HomeMy WebLinkAboutOrdinance 2009.19 Adopting the 2009 tax code amendments'~ F. ANN RODRIGUEZ, RECORDER
RECORDED BY: LLW
DEPUTY RECORDER °g ~I~Zy
1956 PE-2 ~~ ~~O
SMARA W ~ . ~z
TOWN OF MARANA ~N \ ~ ~'~
ATTN: TOWN CLERK ~R\\\~0~~
11555 W CIVIC CENTER DR
MARANA AZ 85653
DOCKET:
PAGE:
NO. OF PAGES
SEQUENCE:
ORD IN
13646
54
1
20091810014
09/18/2009
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MAIL
AMOUNT PAID $ 8.00
MARANA ORDINANCE N0.2009.19
RELATING TO THE PRIVILEGE LICENSE TAX; ADOPTING "THE 2009
AMENDMENTS TO THE TAX CODE OF THE TOWN OF MARANA" BY
REFERENCE; ESTABLISHING AN EFFECTIVE DATE; PROVIDING FOR
SEVERABILITY AND PROVIDING PENALTIES FOR VIOLATIONS
BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE TOWN OF
MARANA, ARIZONA:
SECTION 1: That certain document known as "The 2009 Amendments to the Tax
Code of the Town of Marana," three copies of which are on file in the office of the town
clerk of the Town of Marana, Arizona, which document was made a public record by
Resolution No. 151 of the Town of Marana, Arizona, is hereby referred to, adopted and
made a part hereof as if fully set out in this ordinance.
SECTION 2: Any person found guilty of violating any provision of these
amendments to the tax code shall be guilty of a class one misdemeanor. Each day that a
violation continues shall be a separate offense punishable as herein above described.
SECTION 3: If any section, subsection, sentence, clause, phrase or portion of this
ordinance or any part of these amendments to the tax code adopted herein by reference is
for any reason held to be invalid or unconstitutional by the decision of any court of
competent jurisdiction, such decision shall not affect the validity of the remaining
portions thereof.
SECTION 4: The provisions of sections 1 through 3 of this ordinance shall be
effective from and after September 1, 2006. The provisions of sections 4 and 5 of this
ordinance shall be effective from and after July 1, 2008.
PASSED AND ADOPTED by the Mayor and Council of the Town of Marana, Arizona,
this 15~' day of September, 2009.
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yn C~'ronson, Town Clerk
APPROVED AS TO FORM:
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F'rarik Cassidy; Town Attorney
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UTLINE OF PROPOSED CONFORMING CHANGES TO MODEL CITY TAX CODE
The attached Model City Tax Code changes, summarized below, were approved by the
Municipal Tax Code Commission in February.
Sections 1-3
These sections incorporate last year's legislative changes to A.R.S. 42-6004, modifying the
Development Fee exemption found in MCTC Sections 415, 416, and 417. These changes serve
to clarify the exemptions, and are the result of a cooperative effort between the UAC and
taxpayer advocates to craft language that was administratively workable without altering the
legislative intent of the original exemption. These sections have a retroactive effective date of
September 1, 2006 to coincide with the original exemption.
Section 4
This is a technical correction, adding the exemption .for Solar Energy devices to Section 450,
Rental of Tangible Personal Property, allowing for the exempt leasing of solar energy devices.
This section was inadvertently left out when the same exemption was added to the Contracting,
Retail, and Use tax activities last year. This change has a retroactive effective date of July 1,
2008 to align it with the other matching exemptions.
Section 5
This is also a technical correction, removing the reference to residency requirements in
Regulation 350.3 that was overlooked when similar language was removed from the definition of
"Out-of--State sales" in Section 100 last year. This change is also retroactive to July 1, 2008 to
align it with the original definition change.
Effective Date
The provisions of sections 1 through 3 shall be effective from and after September 1, 2006. The
provisions of sections 4 and 5 shall be effective from and after July 1, 2008.
