REFERENCE TITLE: use tax; retailer; definition
State of Arizona
Second Regular Session
Senators Melvin, McComish: Representatives Mesnard, Olson
amending sections 42-5151, 42-5160, 42-5161, 42‑5162 and 42-5167, Arizona Revised Statutes; Repealing section 42-5169, Arizona Revised Statutes; amending section 43-321, Arizona Revised Statutes; relating to use tax.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 42-5151, Arizona Revised Statutes, is amended to read:
In this article, unless the context otherwise requires:
1. "Ancillary services" means those services so designated in federal energy regulatory commission order 888 adopted in 1996 that include the services necessary to support the transmission of electricity from resources to loads while maintaining reliable operation of the transmission system according to good utility practice.
2. "Electric distribution service" means distributing electricity to retail electric customers through the use of electric distribution facilities.
3. "Electric generation service" means providing electricity for sale to retail electric customers but excluding electric distribution or transmission services.
4. "Electric transmission service" means transmitting electricity to retail electric customers or to electric distribution facilities so classified by the federal energy regulatory commission or, to the extent permitted by law, so classified by the Arizona corporation commission.
5. "Electric utility services" means the business of providing electric ancillary services, electric distribution services, electric generation services, electric transmission services and other services related to providing electricity.
6. "Electricity" means electric energy, electric capacity or electric capacity and energy.
7. "Electricity supplier" means a person, whether acting in a principal, agent or other capacity, that offers to sell electricity to a retail electric customer in this state.
8. "Natural gas" means natural or artificial gas, and includes methane and propane gas, the natural gas commodity, natural gas pipeline capacity or natural gas commodity and pipeline capacity.
9. "Natural gas utility services" means the business of selling natural gas or providing natural gas transportation services or other services related to providing natural gas.
10. "Notice" means written notice served personally or by certified mail and addressed to the last known address of the person to whom such notice is given.
11. "Other services" includes metering, meter reading services, billing and collecting services.
12. "Person" means an individual, firm, partnership, joint venture, association, corporation, estate, trust, receiver or syndicate, this state or a county, city, municipality, district or other political subdivision or agency thereof.
13. "Purchase" means any transfer, exchange or barter, conditional or otherwise, in any manner or by any means, of tangible personal property for a consideration, including transactions by which the possession of property is transferred but the seller retains the title as security for payment.
14. "Purchase price" or "sales price" means the total amount for which tangible personal property is sold, including any services that are a part of the sale, valued in money, whether paid in money or otherwise, and any amount for which credit is given to the purchaser by the seller without any deduction on account of the cost of the property sold, materials used, labor or services performed, interest charged, losses or other expenses, but does not include:
(a) Discounts allowed and taken.
(b) Charges for labor or services in installing, remodeling or repairing.
(c) Freight costs billed to and collected from a purchaser by a retailer for tangible personal property which, on the order of the retailer, is shipped directly from a manufacturer or wholesaler to the purchaser.
(d) Amounts attributable to federal excise taxes imposed by 26 United States Code section 4001, 4051 or 4081 on sales of heavy trucks and trailers and automobiles or on sales of use fuel, as defined in section 28‑5601.
(e) The value of merchandise that is traded in on the purchase of new or pre‑owned merchandise when the trade‑in allowance is deducted from the sales price of the new or pre‑owned merchandise before the completion of the sale.
15. "Retail electric customer" means a person who purchases electricity for that person's own use, including use in that person's trade or business, and not for resale, redistribution or retransmission.
16. "Retail natural gas customer" means a person who purchases natural gas for that person's own use, including use in that person's trade or business, and not for resale, redistribution or retransmission.
17. "Retailer" includes:
(a) Every person engaged in the business of making sales of tangible personal property for storage, use or other consumption or in the business of making sales at auction of tangible personal property owned by that person or others for storage, use or other consumption. If in the opinion of the department it is necessary for the efficient administration of this article to regard any salesmen, representatives, peddlers or canvassers as the agents of the dealers, distributors, supervisors or employers under whom they operate or from whom they obtain the tangible personal property sold by them, regardless of whether they are making sales on their own behalf or on behalf of such dealers, distributors, supervisors or employers, the department may so regard them and may regard the dealers, distributors, supervisors or employers as retailers for purposes of this article.
(b) A person who solicits orders for tangible personal property by mail if the solicitations are substantial and recurring or if the retailer benefits from any banking, financing, debt collection, telecommunication, television shopping system, cable, optic, microwave or other communication system or marketing activities occurring in this state or benefits from the location in this state of authorized installation, servicing or repair facilities.
