DIVISION 3-05-005
ADMINISTRATION
SECTIONS:
3-05-005-0500 ADMINISTRATION OF THIS CHAPTER; RULE MAKING:
3-05-005-0510 DIVULGING OF INFORMATION PROHIBITED; EXCEPTIONS ALLOWING DISCLOSURE:
3-05-005-0515 DUTIES OF THE TAXPAYER PROBLEM RESOLUTION OFFICER:
3-05-005-0516 TAXPAYER ASSISTANCE ORDERS:
3-05-005-0517 BASIS FOR EVALUATING EMPLOYEE PERFORMANCE:
3-05-005-0520 REPORTING AND PAYMENT OF TAX:
3-05-005-0530 WHEN TAX DUE; WHEN DELINQUENT; VERIFICATION OF RETURN; EXTENSIONS:
3-05-005-0540 INTEREST AND CIVIL PENALTIES:
3-05-005-0541 ERRONEOUS ADVICE OR MISLEADING STATEMENTS BY THE TAX COLLECTOR; ABATEMENT OF PENALTIES AND INTEREST; DEFINITION:
3-05-005-0542 PROSPECTIVE APPLICATION OF NEW LAW OR INTERPRETATION OR APPLICATION OF LAW
3-05-005-0545 DEFICIENCIES; WHEN INACCURATE RETURN IS FILED; WHEN NO RETURN IS FILED; ESTIMATES:
3-05-005-0546 CLOSING AGREEMENTS IN CASES OF EXTENSIVE TAXPAYER MISUNDERSTANDING OR MISAPPLICATION; CITY ATTORNEY APPROVAL; RULES:
3-05-005-0550 LIMITATION PERIODS:
3-05-005-0555 TAX COLLECTOR MAY EXAMINE BOOKS AND OTHER RECORDS; FAILURE TO PROVIDE RECORDS:
3-05-005-0556 NO ADDITIONAL AUDITS OR PROPOSED ASSESSMENTS; EXCEPTIONS:
3-05-005-0560 ERRONEOUS PAYMENT OF TAX; CREDITS AND REFUNDS; LIMITATIONS:
3-05-005-0565 PAYMENT OF TAX BY THE INCORRECT TAXPAYER OR TO THE INCORRECT ARIZONA CITY OR TOWN:
3-05-005-0567 RESERVED:
3-05-005-0570 ADMINISTRATIVE REVIEW; PETITION FOR HEARING OR FOR REDETERMINATION; FINALITY OF ORDER:
3-05-005-0571 JEOPARDY ASSESSMENTS:
3-05-005-0572 EXPEDITED REVIEW OF JEOPARDY ASSESSMENTS:
3-05-005-0575 JUDICIAL REVIEW:
3-05-005-0577 REFUNDS OF TAXES PAID UNDER PROTEST:
3-05-005-0578 REIMBURSEMENT OF FEES AND OTHER COSTS; DEFINITIONS:
3-05-005-0580 CRIMINAL PENALTIES:
3-05-005-0590 CIVIL ACTIONS:
3-05-005-0595 COLLECTION OF TAXES WHEN THERE IS SUCCESSION IN AND/OR CESSATION OF BUSINESS:
3-05-005-0596 AGREEMENT FOR INSTALLMENT PAYMENTS OF TAX:
3-05-005-0597 PRIVATE TAXPAYER RULINGS; REQUEST; REVOCATION OR MODIFICATION; DEFINITION:
3-05-005-0500 ADMINISTRATION OF THIS CHAPTER; RULE MAKING:
A. The administration of this chapter is vested in the Tax Collector, except as otherwise specifically provided, and all payments shall be made to the Tax Collector.
B. The Tax Collector shall prescribe the forms and procedures necessary for the administration of the taxes imposed by this chapter.
C. Except as provided in this section, no rule or regulation shall be adopted until approved by formal action of the City Council.
D. Reserved.
E. The Unified Audit Committee shall publish uniform guidelines that interpret the Model City Tax Code and that apply to all cities and towns that have adopted the Model City Tax Code as provided by A.R.S. Section 42-6005.
(1) Prior to finalization of Uniform Guidelines that interpret the Model City Tax Code, the Unified Audit Committee shall disseminate draft guidelines for public comment.
(2) Pursuant to A.R.S. Section 42-6005(D), when the State statutes and Model City Tax Code are the same and where the Arizona Department of Revenue has written guidance, the Department’s interpretation is binding on cities and towns. (Ord. 1924, 01/07/1997; Ord. No. 2004-25, Amended, 01/10/05)
3-05-005-0510 DIVULGING OF INFORMATION PROHIBITED; EXCEPTIONS ALLOWING DISCLOSURE:
A. Except as specifically provided, it shall be unlawful for any official or employee of the City to make known information obtained pursuant to this chapter concerning the business financial affairs or operations of any person.
B. The City Council may authorize an examination of any return or audit of a specific taxpayer made pursuant to this chapter by authorized agents of the Federal government, the State of Arizona, or any political subdivisions.
C. The Tax Collector may provide to an Arizona county, city, or town any information concerning any taxes imposed in this chapter relative to the taxing ordinances of that county, city, or town.
D. Successors, receivers, trustees, personal representatives, executors, guardians, administrators, and assignees, if directly interested, may be given information by the Tax Collector as to the items included in the measure and amounts of any unpaid tax, interest, and penalties required to be paid.
E. Upon a written direction by the City Attorney or other legal advisor to the City designated by the City Council, officials or employees of the City may divulge the amount and source of income, profits, leases, or expenditures disclosed in any return or report, and the amount of such delinquent and unpaid tax, penalty, or interest, to a private collection agency having a written collection agreement with the City.
F. The Tax Collector shall provide information to appropriate representatives of any Arizona city or town to comply with the provisions of Arizona Revised Statutes Section 42-6003, A.R.S. Section 42-6005 and A.R.S. Section 42-6056.
G. The Tax Collector may provide information to authorized agents of any other Arizona governmental agency involving the allocation of taxes imposed by Section 3-05-004-0435 upon publishing and distribution of periodicals.
H. The Tax Collector shall provide information regarding the enforcement and collection of taxes imposed by this Chapter to any governmental agency with which the City has an agreement.
(Ord. No. 2004-25, Amended, 01/10/05)
3-05-005-0515 DUTIES OF THE TAXPAYER PROBLEM RESOLUTION OFFICER:
A. The Taxpayer Problem Resolution Officer shall assist taxpayers in:
1. Obtaining easily understandable tax information and information on audits, corrections and appeals procedures of the City.
2. Answering questions regarding preparing and filing the returns required under this Chapter.
3. Locating documents filed with or payments submitted to the Tax Collector by the taxpayer.
B. The Taxpayer Problem Resolution Officer shall also:
1. Receive and evaluate complaints of improper, abusive or inefficient service by the Tax Collector or any of his designees, employees, or agents and recommend to the City Manager or, for a city without a city manager, the chief administrative officer appropriate action to correct such service.
2. Identify policies and practices of the Tax Collector or any of his designees, employees, or agents that might be barriers to the equitable treatment of taxpayers and recommend alternatives to the City Manager or, for a city without a city manager, the chief administrative officer.
3. Provide expeditious service to taxpayers whose problems are not resolved through normal channels.
4. Negotiate with the Tax Collector, his designees, employees, or agents to resolve the most complex and sensitive taxpayer problems.
