Arizona

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On June 7, 2024, the Arizona Supreme Court held that reimbursements received by a hotel when participating in a hotel rewards program were subject to the Transaction Privilege Tax (TPT). The reimbursements were paid to the taxpayer when it provided a guest with a complementary hotel stay under the program. The rewards program required the…

The Arizona Department of Revenue recently released Private Taxpayer Ruling LR 21-003 (dated May 27, 2021), finding that gross income arising from the provision of temporary use of digital information and data is subject to the transaction privilege tax (TPT). The taxpayer is an information and analytics company that provides primarily publically available information and…

Arizona’s Supreme Court unanimously held that the city of Phoenix’s fee increase on ride-sharing trips at airports are not “transaction-based” fees and therefore constitutional. In 2016, Phoenix’s City Council had amended its City Code to require commercial ground transportation providers to pay a “trip fee” each time drivers picked up passengers from the Phoenix Sky…

A 2018 Arizona ballot initiative banned the imposition or increase of transaction-based taxes on services. A December 2019 ordinance in Phoenix increases the fee charged on pickups by on-demand drivers at the Phoenix airport. The ordinance was supposed to take effect February 1, 2020, but the city agreed to suspend collection as the state of…

The Arizona Department of Revenue ruled that custom video production, marketing and graphic design services are not subject to Transaction Privilege Tax (TPT). The retail classification of the TPT is imposed on the gross receipts from the business of selling tangible personal property at retail, and there is an exemption for gross receipts of “[p]rofessional…

By Open Weaver Banks and Liz Cha

The Arizona Department of Revenue (Department) issued a taxpayer information ruling stating that a taxpayer’s gross income from transactions provided through the use of computer software is not subject to tax under the personal property rental classification for Arizona Transaction Privilege Tax purposes.

The taxpayer’s software provides its…

By Nicole Boutros and Jeff Friedman

The Director of the Arizona Department of Revenue affirmed an Administrative Law Judge determination that a taxpayer must pay the Transaction Privilege Tax on sales of access to the taxpayer’s subscription-based online research service. The Director reasoned that these sales were taxable as rentals of tangible personal property—and not…

By Stephen Burroughs and Amy Nogid

The Superior Court of Arizona, Maricopa County, rejected the Department of Revenue’s request that rental car companies be granted only prospective relief from the court’s earlier decision which declared the car rental charge illegal. The voter-approved surcharge was enacted for the Arizona Tourism and Sports Authority to finance the…

By Christopher Chang and Andrew Appleby

The Arizona Court of Appeals upheld a broad definition of business income, adopting both the transactional and functional tests. The Court of Appeals stated that business income includes both income arising from transactions in a taxpayer’s regular course of business (the “transactional test”) and income from the acquisition, management,…