Regular Council Meeting -September 15, 2009 -Page 48 of 224
009 AMENDMENTS TO THE
TAX CODE OF THE TOWN OF MARANA
Section 1. Section 8-415 of the Tax Code of the Town of Marana is amended to read:
Sec. 8-415. Construction contracting: construction contractors.
(a) The tax rate shall be at an amount equal to four percent (4%) of the gross income from the
business upon every construction contractor engaging or continuing in the business activity of
construction contracting within the Town.
(1) However, gross income from construction contracting shall not include charges related to
groundwater measuring devices required by A.R.S. Section 45-604.
(2) (Reserved)
(3) gross income from construction contracting shall not include gross income from the sale of
manufactured buildings taxable under Section 8-427.
(4) For taxable periods beginning from and after July 1, 2008, the portion of gross proceeds of
sales or gross income attributable to the actual direct costs of providing architectural or
engineering services that are incorporated in a contract is not subject to tax under this
Section. For the purposes of this subsection, "direct costs" means the portion of the actual
costs that are directly expended in providing architectural or engineering services.
(b) Deductions and exemptions.
(1) Gross income derived from acting as a "subcontractor" shall be exempt from the tax
imposed by this Section.
(2) All construction contracting gross income subject to the tax and not deductible herein shall
be allowed a deduction of thirty-five percent (35%).
(3) The gross proceeds of sales or gross income attributable to the purchase of machinery,
equipment or other tangible personal property that is exempt from or deductible from
privilege or use tax under:
(A) Section 8-465, subsections (g) and (p)
(B) Section 8-660, subsections (g) and (p)
shall be exempt or deductible, respectively, from the tax imposed by this Section.
(4) The gross proceeds of sales or gross income that is derived from a contract entered into for
the installation, assembly, repair or maintenance of income-producing capital equipment, as
defined in Section 8-110, that is deducted from the retail classification pursuant to Section
8-465(g) that does not become a permanent attachment to a building, highway, road,
railroad, excavation or manufactured building or other structure, project, development or
improvement shall be exempt from the tax imposed by this Section. If the ownership of the
realty is separate from the ownership of the income-producing capital equipment, the
determination as to permanent attachment shall be made as if the ownership was the same.
The deduction provided in this paragraph does not include gross proceeds of sales or gross
income from that portion of any contracting activity which consists of the development of, or
modification to, real property in order to facilitate the installation, assembly, repair,
maintenance or removal of the income-producing capital equipment. For purposes of this
paragraph, "permanent attachment" means at least one of the following:
(A) to be incorporated into real property.
(B) to become so affixed to real property that it becomes part of the real property.
(C) to be so attached to real property that removal would cause substantial damage to
the real property from which it is removed.
(5) The gross proceeds of sales or gross income received from a contract for the construction
of an environmentally controlled facility for the raising of poultry for the production of eggs
and the sorting, or cooling and packaging of eggs shall be exempt from the tax imposed
under this Section.
(6) The gross proceeds of sales or gross income that is derived from the installation, assembly,
repair or maintenance of cleanrooms that are deducted from the tax base of the retail
classification pursuant to Section 8-465, subsection (g) shall be exempt from the tax
imposed under this Section.
Regular Council Meeting -September 15, 2009 -Page 49 of 224
7) The gross proceeds of sales or gross income that is derived from a contract entered into
with a person who is engaged in the commercial production of livestock, livestock products
or agricultural, horticultural, viticultural or floricultural crops or products in this State for the
construction, alteration, repair, improvement, movement, wrecking or demolition or addition
to or subtraction from any building, highway, road, excavation, manufactured building or
other structure, project, development or improvement used directly and primarily to prevent,
monitor, control or reduce air, water or land pollution shall be exempt from the tax imposed
under this Section.
(8) The gross proceeds of sales or gross income received from a post construction contract to
perform post-construction treatment of real property for termite and general pest control,
including wood destroying organisms, shall be exempt from tax imposed under this Section.
(9) Through December 31, 2009, the gross proceeds of sales or gross income received from a
contract for constructing any lake facility development in a commercial enhancement reuse
district that is designated pursuant to A.R.S. § 9-499.08 if the contractor maintains the
following records in a form satisfactory to the Arizona Department of Revenue and to the
Town:
(A) The certificate of qualification of the lake facility development issued by the Town
pursuant to A.R.S. § 9-499.08, subsection D.
