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For the purposes of this article, the following definitions apply:
Assembler means a person who unites or combines products, wares or articles of manufacture so as to produce a change in form or substance of such items without changing or altering component parts.
Broker means any person engaged or continuing in business who acts for another for a consideration in the conduct of a business activity taxable under this article, and who receives for his principal all or part of the gross income from the taxable activity.
Business means all activities or acts, personal or corporate, engaged in and caused to be engaged in with the object of gain, benefit or advantage, either direct or indirect, but not casual activities or sales.
Casual activity or sale means a transaction of an isolated nature made by a person who neither represents himself to be nor is engaged in a business subject to a tax imposed by this article. However, no sale, rental, license for use, or lease transaction concerning real property nor any activity entered into by a business taxable by this article shall be treated, or be exempt, as casual. This definition shall include sales of used capital assets, provided that the volume and frequency of such sales do not indicate that the seller regularly engages in selling such property.
Combined taxes means the sum of all applicable state transaction privilege and use taxes; all applicable transportation taxes imposed upon gross income by the county as authorized by A.R.S. chapter 8.3, title 42; all applicable taxes imposed by Articles II and III of this Chapter; and all other taxes and fees imposed by this city which are measured by gross income.
Communications channel means any line, wire, cable, microwave, radio signal, light beam, telephone, telegraph or any other electromagnetic means of moving a message.
Engaging, when used with reference to engaging or continuing in business, includes the exercise of corporate or franchise powers.
Federal government means the United States government, its departments and agencies; but not including national banks or federally chartered or insured banks, savings and loan institutions, or credit unions.
Person means an individual, firm, partnership, joint venture, association, corporation, estate, trust, receiver, syndicate, broker, the federal government, this state, or any political subdivision or agency of this state. For the purposes of this article, a person shall be considered a distinct and separate person from any general or limited partnership or joint venture or other association with which such person is affiliated. A subsidiary corporation shall be considered a separate person from its parent corporation for purposes of taxation of transactions with its parent corporation.
Providing telecommunication services means providing transmissions between or among points specified by the user, of information of the user's choosing (whether voice, video, or data), without change in content of information are sent and received, where such transmissions are accomplished through a telecommunication network. Telecommunications services shall include all ancillary or adjunct switching services and signal conversions rendered as a function of underlying transmission services, but excludes interstate long distance transmissions. Telecommunications services also include all content or value-added services rendered in conjunction with transmission services. Providing telecommunication services means:
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. Relay or repeater service.
e. Computer interface services over a communications channel.
f. Time-sharing activities with a computer accomplished through the use of a communications channel.
Public utility means a person carrying on a utility service or telecommunication service.
Public utility business activity includes only those activities of a public utility which comprise utility services or telecommunication services.
Resides within the city means in cases other than individuals, whose legal addresses are determinative of residence, the engaging, continuing or conducting of regular business activity within the city.
Sale means any transfer of title or possession, or both, exchange, barter, conditional or otherwise, in any manner or by any means whosoever, including consignment transactions and auctions, of property for a consideration. "Sale" includes any transaction whereby the possession of such property is transferred but the seller retains the title as security for the payment of the price. "Sale" also includes the fabrication of tangible personal property for consumers who, in whole or in part, furnish either directly or indirectly the materials used in such fabrication work.
Tax collector means the finance director or his/her designee or agent for all purposes under this article.
Telecommunication service means any service or activity connected with the transmission or relay of sound, visual image, data, information, images or material over a communications channel or any combination of communications channels.
Utility service means the producing, providing, or furnishing of electricity, electric lights, current, power, gas (natural or artificial), or water to consumers or ratepayers.
(Ord. No. 6926, § 1.B, 4-18-88; Ord. No. 8998, § 1, 12-8-97; Ord. No. 9870, § 1, 6-30-03; Ord. No. 11183, § 17, 6-17-14, eff. 8-1-14)
DIVISION 2.
DETERMINATION OF GROSS INCOME
DETERMINATION OF GROSS INCOME
(a) Gross income includes:
(1) The value proceeding or accruing from the sale of property, the provision of service, or both.
(2) The total amount of the sale, lease, license for use, or rental price at the time of such sale, rental, lease or license.
(3) All receipts, cash, credits, barter, exchange, reduction of or forgiveness of indebtedness, and property of every kind or nature derived from a sale, lease, license for use, rental or other taxable activity.
(4) All other receipts whether payment is advanced prior to, contemporaneous with, or deferred in whole or in part subsequent to the activity or transaction.
(b) Barter, exchange, trade-outs or similar transactions are includable in gross income at the fair market value of the service rendered or property transferred, whichever is higher, as they represent consideration given for consideration received.
(c) No deduction or exclusion is allowed from gross income on account of the cost of the property sold, the time value of money, expense of any kind or nature, losses, materials used, labor or service performed, interest paid, or credits granted.
(Ord. No. 6926, § 1.B, 4-18-88)
Notwithstanding any other provision of this article III, gross income does not include any amounts or values derived by a public utility from activities which are not public utility business activities.
