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(a) When Tax Due. Except as provided elsewhere in this section, the taxes shall be due and payable monthly on or before the twentieth day of the month next succeeding the month in which the tax accrues.
(1) Quarterly returns. The tax collector may authorize a taxpayer whose reporting history indicates an estimated annual city privilege and use tax liability on taxable gross income in excess of five thousand dollars ($5,000.00) but less than fifty thousand dollars ($50,000.00) to file returns on a calendar-quarterly basis. The taxes for each calendar quarter shall be due and payable on or before the twentieth day of the month next succeeding the end of each calendar quarter.
(2) Annual returns. The tax collector may authorize a taxpayer whose reporting history indicates an estimated annual city privilege and use tax liability on taxable gross income of not more than five thousand dollars ($5,000.00) to file returns for such taxes on a calendar-annual basis. The taxes for each calendar year shall be due and payable on or before the twentieth day of January of the following year.
(b) Any person who is engaged in or conducting business in two (2) or more locations or under two (2) or more business names shall file the return required under this chapter by electronic means.
(c) The Department, for any taxpayer whose estimated annual liability for taxes imposed or administered by A.R.S. Title 42, Chapter 5, Article 1 or A.R.S. Title 42, Chapter 6 is between two thousand dollars ($2,000) and eight thousand dollars ($8,000), shall authorize such taxpayer to pay such taxes on a quarterly basis. The Department, for any taxpayer whose estimated annual liability for taxes imposed or administered by A.R.S. Title 42, Chapter 5, Article 1 or A.R.S. Title 42, Chapter 6 is less than two thousand dollars ($2,000) shall authorize such taxpayer to pay such taxes on an annual basis.
(d) Delinquency Date. The taxes levied under this article will be considered delinquent in accordance with A.R.S. Section 42-5014, as follows:
(1) For taxpayers that are required or elect to file and pay electronically in any month, if not received by the department on or before the last business day of the month.
(2) For all other taxpayers, if not received by the department on or before the business day preceding the last business day of the month.
(e) Jeopardy reporting. If the tax collector determines that the collection of any tax due to the city is in jeopardy, the tax collector may direct the taxpayer to file his return and remit the tax on a weekly, daily or transaction-by-transaction basis. Such return and remittance shall be due upon the date fixed by the tax collector, and the delinquency date shall be the following day.
(f) Extensions. The tax collector may extend the time for filing a return, for good cause shown, and only when requested in writing and received by the tax collector prior to the tax due date. However, the time for filing such return shall not be extended beyond the last business day of the month next succeeding the due date of such return. In such cases, only the penalties for late filing and late payment may be waived by the tax collector for filing and payment within the extension period. Notwithstanding the granting of an extension, the interest payable for late payment of taxes shall be paid for the period commencing upon the original delinquency date and ending on the date the tax is paid. The interest may not be waived by the tax collector.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 7446, § 2.12, 7-2-90; Ord. No. 8440, § 18, 1-23-95; Ord. No. 11936, § 16, 7-12-22)
Editor’s note – Section 16 of Ord. No. 11936, adopted July 12, 2022, provides for an effective date of Jan. 1, 2015.
(a) Any taxpayer who failed to pay any of the taxes imposed by this chapter which were due or found to be due before the delinquency date shall be subject to and shall pay interest upon such tax until paid. From and after October 1, 2005, the interest rate shall be determined in the same manner and at the same times as prescribed by Section 6621 of the United States Internal Revenue Code and compounded annually under the method described in subsection (1) below. The rate of interest for both overpayments and underpayments for all taxpayers is the federal short-term rate, determined pursuant to Section 6621(B) of the Internal Revenue Code, plus three (3) percentage points. The interest rate prior to October 1, 2005, shall be one (1) percent per month. Said interest may be neither waived by the tax collector nor abated by the hearing officer except as it might relate to a tax abated as provided by section 19-570.
(1) On January 1 of each year, any interest outstanding as of that date that was accrued from and after October 1, 2005, is thereafter considered a part of the principal amount of the tax and accrues interest pursuant to this section.
(2) Interest accrued prior to October 1, 2005, shall not be added to the principal.
(b) In addition to interest assessed under subsection (a) above, any taxpayer who failed to pay any of the taxes imposed by this article which were due or found to be due before the delinquency date shall be subject to and shall pay any or all of the following civil penalties, in addition to any other penalties prescribed by this article:
(1) A taxpayer who fails to timely file a return for a tax imposed by this article shall pay a penalty of five (5) percent of the tax for each month or fraction of a month elapsing between the delinquency date of the return and the date on which it is filed, unless the taxpayer shows that the failure to timely file is due to reasonable cause and not due to willful neglect. This penalty shall not exceed twenty-five (25) percent of the tax due.