5. Take action to stop or prohibit the tax collector from taking an action against a taxpayer.
6. Participate and present taxpayers’ interests and concerns in meetings formulating the City’s policies and procedures under and interpretation of this Chapter.
7. Compile data each year on the number and type of taxpayer complaints and evaluate the actions taken to resolve those complaints.
8. Survey taxpayers each year to obtain their evaluation of the quality of service provided by the Tax Collector, his designees, employees, and agents.
9. Perform other functions which relate to taxpayer assistance as prescribed by the City Manager or, for a city without a city manager, the chief administrative officer.
C. Actions taken by the Taxpayer Problem Resolution Officer may be reviewed and/or modified only by the City Manager or, for a city without a city manager, the chief administrative officer upon request of the Tax Collector or a taxpayer.
D. The Mayor and Council of the City shall be provided with a report quarterly which identifies:
1. Any complaints of improper, abusive or inefficient service received by the Taxpayer Problem Resolution Officer since the date of the last report.
2. Any recommendations made, action taken or surveys obtained by the Taxpayer Problem Resolution Officer pursuant to subsection B.1.-9., above, since the date of the last report. (Ord. 1924, 01/07/97)
3-05-005-0516 TAXPAYER ASSISTANCE ORDERS:
A. The Taxpayer Problem Resolution Officer, with or without a formal written request from a taxpayer, may issue a taxpayer assistance order that suspends or stays an action or proposed action by the Tax Collector if, in the problem resolution officer’s determination, a taxpayer is suffering or will suffer a significant hardship due to the manner in which the Tax Collector is administering the tax laws.
B. A taxpayer assistance order may require the Tax Collector to release any lien perfected under this Chapter, or cease any action or refrain from taking any action to enforce against the taxpayer any section of this Chapter pending resolution of the issue giving rise to the taxpayer assistance order.
C. The Taxpayer Problem Resolution Officer, City Manager or, for a city without a city manager, the chief administrative officer may modify, reverse or rescind a taxpayer assistance order. A taxpayer assistance order is binding on the Tax Collector until it is reversed or rescinded.
D. The running of the applicable statute of limitations for any action that is the subject of a taxpayer assistance order is suspended from the date the taxpayer applies for the order or the date the order is issued, whichever is earlier, until the order’s expiration date, modification date or recision date, if any. Interest that would otherwise accrue on an outstanding tax obligation is not affected by the issuance of a taxpayer assistance order.
E. A taxpayer assistance order may not be used:
1. To contest the merits of a tax liability.
2. To substitute for informal protest procedures or administrative or judicial proceedings to review a deficiency assessment, collection action or denial of a refund claim. (Ord. 1924, 01.07/97)
3-05-005-0517 BASIS FOR EVALUATING EMPLOYEE PERFORMANCE:
A. The Tax Collector shall solicit evaluations from taxpayers and include such evaluations in the performance appraisals of his employees, where applicable.
B. The Tax Collector shall not evaluate an employee on the basis of taxes assessed or collected by that employee. (Ord. 1924, 01/07/97)
3-05-005-0520 REPORTING AND PAYMENT OF TAX:
A. Returns: The returns required under this Chapter shall be made upon forms prescribed or approved by the Tax Collector, and shall be considered filed only when the accuracy of the return has been attested to, by signature upon the form, by an authorized agent of the taxpayer, and when such form has been received by the Tax Collector.
B. Payment: If payment is made in any form other than United States legal tender, the tax obligation shall not be satisfied until the payment has been honored in funds.
C. Requirement of Security: If a taxpayer has remitted payment in the form of a check or other form of draw upon a bank or third party and such remittance has not been honored in funds, the Tax Collector may demand security for future payments.
D. Method of Reporting: Each taxpayer shall elect to report on either a cash receipts basis or an accrual basis and shall indicate the choice on the privilege license application. A taxpayer shall not change his reporting method without receiving prior written approval by the Tax Collector.
1. Taxpayers must report all gross income subject to the tax using the same basis of reporting.
2. Taxes imposed upon construction contracting shall be reported as follows:
a. Construction contractors shall report on either a progressive billing ("accrual") basis or cash receipts basis.
b. Speculative builders shall report the gross income derived from sale of improved real property at close of escrow or at transfer of title or possession, whichever occurs earlier.
c. Owner-builders who are not speculative builders shall report taxable amounts as provided in Section 3-05-004-0417.
3-05-005-0530 WHEN TAX DUE; WHEN DELINQUENT; VERIFICATION OF RETURN; EXTENSIONS:
A. Except as provided elsewhere in this Section, the taxes shall be due and payable monthly on or before the twentieth (20th) day of the month next succeeding the month in which the tax accrues.
1. Quarterly returns. The Tax Collector may authorize a taxpayer whose reporting history indicates an estimated annual City privilege and use tax liability on taxable gross income in excess of five thousand dollars ($5,000.00) but less than fifty thousand dollars ($50,000.00) to file returns on a calendar-quarterly basis.
The taxes for each calendar quarter shall be due and payable on or before the twentieth (20th) day of the month next succeeding the end of each calendar quarter.
2. Annual returns. The Tax Collector may authorize a taxpayer whose reporting history indicates an estimated annual City privilege and use tax liability on taxable gross income of not more than five thousand dollars ($5,000.00) to file returns for such taxes on a calendar-annual basis. The taxes for each calendar year shall be due and payable on or before January 20 of the following year.
B. Special Requirements of Taxpayers Filing Quarterly or Annual Returns: No taxpayer may report on a quarterly or annual basis until he has established, to the Tax Collector’s satisfaction, six (6) months reporting history. It is the taxpayer’s responsibility to notify the Tax Collector and increase his reporting frequency (to quarterly or monthly as applicable) when his taxable income or tax due exceeds the maximum limits for his current reporting frequency. Failure to do so may be deemed negligence or evasion, and penalties may apply. Failure to file returns timely, without good cause shown to the satisfaction of the Tax Collector, is sufficient cause for the Tax Collector to deny future filings by the taxpayer on a quarterly or annual basis.
C. Delinquency Date: Except as provided in subsection D. below, all returns and remittances received within the Tax Collector’s office on or before the last business day of the month when due shall be regarded as timely filed. The start of business of the first business day following the month when due shall be the delinquency date. It shall be the taxpayer’s responsibility to cause his return and remittance to be timely received. Mailing the return or remittance on or before the due date or delinquency date does not relieve the taxpayer of the responsibility of causing his return or remittance to be received by the last business day of the month when due.
D. Jeopardy Reporting: If the Tax Collector determines that the collection of any tax due to the City is in jeopardy, the Tax Collector may direct the taxpayer to file his return and remit the tax on a weekly, daily, or transaction-by-transaction basis. Such return and remittance shall be due upon the date fixed by the Tax Collector, and the "delinquency date" shall be the following day.
E. Extensions: The Tax Collector may extend the time for filing a return, for good cause shown, and only when requested in writing and received by the Tax Collector prior to the tax due date. However, the time for filing such return shall not be extended beyond the last business day of the month next succeeding the due date of such return. In such cases, only the penalties for late filing and late payment may be waived by the Tax Collector for filing and payment within the extension period. Notwithstanding the granting of an extension, the interest payable for late payment of taxes shall be paid for the period commencing upon the original delinquency date and ending on the date the tax is paid. The interest may not be waived by the Tax Collector.
