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(a) The tax rate shall be at an amount equal to zero percent (0%) of the gross income from the business activity upon every person engaging or continuing in the business of selling food for home consumption at retail.
(b) For the purposes of this section only, the following definitions shall be applicable:
(1) Eligible grocery business means an establishment that is deemed eligible to participate in 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) by the United States Department of Agriculture Food and Nutrition Service or an establishment that proves to the satisfaction of the Department of Revenue that, based on the nature of the establishment's food sales, could be eligible to participate in the Supplemental Nutrition Assistance Program established by the Food and Nutrition Act of 2008.
(2) Facilities for the consumption of food means tables, chairs, benches, booths, stools, counters, and similar conveniences, trays, glasses, dishes, or other tableware and parking areas for the convenience of in-car consumption of food in or on the premises on which the retailer conducts business.
(3) Food for consumption on the premises means any of the following:
a. "Hot prepared food" as defined below [in paragraph (4)].
b. Hot or cold sandwiches.
c. Food served by an attendant to be eaten at tables, chairs, benches, booths, stools, counters, and similar conveniences, and within parking areas for the convenience of in-car consumption of food.
d. Food served with trays, glasses, dishes, or other tableware.
e. Beverages sold in cups, glasses, or open containers.
f. Food sold by caterers.
g. Food sold within the premises of theaters, movies, operas, shows of any type or nature, exhibitions, concerts, carnivals, circuses, amusement parks, fairs, races, contests, games, athletic events, rodeos, billiard and pool parlors, bowling alleys, public dances, dance halls, boxing, wrestling and other matches, and any business which charges admission, entrance, or cover fees for exhibition, amusement, entertainment, or instruction.
h. Any items contained in subsections (b)(3)a. through (b)(3)g. above even though they are sold on a take-out or to go basis, and whether or not the item is packaged, wrapped, or is actually taken from the premises.
(4) Hot prepared food means those products, items, or ingredients of food which are prepared and intended for consumption in a heated condition. "Hot prepared food" includes a combination of hot and cold food items or ingredients if a single price has been established.
(5) Premises means the total space and facilities in or on which a vendor conducts business and which are owned or controlled, in whole or in part, by a vendor or which are made available for the use of customers of the vendor or group of vendors, including any building or part of a building, parking lot, or grounds.
(6) Food for home consumption means all food, except food for consumption on the premises, if sold by any of the following:
a. An eligible grocery business.
b. A person who conducts a business whose primary business is not the sale of food but who sells food which is displayed, packaged, and sold in a similar manner as an eligible grocery business.
c. A person who sells food and does not provide or make available any facilities for the consumption of food on the premises.
d. A person who conducts a delicatessen business either from a counter which is separate from the place and cash register where taxable sales are made or from a counter which has two (2) cash registers and which are used to record taxable and tax exempt sales, or a retailer who conducts a delicatessen business who uses a cash register which has at least two tax (2) computing keys which are used to record taxable and tax exempt sales.
e. Vending machines and other types of automatic retailers.
f. A person's sales of food, drink and condiment for consumption within the premises of any prison, jail or other institution under the jurisdiction of the state department of corrections, the department of public safety, the department of juvenile corrections or a county sheriff.
(c) Income derived from the following sources is exempt from the tax imposed by this section:
(1) Sales of food for home consumption to a person regularly engaged in the business of selling such property.
(2) Out-of-city sales of out-of-state sales.
(3) Charges for delivery or other "direct customer services" as prescribed by regulation.
(4) Food purchased under the Supplemental Nutrition Assistance Program (SNAP) established by the Food and Nutrition Act of 2008 (P.L. 110-246; 122 stat. 1651; 7 United States Code Sections 2011 through 2036a) by the United States Department of Agriculture Food and Nutrition Service but only to the extent that SNAP benefits using an electronic benefits transfer (EBT) card or other method of conveying SNAP benefits was actually used to purchase such food.
(5) Sales of food products by producers as provided for by A.R.S. §§ 3-561, 3-562 and 3-563.
(6) Sales of food, beverages, condiments and accessories to a public educational entity, pursuant to any of the provisions of A.R.S. Title 15, including a regularly organized private or parochial school that offers an educational program for grade twelve (12) or under which may be attended in substitution for a public school pursuant to A.R.S. § 15-802; 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. For the purposes of this subsection, "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.
