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Beginning January 1, 2016, the Arizona Department of Revenue will become the single point of administration and collection of state, county and municipal transactions privilege tax (TPT). The previously stated effective date was January 1, 2015.Taxpayers should continue to file TPT to the state and municipalities as they have been doing. Non-program cities will administer their own renewals, licensing and payments through 2015.(Release, Arizona Department of Revenue, October 28, 2014)


Effective January 1, 2015, three more Arizona cities - Bullhead City, Somerton, and Willcox - will become program cities, which means that the Arizona Department of Revenue will license and collect the cities’ transaction privilege taxes. Currently, the following cities are non-program cities: Apache Junction, Avondale, Chandler, Douglas, Flagstaff, Glendale, Mesa, Nogales, Peoria, Phoenix, Prescott, Scottsdale, Sedona, Tempe, and Tucson. Effective January 1, 2016, the Department of Revenue will become the single point of administration and collection for all municipal, county and state transaction privilege taxes.(Release, Arizona Department of Revenue, November 11, 2014)


Arizona has created a new deduction from the gross receipts from sales of electricity and natural gas to a business that is principally engaged in a manufacturing or smelting operation, if at least 51% of the electricity or natural gas is used in the manufacturing or smelting operation. The exemption is effective August 1, 2014. Qualified utility companies are required to obtain the new Form 5014, Exemption Certificate for Electricity and Natural Gas Primarily Used in Manufacturing and Smelting Operations, in order to claim the deduction.The form requires disclosure of revenues, number of employees, operating costs, square footage and quantity of electricity for the business in total and from manufacturing or smelting operations.(Release, Arizona Department of Revenue, July 17, 2014)


President Barack Obama has signed federal legislation extending the Internet Tax Freedom Act (ITFA) through December 11, 2014 as part of the joint resolution which made continuing appropriations for fiscal year 2015. The ITFA was previously set to expire on November 1, 2014. The ITFA bars state and local governments from imposing multiple or discriminatory taxes on electronic commerce and taxes on Internet access.


For an update to this news item, see Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.


(P.L. 113-164 (H.J. Res. 124), 113th Congress, 2nd Session, Laws 2014)


Oil and grease did not qualify as components of machinery and equipment used directly in mining and metallurgical operations in Arizona. As a result, they did not qualify for an Arizona transaction privilege tax exemption. Hydraulic fluids and transmission fluids are considered exempt for Arizona sales and use tax purposes, but oil and grease are not because their primary function was deemed to be lubrication. The products are not parts of the machines.  The products do not touch the raw materials or work in progress, affect them, or add value to them. They play no direct part in the completion of the finished product. They are foreign substances used on the machines to prevent or minimize the destructive contact of machine parts.(Chevron USA, Inc. v. Arizona Department of Revenue, Arizona Tax Court, No. TX 2011-001038, June 5, 2014)



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