(B) All state and local transaction privilege tax returns for the period of time during which
the contractor received gross proceeds of sales or gross income from a contract to
construct a lake facility development in a designated commercial enhancement reuse
district, showing the amount exempted from state and local taxation.
(C) Any other information considered to be necessary.
(10)
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ANY AMOUNT ATTRIBUTABLE TO DEVELOPMENT FEES THAT ARE INCURRED IN RELATION TO THE
CONSTRUCTION, DEVELOPMENT OR IMPROVEMENT OF REAL PROPERTY AND PAID BY THE TAXPAYER
AS DEFINED IN THE MODEL CITY TAX CODE OR BY A CONTRACTOR PROVIDING SERVICES TO THE
TAXPAYER. FOR THE PURPOSES OF THIS PARAGRAPH:
(A) THE ATTRIBUTABLE AMOUNT SHALL NOT EXCEED THE VALUE OF THE DEVELOPMENT
FEES ACTUALLY IMPOSED.
(B) THE ATTRIBUTABLE AMOUNT IS EQUAL TO THE TOTAL AMOUNT OF DEVELOPMENT FEES
PAID BY THE TAXPAYER OR BY A CONTRACTOR PROVIDING SERVICES TO THE TAXPAYER
AND THE TOTAL DEVELOPMENT FEES CREDITED IN EXCHANGE FOR THE CONSTRUCTION
OF, CONTRIBUTION TO OR DEDICATION OF REAL PROPERTY FOR PROVIDING PUBLIC
INFRASTRUCTURE, PUBLIC SAFETY OR OTHER PUBLIC SERVICES NECESSARY TO THE
DEVELOPMENT. THE REAL PROPERTY MUST BE THE SUBJECT OF THE DEVELOPMENT
FEES.
(C) ~~DEVELOPMENT FEES~~ MEANS FEES IMPOSED TO OFFSET CAPITAL COSTS OF PROVIDING
PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR OTHER PUBLIC SERVICES TO A
DEVELOPMENT AND AUTHORIZED PURSUANT TO SECTION 9-463.05, SECTION 11-1102
OR TITLE 48 REGARDLESS OF THE JURISDICTION TO WHICH THE FEES ARE PAID.
(11) For taxable periods beginning from and after July 1, 2008 and ending before January 1,
2011, the gross proceeds of sales or gross income derived from a contract to provide and
install a solar energy device. The contractor shall register with the department of revenue
as a solar energy contractor. By registering, the contractor acknowledges that it will make
its books and records relating to sales of solar energy devices available to the department
of revenue and the city, as applicable, for examination.
(c) Subcontractor means a construction contractor performing work for either:
(1) a construction contractor who has provided the subcontractor with a written declaration that
he is liable for the tax for the project and has provided the subcontractor his Town Privilege
License number.
(2) an owner-builder who has provided the subcontractor with a written declaration that:
(A) the owner-builder is improving the property for sale; and
Regular Council Meeting -September 15, 2009 -Page 50 of 224
b) the owner-builder is liable for the tax for such construction contracting activity; and
(c) the owner-builder has provided the contractor his Town Privilege License number.
(3) a person selling new manufactured buildings who has provided the subcontractor with a
written declaration that he is liable for the tax for the site preparation and set-up; and
provided the subcontractor his Town Privilege License number.
Subcontractor also includes a construction contractor performing work for another subcontractor as
defined above.
Section 2. Section 8-416 of the Tax Code of the Town of Marana is amended to read:
Sec. 8-416. Construction contracting: speculative builders.
(a) The tax shall be equal to four percent (4%) of the gross income from the business activity upon
every person engaging or continuing in business as a speculative builder within the Town.
(1) The gross income of a speculative builder considered taxable shall include the total selling
price from the sale of improved real property at the time of closing of escrow or transfer of
title.