(7) Sales of food, beverages, condiments and accessories to a nonprofit charitable organization that has qualified as an exempt organization under 26 U.S.C § 501(c)(3) and regularly serves meals to the needy and indigent on a continuing basis at no cost. For the purposes of this subsection, "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.
(d) Reporting. Such persons who sell food for home consumption shall, in conjunction with the return required pursuant to section 19-520, report to the tax collector in a manner prescribed by the tax collector all sales of food for home consumption exempted from taxes imposed by this article.
(e) Recordkeeping.
(1) Retailers shall maintain accurate, verifiable, and complete records of all purchases and sales of tangible personal property in order to verify exemptions from taxes imposed by this article. A retailer may use any method of reporting that properly reflects all purchases and sales of food for home consumption, as well as all purchases and sales of items subject to taxes imposed by this article, provided that such records are maintained in accordance with division 3, and regulations of the tax collector.
Any person who fails to maintain records as provided herein shall be deemed to have had no sales of food for home consumption, and if upon request by the tax collector, a person cannot demonstrate to the tax collector that such records and reports do properly reflect all sales of food for home consumption, the tax collector may recompute the amount of tax to be paid as provided in sections 19-370 and 19-545(b).
(f) 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 home consumption, the tax must be applied uniformly with respect to all food, and an additional tax or fee differential may not be assessed or applied with respect to any specific food item.
(Ord. No. 11183, § 8, 6-17-14, eff. 1-1-13; Ord. No. 11936, § 12, 7-12-22)
Editor’s note – Section 12 of Ord. No. 11936, adopted July 12, 2022, provides for an effective date of Jan. 1, 2015, except new subsection (f), eff. August 3, 2018.
Income derived from the following sources is exempt from the tax imposed by section 19-460:
(1) Sales of tangible personal property to a person regularly engaged in the business of selling such property.
(2) Out-of-city sales or out-of-state sales.
(3) Charges for delivery, installation, or other direct customer services as prescribed by regulation.
(4) Charges for repair services as prescribed by regulation, when separately charged and separately maintained in the books and records of the taxpayer.
(5) Sales of warranty, maintenance, and service contracts, when separately charged and separately maintained in the books and records of the taxpayer.
(6) Sales of prosthetics.
(7) Sales of income-producing capital equipment.
(8) Sales of rental equipment and rental supplies.
(9) Sales of mining and metallurgical supplies.
(10) Sales of motor vehicle fuel and use fuel which are subject to a tax imposed under the provisions of Article I or II, Chapter 16, Title 28, Arizona Revised Statutes; or sales of use fuel to a holder of a valid single trip use fuel tax permit issued under A.R.S. Section 28-5739, or sales of natural gas or liquefied petroleum gas used to propel a motor vehicle.
(11) Sales of tangible personal property to:
a. A construction contractor who holds a valid Privilege Tax License for engaging or continuing in the business of construction contracting where the tangible personal property sold is incorporated into any structure or improvement to real property as part of construction contracting activity.
b. A person that is not subject to tax under Section 415(b)(12) and that has been provided a copy of a certificate under A.R.S. Section 42-5009, subsection L, if the property so sold is incorporated or fabricated by the person into the real property, structure, project, development, or improvement described in the certificate.
(12) Sales of motor vehicles to nonresidents of this state for use outside this state if the vendor ships or delivers the motor vehicle to a destination outside this state.
(13) Sales of tangible personal property which directly enters into and becomes an ingredient or component part of a product sold in the regular course of the business of job printing, manufacturing, or publication of newspapers, magazines, or other periodicals. Tangible personal property which is consumed or used up in a manufacturing, job printing, publishing, or production process is not an ingredient nor component part of a product.
(14) Sales made directly to the federal government to the extent of:
a. One hundred (100) percent of the gross income derived from retail sales made by a manufacturer, modifier, assembler, or repairer.
b. Fifty (50) percent of the gross income derived from retail sales made by any other person.
(15) Sales to hotels, bars, restaurants, dining cars, lunchrooms, boardinghouses, or similar establishments of articles consumed as food, drink, or condiment, whether simple, mixed, or compounded, where such articles are customarily prepared or served to patrons for consumption on or off the premises, where the purchaser is properly licensed and paying a tax under section 19-455 or the equivalent excise tax upon such income.
(16) Sales of tangible personal property to a qualifying hospital, qualifying community health center or a qualifying health care organization, except when the property sold 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 sales of tangible personal property purchased 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.
(17) (Reserved).
