PHOENIX CITY AUDITOR ISSUE STATEMENTS

 

City of Phoenix

City Auditor Department

Privilege and Use Tax

Issue Statements

 

 

                                                                 Issue                       0.00

                                                                                                                                     Ruling

   Issue                                                                                                                          Number

   Not issued.  Ruling number skipped.                                                                              1155

   Not issued.  Ruling number skipped.                                                                              1156

   Not issued.  Ruling number skipped.                                                                              1157

   Not issued.  Ruling number skipped.                                                                              1158

   Not issued.  Ruling number skipped.                                                                              1159

   No issue.  Assessment withdrawn.                                                                                1203

   No issues.                                                                                                                   1223

 

                                                                 Issue                       1.00

 

   Upheld as authority to tax was in the code during                                                           0091

   Income from national advertising taxable by the                                                              0130

   City during period of audit and continually up to

   December 1, 1978.

   Income from national advertising was not taxable                                                            0130

   as of December 1, 1978 per Phoenix City

   Ordinance G-1897.

   Taxpayer's advertising revenues were found                                                                    0246

   Advertising over a public address system is                                                                    0443

   taxable, broadcasting personal messages over a

   public address system is a service and is

   Income received for maintenance and processing                                                            0745

    of real estate broker listings not taxable as

   advertising income since listings distributed to

   Gross income from mass mailing of printed                                                                    0902

   material taxable as advertising income.

 

                                                                 Issue                       1.50

 

   Charges between related corporations taxable                                                                0108

   transactions under Phoenix City Code Section

   14-2(a)(12).

   Taxpayer submitted no evidence of alleged                                                                     0622

   relationship between entities, and neither does

   Code exempt rental receipts between such

   Sale between related parties taxable even                                                                      0928

   though Taxpayer not released from

   indebtedness.

   Inter-company charge to an affiliate for a shared                                                              1213

   Sale of property by a corporation to its affiliate is                                                            1214

 

                                                                 Issue                       2.00

 

   Where no express agency relationship and                                                                    0449

   taxpayer has legal title to goods before

   purchaser takes delivery - no implied agency is

   City collection officers did not have authority,                                                                  0518

   actual or apparent to agree not to assess

   additional penalties properly assessed under the

   Taxpayer did not act as agent for horse owners                                                              0519

   because payment of winning purses is a

   business obligation of Taxpayer.

   Premiums collected by Taxpayer acting as                                                                    0533

   purchasing agent from customers for inclusion of

    coverage on Taxpayer's group policy are not

   Usually, principal not liable for agent's acts if                                                                  0803

   outside of scope of authority or if independent

   contractor.

   Taxpayer did not act as agent for horse owners                                                              0878

   because payment of purses is statutorily

   provided with no evidence of agency

 

                                                                 Issue                       3.00

 

   Based on state statute taxpayer directed to pay                                                             0405

   percentage of income to third party. City code

   not provide for deduction.

   Audio tapes used to generate amusement                                                                      0470

   Purse supplements and amount retained by                                                                   0519

   Sale of ticket to bettor is the taxable event fixing                                                             0519

   point in time amusement income is realized for

   tax purposes.

   Hot air balloons subject to the Federal Air                                                                      0894

   Transportation Excise Tax are exempt from City

   amusement tax.

 

                                                                 Issue                       4.00

 

   Sales of repossessed automobiles to nondealers                                                            0199

    at public auction constituted taxable sales under

    14-2(a)(8).

 

                                                                 Issue                       4.20

 

   Rents collected by bankrupt estate is gross                                                                   0901

   income of Taxpayer, whether or not actually

   received by Taxpayer.

 

                                                                 Issue                       4.50

 

   Commissions received by Brokers are not                                                                      0533

   taxable pursuant to Code Sec 14-12(f).

   Sales commission checks are not taxable gross                                                            0582

   An auctioneer is a broker for the seller, taxable                                                               0755

   to the extent that the principal is taxable.