(Ord. 1851, 01/03/95) (Revised, Ordinance No. 2006-19, 08/01/2006)
3-05-005-0540 INTEREST AND CIVIL PENALTIES:
A. Any taxpayer who failed to pay any of the taxes imposed by this Chapter which were due or found to be due before the delinquency date shall be subject to and shall pay interest upon such tax, until paid. From and after October 1, 2005, the interest rate shall be determined in the same manner and at the same times as prescribed by Section 6621 of the United States Internal Revenue Code and compounded annually under the method described in Subsection 1 below. The rate of interest for both overpayments and underpayments for all taxpayers is the federal short-term rate, determined pursuant to Section 6621(b) of the Internal Revenue code, plus three percentage points. The interest rate prior to October 1, 2005 shall be one percent (1.0%) per month. Said interest may be neither waived by the Tax Collector nor abated by the Hearing Officer except as it might relate to a tax abated as provided by Section 3-05-005-0570.
1. On January 1 of each year any interest outstanding as of that date that was accrued from and after October 1, 2005 is thereafter considered a part of the principal amount of the tax and accrues interest pursuant to this section.
2. Interest accrued prior to October 1, 2005 shall not be added to the principal.
B. In addition to interest assessed under subsection A. above, any taxpayer who failed to pay any of the taxes imposed by this Chapter which were due or found to be due before the delinquency date shall be subject to and shall pay any or all of the following civil penalties, in addition to any other penalties prescribed by this Chapter:
1. A taxpayer who fails to timely file a return for a tax imposed by this Chapter shall pay a penalty of five percent (5%) of the tax for each month or fraction of a month elapsing between the delinquency date of the return and the date on which it is filed, unless the taxpayer shows that the failure to timely file is due to reasonable cause and not due to wilful neglect. This penalty shall not exceed twenty five percent (25%) of the tax due.
2. A taxpayer who fails to pay the tax within the time prescribed shall pay a penalty of ten percent (10%) of the unpaid tax, unless the taxpayer shows that the failure to timely pay is due to reasonable cause and not due to wilful neglect. If the taxpayer is also subject to a penalty under subsection B.1. above for the same period, the total penalties under subsection B.1.and this subsection shall not exceed twenty five percent (25%)of the tax due.
3. A taxpayer who fails or refuses to file a return within thirty (30) days of having received a written notice and demand from the Tax Collector shall pay a penalty of twenty five percent (25%) of the tax, unless the taxpayer shows that the failure is due to reasonable cause and not due to wilful neglect or the Tax Collector agrees to a longer time period.
4. If the cause of a tax deficiency is determined by the Tax Collector to be due to negligence, but without regard for intent to defraud, the taxpayer shall pay a penalty of ten percent (10%) of the amount of deficiency. If the taxpayer is also subject to a penalty under subsection B.1. or B.2. above for the same tax period, the total penalties imposed under subsection B.1., B.2. and this subsection shall not exceed twenty-five percent (25%) of the tax due.
5. If the cause of a tax deficiency is determined by the Tax Collector to be due to civil fraud or evasion of the tax, the taxpayer shall pay a penalty of fifty percent (50%) of the amount of deficiency.
C. Penalties and interest imposed by this Section are due and payable upon notice by the Tax Collector.
D. If, following an audit, penalties attributable to the audit period are to be assessed pursuant to subsection B.1. or B.2. above, the Tax Collector, before assessing such penalties, must take into consideration any information or explanations provided by the taxpayer as to why the return was not timely filed and/or the tax was not timely paid. If such information and/or explanations are provided by the taxpayer, and the Tax Collector never the less decides to assess penalties pursuant to subsection B.1. and B.2. above, then, at the time the penalties are assessed, the Tax Collector must provide the taxpayer with a detailed written explanation of the basis for the Tax Collector’s determination that the information and/or explanations provided by the taxpayer did not constitute reasonable cause.
E. The assessment of the penalties prescribed by subsection B.3. through B.5. above must be approved on a case-by-case basis by the Tax Collector prior to such assessment. In addition, any assessment which includes penalties based upon subsection B.3., B.4., or B.5. above must be accompanied by a statement signed by the Tax Collector setting forth in detail the basis for the Tax Collector’s determination that the penalties are warranted under the circumstances.
F. The Tax Collector shall waive or adjust penalties imposed by subsections B.1. and B.2. above upon a finding that:
1. In the past, the taxpayer has consistently filed and paid the taxes imposed by this Chapter in a timely manner; or
2. The amount of the penalty is greatly disproportionate to the amount of the tax; or
3. The failure of a taxpayer to file a return and/or pay any tax by the delinquency date was caused by any of the following circumstances which must occur prior to the delinquency date of the return or payment in question:
a. The return was timely filed but was inadvertently forwarded to another taxing jurisdiction.
b. Erroneous or insufficient information was furnished the taxpayer by the Tax Collector or his employee or agent.
c. Death or serious illness of the taxpayer, member of his immediate family, or the preparer of the reports immediately prior to the due date.
d. Unavoidable absence of the taxpayer immediately prior to the due date.
e. Destruction, by fire or other casualty, of the taxpayer’s place of business or records.
f. Prior to the due date, the taxpayer made application for proper forms which could not be furnished in sufficient time to permit a timely filing.
g. The taxpayer was in the process of pursuing an active protest of the tax in question in another taxing jurisdiction at the time the tax and/or return was due.
h. The taxpayer establishes through competent evidence that the taxpayer contacted a tax advisor who is competent on the specific tax matter and, after furnishing necessary and relevant information, the taxpayer was incorrectly advised that no tax was owed and/or the filing of a return was not required.
i. The taxpayer has never been audited by a city for the tax or on the issue in question and relied, in good faith, on a State exemption or interpretation.
j. The taxpayer can provide some public record (court case, report in a periodical, professional journal or publication, etc.) stating that the transaction is not subject to tax.
k. The Arizona Department of Revenue, based upon the same facts and circumstances, abated penalties for the same filing period.
A taxpayer may also request a waiver or adjustment of penalty for a reason thought to be equally substantive to those reasons itemized above. All requests for waiver or adjustment of penalty must be in writing and shall contain all pertinent facts and other reliable and substantive evidence to support the request. In all cases, the burden of proof is upon the taxpayer.
G. No request for waiver of penalty under subsection F. above may be granted unless written request for waiver is received by the Tax Collector within forty five (45) days following the imposition of penalty. Any taxpayer aggrieved by the refusal to grant a waiver under subsection F. above may appeal under the provisions of Section 3-05-005-0570 provided that a petition of appeal or request for an extension is submitted to the Tax Collector within forty five (45) days of the taxpayer’s receipt of notice by the City that waiver has been denied.
H. For the purpose of this Section, "reasonable cause" shall mean that the taxpayer exercised ordinary business care and prudence, i.e., had a reasonable basis for believing that the tax did not apply to the business activity or the storage or use of the taxpayer’s tangible personal property in this City.
I. For the purpose of this Section, "negligence" shall be characterized chiefly by inadvertence, thoughtlessness, inattention, or the like, rather than an "honest mistake". Examples of negligence include:
1. The taxpayer’s failure to maintain records in accordance with Division 003 of this Chapter.
2. Repeated failures to timely file returns; or
3. Gross ignorance of the law.
(Ord. 1924, 01/07/97) (Revised, Ordinance No. 2006-19, 08/01/2006)
3-05-005-0541 ERRONEOUS ADVICE OR MISLEADING STATEMENTS BY THE TAX COLLECTOR; ABATEMENT OF PENALTIES AND INTEREST; DEFINITION:
A. Notwithstanding Section 3-05-005-0540 A., no interest or penalty may be assessed on an amount assessed as a deficiency if either:
1. The deficiency assessed is directly attributable to erroneous written advice furnished to the taxpayer by an employee of the City acting in an official capacity in response to a specific request from the taxpayer and not from the taxpayer’s failure to provide adequate or accurate information.