(2) "Improved Real Property" means any real property:
(A) upon which a structure has been constructed; or
(B) where improvements have been made to land containing no structure (such as
paving or landscaping); or
(C) which has been reconstructed as provided by Regulation; or
(D) where water, power, and streets have been constructed to the property line.
(3) "Sale of Improved Real Property" includes any form of transaction, whether characterized as
a lease or otherwise, which in substance is a transfer of title of, or equitable ownership in,
improved real property and includes any lease of the property for a term of thirty (30) years
or more (with all options for renewal being included as a part of the term). In the case of
multiple unit projects, "sale" refers to the sale of the entire project or to the sale of any
individual parcel or unit.
(4) "Partially Improved Residential Real Property", as used in this Section, means any improved
real property, as defined in subsection (a)(2) above, being developed for sale to individual
homeowners, where the construction of the residence upon such property is not
substantially complete at the time of the sale.
(b) Exclusions.
(1) In cases involving reconstruction contracting, the speculative builder may exclude from
gross income the prior value allowed for reconstruction contracting in determining his
taxable gross income, as provided by Regulation.
(2) Neither the cost nor the fair market value of the land which constitutes part of the improved
real property sold may be excluded or deducted from gross income subject to the tax
imposed by this Section.
(3) (Reserved)
(4) A speculative builder may exclude gross income from the sale of partially improved
residential real property as defined in (a)(4) above to another speculative builder only if all of
the following conditions are satisfied:
(A) The speculative builder purchasing the partially improved residential real property
has a valid Town privilege license for construction contracting as a speculative
builder; and
(B) At the time of the transaction, the purchaser provides the seller with a properly
completed written declaration that the purchaser assumes liability for and will pay all
privilege taxes which would otherwise be due the Town at the time of sale of the
partially improved residential real property; and
(C) The seller also:
(i) maintains proper records of such transactions in a manner similar to the
requirements provided in this chapter relating to sales for resale; and
Regular Council Meeting -September 15, 2009 -Page 51 of 224
ii) retains a copy of the written declaration provided by the buyer for the
transaction; and
(iii) is properly licensed with the Town as a speculative builder and provides the
Town with the written declaration attached to the Town privilege tax return
where he claims the exclusion.
(5) For taxable periods beginning from and after July 1, 2008, the portion of gross proceeds of
sales or gross income attributable to the actual direct costs of providing architectural or
engineering services that are incorporated in a contract is not subject to tax under this
section. For the purposes of this subsection, "direct costs" means the portion of the actual
costs that are directly expended in providing architectural or engineering services.
(c) Tax liability for speculative builders occurs at close of escrow or transfer of title, whichever occurs
earlier, and is subject to the following provisions, relating to exemptions, deductions and tax
credits:
(1) Exemptions.
(A) The gross proceeds of sales or gross income attributable to the purchase of
machinery, equipment or other tangible personal property that is exempt from or
deductible from privilege or use tax under:
(i) Section 8-465, subsections (g) and (p)
(ii) Section 8-660, subsections (g) and (p)
shall be exempt or deductible, respectively, from the tax imposed by this Section.
(B) The gross proceeds of sales or gross income received from a contract for the
construction of an environmentally controlled facility for the raising of poultry for the
production of eggs and the sorting, or cooling and packaging of eggs shall be exempt
from the tax imposed under this Section.
(C) The gross proceeds of sales or gross income that is derived from the installation,
assembly, repair or maintenance of cleanrooms that are deducted from the tax base
of the retail classification pursuant to Section 8-465, subsection (g) shall be exempt
from the tax imposed under this section.
(D) The gross proceeds of sales or gross income that is derived from a contract entered
into with a person who is engaged in the commercial production of livestock, livestock
products or agricultural, horticultural, viticultural or floricultural crops or products in
this state for the construction, alteration, repair, improvement, movement, wrecking or
demolition or addition to or subtraction from any building, highway, road, excavation,
manufactured building or other structure, project, development or improvement used
directly and primarily to prevent, monitor, control or reduce air, water or land pollution
shall be exempt from the tax imposed under this Section.
