(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 providing telecommunication services to consumers within this city.
(1) Telecommunication services shall include:
a. Two-way voice, sound, and/or video communication over a communications channel.
b. One-way voice, sound, and/or video transmission or relay over a communications channel.
c. Facsimile transmissions.
d. Providing relay or repeater service.
e. Providing computer interface services over a communications channel.
f. Time-sharing activities with a computer accomplished through the use of a communications channel.
(2) Gross income from the business activity of providing telecommunication services to consumers within this city shall include:
a. All fees for connection to a telecommunication system.
b. Toll charges, charges for transmissions, and charges for other telecommunications services; provided that such charges relate to transmissions originating in the city and terminating in this state.
c. Fees charged for access to or subscription to or membership in a telecommunication system or network.
d. Charges for telephone, fax, or Internet access services provided at an additional charge by a hotel business subject to taxation under section 19-444.
(3) Gross income from the business activity of providing telecommunication services to consumers within this city shall not include:
a. Charges for installation, maintenance, and repair of telecommunication equipment which are subject to the provisions of sections 19-415, 19-416, or 19-417 (construction contracting); 19-445 (real property rental); 19-450 (tangible personal property rental); or 19-460 (retail sales); depending upon the nature of the work performed.
(4) Mobile equipment. In cases where the customer is being provided telecommunication services to receiving/ transmission equipment designed to be mobile in nature (for example, mobile telephones, portable hand-held two-way radios, paging devices, etc.), the provider shall, for the purposes of the tax imposed by this section, determine whether such provider's customers are "within this city" by the billing address of the customer, provided that such address is a permanent residence or business location of the consumer within the State.
(b) Resale telecommunication services. Gross income from sales of telecommunication services to another provider of telecommunication services for the purpose of providing the purchaser’s customers with such service shall be exempt from the tax imposed by this section; provided, however, that such purchaser is properly licensed by the city to engage in such business.
(c) Interstate transmissions. Charges by a provider of telecommunication services for transmissions originating in the city and terminating outside the state are exempt from the tax imposed by this section.
(d) (Reserved).
(e) (Reserved).
(f) Prepaid calling cards. Telecommunications services purchased with a prepaid calling card that are taxable under section 19-460 are exempt from the tax imposed under this section.
(g) Internet access services. The gross income subject to tax under this section shall not include sales of internet access services to the person’s subscribers and customers. For the purposes of this subsection:
(1) “Internet” means the computer and telecommunications facilities that comprise the interconnected worldwide network of networks that employ the transmission control protocol or internet protocol, or any predecessor or successor protocol, to communicate information of all kinds by wire or radio.
(2) “Internet access” means a service that enables users to access content, information, electronic mail or other services over the internet. Internet access does not include telecommunication services provided by a common carrier.
(h) Alarm monitoring services. The gross income subject to tax under this Section shall not include sales of monitoring services relating to an alarm system as defined in A.R.S. Section 32-101.
(i) Over-The-Top services. The gross income subject to tax under this section shall not include sales of over-the-top services. For the purposes of this paragraph "over-the-top services" means audio or video programming services that are received by the purchaser by means of an internet connection, regardless of the technology used, that include linear or live programming and that are generally considered comparable to programming provided by a radio or television broadcast station and includes related on demand programming provided at no additional charge, regardless of whether the services are provided independently or packaged with other audio or video programming.
(j) 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. 8783, § 1, 12-2-96; Ord. No. 9322, § 11, 11-22-99; Ord. No. 9652, § 7, 1-14-02; Ord. No. 10361, § 11, 12-19-06, eff. 1-1-07; Ord. No. 11479, § 1, 8-8-17; Ord. No. 11485, eff. 8-8-17; Ord. No. 11518, eff. 1-23-18; Ord. No. 11936, § 14, 7-12-22)
Editor’s note – Section 14 of Ord. No. 11936, adopted July 12, 2022, provides for an effective date of July 24, 2014, for subsections (a)(2) and (h), and the remainder having an effective date of July 1, 2019.