2. All of the following are true:
a. A tax return form prepared by the Tax Collector contains a statement that, if followed by a taxpayer, would cause the taxpayer to misapply this Chapter.
b. The taxpayer reasonably relies on the statement.
c. The taxpayer’s underpayment directly results from this reliance.
B. Each employee of the Tax Collector, at the time any oral advice is given to any person, shall inform the person that the Tax Collector is not bound by such oral advice.
C. For purposes of this Section "tax return form" includes the instructions that the Tax Collector prepares for use with the tax return form. (Ord. 1924, 01/07/97)
3-05-005-0542 PROSPECTIVE APPLICATION OF NEW LAW OR INTERPRETATION OR APPLICATION OF LAW
A. Unless expressly authorized by law, the tax collector shall not apply any newly enacted legislation retroactively or in a manner that will penalize a taxpayer for complying with prior law.
B. If the tax collector adopts a new interpretation or application of any provision of this chapter or determines that any provision applies to a new or additional category or type of business and the change in interpretation or application is not due to a change in the law:
(1) The change in interpretation or application applies prospectively only unless it is favorable to taxpayers.
(2) The tax collector shall not assess any tax, penalty or interest retroactively based on the change in interpretation or application.
C. For purposes of subsection Subsection B, "New Interpretation or Application" includes policies and procedures which differ from established interpretations of this chapter.
D. Reserved.
(Ord. No. 2004-25, Amended, 01/10/05); (Amended, Ordinance No. 2006-19, 08/01/2006)
3-05-005-0545 DEFICIENCIES; WHEN INACCURATE RETURN IS FILED; WHEN NO RETURN IS FILED; ESTIMATES:
A. 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 such 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 3-05-005-0540, and every such notice of a determination of an additional amount due shall be assessed within the limitation period provided in Section 3-05-005-0550.
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 Chapter 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 3-05-005-0550, 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 Chapter 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 chapter or satisfactory to the Tax Collector. (Ord. 1491, 06/16/1987)
3-05-005-0546 CLOSING AGREEMENTS IN CASES OF EXTENSIVE TAXPAYER MISUNDERSTANDING OR MISAPPLICATION; CITY ATTORNEY APPROVAL; RULES:
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 percent (60%) 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 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 and pay such taxes in the future. If a 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 months after the date that he declares that closing agreement void or within the period prescribed by section 3-05-005-0550 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. 1924, 01/07/97)
3-05-005-0550 LIMITATION PERIODS:
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 percent (25%) 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 Chapter.
D. Special Provisions Relating to Owner-Builders: The limitation for an owner-builder subject to the tax as prescribed in Section 3-05-004-0417 shall be based upon the date such tax liability is reportable or was reported, as provided in Section 3-05-004-0417. (Ord. 1924, 01/07/97)
3-05-005-0553 EXAMINATION OF TAXPAYER RECORDS; JOINT AUDITS.
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 03-05-005-0550.
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. 2004-25, Amended, 01/10/05)
3-05-005-0555 TAX COLLECTOR MAY EXAMINE BOOKS AND OTHER RECORDS; FAILURE TO PROVIDE RECORDS:
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 Chapter, for any periods available to him under Section 3-05-005-0550.
B. In order to perform any examination authorized by this Chapter, 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 3-05-005-0540, impose an additional penalty of twenty five percent (25%) 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 is due to reasonable cause and not due to wilful 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 3-05-005-0545 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 Section 3-05-005-0570 through 3-05-005-0575. (Ord. 1924, 01/07/97)
3-05-005-0556 NO ADDITIONAL AUDITS OR PROPOSED ASSESSMENTS; EXCEPTIONS:
(a) Once the Tax Collector completes an examination authorized by Section 3-5-555 and a written notice of the determination of a deficiency has been issued to the taxpayer pursuant to Section 3-5-545(a) or 3-5-555(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 3-5-560, 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 3-5-570.
(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.
(c) If the Tax Collector issues a notice of deficiency pursuant to either Section 3-5-545(a) or Section 3-5-555(f), the Tax Collector may not increase the proposed deficiency except in one or more of the following circumstances:
(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 60 days as required by Section 3-5-555(c).
(4) after issuing the notice of determination of deficiency but before the deficiency became final, the Arizona Tax Court, Court of Appeals or Supreme Court issued a decision, the applicability of which causes the deficiency initially proposed to increase.
(Ord. 1924, 01/07/97; Ord. 1979, 10/06/98); (Ord. No. 1979, Amended, 10/06/98)
3-05-005-0560 ERRONEOUS PAYMENT OF TAX; CREDITS AND REFUNDS; LIMITATIONS:
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 cancelled from the accounts of the City if no timely filed request for credit or refund is made by the claimant claiming same within one 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 3-05-005-0565.
2. Upon examination of filed returns for any period not excluded by Section 3-05-005-0550, 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 3-05-005-0550. In the case of an examination performed at the taxpayer’s request, credit shall be allowed or refund paid only for any excess taxes, penalties, or interest taxes actually paid within the limitation period provided in Section 3-05-005-0550, 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; and
2. Identify the dollar amount of the credit or refund requested; and
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 3-5-550. 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 3-5-550.
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 3-5-570.
b. A claimant aggrieved by a request for information or documentation under this subsection may file an appeal in the manner provided for in Section 3-5-570 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 subsubsections (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 subsubsections (e)(3) or (e)(4) of this Section through a lack of filing a petition under this subsubsection.
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 3-5-570.
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 3-5-570.
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 3-5-540(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 3-5-570.
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 3-05-005-0570. If the claimant is the prevailing party in an appeal of a determination under this section, Section 3-05-005-0578 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 Section 3-05-005-0578(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. 2006-19 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. 2006-19 shall apply, except that interest shall be allowed from and after October 1, 2005 as provided in subsection (F) of this section as enacted by Ordinance No. 2006-19.
b. Except as noted in subsection (I)(1)(a) of this section, the amendments to this section as enacted in Ordinance No. 2006-19 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. 2006-19 shall apply to all claims for refund or credit, for any periods as determined by subsection (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 Tax 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. 1924, 01/07/1997; Ord. 2006-18, Amended, 08/01/2006)
3-05-005-0565 PAYMENT OF TAX BY THE INCORRECT TAXPAYER OR TO THE INCORRECT ARIZONA CITY OR TOWN:
A. When it is determined that taxes have been reported and paid to the City by the wrong taxpayer, any taxes erroneously paid shall be transferred by the City to the privilege tax account of the person who actually owes and should have paid such taxes; provided, that the City receives an assignment and waiver signed by both the person who actually paid the tax and the person who should have paid the tax.
B. An assignment and waiver provided under this section must:
1. Identify the name and City privilege license number of the person who erroneously paid the tax and the person who should have paid the tax.
2. Provide that the person who erroneously paid the tax waives any right such person may have to a refund of the taxes erroneously paid.
3. Authorize the City Treasurer to transfer the erroneously paid tax to the privilege tax account of the person who should have paid the tax.