   A property manager is subject to taxes for the                                                                0939

   rental of real property even if it would be casual if

    rented by owner.

   Property Mgr. is subject to tax upon the rental of                                                            0947

   real property even though such rental would be

   deemed "casual" if principal acted in his own

   Taxpayer is agent of a financial institution in the                                                             0950

   business of leasing and not liable for taxes

   relating to brokered auto leases.

                                                                 Issue                       5.00

 

   Allowing builders to report income at time of                                                                   0134

   transfer of title discriminates against commercial

   builders who report taxes on cash receipts basis.

   As normal bankruptcy procedures require the                                                                 0467

   business to go to cash basis accounting

   taxpayer's deduction was allowed.

   Gross income for cash basis reporting includes                                                              1248

                                                                 Issue                       6.00

 

   City properly taxed taxpayers gross circulation                                                               0130

   revenue measured by using retail sales price of

   the newspapers.

 

                                                                 Issue                       7.00

 

   Taxpayer found to be in taxable activity,                                                                         0176

   proceeds derived from coin-operated car wash

   machines subject to tax.

   Taxpayer who controls game room operations is                                                             0916

   considered lessee of game equipment, not

   licensor of real property.

                                                                 Issue                       8.00

 

   Sales of computer hardware were found not                                                                    0209

   exempt under Section 14-40(1)because taxpayer

    did not manufacture computer hardware.

 

                                                                 Issue                       9.00

 

   Software found to be intangible personal                                                                         0209

   property according to current court cases

   therefore not taxable under 14-2(a)(8) or

   Software subscription manuals.                                                                                     0338

   Licensed software delivered with software                                                                       0908

   manuals and materials is tangible personal

   property taxable under Code Section 14-2.

   Licensed software delivered with software                                                                       0909

   manuals and materials is tangible personal

   property taxable under Code Section 14-2.

   Licensed software delivered with software                                                                       0910

   manuals and materials is tangible personal

   property taxable under Code Section 14-2.

   Licensed software delivered with software                                                                       0911

   manuals and materials is tangible personal

   property taxable under Code Section 14-2.

   Licensed software delivered with software                                                                       0912

   manuals and materials is tangible personal

   property taxable under Code Section 14-2.

   Licensed software delivered with software                                                                       0913

   manuals and materials is tangible personal

   property taxable under Code Section 14-2.

   Licensed software delivered with software                                                                       0914

   manuals and materials is tangible personal

   property taxable under Code Section 14-2.

   Software acquired for the purpose of developing                                                              0984

   new applications software programs subject to

   tax.

                                                                 Issue                      10.00

 

   Rental income from computer time rentals                                                                      0209

   properly taxed under Section 14-2(a)(11),does

   not constitute a casual activity.

 

                                                                 Issue                      11.00

 

   Income from real property is renting or licensing-                                                             0405

   agreement determines whether lease or license-

   selling from non-fixed locations not rental.

                                                                 Issue                      12.00

 

   Where Taxpayer spends less than 15% of sales                                                             0111

   price to upgrade real property, he is held not to

   be acting as developer performing construction

   Gross receipts from the contracting business                                                                 0112

   ordinarily mean the gross amount of cash

   received.

   Taxable receipts of contractors on cash receipts                                                             0112

   basis is cash collected on obligations underlying

   sales transaction, includes principal and interest.

   Permanent is a valid, consistent criteria used to                                                             0138

   determine contracting versus a material supplier

   activity.

   Contracting activity was performed in the                                                                        0148

   Developers were not engaged in contracting                                                                   0169

   Taxpayer and the City agreed that installation                                                                 0240

   activity is not retail activity, but contracting

   activity.

   Taxpayer should report income from building the                                                             0252

   Repairs to the improvements or structures would                                                            0257

   Altering, adding to, or improving any building.                                                                 0361

 

                                                                 Issue                      12.00

 

   Exempt sales to hospital versus part of                                                                          0375

   Exempt sale to the city, schools with city.                                                                     0379

   Lump sum settlement for changes to original                                                                  0387

   construction agreement is contracting income.