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ANY AMOUNT ATTRIBUTABLE TO DEVELOPMENT FEES THAT ARE INCURRED IN RELATION TO
THE CONSTRUCTION, DEVELOPMENT OR IMPROVEMENT OF REAL PROPERTY AND PAID BY THE
TAXPAYER AS DEFINED IN THE MODEL CITY TAX CODE OR BY A CONTRACTOR PROVIDING
SERVICES TO THE TAXPAYER SHALL BE EXEMPT FROM THE TAX IMPOSED UNDER THIS
SECTION. FOR THE PURPOSES OF THIS PARAGRAPH:
(I) THE ATTRIBUTABLE AMOUNT SHALL NOT EXCEED THE VALUE OF THE
DEVELOPMENT FEES ACTUALLY IMPOSED.
(II) THE ATTRIBUTABLE AMOUNT IS EQUAL TO THE TOTAL AMOUNT OF
DEVELOPMENT FEES PAID BY THE TAXPAYER OR BY A CONTRACTOR PROVIDING
SERVICES TO THE TAXPAYER AND THE TOTAL DEVELOPMENT FEES CREDITED IN
EXCHANGE FOR THE CONSTRUCTION OF, CONTRIBUTION TO OR DEDICATION OF
REAL PROPERTY FOR PROVIDING PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR
OTHER PUBLIC SERVICES NECESSARY TO THE DEVELOPMENT. THE REAL
PROPERTY MUST BE THE SUBJECT OF THE DEVELOPMENT FEES.
(III) "DEVELOPMENT FEES" MEANS FEES IMPOSED TO OFFSET CAPITAL COSTS OF
PROVIDING PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR OTHER PUBLIC
Regular Council Meeting -September 15, 2009 -Page 52 of 224
ERVICES TO A DEVELOPMENT AND AUTHORIZED PURSUANT TO SECTION 9-
463.05, SECTION 11-11 O2 OR TITLE 48 REGARDLESS OF THE JURISDICTION TO
WHICH THE FEES ARE PAID.
(2) Deductions.
(A) All amounts subject to the tax shall be allowed a deduction in the amount of thirty-five
percent (35%).
(B) The gross proceeds of sales or gross income that is derived from a contract entered
into for the installation, assembly, repair or maintenance of income-producing capital
equipment, as defined in Section 8-110, that is deducted from the retail classification
pursuant to Section 8-465(g), that does not become a permanent attachment to a
building, highway, road, railroad, excavation or manufactured building or other
structure, project, development or improvement shall be exempt from the tax
imposed by this Section. If the ownership of the realty is separate from the ownership
of the income-producing capital equipment, the determination as to permanent
attachment shall be made as if the ownership was the same. The deduction provided
in this paragraph does not include gross proceeds of sales or gross income from that
portion of any contracting activity which consists of the development of, or
modification to, real property in order to facilitate the installation, assembly, repair,
maintenance or removal of the income-producing capital equipment. For purposes of
this paragraph, "permanent attachment" means at least one of the following:
(i) to be incorporated into real property.
(ii) to become so affixed to real property that it becomes part of the real property.
(iii) to be so attached to real property that removal would cause substantial
damage to the real property from which it is removed.
(C) For taxable periods beginning from and afterjuly 1, 2008 and ending before January
1, 2011, the gross proceeds of sales or gross income derived from a contract to
provide and install a solar energy device. The contractor shall register with the
department of revenue as a solar energy contractor. By registering, the contractor
acknowledges that it will make its books and records relating to sales of solar energy
devices available to the department of revenue and the city, as applicable, for
examination.
(3) Tax credits.
The following tax credits are available to owner-builders or speculative builders, not to
exceed the tax liability against which such credits apply, provided such credits are
documented to the satisfaction of the tax collector:
(A) A tax credit equal to the amount of town privilege or use tax, or the equivalent excise
tax, paid directly to a taxing jurisdiction or as a separately itemized charge paid
directly to the vendor with respect to the tangible personal property incorporated into
the said structure or improvement to real property undertaken by the owner-builder or
speculative builder.