(2) A taxpayer who fails to pay the tax within the time prescribed shall pay a penalty of ten (10) percent of the unpaid tax, unless the taxpayer shows that the failure to timely pay is due to reasonable cause and not due to willful neglect. If the taxpayer is also subject to a penalty under subsection (b)(1) above for the same tax period, the total penalties under subsection (b)(1) and this subsection shall not exceed twenty-five (25) percent of the tax due.
(3) A taxpayer who fails or refuses to file a return within thirty (30) days of having received a written notice and demand from the tax collector shall pay a penalty of twenty-five (25) percent of the tax, unless the taxpayer shows that the failure is due to reasonable cause and not due to willful neglect or the tax collector agrees to a longer time period.
(4) If the cause of a tax deficiency is determined by the tax collector to be due to negligence, but without regard for intent to defraud, the taxpayer shall pay a penalty of ten (10) percent of the amount of deficiency. If the taxpayer is also subject to a penalty under subsection (b)(1) or (b)(2) above for the same tax period, the total penalties imposed under subsection (b)(1), (b)(2) and this subsection shall not exceed twenty-five (25) percent of the tax due.
(5) If the cause of a tax deficiency is determined by the tax collector to be due to civil fraud or evasion of the tax, the taxpayer shall pay a penalty of fifty (50) percent of the amount of deficiency.
(c) Penalties and interest imposed by this section are due and payable upon notice by the tax collector.
(d) If, following an audit, penalties attributable to the audit period are to be assessed pursuant to subsection (b)(1) or (b)(2) above, the tax collector, before assessing such penalties, must take into consideration any information or explanations provided by the taxpayer as to why the return was not timely filed and/or the tax was not timely paid. If such information and/or explanations are provided by the taxpayer, and the tax collector nevertheless decides to assess penalties pursuant to subsection (b)(1) or (b)(2) above, then, at the time the penalties are assessed, the tax collector must provide the taxpayer with a detailed written explanation of the basis for the tax collector's determination that the information and/or explanations provided by the taxpayer did not constitute reasonable cause.
(e) The assessment of the penalties prescribed by subsections (b)(3) through (b)(5) above must be approved on a case-by-case basis by the tax collector prior to such assessment. In addition, any assessment which includes penalties based upon subsection (b)(3), (b)(4), or (b)(5) above must be accompanied by a statement signed by the tax collector setting forth in detail the basis for the tax collector's determination that the penalties are warranted under the circumstances.
(f) The tax collector shall waive or adjust penalties imposed by subsections (b)(1) and (b)(2) above upon a finding that:
(1) In the past, the taxpayer has consistently filed and paid the taxes imposed by this article in a timely manner; or
(2) The amount of the penalty is greatly disproportionate to the amount of the tax; or
(3) The failure of a taxpayer to file a return and/or pay any tax by the delinquency date was caused by any of the following circumstances which must occur prior to the delinquency date of the return or payment in question:
a. The return was timely filed but was inadvertently forwarded to another taxing jurisdiction.
b. Erroneous or insufficient information was furnished the taxpayer by the tax collector or his employee or agent.
c. Death or serious illness of the taxpayer, member of his immediate family, or the preparer of the reports immediately prior to the due date.
d. Unavoidable absence of the taxpayer immediately prior to the due date.
e. Destruction, by fire or other casualty, of the taxpayer's place of business or records.
f. Prior to the due date, the taxpayer made application for proper forms which could not be furnished in sufficient time to permit a timely filing.
g. The taxpayer was in the process of pursuing an active protest of the tax in question in another taxing jurisdiction at the time the tax and/or return was due.
h. The taxpayer establishes through competent evidence that the taxpayer contacted a tax advisor who is competent on the specific tax matter and, after furnishing necessary and relevant information, the taxpayer was incorrectly advised that no tax was owed and/or the filing of a return was not required.
i. The taxpayer has never been audited by a city for the tax or on the issue in question and relied, in good faith, on a state exemption or interpretation.
j. The taxpayer can provide some public record (court case, report in a periodical, professional journal or publication, etc.) stating that the transaction is not subject to tax.
k. The state department of revenue, based upon the same facts and circumstances, abated penalties for the same filing period.
