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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 Assessment withdrawn. 1203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