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In order to qualify for the exemption, the motor carrier fee must be paid by the lessor, lessee, or authorized third party on the specific vehicle(s) being leased. This exemption only applies to vehicles that weight over 12,000 pounds and that are self-propelled. Lessors are also exempt on their purchases of vehicles, repairs, and parts when motor carrier fees have been paid on the vehicles being repaired. (Transaction Privilege Tax Ruling TPR 03-2, December 4, 2003.)

(02/15/2004)

In Arizona, subcontractors contracted to do work separately from the "prime contractor" are responsible for the Arizona transaction privilege tax obligation on their part of the job. In the case of Ormond Builders, Inc. v. Arizona Department of Revenue, a construction management services company was hired by a school district to perform certain set activities which included reviewing, advising, and assisting the administering of several projects. They were not responsible for making sure the construction projects were completed and acted as "construction manager for the owner" not the prime contractor. Thus, they were only responsible for the tax attributed to the jobs they were sub-contacted to perform. (Ormond Builders, Inc. v. Arizona Department of Revenue, Arizona State Board of Tax Appeals, No. 1883-02-S, May 15, 2003)

(12/15/2003)

In a recent decision by the Arizona Court of Appeals, a prime contractor was denied its challenge of an auditor's reduction of the original assessed land-value deduction towards the contractor's sales and use tax liability. The contractor's business is the building of condominiums to sell as residential units. The taxpayer failed to argue a plausible case against the auditor's readjusted assessment. In fact, the taxpayer focused his dispute on the belief that it was illegal for the Department or Revenue to change its original approval of deductions. The Department of Revenue argued that the assessment was an ongoing process and was finalized with the changes after requesting certain documentation from the taxpayer and failing to get a response. (Arizona Joint Venture v. Arizona Department of Revenue, Arizona Court of Appeals, Div. One, No. 1 CA-TX 02-0010, February 24, 2003)

(04/15/2003)

Pizza-making equipment did not qualify for the Arizona transaction privilege and use tax manufacturing exemption. To qualify for the exemption, the equipment must be used directly in a manufacturing or processing operation. Although the manufacturing of the pizza may have transformed personal property into a different product, the purpose of the exemption is to encourage manufacturing businesses and investment in manufacturing equipment. Thus, the restaurant business’s equipment remained taxable as it is truly used for fostering the restaurant business and not manufacturing. (Arizona Department of Revenue v. Blue Line Distributing, Inc., Arizona Court of Appeals, Div. One, No. 1 CA-TX 01-0011, April 4, 2002)

(04/15/2002)

The receipts received for services offered by a retail bookseller’s through a preferred reader program were subject to transaction privilege (sales) tax. The services aimed at encouraging customers to purchase the bookseller’s merchandise were considered a part of the sale of the merchandise. (Walden Books Co., d/b/a Waldenbooks, Arizona Court of Appeals, Div. 1, No. 1 CA-TX 99-0022, November 2, 2000)

(11/15/2000)

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