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(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)
(a) Waiver of joint audit. A taxpayer that does not authorize a joint audit to be conducted for a tax jurisdiction is subject to audit by that tax jurisdiction at any time subject to the limitation provisions provided in section 19-550.
(b) Tax jurisdiction acceptance of joint audit. If the Arizona Department of Revenue intends to conduct an audit of a taxpayer, the cities or towns for whom a joint audit is being conducted may accept the audit by the Arizona Department of Revenue or may elect to have a representative participate, provided that no more than two city or town representatives in total may participate.
(1) If a city or town does not accept the audit as a joint audit, the city or town may not conduct an audit of the taxpayer for forty-two months from the close of the last tax period covered by the audit unless an exception applies to that taxpayer pursuant to A.R.S. Section 42-2059.
(2) If a joint audit is performed by a city or town, the Arizona Department of Revenue is not prohibited from conducting an audit that does not violate the provisions of A.R.S. Section 42-2059.
(Ord. No. 9569, § 2, 6-18-01)
(a) The tax collector may require the taxpayer to provide and may examine any books, records or other documents of any person who, in the opinion of the tax collector, might be liable for any tax under this article, for any periods available to him under section 19-550.
(b) In order to perform any examination authorized by this article, the tax collector may issue an administrative request for the attendance of witnesses or for the production of documents, as provided by regulation.
(c) If within sixty (60) days of receiving a written request for information in the possession of the taxpayer, the taxpayer fails or refuses to furnish the requested information, the tax collector may, in addition to penalties prescribed under section 19-540, impose an additional penalty of twenty-five (25) percent of the amount of any tax deficiency which is attributable to the information which the taxpayer failed to provide, unless the taxpayer shows that the failure was due to reasonable cause and not due to willful neglect.
(d) The tax collector may use any generally accepted auditing procedures, including sampling techniques, to determine the correct tax liability of any taxpayer. The tax collector shall ensure that the procedures used are in accordance with generally accepted auditing standards.
(e) The fact that the taxpayer has not maintained or provided such books and records which the tax collector considers necessary to determine the tax liability of any person does not preclude the tax collector from making any assessment. In such cases, the tax collector is authorized to use estimates, projections, or samplings, to determine the correct tax. The provisions of section 19-545(b), concerning estimates, shall apply.
(f) The tax collector shall give the taxpayer written notice of his determination of a deficiency by certified mail, to the taxpayer's address of record with the tax collector, and the tax deficiency, plus interest and penalties, is final forty-five (45) days from the date of receipt of the notice by the taxpayer, unless an appeal is taken pursuant to the provisions of sections 19-570 through 19-575.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8440, § 19, 1-23-95; Ord. No. 8784, § 17, 12-2-96)
(a) Once the tax collector completes an examination authorized by section 19-555 and a written notice of the determination of a deficiency has been issued to the taxpayer pursuant to section 19-545(a) or 19-555(f). The taxpayer's liability for the time period subjected to the examination is fixed and determined, and no additional audit or examination may be conducted by the tax collector with respect to such time period except under the following circumstances.
(1) If a taxpayer files a claim for refund under section 19-560, the tax collector may conduct an examination limited to the issues presented in the refund claim.
(2) If the taxpayer failed to disclose material information during the initial examination, falsified books or records, or otherwise engaged in conduct which prevented the tax collector from conducting an accurate examination. The applicability of this subsection, and the tax collector's right to proceed thereunder, may be raised and contested by the taxpayer in a subsequent administrative review brought pursuant to section 19-570.
(b) An audit or examination conducted by any other taxing jurisdiction will not preclude the tax collector from conducting an audit or examination for the same time period.
(1) The taxpayer made a material misrepresentation of fact.
(2) The taxpayer failed to disclose a material fact.
(3) The tax collector submitted a written request for information prior to issuance of the assessment, and the taxpayer, despite possessing or having access to such information, failed to provide it within sixty (60) days as required by section 19-555(c).
(4) After issuing the notice of determination of deficiency but before the deficiency became final, the state tax court, court of appeals or supreme court issued a decision, the applicability of which causes the deficiency initially proposed to increase.
(Ord. No. 8784, § 18, 12-2-96; Ord. No. 9069, § 1(12), 6-15-98)
(a) The tax collector may authorize either credits or payments of refunds for any taxes, penalties or interest paid in excess of the amount actually due. Any credit authorized by the tax collector shall be canceled from the accounts of the city if no timely filed request for credit or refund is made by the claimant claiming same within one (1) year following the date of determination and notice by the tax collector of the excess payment. For purposes of this section, "claimant" means a taxpayer that has paid a tax imposed under this article and has submitted a credit or refund claim under this section. Except where the taxpayer has granted a customer a power of attorney to pursue a credit or refund claim on the taxpayer's behalf, claimant does not include any customer of such taxpayer, whether or not the claimant collected the tax from customers by separately stated itemization.
(b) No credit shall be allowed or refund paid except under one of the following conditions:
(1) As provided in section 19-565.
(2) Upon examination of filed returns for any period not excluded by section 19-550 and not to exceed the tax, penalty, or interest actually paid with such returns.
(3) Upon audit or other examination of the books and records of the taxpayer but only for periods as provided in section 19-550. In the case of an examination performed at the taxpayer's request, credit shall be allowed or refund paid only for any taxes, penalties, or interest actually paid within the limitation period provided in section 19-550, such period to be calculated from the date of receipt of the taxpayer's request by the tax collector. Requests by taxpayers for audits to authorize credits shall be honored unless, in the opinion of the tax collector, the taxpayer has made excessive requests for audits.
(4) Upon the claimant's submission of a written claim for credit or refund of any taxes, penalties, or interest paid to the city by the claimant.