(c) Any person who makes sales of tangible personal property that are taxable under this article for storage, use or other consumption in this state if any other person, other than a common carrier acting in its official capacity, maintains a distribution center, warehouse, fulfillment center or similar place of business within this state that facilitates the delivery of property sold by the person to the person's customers. This subdivision creates a presumption that such person is a retailer, and this presumption may be rebutted by demonstrating that the activities conducted by the person maintaining the distribution center, warehouse, fulfillment center or similar place of business are not significantly associated with the person's ability to establish or maintain a market in the state for the person's sales.
18. "Solar daylighting" means a device that is specifically designed to capture and redirect the visible portion of the solar beam, while controlling the infrared portion, for use in illuminating interior building spaces in lieu of artificial lighting.
19. "Solar energy device" means a system or series of mechanisms designed primarily to provide heating, to provide cooling, to produce electrical power, to produce mechanical power, to provide solar daylighting or to provide any combination of the foregoing by means of collecting and transferring solar generated energy into such uses by either active or passive means, including wind generator systems that produce electricity. Solar energy systems may also have the capability of storing solar energy for future use. Passive systems shall clearly be designed as a solar energy device, such as a trombe wall, and not merely as a part of a normal structure, such as a window.
20. "Storage" means keeping or retaining tangible personal property purchased from a retailer for any purpose except sale in the regular course of business or subsequent use solely outside this state.
21. "Taxpayer" means any retailer or person storing, using or consuming tangible personal property the storage, use or consumption of which is subject to the tax imposed by this article when such tax was not paid to a retailer.
22. "Use or consumption" means the exercise of any right or power over tangible personal property incidental to owning the property except holding for sale or selling the property in the regular course of business.
23. "Utility business" means a person that is engaged in the business of providing electric utility services to retail electric customers or natural gas utility services to retail natural gas customers.
Sec. 2. Section 42-5160, Arizona Revised Statutes, is amended to read:
42-5160. Liability for tax
a. Any person who uses, stores or consumes any tangible personal property upon on which a tax is imposed by this article and upon on which the tax has not been collected by a registered retailer or utility business shall pay the tax as provided by this article, but every retailer and utility business maintaining a place of business in this state and making sales of tangible personal property for storage, use or other consumption in this state shall collect the tax from the purchaser or user unless the property is exempt under this article or the purchaser or user pays the tax directly to the department as provided by section 42‑5167.
B. Any person who uses, stores or consumes any tangible personal property on which a tax is imposed by this article and on which the tax has not been collected by a registered retailer shall pay the tax as provided by this article, but every retailer making sales of tangible personal property for storage, use or other consumption in this state shall collect the tax from the purchaser or user unless the property is exempt under this article.
c. In the case of a manufactured building that is purchased from a dealer outside this state and brought into this state, any person who is hired to set up the manufactured building and who is licensed pursuant to title 41, chapter 16, article 4 shall collect the tax from the owner and remit the tax with any tax that is due under the prime contracting classification.
Sec. 3. Section 42-5161, Arizona Revised Statutes, is amended to read:
42-5161. Collection from purchaser; receipt; tax as debt to state
a. Except as provided by section 42‑5167, every retailer and utility business shall collect from the purchaser the tax imposed by this article and give to such purchaser a receipt for the tax in the manner and form prescribed by the department. The tax required to be collected shall be shown separately on the invoice or other proof of sale. The tax required to be collected shall constitute a debt owed by the retailer or utility business to this state.
B. Every retailer making sales of tangible personal property for storage, use or other consumption in this state shall collect from the purchaser the tax imposed by this article and give to the purchaser a receipt for the tax in the manner and form prescribed by the department. The tax required to be collected shall be shown separately on the invoice or other proof of sale. The tax required to be collected shall constitute a debt owed by the retailer to this state.
Sec. 4. Section 42-5162, Arizona Revised Statutes, is amended to read:
42-5162. Monthly return; time for payment; extension of time; quarterly payment
A. Except as provided in section 42‑5169, Every retailer engaged in the business of making sales of tangible personal property the use, storage or consumption of which is subject to the tax imposed by this article, and every person who purchases for use, storage or consumption any such property for which the tax is not paid to the retailer, shall file a return with the department on or before the twentieth day of the month next succeeding the month in which the tax accrues. The return shall be on a form prescribed by the department and shall show the tangible personal property sold for use, storage or consumption or purchased for use, storage or consumption within the state during the preceding calendar month. Such return shall be verified by oath or affirmation of the retailer or person making the report, or his agent, and shall be accompanied by payment of the tax shown to be due. The return and tax are delinquent if not postmarked on or before the twenty-fifth day of the month when due or if not received by the department on or before the business day preceding the last business day of that month for those taxpayers electing to file by mail, or are delinquent if not received by the department on the business day preceding the last business day of the month when due for those taxpayers electing to file in person.