(18) Sales of the following to persons engaging or continuing in the business of farming, ranching, or feeding livestock, poultry or ratites:
a. Seed, fertilizer, fungicides, seed treating chemicals, and other similar chemicals.
b. Feed for livestock, poultry or ratites, including salt, vitamins, and other additives to such feed.
c. Livestock, poultry or ratites purchased or raised for slaughter, but not including livestock purchased or raised for production or use, such as milch cows, breeding bulls, laying hens, riding or work horses.
d. Neat animals, horses, asses, sheep, swine, or goats for the purpose of becoming breeding or production stock, including sales of breedings or ownership shares in such animals.
This exemption shall not be construed to include machinery, equipment, fuels, lubricants, pharmaceuticals, repair and replacement parts, or other items used or consumed in the running, maintenance, or repair of machinery, equipment, buildings, or structures used or consumed in the business of farming, ranching, or feeding of livestock, poultry or ratites.
(19) Sales of groundwater measuring devices required by A.R.S. Section 45-604.
(20) Sales of paintings, sculptures or similar works of fine art, provided that such works of fine art are sold by the original artist; and provided further that sales of "art creations", such as jewelry, macrame, glasswork, pottery, woodwork, metalwork, furniture, and clothing, when such "art creations" have a dual purpose, both aesthetic and utilitarian, are not exempt, whether sold by the artist or by another.
(21) Sales of aircraft acquired for use outside the state, as prescribed by regulation.
(22) Sales of food products by producers as provided for by A.R.S. Sections 3-561, 3-562 and 3-563. This includes sales made directly by owners, proprietors or tenants of agricultural lands or farms who sell livestock or poultry feed that is grown or raised on their lands to any of the following:
a. Persons who feed their own livestock or poultry.
b. Persons who are engaged in the business of producing livestock or poultry commercially.
c. Persons who are engaged in the business of feeding livestock or poultry commercially or who board livestock noncommercially.
(23) (Reserved).
(24) Sales of food and drink to a person who is engaged in business that is classified under the restaurant classification and that provides such food and drink without monetary charge to its employees for their own consumption on the premises during such employees’ hours of employment.
(25) Sales of tangible personal property by a nonprofit organization that is exempt from taxation under Section 501(c)(3), 501(c)(4) or 42 501(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.
(26) (Reserved).
(28) Sales of materials that are purchased by or for publicly funded libraries including school district libraries, charter school libraries, community college libraries, state university libraries or federal, state, county or municipal libraries for use by the public as follows:
a. Printed or photographic materials.
b. Electronic or digital media materials.
(29) 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. For the purposes of this subsection, ‘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.
(30) In computing the tax base in the case of the sale or transfer of wireless telecommunication equipment as an inducement to a customer to enter into or continue a contract for telecommunication services that are taxable under section 19-470, gross proceeds of sales or gross income does not include any sales commissions or other compensation received by the retailer as a result of the customer entering into or continuing a contract for the telecommunications services.
(31) For the purposes of this section, a sale of wireless telecommunication equipment to a person who holds the equipment for sale or transfer to a customer as an inducement to enter into or continue a contract for telecommunication services that are taxable under section 19-470 is considered to be a sale for resale in the regular course of business.
(32) Sales of alternative fuel as defined in A.R.S. § 1-215, to a used oil fuel burner who has received a department of environmental quality permit to burn used oil or used oil fuel under A.R.S. § 49-426 or § 49-480.
(33) Sales of food, beverages, condiments and accessories to a public educational entity pur-suant to any of the provisions of A.R.S. Title 15, including a regularly organized private or parochial school that offers an educational program for grade twelve (12) or under which may be attended in substitution for a public school pursuant to A.R.S. § 15-802; 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. For the purposes of this subsection, “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.
(34) Sales of personal hygiene items to a person engaged in the business of and subject to tax under section 19-444 of this code if the tangible personal property is furnished without additional charge to and intended to be consumed by the person during his occupancy.
(35) For the purposes of this section, the diversion of gas from a pipeline by a person engaged in the business of operating a natural or artificial gas pipeline, for the sole purpose of fueling compressor equipment to pressurize the pipeline, is not a sale of the gas to the operator of the pipeline.
(36) Sales of food, beverages, condiments and accessories to a nonprofit charitable organization that has qualified as an exempt organization under 26 U.S.C. Section 501(c)(3) and regularly serves meals to the needy and indigent on a continuing basis at no cost. For the purposes of this subsection, “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.