C. When it is determined that taxes have been reported and paid to the wrong Arizona city or town, such taxes shall be remitted to the correct city or town, provided that the city or town to whom the taxes were erroneously paid receives an assignment and waiver signed by both the person who actually paid the tax and the person who should have paid the tax. Where the person who actually paid the tax and the person who should have paid the tax are one and the same, no assignment and waiver need be provided. The City shall neither pay nor charge any interest or penalty on any overpayment or underpayment except such interest and penalty actually paid by the taxpayer relating to such tax.
D. This section in no way limits or restricts the applicability of any remedies which may otherwise be available under A.R.S. Section 42-6003. The limitations and procedures set forth in A.R.S. Section 42-6003 shall apply to all payments under this section.
E. When reference is made in this section to this City or an Arizona city or town, and payments made to or requested from this City or an Arizona city or town, the provisions shall be applicable to the Arizona Department of Revenue when it is acting for or on behalf of this City or an Arizona city or town. (Ord. 1924, 01/07/1997; Ord. 2007-28, Amended, 05/01/2007)
3-05-005-0567 RESERVED:
3-05-005-0570 ADMINISTRATIVE REVIEW; PETITION FOR HEARING OR FOR REDETERMINATION; FINALITY OF ORDER
For the purposes of this section, "Municipal Tax Hearing Office" means the administrative offices of the Municipal Tax Hearing Officer.
A. Informal Conference. A taxpayer shall have the right to discuss any proposed assessment with the auditor prior to the issuance of any assessment, but any such informal conference is not required for the taxpayer to file a petition for administrative review.
B. Administrative Review.
1. Filing a Petition. Other than in the case of a jeopardy assessment, a taxpayer may contest the applicability or amount of any tax, penalty, or interest imposed upon or paid by him pursuant to this chapter by filing a petition for a hearing or for redetermination with the Tax Collector as set forth below:
a. Within forty-five (45) days of receipt by the taxpayer of notice of a determination by the Tax Collector that a tax, penalty, or interest amount is due, or that a request for refund or credit has been denied; or
b. By voluntary payment of any contested amount when accompanied by a timely filed return and a petition requesting a refund of the protested portion of said payment; or
c. By petition accompanying a timely filed return contesting an amount reported but not paid; or
d. By petition requesting review of denial of waiver of penalty as provided in Section 3-05-005-0540(G).
2. Extension to file a petition. In all cases, the taxpayer may request an extension from the Tax Collector. Such request must be in writing, state the reasons for the requested delay and must be filed with the Tax Collector within the period allowed above for originally filing a petition. The Tax Collector shall allow a forty-five (45) day extension to file a petition, when such written request has been properly and timely made by the taxpayer The Tax Collector may grant an additional extension and may determine the corresponding time of any such extension at his sole discretion.
3. Requirements for petition.
a. The petition shall be in writing and shall set forth the reasons why any correction, abatement, or refund should be granted, and the amount of reduction or refund requested. The petition may be amended at any time prior to the time the taxpayer rests his case at the hearing or such time as the Hearing Officer allows for submitting of amendments in cases of redeterminations without hearings. The Hearing Officer may require that amendments be in writing, and in that case, he shall provide a reasonable period of time to file the amendment. The Hearing Officer shall provide a reasonable period of time for the Tax Collector to review and respond to the petition and to any written amendments.
b. The taxpayer, as part of the petition, may request a hearing which shall be granted by the Hearing Officer. If no request for hearing is made the petition shall be considered to be submitted for decision by the Hearing Officer on the matters contained in the petition and in any reply made by the Tax Collector.
d. The provisions of this section are exclusive, and no petition seeking any correction, abatement, or refund shall be considered unless the petition is timely and properly filed under this Section.
4. Transmittal to Hearing Officer. The city shall designate a Hearing Officer, who may be other than an employee of the City. The Tax Collector, if designated to receive petitions, shall forward any petition to the Municipal Tax Hearing Office (MTHO) within twenty (20) days after receipt, accompanied by documentation as to timeliness. In cases where the Hearing Officer determines that the petition is not timely or not in proper form, he shall notify both the taxpayer and the Tax Collector; and in cases of petitions not in proper form only, the Hearing Officer shall provide the taxpayer with an extension up to forty-five (45) days to correct the petition.
5. Hearings shall be conducted by a Hearing Officer and shall be continuous until the Hearing Officer closes the record. The taxpayer may be heard in person or by his authorized representative at such hearing. Hearings shall be conducted informally as to the order of proceeding and presentation of evidence. The Hearing Officer shall admit evidence over hearsay objections where the offered evidence has substantial probative value and reliability. Further, copies of records and documents prepared in the ordinary course of business may be admitted, without objection as to foundation, but subject to argument as to weight, admissibility, and authenticity. Summary accounting records may be admitted subject to satisfactory proof of the reliability of the summaries. In all cases, the decision of the Hearing Officer shall be made solely upon substantial and reliable evidence. All expenses incurred in the hearing shall be paid by the party incurring the same.
6. Redeterminations upon a "petition for redetermination" shall follow the same conditions, except that no oral hearing shall be held.
7. Hearing Ruling. In either case, the Hearing Officer shall issue his ruling not later than forty-five (45) days after the close of the record by the Hearing Officer.
8. Notice of Refund or Adjusted Assessment. Within sixty (60) days of the issuance of the Hearing Officer’s decision, the Tax Collector shall issue to the taxpayer either a notice of refund or an adjusted assessment recalculated to conform to the Hearing Officer’s decision.
C. Stipulations that future tax is also protested. A taxpayer may enter into a stipulation with the Tax Collector that future taxes of similar nature are also at issue in any protest or appeal. However, unless such stipulation is made, it is presumed that the protest or appeal deals solely and exclusively with the tax specifically protested and no other. When a taxpayer enters into such a stipulation with the Tax Collector that future taxes of similar nature will be included in any redetermination, hearing, or court case, it is the burden of that taxpayer to identify, segregate, and keep record of such income or protested taxable amount in his books and records in the same manner as the taxpayer is required to segregate exempt income.
D. When an assessment is final.
1. If a request for administrative review and petition for hearing or redetermination of an assessment made by the Tax Collector is not filed within the period required by subsection (b) above, such person shall be deemed to have waived and abandoned the right to question the amount determined to be due and any tax, interest, or penalty determined to be due shall be final as provided in subsections 3-5-545(a) and 3-5-555(f).
2. The decision made by the Hearing Officer upon administrative review by hearing or redetermination shall become final thirty (30) days after the taxpayer receives the notice of refund or adjusted assessment required by subsection (b)(8) above, unless the taxpayer appeals the order or decision in the manner provided in Section 3-5-575.
E. Reserved
(Ord. 1924, 01/07/97; Ord. 1979, 10/06/98); (Ord. No. 1979, Amended, 10/06/98) (Ord. 2000-29, Amended, 11/21/00) (Ord. 2001-04, Amended, 01/16/2001; Ord. 2000-29, Amended, 11/21/2000; Ord. 2008, Amended, 11/02/1999); (Ord. No. 2004-25, Amended, 01/10/05; Ord. 2009-16, Amended, 06/16/09)
3-05-005-0571 JEOPARDY ASSESSMENTS
A. If the Tax Collector believes that the collection of any assessment or deficiency of any amounts imposed by this Chapter will be jeopardized by delay, he shall deliver to the taxpayer a notice of such finding and demand immediate payment of the tax or deficiency declared to be in jeopardy, including interest, penalties, and additions.
