided by IRC Section 42, to the extent that the collection of tax on rental income causes the “gross rent” defined by IRC Section 42 to exceed the income limitation for the low-income unit is exempt. This exemption also applies to income received from the rental of individual rental units subject to statutory or regulatory “low-income unit” rent restrictions similar to IRC Section 42 to the extent that the collection of tax from the tenant causes the rental receipts to exceed a rent restriction for the low-income unit. This subsection also applies to rent received by a person other than the owner or lessor of the low-income unit, including a broker. This subsection does not apply unless a taxpayer maintains the documentation to support the qualification of a unit as a low-income unit, the “gross rent” limitation for the unit, and the rent received from that unit.
(s) The gross proceeds of a commercial lease of real property between affiliated companies, businesses, persons or reciprocal insurers are exempt. For the purposes of this paragraph:
(1) “Affiliated companies, businesses, persons or reciprocal insurers” means the lessor holds a controlling interest in the lessee, the lessee holds a controlling interest in the lessor, an affiliated entity holds a controlling interest in both the lessor and the lessee or an unrelated person holds a controlling interest in both the lessor and lessee.
(2) “Controlling interest” means direct or indirect ownership of at least eighty percent (80%) of the voting shares of a corporation or of the interests in a company, business, or person other than a corporation.
(3) “Reciprocal insurer” has the same meaning as prescribed in A.R.S. § 20-762.
(t) Notwithstanding the tax rate identified elsewhere in this section, an additional tax in an amount equal to one-tenth of one (0.1) percent of the gross income from any business activity taxable under this section is imposed pursuant to Chapter IV, Section 5 of the Charter of the City of Tucson.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 7446, § 7.2, 7-2-90; Ord. No. 8440, § 14, 1-23-95; Ord. No. 9069, § 1(7), 6-15-98; Ord. No. 9322, § 7, 11-22-99; Ord. No. 9652, § 4, 1-14-02; Ord. No. 10287, § 5, 6-13-06; Ord. No. 10911, § 5, 8-9-11, eff. 7-29-10; Ord. No. 11183, § 13, 6-17-14, eff. 7-20-11; Ord. No. 11479, § 1, 8-8-17; Ord. No. 11485, eff. 8-8-17; Ord. No. 11518, eff. 1-23-18; Ord. No. 11936, § 9, 7-12-22)
Editor’s note – Section 9 of Ord. No. 11936, adopted July 12, 2022, provides for an effective date of January 1, 2018, except that change in subsection (i) has an effective date of January 1, 2012.
(a) Tax rate. The tax rate shall be at an amount equal to two and six-tenths (2.6) percent of the gross income from the business activity upon every person engaging or continuing in the business of leasing, licensing for use, or renting tangible personal property for a consideration, including that which is semi-permanently or permanently installed within the city as provided by regulation.
(b) Special provisions relating to long-term motor vehicle leases. A lease transaction involving a motor vehicle for a minimum period of twenty-four (24) months shall be considered to have occurred at the location of the motor vehicle dealership, rather than the location of the place of business of the lessor, even if the lessor's interest in the lease and its proceeds are sold, transferred, or otherwise assigned to a lease financing institution; provided further that the city or town where such motor vehicle dealership is located levies a privilege tax or an equivalent excise tax upon the transaction.
(c) Exemptions. Gross income derived from the following transactions shall be exempt from privilege taxes imposed by this section:
(1) Rental, leasing, or licensing for use of tangible personal property to persons engaged or continuing in the business of leasing, licensing for use, or rental of such property.
(2) Rental, leasing, or licensing for use of tangible personal property that is semi- permanently or permanently installed within another city or town that levies an equivalent excise tax on the transaction.
(3) Rental, leasing, or licensing for use of film, tape, or slides to a theater or other person taxed under section 19-410, or to a radio station, television station, or subscription television system.
(4) Rental, leasing, or licensing for use of the following:
a. Prosthetics.
b. Income-producing capital equipment.
c. Mining and metallurgical supplies.
These exemptions include the rental, leasing, or licensing for use of tangible personal property which, if it had been purchased instead of leased, rented, or licensed by the lessee or licensee, would qualify as income-producing capital equipment or mining and metallurgical supplies.
(5) Rental, leasing, or licensing for use of tangible personal property to a qualifying hospital, qualifying community health center or a qualifying health care organization, except when the property so rented, leased, or licensed is for use in activities resulting in gross income from unrelated business income as that term is defined in 26 U.S.C. Section 512 or rental, leasing, or licensing for use of tangible personal property in this state by a nonprofit charitable organization that has qualified under Section 501(c)(3) of the United States Internal Revenue Code and that engages in and uses such property exclusively for training, job placement or rehabilitation programs or testing for mentally or physically handicapped persons.
(6) Separately billed charges for delivery, installation, repair, and/or maintenance as provided by regulation.