   Attached awnings porches, etc. to mobile homes                                                           0398

   Where the Taxpayer has a fixed fee arrangement                                                            0439

    and contracts with subcontractors the Taxpayer

   is the prime contractor.

   Taxpayer failed to show that construction                                                                       0492

   receipts from tenant improvements "flowed

   through its books" and that contractors paid tax

   Furnishing and installing custom window                                                                        0547

   Laying cable adds to a project or development                                                                0549

   and therefore falls within contracting activity.

   Taxpayer didn't claim exemption to which it wasn't                                                          0574

    entitled, pursuant to Sec 14-17(c), subjecting it

   to tax liability of subcontractors on contract.

   Boring holes for cable TV is contracting where                                                                0587

   Taxpayer installs materials in them.

 

                                                                 Issue                      12.00

 

   Partner's contracting activity not attributed to                                                                  0602

   Gross proceeds from land not included in                                                                       0605

   contractor's taxable receipts because the Code

   contains no provision taxing them.

   Design and architectural work does not fit the                                                                 0617

   definition of construction contracting.

   One percent tax rate applies to construction                                                                   0647

   Revenue from sale of property, shown partly to                                                               0671

   be for service and non-contracting agreements,

   not taxable to owner-builder.

   Complete replacement of faucets and other                                                                    0676

   assemblies taxable as contracting, not retail

   sales plus exempt service labor.

   Installation of parts such as o-ring, toilet flappers,                                                           0676

    faucet stems, etc. qualify as consumable goods.

   Locating a broken sewer line, where no materials                                                            0676

    are transferred, is an exempt service.

   Leaseholds and personal property are not                                                                      0684

   includable in sale proceeds subject to

   contracting tax.

   The Taxpayer's sale and installation of load                                                                    0693

   controllers falls within the definition of

   contracting.

 

                                                                 Issue                      12.00

 

   Code neither prohibits the deduction of land                                                                    0714

   costs nor requires that proceeds from its sale be

   in gross receipts.

   Code neither prohibits the deduction of land                                                                    0715

   costs nor requires that proceeds from its sale be

   in gross receipts.

   Taxpayer should not receive a tax credit for taxes                                                           0723

    paid on the rental of truss equipment because

   truss equipment not incorporated into building.

   Evidence does not support taxpayer's position                                                                0729

   that it was a subcontractor not liable for privilege

   tax.

   Issue of which partner is liable for contracting tax                                                            0754

   is irrelevant in determining extent of actual

   liability.

   Certain income of taxpayer was for                                                                                0802

   pre-construction expenses and was not taxable

   as contracting.

   Owner of real property improved by others not                                                                 0804

   taxable on sale of such property as owner

   builder.

   Taxpayer's evidence did not establish that it                                                                   0808

   hired a contractor and wasn't an owner builder.

   Taxpayer could not establish that it hired a                                                                     0817

   contractor for construction work and was held

   liable as a prime contractor.

   Code speculative builder provisions encompass                                                              0821

   sale portion of a sale-leaseback transaction.

 

                                                                 Issue                      12.00

 

   Code speculative builder provisions encompass                                                              0824

   sale portion of a sale-leaseback transaction.

   "By or through others" language of 14-100                                                                      0832

   [Owner-Builder] does not require an agency

   relationship.

   A taxpayer becomes an owner-builder by                                                                       0832

   constructing, or having constructed,

   improvements to real property. Signing a

   Code Sec. 14-100 [Owner-Builder] legislatively                                                               0832

   Intent to make profit or gain irrelevant to                                                                         0832

   speculative builder status. Tax liability results

   when speculative builder definition is met.

   Contracting vs. retail activity explained.                                                                          0856

   Taxpayer did not show that some activities                                                                     0856