(Ord. No. 6926, § 1.B, 4-18-88)
In transactions between affiliated companies or persons, or in other circumstances where the relationship between the parties is such that the gross income from the transaction is not indicative of the market value of the subject matter of the transaction, the tax collector shall determine the "market value" upon which the city public utility tax shall be levied. "Market value" shall correspond as nearly as possible to the gross income from similar transactions of like quality or character by other taxpayers where no common interest exists between the parties, but otherwise under similar circumstances and conditions.
(Ord. No. 6926, § 1.B, 4-18-88)
The tax collector may examine any transaction, reported or unreported, if, in his opinion, there has been or may be an evasion of the taxes imposed by this article and to estimate the amount subject to tax in cases where such evasion has occurred. The tax collector shall disregard any transaction which has been undertaken in an artificial manner in order to evade the taxes imposed by this article.
(Ord. No. 6926, § 1.B, 4-18-88)
(1) Cash basis. When a person elects to report and pay taxes on a cash basis, gross income for the reporting period shall include:
a. The total amounts received on "paid in full" transactions, against which are allowed all applicable deductions and exclusions; and
b. All amounts received on accounts receivable, conditional sales contract, or other similar transactions, against which no deductions and no exclusions from gross income are allowed.
(2) Accrual basis. When a person elects to report and pay taxes on an accrual basis, gross income shall include all gross income for the applicable period regardless of whether receipts are for cash, credit, conditional, or partially deferred transactions, and regardless of whether or not any security document or instrument is sold, assigned or otherwise transferred to another. Persons reporting on the accrual basis may deduct bad debts, provided that:
a. The amount deducted for the bad debt must be deducted from gross income of the month in which the actual charge-off was made, and only to the extent that such amount was actually charged off, and also only to the extent that such amount is or was included as taxable gross income; and
b. If any amount is subsequently collected on such charged-off account, it shall be included in gross income for the month in which it was collected, without deduction for expense of collection.
(Ord. No. 6926, § 1.B, 4-18-88)
(a) The following items are not included in gross income:
(1) Cash discounts allowed by the vendor for timely payment, but only discounts allowed against taxable gross income.
(2) The value of property returned by customers to the extent of the amount actually refunded either in cash or by credit and the amount refunded was included in taxable gross income.
(3) The trade-in allowance for tangible personal property accepted as payment, not to exceed the full sales price for any tangible personal property sold, when the full sales price is included in taxable gross income.
(4) When coupons issued by a vendor are later accepted by the vendor as a discount against the transaction, the discount may be excluded from gross income as a cash discount. Amounts credited or refunded by a vendor for redemption of coupons issued by any person other than the vendor may not be excluded from gross income.
(5) Rebates issued by the vendor to a customer as a discount against the transaction may be excluded from gross income as a cash discount. Rebates issued by a person other than the vendor may not be excluded from gross income, even when the vendee assigns his right to the rebate to the vendor.
(b) If the amount specified in subsection (a) above is credited by a vendor subsequent to the reporting period in which the original transaction occurs, such amount may be excluded from the taxable gross income of that subsequent reporting period, but only to the extent that the excludable amount was reported as taxable gross income in that prior reporting period.
(Ord. No. 6926, § 1.B, 4-18-88)
(a) When Tax Is Separately Charged and/or Collected. The total amount of gross income shall be exclusive of combined taxes only when the person upon whom the tax is imposed shall establish to the satisfaction of the tax collector that such tax has been added to the total price of the transaction. The taxpayer must provide to this customer and also keep a reliable record of the actual tax charged or collected, shown by cash register tapes, sales tickets, or other accurate record, separating net transaction price and combined tax. If at any time the tax collector cannot ascertain from the records kept by the taxpayer the total or amounts billed or collected on account of combined taxes, the claimed taxes collected may not be excluded from gross income, unless such records are completed and/or classified to the satisfaction of the tax collector.
(1) Remittance of all tax charged and/or collected. When an added charge is made to cover city (or combined) privilege and public utility taxes, the person upon whom the tax is imposed shall pay the full amount of the city taxes due, whether collected by him or not; and in the event he collects more than the amount due, he shall remit the excess to the tax collector. In the event the tax collector cannot ascertain from the records kept by the taxpayer the total of amounts of taxes collected by him, and the tax collector is satisfied that the taxpayer has collected taxes in an amount in excess of the tax assessed under this article, the tax collector may determine the amount collected and collect the tax so determined in the manner provided in this article.
(2) Itemization. A taxpayer, in order to be entitled to exclude from his gross income any amounts paid to him by customers for combined taxes passed on to the customer, must prove that he has provided his customer with a written record of the transaction showing at a minimum the price before the tax, the combined taxes, and the total cost. This shall be in addition to the record required to be kept under subsection (a) above.
(b) When Tax Has Been Neither Separately Charged Nor Separately Collected. When the person upon whom the tax is imposed shall establish by means of invoices, sales tickets or other reliable evidence that no added charge was made to cover combined taxes, the taxpayer may exclude tax collected from such income by dividing such taxable gross income by 1.00 plus a decimal figure representing the effective combined tax rate expressed as a fraction of 1.00.
(Ord. No. 6926, § 1.B, 4-18-88)
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