(B) A tax credit equal to the amount of privilege taxes paid to this Town, or charged
separately to the speculative builder, by a construction contractor, on the gross
income derived by said person from the construction of any improvement to the real
property.
(C) No credits provided herein may be claimed until such time that the gross income
against which said credits apply is reported.
Section 3. Section 8-417 of the Tax Code of the Town of Marana is amended to read:
Sec. 8-417. Construction contracting: owner-builders who are not speculative builders.
(a) At the expiration of twenty-four (24) months after improvement to the property is substantially
complete, the tax liability for an owner-builder who is not a speculative builder shall be at an
amount equal to four percent (4%) of:
Regular Council Meeting -September 15, 2009 -Page 53 of 224
1) the gross income from the activity of construction contracting upon the real property in
question which was realized by those construction contractors to whom the owner-builder
provided written declaration that they were not responsible for the taxes as prescribed in
Subsection 8-415(c)(2); and
(2) the purchase of tangible personal property for incorporation into any improvement to real
property, computed on the sales price.
(b) For taxable periods beginning from and after July 1, 2008, the portion of gross proceeds of sales or
gross income attributable to the actual direct costs of providing architectural or engineering
services that are incorporated in a contract is not subject to tax under this section. For the
purposes of this subsection, "direct costs" means the portion of the actual costs that are directly
expended in providing architectural or engineering services.
(c) The tax liability of this Section is subject to the following provisions, relating to exemptions,
deductions and tax credits:
(1) Exemptions.
(A) The gross proceeds of sales or gross income attributable to the purchase of
machinery, equipment or other tangible personal property that is exempt from or
deductible from privilege or use tax under:
(i) Section 8-465, subsections (g) and (p)
(ii) Section 8-660, subsections (g) and (p)
shall be exempt or deductible, respectively, from the tax imposed by this Section.
(B) The gross proceeds of sales or gross income received from a contract for the
construction of an environmentally controlled facility for the raising of poultry for the
production of eggs and the sorting, or cooling and packaging of eggs shall be exempt
from the tax imposed under this Section.
(C) The gross proceeds of sales or gross income that is derived from the installation,
assembly, repair or maintenance of cleanrooms that are deducted from the tax base
of the retail classification pursuant to Section 8-465, subsection (g) shall be exempt
from the tax imposed under this Section.
(D) The gross proceeds of sales or gross income that is derived from a contract entered
into with a person who is engaged in the commercial production of livestock, livestock
products or agricultural, horticultural, viticultural or floricultural crops or products in
this state for the construction, alteration, repair, improvement, movement, wrecking or
demolition or addition to or subtraction from any building, highway, road, excavation,
manufactured building or other structure, project, development or improvement used
directly and primarily to prevent, monitor, control or reduce air, water or land pollution
shall be exempt from the tax imposed under this Section.
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ANY AMOUNT ATTRIBUTABLE TO DEVELOPMENT FEES THAT ARE INCURRED IN RELATION TO
THE CONSTRUCTION, DEVELOPMENT OR IMPROVEMENT OF REAL PROPERTY AND PAID BY THE
TAXPAYER AS DEFINED IN THE MODEL CITY TAX CODE OR BY A CONTRACTOR PROVIDING
SERVICES TO THE TAXPAYER SHALL BE EXEMPT FROM THE TAX IMPOSED UNDER THIS
SECTION. FOR THE PURPOSES OF THIS PARAGRAPH:
(I) THE ATTRIBUTABLE AMOUNT SHALL NOT EXCEED THE VALUE OF THE
DEVELOPMENT FEES ACTUALLY IMPOSED.
(II) THE ATTRIBUTABLE AMOUNT IS EQUAL TO THE TOTAL AMOUNT OF
DEVELOPMENT FEES PAID BY THE TAXPAYER OR BY A CONTRACTOR PROVIDING
SERVICES TO THE TAXPAYER AND THE TOTAL DEVELOPMENT FEES CREDITED IN
EXCHANGE FOR THE CONSTRUCTION OF, CONTRIBUTION TO OR DEDICATION OF
REAL PROPERTY FOR PROVIDING PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR
OTHER PUBLIC SERVICES NECESSARY TO THE DEVELOPMENT. THE REAL
PROPERTY MUST BE THE SUBJECT OF THE DEVELOPMENT FEES.