(7) Charges for joint pole usage by a person engaged in the business of providing or furnishing utility or telecommunication services or that is a cable operator, or charges for joint pole usage to a person engaged in the business of providing or furnishing utility or telecommunication services or that is a cable operator. "Cable operator" has the same meaning as prescribed by A.R.S. Section 9-505.
(8) The gross income from coin-operated washing, drying, and dry cleaning machines, or from coin-operated car washing machines. This exemption shall not apply to suppliers or distributors renting, leasing, or licensing for use of such equipment to persons engaged in the operation of coin-operated washing, drying, dry cleaning, or car washing establishments.
(9) Rental, leasing, or licensing of aircraft that would qualify as aircraft acquired for use outside the state, as prescribed by regulation, if such rental, leasing, or licensing had been a sale.
(10) Rental, leasing or licensing for use of an alternative fuel vehicle if such vehicle was manufactured as a diesel fuel vehicle and converted to operate on alternative fuel and equipment that is installed in a conventional diesel fuel motor vehicle to convert the vehicle to operate on an alternative fuel, as defined in A.R.S. Section 1-215.
(11) Rental, leasing, and licensing for use of solar energy devices, for taxable periods beginning from and after July 1, 2008. The lessor shall register with the department of revenue as a solar energy retailer. By registering, the lessor acknowledges that it will make its books and records relating to leases of solar energy devices available to the department of revenue and city, as applicable, for examination.
(12) Leasing or renting certified ignition interlock devices installed pursuant to the requirements prescribed by A.R.S. § 28-1461. For the purposes of this paragraph, "certified ignition interlock device" has the same meaning prescribed in A.R.S. § 28-1301.
(d) Notwithstanding the tax rate identified elsewhere in this section, an additional tax in an amount equal to one-tenth of one (0.1) percent of the gross income from any business activity taxable under this section is imposed pursuant to Chapter IV, Section 5 of the Charter of the City of Tucson.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8440, § 15, 1-23-95; Ord. No. 9069, § 1(8), 6-15-98; Ord. No. 9322, § 8, 11-22-99; Ord. No. 9652, § 5, 1-14-02; Ord. No. 10361, § 8, 12-19-06; Ord. No. 10754, § 4, 1-20-10, eff. 7-1-08; Ord. No. 11183, § 15, 6-17-14, eff. 9-1-04; Ord. No. 11479, § 1, 8-8-17; Ord. No. 11485, eff. 8-8-17; Ord. No. 11518, eff. 1-23-18; Ord. No. 11936, § 10, 7-12-22)
Editor’s note – Section 10 of Ord. No. 11936, adopted July 12, 2022, provides for an effective date of August 1, 2015.
(a) The tax rate shall be at an amount equal to two and six-tenths (2.6) percent of the gross income from the business activity upon every person engaging or continuing in the business of preparing or serving food or beverage in a bar, cocktail lounge, restaurant, or similar establishment where articles of food or drink are prepared or served for consumption on or off the premises, including also the activity of catering. Cover charges and minimum charges must be included in the gross income of this business activity. (Reg. 445.1)
(b) Caterers and other taxpayers subject to the tax who deliver food and/or serve such food off the premises shall also be allowed to exclude separately charged delivery, setup, and cleanup charges, provided that the charges are also maintained separately in the books and records. When a taxpayer delivers food and/or serves such food off the premises, his regular business location shall still be deemed the location of the transaction for the purposes of the tax imposed by this section.
(c) The tax imposed by this section shall not apply to sales to a qualifying hospital, qualifying community health center or a qualifying health care organization, except when sold for use in activities resulting in gross income from unrelated business income as that term is defined in 26 U.S.C. Section 512.
(d) The tax imposed by this section shall not apply to sales of food, beverages, condiments and accessories used for serving food and beverages to a commercial airline, as defined in A.R.S. § 42-5061, that serves the food and beverages to its passengers, without additional charge, for consumption in flight.
(e) The tax imposed by this section shall not apply to sales of prepared food, beverages, condiments or accessories to a public educational entity, pursuant to any of the provisions of Title 15, Arizona Revised Statutes, to the extent such items are to be prepared or served to individuals for consumption on the premises of a public educational entity during school hours.
(f) The tax imposed by this section shall not apply to sales of low or reduced cost articles of food or drink to eligible elderly or homeless persons or persons with a disability by a business subject to tax under A.R.S. Section 42-5074 that contracts with the Department of Economic Security and that is approved by the Food and Nutrition Service of the United States Department of Agriculture pursuant to the Supplemental Nutrition Assistance Program established by the Food and Nutrition Act of 2008 (P.L. 110-246; 122 stat. 1651; 7 United States Code Sections 2011 through 2036a), if the purchases are made with the benefits issued pursuant to the supplemental nutrition assistance program.