(37) Sales of motor vehicles that use alternative fuel if such vehicle was manufactured as a diesel fuel vehicle and converted to operate on alternative fuel and sales of 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. § 1-215.
(38) Sales of solar energy devices for taxable periods beginning from and after July 1, 2008. The retailer shall register with the Department of Revenue as a solar energy retailer. By registering, the retailer acknowledges that it will make its books and records relating to sales of solar energy devices available to the Department of Revenue and city, as applicable, for examination.
(39) Sales or other transfers of renewable energy credits or any other unit created to track energy derived from renewable energy resources. For the purposes of this paragraph, “renewable energy credit” means a unit created administratively by the Corporation Commission or governing body of a public power utility to track kilowatt hours of electricity derived from a renewable energy resource or the kilowatt hour equivalent of conventional energy resources displaced by distributed renewable energy resources.
(40) Sales of magazines or other periodicals or other publications by this state to encourage tourist travel.
(41) Sales of paper machine clothing, such as forming fabrics and dryer felts, sold to a paper manufacturer and directly used or consumed in paper manufacturing.
(42) Sales of overhead materials or other tangible personal property that is used in performing a contract between the United States Government and a manufacturer, modifier, assembler or repairer, including property used in performing a subcontract with a government contractor who is a manufacturer, modifier, assembler or repairer, to which title passes to the government under the terms of the contractor or subcontract.
(43) Sales of coal, petroleum, coke, natural gas, virgin fuel oil and electricity sold to a qualified environmental technology manufacturer, producer or processor as defined in A.R.S. § 41-1514.02 and directly used or consumed in the generation or provision of on-site power or energy solely for environmental technology manufacturing, producing or processing or environmental protection. This paragraph shall apply for twenty (20) full consecutive calendar or fiscal years from the date the first paper manufacturing machine is placed in service. In the case of an environmental technology manufacturer, producer or processor who does not manufacture paper, the time period shall begin with the date the first manufacturing, processing or production equipment is placed in service.
(44) Sales or gross income derived from sales of machinery, equipment, materials and other tangible personal property used directly and predominantly to construct a qualified environmental technology manufacturing, producing or processing facility as described in A.R.S. § 41-1514.02. This subsection applies for ten (10) full consecutive calendar or fiscal years after the start of initial construction.
(45) The transfer of title or possession of coal back and forth between an owner or operator of a power plant and a person who is responsible for refining coal if both of the following apply:
a. The transfer of title or possession of the coal is for the purpose of refining the coal; and
b. The title or possession of the coal is transferred back to the owner or operator of the power plant after completion of the coal refining process. For the purposes of this subdivision, "coal refining process" means the application of a coal additive system that aids the reduction of power plant emissions during the combustion of coal and the treatment of flue gas.
(46) (Reserved).
(47) Computer data center equipment sold to the owner, operator or qualified colocation tenant of a computer data center that is certified by the Arizona Commerce Authority under A.R.S. Section 41-1519 or an authorized agent of the owner, operator or qualified colocation tenant during the qualification period for use in the qualified computer data center. For the purposes of this paragraph, "computer data center", "computer data center equipment", "qualification period" and "qualified colocation tenant" have the same meanings prescribed in A.R.S. Section 41-1519.
(48) The sale, manufacture, wholesale or distribution to or among any wholesalers, distributors or retailers, 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 home consumption or for consumption on the premises.
(49) The sale of any container or packaging used exclusively for transporting, protecting or consuming 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 home consumption or for consumption on the premises.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8440, § 16, 1-23-95; Ord. No. 8784, § 7, 12-2-96; Ord. No. 8958, § 6, 9-22-97; Ord. No. 9004, § 1(2), 1-5-98; Ord. No. 9069, § 1(10), 6-15-98; Ord. No. 9322, § 10, 11-22-99; Ord. No. 9652, § 6, 1-14-02; Ord. No. 10361, § 10, 12-19-06; Ord. No. 10524, § 5, 5-13-08, eff. 7-1-08; Ord. No. 11183, § 3, 6-17-14, eff. 1-1-13*; Ord. No. 11936, § 13, 7-12-22)
*Editor’s note – Ord. No. 11183, § 18, adopted June 17, 2014, provides that the amendments made to Sec. 19-465(40) shall be effective from and after January 1, 2007.