Regular Council Meeting -September 15, 2009 -Page 54 of 224
III) "DEVELOPMENT FEES" MEANS FEES IMPOSED TO OFFSET CAPITAL COSTS OF
PROVIDING PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR OTHER PUBLIC
SERVICES TO A DEVELOPMENT AND AUTHORIZED PURSUANT TO SECTION 9-
463.05, SECTION 11-1102 OR TITLE 48 REGARDLESS OF THE JURISDICTION TO
WHICH THE FEES ARE PAID.
(2) Deductions.
(A) All amounts subject to the tax shall be allowed a deduction in the amount of thirty-five
percent (35%).
(B) The gross proceeds of sales or gross income that is derived from a contract entered
into for the installation, assembly, repair or maintenance of income-producing capital
equipment, as defined in Section 8-110, that is deducted from the retail classification
pursuant to Section 8-465(g), that does not become a permanent attachment to a
building, highway, road, railroad, excavation or manufactured building or other
structure, project, development or improvement shall be exempt from the tax
imposed by this Section. If the ownership of the realty is separate from the
ownership of the income-producing capital equipment, the determination as to
permanent attachment shall be made as if the ownership was the same. The
deduction provided in this paragraph does not include gross proceeds of sales or
gross income from that portion of any contracting activity which consists of the
development of, or modification to, real property in order to facilitate the installation,
assembly, repair, maintenance or removal of the income-producing capital
equipment. For purposes of this paragraph, "permanent attachment" means at least
one of the following:
(i) to be incorporated into real property.
(ii) to become so affixed to real property that it becomes part of the real property.
(iii) to be so attached to real property that removal would cause substantial
damage to the real property from which it is removed.
(C) For taxable periods beginning from and after July 1, 2008 and ending before January
1, 2011, the gross proceeds of sales or gross income derived from a contract to
provide and install a solar energy device. The contractor shall register with the
department of revenue as a solar energy contractor. By registering, the contractor
acknowledges that it will make its books and records relating to sales of solar energy
devices available to the department of revenue and the city, as applicable, for
examination.
(3) Tax credits.
The following tax credits are available to owner-builders and speculative builders, not to
exceed the tax liability against which such credits apply, provided such credits are
documented to the satisfaction of the tax collector:
(A) A tax credit equal to the amount of town privilege or use tax, or the equivalent excise
tax, paid directly to a taxing jurisdiction or as a separately itemized charge paid
directly to the vendor with respect to the tangible personal property incorporated into
the said structure or improvement to real property undertaken by the owner-builder or
speculative builder.
(B) A tax credit equal to the amount of privilege taxes paid to this Town, or charged
separately to the speculative builder, by a construction contractor, on the gross
income derived by said person from the construction of any improvement to the real
property.
(C) No credits provided herein may be claimed until such time that the gross income
against which said credits apply is reported.
(d) The limitation period for the assessment of taxes imposed by this Section is measured based upon
when such liability is reportable, that is, in the reporting period that encompasses the twenty-fifth
(25th) month after said unit or project was substantially complete. Interest and penalties, as
provided in Section 8-540, will be based on reportable date.
(e) (Reserved)
Regular Council Meeting -September 15, 2009 -Page 55 of 224
ection 4. Section 8-450 of the Tax Code of the Town of Marana is amended to read:
Sec. 8-450. Rental, leasing, and licensing for use of tangible personal property.
(a) The tax rate shall be at an amount equal to two percent (2%) of the gross income from the
business activity upon every person engaging or continuing in the business of leasing, licensing for
use, or renting tangible personal property for a consideration, including that which is
semi-permanently or permanently installed within the Town as provided by Regulation.