A taxpayer may also request a waiver or adjustment of penalty for a reason thought to be equally substantive to those reasons itemized above. All requests for waiver or adjustment of penalty must be in writing and shall contain all pertinent facts and other reliable and substantive evidence to support the request. In all cases, the burden of proof is upon the taxpayer.
(g) No request for waiver of penalty under subsection (f) above may be granted unless written request for waiver is received by the tax collector within forty-five (45) days following the imposition of penalty. Any taxpayer aggrieved by the refusal to grant a waiver under subsection (f) above may appeal under the provisions of section 19-570 provided that a petition of appeal or request for an extension is submitted to the tax collector within forty-five (45) days of the taxpayer's receipt of notice by the city that waiver has been denied.
(h) For the purpose of this section, "reasonable cause" shall mean that the taxpayer exercised ordinary business care and prudence, i.e., had a reasonable basis for believing that the tax did not apply to the business activity or the storage or use of the taxpayer's tangible personal property in this city.
(i) For the purpose of this section, "negligence" shall be characterized chiefly by inadvertence, thoughtlessness, inattention, or the like, rather than an "honest mistake." Examples of negligence include:
(1) The taxpayer's failure to maintain records in accordance with division III of this chapter;
(2) Repeated failures to timely file returns; or
(3) Gross ignorance of the law.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 6938, § 15, 4-25-88; Ord. No. 8784, § 13, 12-2-96; Ord. No. 10287, § 1, 6-13-06)
(a) Notwithstanding section 19-540(a), no interest or penalty may be assessed on an amount assessed as a deficiency if either:
(1) The deficiency assessed is directly attributable to erroneous written advice furnished to the taxpayer by an employee of the city acting in an official capacity in response to a specific request from the taxpayer and not from the taxpayer's failure to provide adequate or accurate information.
(2) All of the following are true:
a. A tax return form prepared by the tax collector contains a statement that, if followed by a taxpayer, would cause the taxpayer to misapply this chapter.
b. The taxpayer reasonably relies on the statement.
c. The taxpayer's underpayment directly results from this reliance.
(b) Each employee of the tax collector, at the time any oral advice is given to any person, shall inform the person that the tax collector is not bound by such oral advice.
(c) For purposes of this section, "tax return form" includes the instructions that the tax collector prepares for use with the tax return form.
(Ord. No. 8784, § 14, 12-2-96)
(a) Unless expressly authorized by law, the tax collector shall not apply any newly enacted legislation retroactively or in a manner that will penalize a taxpayer for complying with prior law.
(b) If the tax collector adopts a new interpretation or application of any provision of this chapter or determines that any provision applies to a new or additional category or type of business and the change in interpretation or application is not due to a change in the law:
(1) The change in interpretation or application applies prospectively only unless it is favorable to taxpayers.
(2) The tax collector shall not assess any tax, penalty or interest retroactively based on the change in interpretation or application.
(c) For purposes of subsection (b), "new interpretation or application" includes policies and procedures which differ from established interpretations of this chapter.
(d) [Reserved.]
(Ord. No. 9652, § 9, 1-14-02; Ord. No. 10287, § 2, 6-13-06)
(a) Determination of Additional Taxes. If the taxpayer has failed to file a return, or if the tax collector is not satisfied with the return and payment of the amount of tax required, and additional taxes are determined by the tax collector to be due, the tax collector shall deliver written notice of his determination of a deficiency to the taxpayer; and deficiency, plus penalties and interest, shall be due and payable forty-five (45) days after receipt of the notice and demand. Such additional taxes shall bear any applicable civil penalties and interest as provided in section 19-540, and every such notice of a determination of an additional amount due shall be assessed within the limitation period provided in section 19-550.
(1) When a return is filed. If the tax collector is not satisfied with a return and payment of the amount of tax required by this article to be paid to the city, he may examine the return or examine the records of the taxpayer, and redetermine the amount of tax, penalties and interest required to be paid, for any periods available to the tax collector under section 19-550, based upon the information contained in the return or records or based upon any information within his possession or which comes into his possession.
(2) When no return is filed. If any person fails to make a return, the tax collector may make an estimate of the amount of tax due under this article and compute any applicable penalties and interest due, based upon any information within his possession or which comes into his possession.
(b) Estimates by the Tax Collector. Any estimate made by the tax collector is to be made on a reasonable basis. The existence of another reasonable basis of estimation does not, in any way, invalidate the tax collector's estimate. It is the responsibility of the taxpayer to prove that the tax collector's estimate is not reasonable and correct, by providing sufficient documentation of the type and form required by this article or satisfactory to the tax collector.