B. The department may, for any taxpayer whose estimated annual liability for taxes imposed by this article is between five hundred and one thousand two hundred fifty dollars, may authorize such taxpayer to pay such taxes on a quarterly basis. The department may, for any taxpayer whose estimated annual liability for taxes imposed by this article is five hundred dollars or less, may authorize such taxpayer to pay such taxes on an annual basis.
C. For good cause shown the department may extend the time for making a return and paying the tax, but the time for filing the return shall not be extended beyond the first day of the third month next succeeding the regular due date of the return.
Sec. 5. Section 42-5167, Arizona Revised Statutes, is amended to read:
42-5167. Use tax direct payment; utility business transactions
A. for transactions with a utility business, a person may elect to pay use taxes directly to the department under this article if the person:
1. Applies to the department for a use tax direct payment permit. The application must be on a form prescribed by the department setting forth the name under which the applicant transacts or intends to transact business, the location of the place or places of business where the applicant intends to make direct payment of use taxes and any other information that the department may require. The application must be signed, in the case of:
(a) A natural person, by the owner.
(b) An association or partnership, by a member or partner.
(c) A corporation, by an executive officer or another person specifically authorized by the corporation to sign the application.
2. Agrees to self‑assess and pay directly to the department any use tax liability incurred under this article.
3. Certifies to the department that the person purchased for the person's own use tangible personal property at a cost of five hundred thousand dollars or more, in the aggregate, during the immediately preceding calendar year.
B. The department shall issue a use tax direct payment permit to any applicant that meets the requirements of subsection A of this section.
C. If the department deems it necessary to protect the revenues to be collected under this section, it may require a person to file a bond to secure the payment of such amounts pursuant to section 42‑1102.
D. A person who holds a valid use tax direct payment permit shall:
1. Self‑assess and pay directly to the department use taxes due under this article for all tangible personal property subject to use tax.
2. Report the tax on a tax return prescribed by the department.
E. A holder of a use tax direct payment certificate permit may issue a use tax direct payment certificate to any retailer or seller, subject to all of the following:
1. The certificate shall be in a form prescribed by the department and must be signed by and bear the name, address and permit number of the holder of the use tax direct payment permit.
2. The certificate is effective until the permit holder revises or withdraws the certificate or until the retailer or seller receives actual notice that the department has revoked the permit.
3. The certificate relieves the retailer or seller of the duty to collect use tax only if taken in good faith from a person who holds a use tax direct payment permit. The department may periodically publish on its web site a list of taxpayers by name with tax identification numbers who have been issued direct payment permits. A purchaser holding a direct payment permit who issues a use tax direct payment certificate that is accepted in good faith by a retailer or seller of tangible personal property shall be liable for use tax and related interest and penalties with respect to any transaction that the department subsequently determines properly subjects the vendor to the transaction privilege tax and not use tax. The vendor shall be relieved of the duty to pay transaction privilege tax on such transactions.
4. In addition to any use tax liabilities, a holder of a use tax direct payment permit that gives a use tax direct payment certificate to a retailer or seller is subject to the same penalty provisions that apply to a retailer or seller.
Sec. 6. Repeal
Section 42-5169, Arizona Revised Statutes, is repealed.
Sec. 7. Section 43-321, Arizona Revised Statutes, is amended to read:
43-321. Information required in returns
Each return required to be filed under this title shall contain the following:
1. It shall contain or be verified by a declaration that it is made under penalties of perjury. The declaration shall be written or in a form prescribed by the department pursuant to section 42‑1105, subsection B.
2. A specific statement of the items of the taxpayer's gross income and the adjustments, deductions and credits allowed by this title.
3. A specific statement of the taxpayer's use tax liability pursuant to section 42‑5169.
4. 3. Such other information as the department may by rule prescribe for the purpose of carrying out the provisions of this title.
Sec. 8. Forgiveness of penalty
Notwithstanding the failure to declare any use tax liability, the penalties prescribed by title 42, chapter 1, article 3, Arizona Revised Statutes, for failing to declare the taxpayer's use tax liability pursuant to section 42‑5169, Arizona Revised Statutes, as repealed by this act, do not apply and the department of revenue shall waive any applicable penalties.
Sec. 9. Retroactivity
A. Sections 42-5162 and 43-321, Arizona Revised Statutes, as amended by this act, are effective retroactively to July 20, 2011.
B. Section 42-5169, Arizona Revised Statutes, as repealed by this act, is effective retroactively to July 20, 2011.