Section 13 of Ord. No. 11936, adopted July 12, 2022, provides for the following effective dates per subsection: (11) January 1, 2015; (22) August 6, 2016; (25) January 1, 2018; (45) July 24, 2014; (46) September 1, 2016; (47) September 12, 2013; (48) August 3, 2018; (49) August 3, 2018.
(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.
(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 providing the following forms of transportation for hire from this city to another point within the state:
(1) Transporting of persons or property by railroad; provided, however, that the tax imposed by this subsection shall not apply to transporting freight or property for hire by a railroad operating exclusively in this state if the transportation comprises a portion of a single shipment of freight or property, involving more than one railroad, either from a point in this state to a point outside this state or from a point outside this state to a point in this state, for purposes of this paragraph, “a single shipment” means the transportation that begins at the point at which one of the railroads first takes possession of the freight or property and continues until the point at which one (1) of the railroads relinquishes possession of the freight or property to a party other than one (1) of the railroads.
(2) Transporting of oil or natural or artificial gas through pipe or conduit.
(3) Transporting of property by aircraft.
(4) Transporting of persons or property by motor vehicle, including towing and the operation of private car companies, as such are defined in Article VII, Chapter 14, Title 42, Arizona Revised Statutes; provided, however, that the tax imposed by this subsection shall not apply to:
a. Gross income subject to the tax imposed by Article IV, Chapter 16, A.R.S. Title 28.
b. Gross income derived from the operation of a governmentally adopted and controlled program to provide urban mass transportation.
c. Reserved.
d. Reserved.
(b) Deductions or exemptions. The gross proceeds of sales or gross income derived from the following sources is exempt from the tax imposed by this section:
(1) Income that is specifically included as the gross income of a business activity upon which another section of Article II imposes a tax, that is separately stated to the customer and is taxable to the person engaged in that classification not to exceed consideration paid to the person conducting the activity.
(2) Income from arranging amusement or transportation when the amusement or transportation is conducted by another person not to exceed consideration paid to the amusement or transportation business.
(3) Any amount attributable to fees collected by transportation network companies issued a permit pursuant to A.R.S. Section 28-9552.
(4) Transporting for hire persons by transportation network company drivers on transactions involving transportation network services as defined in A.R.S. Section 28-9551.
(5) Transporting for hire persons by vehicle for hire companies issued a permit pursuant to A.R.S. Section 28-9503.
(6) Transporting for hire persons by vehicle for hire drivers on transactions involving vehicle for hire services as defined in A.R.S. Section 28-9501.
(c) The tax imposed by this section shall not include arranging transportation as a convenience to a person’s customers if that person is not otherwise engaged in the business of transporting persons, freight or property for hire. This exception does not apply to businesses that dispatch vehicles pursuant to customer orders and send the billings and receive the payments associated with that activity, including when the transportation is performed by third party independent contractors. For the purposes of this Subsection, ‘arranging’ includes billing for or collecting transportation charges from a person’s customers on behalf of the persons providing the transportation.
(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. 8958, § 6, 9-22-97; Ord. No. 9322, § 12, 11-22-99; Ord. No. 10361, § 12, 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, § 15, 7-12-22)
Editor’s note – Section 15 of Ord. No. 11936, adopted July 12, 2022, provides for an effective date of Sept. 1, 2016.
(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 producing, providing or furnishing utility services, including electricity, electric lights, current, power, gas (natural or artificial), or water to:
(1) Consumers or ratepayers who reside within the city.
(2) Consumers or ratepayers of this city, whether within the city or without, to the extent that this city provides such persons utility services, excluding consumers or ratepayers who are residents of another city or town which levies an equivalent excise tax upon this city for providing such utility services to such persons.
(b) Exclusion of Certain Sales of Natural Gas to a Public Utility. Notwithstanding the provisions of subsection (a) above, the gross income derived from the sale of natural gas to a public utility for the purpose of generation of power to be transferred by the utility to its ratepayers shall be considered a retail sale of tangible personal property subject to sections 19-460 and 19-465, and not considered gross income taxable under this section.
(c) Resale Utility Services. Sales of utility services to another provider of the same utility services for the purpose of providing such utility services either to another properly licensed utility provider or directly to such purchaser's customers or ratepayers shall be exempt and deductible from the gross income subject to the tax imposed by this section, provided that the purchaser is properly licensed by all applicable taxing jurisdictions to engage or continue in the business of providing utility services, and further that the seller maintains proper documentation, in a manner similar to that for sales for resale, of such transactions.