B. Jeopardy assessments are immediately due and payable, and the Tax Collector may immediately begin proceedings for collection. The taxpayer, however, may stay collection by filing, within ten (10) days after receipt of notice of jeopardy assessment, or within such additional time as the Tax Collector may allow, by bond or collateral in favor of the City in the amount Tax Collector declared to be in jeopardy in his notice.
C. "Bond or Collateral", as required by this Section,
1. Shall mean either:
a. A bond issued in favor of the City by a surety company authorized to transact business in this State and approved by the Director of Insurance as to solvency and responsibility, or
b. Collateral composed of securities or cash which are deposited with, and kept in the custody of, the Tax Collector.
2. Shall be of such form that it may, at any time without notice, be applied to any tax, penalties, or interest due and payable for the purposes of this Chapter. Securities held as collateral by the Tax Collector must be of a nature that they may be sold at public or private sale without notice to the taxpayer.
D. If bond or collateral is not filed within the period prescribed by subsection B. above, the tax collector may treat the assessment as final for purposes of any collection proceedings. The taxpayer nevertheless shall be afforded the appeal rights provided in Sections 3-05-005-0570 and 3-05-005-0575. The filing of a petition by the taxpayer under Section 3-05-005-0570, however, shall not stay the tax collector’s rights to pursue any collection proceedings.
E. If the taxpayer timely files sufficient bond or collateral, the jeopardy requirements are deemed satisfied, and the taxpayer may avail himself of the provisions of Section 3-05-005-0570, including requests for additional time to file a petition. (Ord. 1593, 12/06/88)
3-05-005-0572 EXPEDITED REVIEW OF JEOPARDY ASSESSMENTS:
A. Within thirty (30) days after the day on which the Tax Collector furnishes the written notice required by Section 3-05-005-0571 A., the taxpayer, pursuant to Section 3-05-005-0570, may request the Tax Collector to review the action taken. Within fifteen (15) days after the request for review, the Tax Collector shall determine whether both the jeopardy determination and the amount assessed are reasonable.
B. Within thirty (30) days after the Tax Collector notifies the taxpayer of the determination he reached pursuant to subsection A. above, the taxpayer may bring a civil action in the appropriate court. If the taxpayer so requests, the City shall stipulate to an accelerated and expedited resolution of the civil action. If the court determines that either the jeopardy determination or the amount assessed is unreasonable, the court may order the Tax Collector to abate the assessment, to redetermine any part of the amount assessed or to take such other action as the court finds to be appropriate. A determination made by the court under this subsection is final except as provided in Arizona Revised Statutes Section 12-170. (Ord. 1924, 01/07/97)
3-05-005-0575 JUDICIAL REVIEW:
(a) A taxpayer may seek judicial review of all or any part of a Hearing Officer’s decision by initiating an action against the City in the appropriate court of this County. A taxpayer is not required to pay any tax, penalty, or interest upheld by the Hearing Officer before seeking such judicial review.
(b) The Tax Collector may seek judicial review of all or any part of a Hearing Officer’s decision by initiating an action in the appropriate court of this County.
(c) An action for judicial review cannot be commenced by either the taxpayer or the Tax Collector more than thirty (30) days after receipt by the taxpayer of notice of any refund or assessment recalculated or reduced to conform to the Hearing Officer’s decision, unless the time to commence such an action is extended in writing signed by both the taxpayer and the Tax Collector. Failure to bring the action within thirty (30) days or such other time as is agreed upon in writing shall constitute a waiver of any right to judicial review, except as provided in subsection F. below.
(d) The court shall hear and determine the appeal as a trial de novo; however, the Tax Collector cannot raise in the court any grounds or basis for the assessment not asserted before the Hearing Officer. Nothing in this subsection, however, shall preclude the Tax Collector from responding to any arguments which are raised by the taxpayer in the appeal.
(e) The City has the burden of proof by a preponderance of the evidence in any court proceeding regarding any factual issue relevant to ascertaining the tax liability of a taxpayer. This subsection does not abrogate any requirements of this chapter that requires a taxpayer to substantiate an item of gross income, exclusion, exemption, deduction, or credit. This subsection applies to a factual issue if a preponderance of the evidence demonstrates that:
(1) The taxpayer asserts a reasonable dispute regarding the issue.
(2) The taxpayer has fully cooperated with the Tax Collector regarding the issue, including providing within a reasonable period of time, access to and inspection of all witnesses, information and documents within the taxpayer’s control, as reasonable requested by the Tax Collector.
(3) The taxpayer has kept and maintained records as required by the City.
(f) The issuance of an adjusted or corrected assessment or notice of refund due to the taxpayer, where made by the Tax Collector pursuant to the decision of the Hearing Officer, shall not be deemed an acquiescence by the City or the Tax Collector in said decision, nor shall it constitute a bar or estoppel to the institution of an action or counterclaim by the City to recover any amounts claimed to be due to it by virtue of the original assessment.
(g) After the initiation of any action in the appropriate court by either party, the opposite party may file such counterclaim as would be allowed pursuant to the Arizona Rules of Civil Procedure. (Ord. 1924, 01/07/97)
(Ord. 2008, Amended, 11/02/1999)
3-05-005-0577 REFUNDS OF TAXES PAID UNDER PROTEST:
In the event the Hearing Officer’s decision or a final judgment by the court is rendered in favor of the taxpayer to recover protested taxes, it shall be the duty of the Tax Collector, upon receipt of such decision or of a certified copy of such final judgment, to authorize a warrant in favor of the taxpayer in an amount equal to the amount of the tax found by such decision or by the final judgment to have been paid under protest, and such warrant shall include the amount of interest or other cost that may have been recovered against the city by the final judgment in such action in the courts, to be paid from the privilege tax revenue accounts.
3-05-005-0578 REIMBURSEMENT OF FEES AND OTHER COSTS; DEFINITIONS:
A. A taxpayer who is a prevailing party may be reimbursed for reasonable fees and other costs related to any administrative proceeding brought by the taxpayer pursuant to Section 3-05-005-0570 B. For purposes of this Section, a taxpayer is considered to be the prevailing party only if both of the following are true:
1. The Tax Collector’s position was not substantially justified.
2. The taxpayer prevails as to the most significant issue or set of issues.
B. Reimbursement under this Section may be denied if any of the following circumstances apply:
1. During the course of the proceeding the taxpayer unduly and unreasonably protracted the final resolution of the matter.
2. The reason that the taxpayer prevailed is due to an intervening change in the applicable law.
C. The taxpayer shall present an itemization of the reasonable fees and other costs to the Taxpayer Problem Resolution Officer within thirty (30) days after receipt by the taxpayer of a notice of refund or recalculated assessment issued by the Tax Collector pursuant to Section 3-05-005-0570 B.8. The Taxpayer Problem Resolution Officer shall determine the validity of the fees and other costs within thirty (30) days after receiving the itemization. The Taxpayer Problem Resolution Officer’s decision is considered a final decision. Either the taxpayer or the Tax Collector may seek judicial review of the Taxpayer Problem Resolution Officer’s decision. An action for judicial review, however, shall not be commenced more than thirty (30) days after receipt of the resolution officer’s decision.
D. In the event judicial review is not sought pursuant to subsection C. above, the City shall pay the fees and other costs awarded as provided in this Section within thirty days after demand by a person who has received an award pursuant to this Section.
E. Reimbursement to a taxpayer under this Section shall not exceed twenty thousand dollars or actual monies spent, whichever is less. The reimbursable attorney or representative fees shall not exceed one hundred dollars per hour or actual monies spent, whichever is less, unless the Taxpayer Problem Resolution Officer determines that an increase in the cost of living or a special factor such as the limited availability of qualified attorneys or representatives for the proceeding involved justifies a higher fee.
