HB2820 - 472R - House Bill Summary

House of Representatives

HB 2820

manufactured buildings; taxation

Sponsors: Representative Kirkpatrick, Representative Reagan, Representative Stump

DPA	Committee on Ways and Means
DPA	Caucus and COW
x	As Engrossed and As Passed the House

HB 2820 clarifies the prime contracting classification and use tax for manufactured homes.

History

In the early 1990s, the manufactured housing industry experienced enormous problems due to confusion and conflicting interpretations about the state and local sales tax rules applicable to manufactured, mobile and factory-built (modular) homes. The industry and the Department of Revenue (DOR) agreed on a series of statutory changes that simplified the rules and stipulates that manufacture homes should be treated like site-built homes for the purposes of transaction privilege tax (TPT). The legislation affected the following principles: new homes are taxed as prime contracting, not retail sales; used home sales are not taxed; the tax is applied where the home is set up.

In 2005, the DOR proposed to issue an interpretive ruling on the statutory changes. The Manufactured Housing Industry of Arizona (MHIA) and the DOR reached an agreement on new language that does not change the taxability of any transaction, but clarifies how the tax applies and is collected. In particular, it cleans up issues relating to interstate transactions and use tax, which has always applied but is difficult to collect.

Provisions

· Clarifies that the proceeds from alterations or repairs to a manufactured home are taxable under the prime contracting classification.

· Clarifies the site of taxation for the sales of manufactured homes in Arizona in the following ways:

· homes sold delivered to another state are not taxed.

· homes sold with no specified delivery site are taxed at the dealer’s location.

· homes sold with a specified delivery or setup site in Arizona are taxed at that site.

· Stipulates that homes purchased outside of Arizona, but setup in Arizona are subject to use tax at the rate of 65% of the sales price. Any person hired to setup the home in Arizona is liable for collecting and remitting the use tax along with any tax due under the prime contracting classification.

· Specifies that sales for resale do not include sales to a lessor of manufactured buildings.

· Contains an intent clause which states that the bill is clarifying existing law and not creating new taxes.

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· Forty-seventh Legislature