(d) Reserved.
(e) Exclusion of Sales of Utility Services to Nonprofit Primary Health Care Facilities. The tax imposed by this section shall not apply to sales of utility services 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.
(f) [Exclusion of Sales of Natural Gas or Liquefied Petroleum Gas.] The tax imposed by this section shall not apply to sales of natural gas or liquefied petroleum gas used to propel a motor vehicle.
(g) [Exceptions to Tax.] The tax imposed by this section shall not apply to:
(1) Revenues received by a municipally owned utility in the form of fees charged to persons constructing residential, commercial or industrial developments or connecting residential, commercial or industrial developments to a municipal utility system or systems if the fees are segregated and used only for capital expansion, system enlargement or debt service of the utility system or systems.
(2) Revenues received by any person or persons owning a utility system in the form of reimbursement or contribution compensation for property and equipment installed to provide utility access to, on or across the land of an actual utility consumer if the property and equipment become the property of the utility. This exclusion shall not exceed the value of such property and equipment.
(h) [Alternative Fuel.] The tax imposed by this section shall not apply to sales of alternative fuel as defined in A.R.S. § 1-215, to a used oil fuel burner who has received a department of environmental quality permit to burn used oil or used oil fuel under A.R.S. Section 49-426 or Section 49-480.
(i) The tax imposed by this section shall not apply to sales or other transfers of renewable energy credits or any other unit created to track energy derived from renewable energy resources. For the purposes of this paragraph, "renewable energy credit" means a unit created administratively by the Corporation Commission or governing body of a public power utility to track kilowatt hours of electricity derived from a renewable energy resource or the kilowatt hour equivalent of conventional energy resources displaced by distributed renewable energy resources.
(j) The tax imposed by this section shall not apply to the portions of gross proceeds of sales or gross income attributable to transfers of electricity by any retail electric customer owning a solar photovoltaic energy generating system to an electric distribution system, if the electricity transferred is generated by the customer's system.
(k) Reserved.
(l) 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. 6938, § 14, 4-25-88; Ord. No. 8784, § 8, 12-2-96; Ord. No. 9069, § 1(11), 6-15-98; Ord. No. 11183, § 4, 6-17-14, eff. 1-1-07; Ord. No. 11219, § 3, 12-9-14, eff. 1-1-15; Ord. No. 11479, § 1, 8-8-17; Ord. No. 11485, eff. 8-8-17; Ord. No. 11518, eff. 1-23-18)
(a) The tax rate shall be an amount equal to zero percent (0%) of the gross income from the business activity upon every person engaging or continuing in the business of providing wastewater removal services by means of sewer lines or similar pipelines to:
(1) Consumers or ratepayers who reside within the city.
(2) Consumers or ratepayers of this city, whether within the city or without, to the extent that this city provides such persons wastewater removal services, excluding consumers or ratepayers who are residents of another city or town which levies an equivalent excise tax upon this city for providing such wastewater removal services to such persons.
(b) The tax imposed by this section shall not apply to gross income relating to the providing of wastewater removal services from a qualifying hospital, qualifying community health center or a qualifying health care organization.
(Ord. No. 11183, § 11, 6-17-14, eff. 1-1-13)
DIVISION 5.
ADMINISTRATION
ADMINISTRATION
(a) The administration of this article is vested in the tax collector, except as otherwise specifically provided, and all payments shall be made to the tax collector.
(b) The tax collector shall prescribe the forms and procedures necessary for the administration of the taxes imposed by this article.
(c) Except as provided in this section, no rule or regulation shall be adopted until approved by formal action of the city council.
(d) (Reserved).
(e) The unified audit committee shall publish uniform guidelines that interpret the Model City Tax Code and that apply to all cities and towns that have adopted the Model City Tax Code as provided by A.R.S. Section 42-6005.
(1) Prior to finalization of uniform guidelines that interpret the Model City Tax Code, the unified audit committee shall disseminate draft guidelines for public comment.
(2) Pursuant to A.R.S. Section 42-6005(d), when the state statutes and the Model City Tax Code are the same and where the Arizona department of revenue has issued written guidance, the department's interpretation is binding on cities and towns.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8440, § 17, 1-23-95; Ord. No. 8784, § 9, 12-2-96; Ord. No. 9652, § 8, 1-14-02)
Editors Note: It should be noted that the provisions of Ord. No. 9641 become effective retroactive to January 1, 2002.
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