F. For 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, but not exceeding the amounts actually spent for expert witnesses, the cost of any study, analysis, report, test or project that is found to be necessary to prepare the party’s case and necessary fees for attorneys or other representatives. (Ord. 1924, 01/07/97)
3-05-005-0580 CRIMINAL PENALTIES:
A. It is unlawful for any person to knowingly or wilfully:
1. Fail or refuse to make any return required by this chapter.
2. Fail to remit as and when due the full amount of any tax or additional tax or penalty and interest thereon.
3. Make or cause to be made a false or fraudulent return.
4. Make or cause to be made a false or fraudulent statement in a return, in written support of a return, or to demonstrate or support entitlement to a deduction, exclusion, or credit or to entitle the person to an allocation or apportionment or receipts subject to tax.
5. Fail or refuse to permit any lawful examination of any book, account, record, or other memorandum by the Tax Collector.
6. Fail or refuse to remit any tax collected by such person from his customer to the Tax Collector before the delinquency date next following such collection.
7. Advertise or hold out to the public in any manner, directly or indirectly, that any tax imposed by this chapter, as provided in this chapter, is not considered as an element in the price to the consumer.
8. Fail or refuse to obtain a privilege license or to aid or abet another in any attempt to intentionally refuse to obtain such a license or evade the license fee.
9. Reproduce, forge, falsify, fraudulently obtain or secure, or aid or abet another in any attempt to reproduce, forge, falsify, or fraudulently obtain or secure, an exemption from taxes imposed by this chapter.
B. The violation of any provision of subsection (A) of this section shall constitute a class one misdemeanor.
C. In addition to the foregoing penalties, any person who shall knowingly swear to or verify any false or fraudulent statement, with the intent aforesaid, shall be guilty of the offense of perjury and on conviction thereof shall be punished in the manner provided by law. (Ord. 2013-26, Amended, 01/07/2014)
3-05-005-0590 CIVIL ACTIONS:
A. Liens:
1. Any tax, penalty, or interest imposed under this Chapter which has become final, as provided in this Chapter, shall become a lien when the City perfects a notice and claim of lien setting forth the name of the taxpayer, the amount of the tax, penalty, and interest, the period or periods for which the same is due, and the date of accrual thereof, the amount of the recording costs by the County Recorder in any county in which the taxpayer owns real property and the documentation and lien processing fees imposed by the City Council and further stating that the City claims a lien therefor.
2. The notice of claim of lien shall be signed by the Administrative Services Director under his official seal or the official seal of the City, and, with respect to real property, shall be recorded in the office of the County Recorder of any county in which the taxpayer owns real property, and, with respect to personal property shall be filed in the office of the Secretary of State. After the notice and claim of lien is recorded or filed, the taxes, penalties, interest and recording costs and lien processing fees referred to above in the amounts specified therein shall be a lien on all real property of the taxpayer located in such county where recorded, and all tangible personal property of the taxpayer within the State, superior to all other liens and assessments recorded or filed subsequent to the recording or filing of the notice and claim of lien.
3. Every tax and any increases, interest, penalties, and recording costs and lien processing fees referred to above, shall become from the time the same is due and payable a personal debt from the person liable to the City, but shall be payable to and recoverable by the Tax Collector and which may be collected in the manner set forth in subsection B. below.
4. Any lien perfected pursuant to this Section shall, upon payment of the taxes, penalties, and interest, recording costs and lien processing fees referred to above and lien release fees imposed by the County Recorder in any county in which the lien was recorded, thereby, be released by the Tax Collector in the same manner as mortgages and judgments are released. The Tax Collector may, at his sole discretion, release a lien in part, that is, against only specified property, for partial payment of moneys due the City.
B. Actions to Recover Tax: An action may be brought by the City Attorney or other legal advisor to the City designated by the City Council, at the request of the Tax Collector, in the name of the City, to recover the amount of any taxes, penalties, interest, recording costs, lien processing fees and lien release fees due under this Chapter; provided that:
1. No action or proceeding may be taken or commenced to collect any taxes levied by this Chapter until the amount thereof has been established by assessment, correction, or reassessment; and
2. Such collection effort is made or the proceedings begun:
a. Within six (6) years after the assessment of the tax; or
b. Prior to the expiration of any period of collection agreed upon in writing by the Tax Collector and the taxpayer before the expiration of such six (6) year period, or any extensions thereof; or
c. At any time for the collection of tax arising by reason of a tax lien perfected, recorded, or possessed by the City under this Section. (Ord. 1851, 01/03/95)
3-05-005-0595 COLLECTION OF TAXES WHEN THERE IS SUCCESSION IN AND/OR CESSATION OF BUSINESS:
A. In addition to any remedy provided elsewhere in this City Code that may apply, the Tax Collector may apply the provisions of subsections B through D below concerning the collection of taxes when there is succession in and/or cessation of business.
B. The taxes imposed by this chapter are a lien on the property of any person subject to this chapter who sells his business or stock of goods, or quits his business, if the person fails to make a final return and payment of the tax within fifteen (15) days after selling or quitting his business.
C. Any person who purchases, or who acquires by foreclosure, by sale under trust deed or warranty deed in lieu of foreclosure, or by any other method, improved real property or a portion of improved real property for which the privilege tax imposed by this Chapter has not been paid shall be responsible for payment of such tax as a speculative builder or owner-builder, as provided in Sections 3-05-004-0416 and 3-05-004-0417.
(1) any person who is a creditor or an affiliate of creditor, who acquires improved real property directly or indirectly from the creditor’s debtor by any means set forth in this subsection, shall pay the tax based on the amount received by the creditor or its affiliate in a subsequent sale of such improved real property to a party unrelated to the creditor, regardless of when such subsequent sale takes place. Such tax shall be due in the month following the month in which the sale of the improved real property by the creditor or its affiliate occurs. Notwithstanding the foregoing, if the real property meets the definition of partially improved residential real property in Section 3-05-004-0416(a)(4) and all of the requirements of Section 3-05-004-0416(b)(4) are met by the parties to the subsequent sale transaction, then the tax shall not apply to the subsequent sale.
(2) In the event a creditor or its affiliate uses the acquired improved real property for any business purpose, other than operating the property in the manner in which it was operated, or was intended to be operated, before the acquisition or in any other manner unrelated to selling the property, the tax shall be due. The gross income upon which the tax shall be determined pursuant to Sections 3-05-004-0416 and 3-05-004-0417 shall be the fair market value of the improved real property as of the date of acquisition. The tax shall be due in the month following the month in which such first business use occurs. When applicable, the credit bid shall be deemed to be the fair market value of the property as of the date of acquisition.
(3) Once the subsequent sale by the creditor or its affiliate has occurred and the creditor or its affiliate has paid the tax due from it pursuant to this subsection, neither the creditor nor its affiliate, nor any future owner, shall be liable for any outstanding tax, penalties or interest that may continue to be due from the debtor based on the transfer from the debtor to the creditor or its affiliate.
(4) If the tax liability imposed by either Section 3-05-004-0416 or Section 3-05-004-0417 on the transfer of the improved real property to the creditor or its affiliate, or any part thereof, is paid to the tax collector by the debtor subsequent to payment of the tax by the creditor or its affiliate, the amount so paid may constitute a credit, as equitably determined by the tax collector in good faith, against the tax imposed on the creditor or its affiliate by either paragraph 1 or paragraph 2 of this subsection.