(g) The tax imposed by this section shall not apply to sales 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 a major league baseball team 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. This paragraph does not apply to an organization that is owned, managed or controlled, in whole or in part, by a major league baseball team, or its owners, officers, employees or agents, or by a major league baseball association or professional golfing association, or its owners, officers, employees or agents, unless the organization conducted or operated exhibition events in this state before January 1, 2018 that were exempt from taxation under A.R.S. Section 42-5073.
(h) If a city, town or other taxing jurisdiction imposes a transaction privilege, sales, use, franchise or other similar tax or fee, however denominated, on the sale of food items intended for human consumption as defined by rule adopted pursuant to A.R.S. Section 42-5106 or items prescribed by A.R.S. Section 42-5106, subsection d for consumption on the premises, the tax must be applied uniformly with respect to all food items, and an additional tax or fee differential may not be assessed or applied with respect to any specific food item.
(i) For the purposes of this section, “accessories” means paper plates, plastic eating utensils, napkins, paper cups, drinking straws, paper sacks or other disposable containers, or other items which facilitate the consumption of the food.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 6938, § 13, 4-25-88; Ord. No. 9069, § 1(9), 6-15-98; Ord. No. 10361, § 9, 12-19-06; Ord. No. 11479, § 1, 8-8-17; Ord. No. 11485, eff. 8-8-17; Ord. No. 11518, eff. 1-23-18; Ord. No. 11936, § 11, 7-12-22)
Editor’s note – Section 11 of Ord. No. 11936, adopted July 12, 2022, provides for an effective date of December 14, 2018, for subsection (d); January 1, 2015, for subsection (f); January 1, 2018, for subsection (g); August 3, 2018, for subsection (h).
(a) Tax Rate. The tax rate shall be at an amount equal to two and six-tenths (2.6) percent of the gross income from the business activity upon every person engaging or continuing in the business of selling tangible personal property at retail. (Regs. 460.2, 460.3, 460.6)
(b) Burden of Proof. The burden of proving that a sale of tangible personal property is not a taxable retail sale shall be upon the person who made the sale.
(c) Exclusions. For the purposes of this article, sales of tangible personal property shall not include:
(1) Sales of stocks, bonds, options or other similar materials.
(2) Sales of lottery tickets or shares pursuant to A.R.S. article I, chapter 5, title 5.
(3) Sales of platinum, bullion or monetized bullion, except minted or manufactured coins transferred or acquired primarily for their numismatic value as prescribed by regulation. (Reg. 460.5)
(4) Gross income derived from the transfer of tangible personal property which is specifically included as the gross income of a business activity upon which another section of this division imposes a tax shall be considered gross income of that business activity and are not includable as gross income subject to the tax imposed by this section. (Reg. 460.1)
(5) Sales by professional or personal service occupations where such sales are inconsequential elements of the service provided. (Reg. 460.4)
(6) Sales of cash equivalents. The gross proceeds of sales or gross income derived from the redemption of any cash equivalent by the holder as means of payment for goods or services that are taxable under this article is subject to the tax. "Cash equivalents" means items or intangibles, whether or not negotiable, that are sold to one or more persons, through which a value denominated in money is purchased in advance and may be redeemed in full or in part for tangible personal property, intangibles or services. Cash equivalents include gift cards, stored value cards, gift certificates, vouchers, traveler's checks, money orders or other instruments, orders or electronic mechanisms, such as an electronic code, personal identification number or digital payment mechanism, or any other prepaid intangible right to acquire tangible personal property, intangibles or services in the future, whether from the seller of the cash equivalent or from another person. Cash equivalents do not include either of the following:
a. Items or intangibles that are sold to one (1) or more persons, through which a value is not denominated in money.
b. Prepaid calling cards or prepaid authorization numbers for telecommunications services made taxable by subsection (g) of this section.
(d) Reserved.
(e) When this city and another Arizona city or town with an equivalent excise tax could claim nexus for taxing a retail sale, the city or town where the permanent business location of the seller at which the order was received shall be deemed to have precedence; and for the purposes of this article, such city or town has sole and exclusive right to such tax.
(f) The appropriate tax liability for any retail sale where the order is received at a permanent business location of the seller located in this city or in an Arizona city or town that levies an equivalent excise tax shall be at the tax rate of the city or town of such seller's location.
(g) Retail sales of prepaid calling cards or prepaid authorization numbers for telecommunications services, including sales of reauthorization of a prepaid card or authorization number, are subject to tax under this section.
(h) Reserved.
(i) Notwithstanding the tax rate identified elsewhere in this section, an additional tax in an amount equal to one-tenth of one (0.1) percent of the gross income from any business activity taxable under this section is imposed pursuant to Chapter IV, Section 5 of the Charter of the City of Tucson.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8784, § 6, 12-2-96; Ord. No. 9322, § 9, 11-22-99; Ord. No. 11183, § 16, 6-17-14, eff. 10-1-07; Ord. No. 11479, § 1, 8-8-17; Ord. No. 11485, eff. 8-8-17; Ord. No. 11518, eff. 1-23-18)
Loading...