(b) Special provisions relating to long-term motor vehicle leases. A lease transaction involving a motor
vehicle for a minimum period of twenty-four (24) months shall be considered to have occurred at
the location of the motor vehicle dealership, rather than the location of the place of business of the
lessor, even if the lessor's interest in the lease and its proceeds are sold, transferred, or otherwise
assigned to a lease financing institution; provided further that the city or town where such motor
vehicle dealership is located levies a Privilege Tax or an equivalent excise tax upon the
transaction.
(c) Gross income derived from the following transactions shall be exempt from Privilege Taxes
imposed by this Section:
(1) rental, leasing, or licensing for use of tangible personal property to persons engaged or
continuing in the business of leasing, licensing for use, or rental of such property.
(2) rental, leasing, or licensing for use of tangible personal property that is semi-permanently or
permanently installed within another city or town that levies an equivalent excise tax on the
transaction.
(3) rental, leasing, or licensing for use of film, tape, or slides to a theater or other person taxed
under Section 8-410, or to a radio station, television station, or subscription television
system.
(4) rental, leasing, or licensing for use of the following:
(A) prosthetics.
(B) income-producing capital equipment.
(C) mining and metallurgical supplies.
These exemptions include the rental, leasing, or licensing for use of tangible personal
property which, if it had been purchased instead of leased, rented, or licensed by the lessee
or licensee, would qualify as income-producing capital equipment or mining and
metallurgical supplies.
(5) rental, leasing, or licensing for use of tangible personal property to a qualifying hospital,
qualifying community health center or a qualifying health care organization, except when the
property so rented, leased, or licensed 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 rental,
leasing, or licensing for use of tangible personal property 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.
(6) separately billed charges for delivery, installation, repair, and/or maintenance as provided
by Regulation.
(7) charges for joint pole usage by a person engaged in the business of providing or furnishing
utility or telecommunication services to another person engaged in the business of providing
or furnishing utility or telecommunication services.
(8) the gross income from coin-operated washing, drying, and dry cleaning machines, or from
coin-operated car washing machines. This exemption shall not apply to suppliers or
distributors renting, leasing, or licensing for use of such equipment to persons engaged in
the operation of coin-operated washing, drying, dry cleaning, or car washing
establishments.
(9) rental, leasing, or licensing of aircraft that would qualify as aircraft acquired for use outside
the State, as prescribed by Regulation, if such rental, leasing, or licensing had been a sale.
(10) rental, leasing and licensing for use of an alternative fuel vehicle if such vehicle was
manufactured as a diesel fuel vehicle and converted to operate on alternative fuel and
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quipment 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. Section 1-215.
(11) RENTAL, LEASING, AND LICENSING FOR USE OF SOLAR ENERGY DEVICES, FOR TAXABLE PERIODS
BEGINNING FROM AND AFTER JULY 1, 2008. THE LESSOR SHALL REGISTER WITH THE DEPARTMENT
OF REVENUE AS A SOLAR ENERGY RETAILER. BY REGISTERING, THE LESSOR ACKNOWLEDGES THAT
IT WILL MAKE ITS BOOKS AND RECORDS RELATING TO LEASES OF SOLAR ENERGY DEVICES
AVAILABLE TO THE DEPARTMENT OF REVENUE AND TOWN, AS APPLICABLE, FOR EXAMINATION.
Section 5. Regulation 8-350.3 of the Tax Code of the Town of Marana is amended to read:
Reg. 8-350.3. Recordkeeping: out-of-Town and out-of-State sales.
(a) Out-of-Town Sales. Any person engaging or continuing in a business who claims out-of-Town
sales shall maintain and keep accounting records or books indicating separately the gross income
from the sales of tangible personal property from such out-of-Town branches or locations.
(b) Out-of-State sales. Persons engaged in a business claiming out-of-State sales shall maintain
accounting records or books indicating for each out-of-State sale the following documentation:
(1) documentation of location of the buyer at the time of order placement; and
ersen "resides withi+i-tie T^~^~a~Q
(32) shipping, delivery, or freight documents showing where the buyer took delivery; and
(43) documentation of intended location of use or storage of the tangible personal property sold
to such buyer.
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