(5) Notwithstanding anything in this chapter to the contrary, if a creditor or its affiliate is subject to tax as described in paragraph 1 or paragraph 2 of this subsection and such creditor or affiliate has not previously been required to be licensed, such creditor or affiliate shall become licensed no later than the date on which the tax is due.
(Ord. 2011-21, Amended, 10/18/2011)
D. A person’s successors or assignees shall withhold from the purchase money an amount sufficient to cover the taxes required to be paid, and interest or penalties due and payable, until the former owner produces a receipt from the Tax Collector showing that all City tax has been paid or a certificate stating that no amount is due as then shown by the records of the Tax Collector. The tax collector shall respond to a request from the seller for a certificate within fifteen (15) days by either providing the certificate or a written notice stating why the certificate cannot be issued.
1. If a subsequent audit shows a deficiency arising before the sale of the business, the deficiency is an obligation of the seller and does not constitute a liability against a buyer who has received a certificate from the Tax Collector.
2. If the purchaser of a business or stock of goods fails to obtain a certificate as provided by this Section, he is personally liable for payment of the amount of taxes required to be paid by the former owner on account of the business so purchased, with interest and penalties accrued by the former owner or assignees. (Ord. 1593, 12/06/88)
(Ord. 2011-21, Amended, 10/18/2011)
3-05-005-0596 AGREEMENT FOR INSTALLMENT PAYMENTS OF TAX:
A. The City may enter into an agreement with a taxpayer to allow the taxpayer to satisfy a liability for any tax imposed by this Chapter by means of installment payments. The Tax Collector may require a taxpayer who requests an installment payment agreement to complete a financial report in such form and manner as the Tax Collector may prescribe.
B. The Tax Collector, without notice, may alter, modify or terminate an installment payment agreement if the taxpayer:
1. Fails to pay an installment at the time the installment payment is due under the agreement.
2. Fails to pay any other tax liability at the time the liability is due.
3. Fails to file any tax report or return at the time the report or return is due.
4. Fails to furnish any information requested by the Tax Collector within thirty days after receiving a written request for such information.
5. Fails to notify the Tax Collector of a material improvement in the taxpayer’s financial condition above the income previously reported in the most recent income statement within thirty days after the material improvement.
6. Provides inaccurate, false or incomplete information to the Tax Collector.
C. Notwithstanding any installment payment agreement, the Tax Collector may offset any tax refunds against the liabilities provided for in the installment payment agreement, may file and perfect any tax liens and, in the event the taxpayer breaches any term or provision of the installment payment agreement, may engage in collection activities.
D. The Tax Collector, without notice, may terminate an installment payment agreement if the Tax Collector believes that the collection of tax to which the payment agreement pertains is in jeopardy.
E. If the Tax Collector determines that the financial condition of a taxpayer has improved, the Tax Collector may alter, modify or terminate the agreement by providing notice to the taxpayer at least thirty days before the effective date of the action. The notice shall include the reasons why the tax collector believes the alteration, modification or termination is appropriate.
F. An installment payment agreement shall remain in effect for the term of the agreement except as otherwise provided in this Section.
G. A taxpayer who is aggrieved by a decision of the Tax Collector to refuse to enter into an installment payment agreement or to alter, modify or terminate an agreement entered into pursuant to this Section may petition the Taxpayer Problem Resolution Officer to review that determination. The taxpayer problem resolution officer may stay such alteration, modification or termination pending its review and may modify or nullify the determination.
H. The City and the taxpayer may modify any installment payment agreement at any time by entering into a new or modified agreement. (Ord. 1924, 01/07/97)
3-05-005-0597 PRIVATE TAXPAYER RULINGS; REQUEST; REVOCATION OR MODIFICATION; DEFINITION:
A. The Tax Collector shall issue private taxpayer rulings to taxpayers and potential taxpayers on request. Each request shall be in writing and shall:
1. State the name, address and, if applicable, taxpayer identifying number of the taxpayer or potential taxpayer who requests the ruling.
2. Describe all facts that are relevant to the requested ruling.
3. State whether, to the best knowledge of the taxpayer or potential taxpayer, the issue or related issues are being considered by the Tax Collector or any other taxing jurisdiction in connection with an active audit, protest or appeal that involves the taxpayer or potential taxpayer and whether the same request has been or is being submitted to another taxing jurisdiction for a ruling.
4. Be signed by the taxpayer or potential taxpayer who makes the request or by an authorized representative of the taxpayer or potential taxpayer.
B. A private taxpayer ruling may be revoked or modified by either:
1. A change or clarification in the law that was applicable at the time the ruling was issued, including changes or clarifications caused by regulations and court decisions.
2. Actual written notice by the Tax Collector to the last known address of the taxpayer or potential taxpayer of the revocation or modification of the private taxpayer ruling.
C. With respect to the taxpayer or prospective taxpayer to whom a private taxpayer ruling is issued, the revocation or modification of a private taxpayer ruling shall not be applied retroactively to tax periods or tax years before the effective date of the revocation or modification and the Tax Collector shall not assess any penalty or tax attributable to erroneous advice that is furnished to the taxpayer or potential taxpayer in the private taxpayer ruling if:
1. The taxpayer reasonably relied on the private taxpayer ruling.
2. The penalty or tax did not result either from a failure by the taxpayer to provide adequate or accurate information or from a change in the information.
D. A private taxpayer ruling may not be relied upon, cited nor introduced into evidence in any proceeding by any taxpayer other than the taxpayer who received the ruling.
E. A taxpayer may appeal the propriety of a retroactive application of a revoked or modified private taxpayer ruling by filing a written petition with the tax collector pursuant to Section 3-05-005-0570 within forty-five (45) days after receiving written notice of the intent to retroactively apply a revoked or modified private taxpayer ruling.
F. A private taxpayer ruling constitutes the Tax Collector’s interpretation of the sections of this chapter only as they apply to the taxpayer making, and the particular facts contained in, the request.
G. A private taxpayer ruling which addresses a taxpayer’s ongoing business activities will apply only to transactions that occur or tax liabilities that accrue from and after the date of the taxpayer’s ruling request.
H. The Tax Collector shall attempt to issue private taxpayer rulings within forty-five (45) days after receiving the written request and on receiving the facts that are relevant to the ruling. If the ruling is expected to be delayed beyond the forty-five (45) days, the Tax Collector shall notify the requestor of the delay and the proposed date of issuance.
I. Within thirty (30) days after being issued, the Tax Collector shall maintain the private taxpayer ruling as a public record and make it available at a reasonable cost for public inspection and copying. The text of private taxpayer rulings is open to public inspection subject to the confidentiality requirements prescribed by Section 3-05-005-0510.
J. In this section, "private taxpayer ruling" means a written determination by the Tax Collector issued pursuant to this section that interprets and applies one or more sections contained in this chapter and any applicable regulations.
K. A private taxpayer ruling issued by the Arizona Department of Revenue pursuant to A.R.S. Section 42-2101 may be relied upon by the taxpayer to whom the ruling was issued and must be recognized and followed by any city in which such taxpayer has obtained a privilege license if the City has not issued a ruling addressing the facts described in the taxpayer’s ruling request and the statute at issue in the taxpayer’s ruling request is, in essence, worded and written the same as the applicable section hereunder. (Ord. 1924, 01/07/97; Ord. 2007-28, Amended, 05/01/2007)