(Ord. No. 6674, § 3, 3-23-87)
(a) If the tax collector determines that noncompliance with tax obligations results from extensive misunderstanding or misapplication of provisions of this chapter it may enter into closing agreements with those taxpayers under the following terms and conditions:
(1) Extensive misunderstanding or misapplication of the tax laws occurs if the tax collector determines that more than sixty (60) percent of the persons in the affected class have failed to properly account for their taxes owing to the same misunderstanding or misapplication of the tax laws.
(2) The tax collector shall publicly declare the nature of the possible misapplication and the proposed definition of the class of affected taxpayers and shall conduct a public hearing to hear testimony regarding the extent of the misapplication and the definition of the affected class.
(3) If, after the public hearing, the tax collector determines that a class of affected taxpayers has failed to comply with their tax obligations because of extensive misunderstanding or misapplication of the tax laws it shall issue a tax ruling announcing that finding and publish the ruling in a newspaper of general circulation in the city and through the next two (2) model city tax code updates.
(4) A closing agreement under this section may abate some or all of the penalties, interest and tax that taxpayers have failed to remit, or the agreement may provide for the prospective treatment of the matter as to the class of affected taxpayers. All taxpayers in the class shall be offered the opportunity to enter into a similar agreement for the same tax periods.
(5) Taxpayers in the affected class who have properly accounted for their tax obligations for these tax periods shall be offered the opportunity to enter into an equivalent closing agreement providing for a pro rata credit or refund of their taxes previously paid.
(6) The closing agreement shall require the taxpayers to properly account for an pay such taxes in the future. If the taxpayer fails to adhere to such a requirement, the closing agreement is voidable by the tax collector and he may assess the taxpayer for the delinquent taxes. The tax collector may issue such a proposed assessment within six (6) months after the date that he declares that closing agreement void or within the period prescribed by section 19-550 of this chapter.
(b) Before entering into closing agreements pursuant to this section, the tax collector shall secure such approval as required by charter, ordinance or administrative regulation.
(c) After a closing agreement has been signed pursuant to this section, it is final and conclusive except on a showing of fraud, malfeasance or misrepresentation of a material fact. The case shall not be reopened as to the matters agreed upon or the agreement shall not be modified by any officer, employee or agent of the city. The agreement or any determination, assessment, collection, payment abatement, refund or credit made pursuant to the agreement shall not be annulled, modified, set aside or disregarded in any suit, action or proceeding.
(d) The tax collector shall report in writing its activities under this section to the mayor and city council on or before February 1 of each year.
(Ord. No. 8784, § 15, 12-2-96)
(a) Limitation When a Return Has Been Filed.
(1) Except as provided elsewhere in this section, the tax collector may assess additional tax due at any time within four (4) years after the date on which the return is required to be filed, or within four (4) years after the date on which the return is filed, whichever period expires later.
(2) However, if a taxpayer does not report an amount properly reportable which is in excess of twenty-five (25) percent of the taxable amount stated on the return, the tax collector, may assess additional tax due at any time within six (6) years after the date on which the return was filed.
(3) Any delay in commencement or completion of any examination by the tax collector, which is requested or agreed to in writing by the taxpayer, shall be excluded from the computation of any limitation period prescribed by this section, and the tax collector shall be entitled to make a determination for taxes due without exclusion of any such time period, and any limitation period shall be extended for a length of time equivalent to the period of the agreed upon delay.
(4) Any assessment of additional tax due by the tax collector shall be deemed to have been made by mailing a copy of a notice of audit assessment by certified mail to the taxpayer's address of record with the tax collector or by personal delivery of a copy of a notice of audit assessment to the taxpayer or his authorized agent.
(b) Suspension of Limitation Period. The limitation period on assessment shall be suspended for any period:
(1) The assets of the taxpayer are in the control or custody of the court in any proceeding before any court of jurisdiction within the United States of America, and for one hundred eighty (180) calendar days thereafter; or
(2) Which the taxpayer and the tax collector agree upon in writing.
(c) When No Return Filed; Fraudulent Return. In the case of a fraudulent return with the intent to evade tax, or the failure or refusal to file a return for any month, the tax collector may assess the amount of taxes payable for that month at any time, without any reliance by the taxpayer upon any time limitation provided elsewhere in this article.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 7446, § 2.13, 7-2-90; Ord. No. 8784, § 16, 12-2-96)
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