(c) A credit or refund claim submitted by a claimant pursuant to subsection (b)(4) of this section must:
(1) Identify the name, address and city tax identification number of the taxpayer;
(2) Identify the dollar amount of the credit or refund requested;
(3) Identify the specific tax period involved; and
(4) Identify the specific grounds upon which the claim is based.
(d) When a written claim for credit or refund is submitted pursuant to subsection (b)(4) of this section, no credit shall be allowed or refund paid except for those taxes, penalties, or interest paid in excess of the amount due within the limitation period provided in section 19-550. The credit or refund limitation period shall be calculated from the date the tax collector receives the claimant's written claim meeting the requirements of subsection (c) of this section.
(e) The following additional requirements apply to the tax collector and the claimant for claims for credit or refund submitted pursuant to subsection (b)(4) of this section:
(1) The tax collector shall notify the claimant that the claim for credit or refund has been received and shall indicate whether the claim meets the requirements of subsection (c) of this section. If the claim does not meet the requirements of subsection (c) of this section, the tax collector shall identify the deficiency in writing. Any claim that does not meet the requirements of subsection (c) of this section shall not secure the limitation period pursuant to section 19-550.
(2) The tax collector may request, in writing, additional information or documentation from the claimant to support the requested credit or refund. Such information or documentation must be reasonably related to the claim and required to be maintained under this chapter in the normal course of business.
(A) The claimant may request in writing one or more extensions to supply the requested information or documentation. The tax collector may reject an extension request only by denying the claim in whole or in part, subject to appeal by the claimant pursuant to section 19-570.
(B) Claimant aggrieved by a request for information or documentation under this subsection may file an appeal in the manner provided for in section 19-570 regarding the scope of the request for information or documentation. Such petition must be filed no later than the last day by which requested information or documentation must be provided to the tax collector, including any extensions. The decision of the Hearing Officer regarding a request for information or documentation may not be appealed by either party until the claim has been approved or denied, in whole or in part, under subsection (h) of this section or through subsections (e)(3) or (e)(4) of this section. A claimant shall not be barred from raising the issue of the reasonableness of the tax collector's information or documentation request in an appeal filed under subsection (h) of this section or through subsections (e)(3) or (e)(4) of this section through a lack of filing a petition under this subsection.
(3) If the tax collector fails to request additional information or documentation pursuant to this section and fails to issue a determination on any claim for credit or refund within six (6) months after the claim is filed, the claimant may consider the claim denied and may file an appeal pursuant to section 19-570.
(4) If the tax collector fails to issue a determination within six (6) months of receiving all requested additional information or documentation, the claimant may consider the claim for credit or refund denied and may file an appeal pursuant to section 19-570.
(5) The burden of proof to show that a notice, request, determination, or other communication was received by the claimant in this section is on the tax collector and will be satisfied by receipt of notice. The burden of proof to show that a claim or additional information or documentation was received by the tax collector is on the claimant and will be satisfied by receipt of notice.
(f) Interest shall be allowed on the overpayment of tax for any credit or refund authorized pursuant to subsections (b)(3) or (b)(4) of this section at the rate and in the manner set forth in section 19-540(a) as follows:
(1) For credits or refunds authorized pursuant to subsection (b)(3) of this section, interest shall be calculated from the date the tax collector receives the claimant's written claim following the date of notice to the claimant authorizing the credit or refund.
(2) For credits or refunds authorized pursuant to subsection (b)(4) of this section, interest shall be calculated from the date the tax collector receives the claimant's written claim meeting the requirements of subsection (c) of this section.
(g) The tax collector shall give the claimant a written notice of determination for a claim made under subsection (b) of this section. If the determination is a denial of a claim, in whole or in part, the determination must state that the claim for credit or refund has been denied in whole or in part, with the reason for denial, and must include the claimant's rights of appeal pursuant to section 19-570.
(h) A determination by the tax collector under this section, whether an approval of a claim or a denial of a claim, in whole or in part, shall become final forty-five (45) days from the date of receipt of the notice by the claimant, unless an appeal is made pursuant to section 19-570. If the claimant is the prevailing party in an appeal of a determination under this section, section 19-578 shall apply, except that reasonable fees and other costs may be awarded either by the hearing officer or court and are not subject to the monetary limitations of subsection 19-578(e) if the tax collector's position was not substantially justified or was brought for the purpose of harassing the claimant, frustrating the credit or refund process, or delaying the credit or refund. For the purposes of this section, "reasonable fees and other costs" means fees and other costs that are based on prevailing market rates for the kind and quality of the furnished services, not to exceed the amounts actually paid for expert witnesses, the cost of any study, analysis, report, test, project, or computer program that is found to be necessary to prepare the claimant's case and necessary fees for attorneys or other representatives.
(i) The amendments to this section as enacted in Ordinance No. 10287 shall be effective as follows:
(1) For any claim for refund or credit received by the tax collector before October 1, 2005:
(A) The provisions of this section as it existed prior to the adoption of Ordinance No. 10287 shall apply, except that interest shall be allowed from and after October 1, 2005, as provided in subsection (f) of this section.
(B) Except as noted in subsection (1)(A), the amendments to this section as enacted in Ordinance No. 10287 shall not be cited or considered in the construction or the interpretation of the city tax refund or credit provisions, interest provisions, or appeal provisions in effect prior to October 1, 2005.
(2) The provisions of this section enacted by Ordinance No. 10287 shall apply to all claims for refund or credit, for any periods as determined by subsections (d) or (e) of this section, received by the tax collector from and after October 1, 2005, except for claims that, in whole or in part, had been received by the collector prior to October 1, 2005.
(j) Any refund paid under the provisions of this section shall be paid from the privilege tax revenue accounts.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8784, § 19, 12-2-96; Ord. No. 10287, § 3, 6-13-06)
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