42-6004

42-6004. Exemption from municipal tax

A. A city, town or special taxing district shall not levy a transaction privilege,
sales, use or other similar tax on:

1. Exhibition events in this state sponsored, conducted or operated by a nonprofit
organization that is exempt from taxation under section 501(c)(3), 501(c)(4) or 501(c)(6)
of the internal revenue code if the organization is associated with a major league
baseball team or a national touring professional golfing association and no part of the
organization's net earnings inures to the benefit of any private shareholder or
individual.

2. Interstate telecommunications services, which include that portion of
telecommunications services, such as subscriber line service, allocable by federal law to
interstate telecommunications service.

3. Sales of warranty or service contracts.

4. Sales of motor vehicles to nonresidents of this state for use outside this state
if the vendor ships or delivers the motor vehicle to a destination outside this state.

5. Interest on finance contracts.

6. Dealer documentation fees on the sales of motor vehicles.

7. Sales of food or other items purchased with United States department of
agriculture food stamp coupons issued under the food stamp act of 1977 (P.L. 95-113; 91
Stat. 958) or food instruments issued under section 17 of the child nutrition act (P.L.
95-627; 92 Stat. 3603; P.L. 99-661, section 4302; 42 United States Code section 1786) but
may impose such a tax on other sales of food. If a city, town or special taxing district
exempts sales of food from its tax or imposes a different transaction privilege rate on
the gross proceeds of sales or gross income from sales of food and nonfood items, it
shall use the definition of food prescribed by rule adopted by the department pursuant to
section 42-5106.

8. Sales of internet access services to the person's subscribers and customers.
For the purposes of this paragraph:

(a) "Internet" means the computer and telecommunications facilities that comprise
the interconnected worldwide network of networks that employ the transmission control
protocol or internet protocol, or any predecessor or successor protocol, to communicate
information of all kinds by wire or radio.

(b) "Internet access" means a service that enables users to access content,
information, electronic mail or other services over the internet. Internet access does
not include telecommunication services provided by a common carrier.

9. The gross proceeds of sales or gross income retained by the Arizona exposition
and state fair board from ride ticket sales at the annual Arizona state fair.

10. Through August 31, 2014, sales of Arizona centennial medallions by the
historical advisory commission.

11. The gross proceeds of sales or gross income derived from a commercial lease in
which a reciprocal insurer or a corporation leases real property to an affiliated
corporation. For the purposes of this paragraph:

(a) "Affiliated corporation" means a corporation that meets one of the following
conditions:

(i) The corporation owns or controls at least eighty per cent of the lessor.

(ii) The corporation is at least eighty per cent owned or controlled by the lessor.

(iii) The corporation is at least eighty per cent owned or controlled by a
corporation that also owns or controls at least eighty per cent of the lessor.

(iv) The corporation is at least eighty per cent owned or controlled by a
corporation that is at least eighty per cent owned or controlled by a reciprocal insurer.

(b) For the purposes of subdivision (a), ownership and control are determined by
reference to the voting shares of a corporation.

B. A city, town or other taxing jurisdiction shall not levy a transaction
privilege, sales, use, franchise or other similar tax or fee, however denominated, on
natural gas or liquefied petroleum gas used to propel a motor vehicle.

C. A city, town or other taxing jurisdiction shall not levy a transaction
privilege, sales, gross receipts, use, franchise or other similar tax or fee, however
denominated, on gross proceeds of sales or gross income derived from any of the
following:

1. A motor carrier's use on the public highways in this state if the motor carrier
is subject to a fee prescribed in title 28, chapter 16, article 4.

2. Leasing, renting or licensing a motor vehicle subject to and upon which the fee
has been paid under title 28, chapter 16, article 4.

3. The sale of a motor vehicle and any repair and replacement parts and tangible
personal property becoming a part of such motor vehicle to a motor carrier who is subject
to a fee prescribed in title 28, chapter 16, article 4 and who is engaged in the business
of leasing, renting or licensing such property.

4. Incarcerating or detaining in a privately operated prison, jail or detention
facility prisoners who are under the jurisdiction of the United States, this state or any
other state or a political subdivision of this state or of any other state.

5. Transporting for hire persons, freight or property by light motor vehicles
subject to a fee under title 28, chapter 15, article 4.

6. Any amount attributable to development fees that are incurred in relation to the
construction, development or improvement of real property and paid by the taxpayer as
defined in the model city tax code or by a contractor providing services to the taxpayer.
For the purposes of this paragraph:

(a) The attributable amount shall not exceed the value of the development fees
actually imposed.

(b) The attributable amount is equal to the total amount of development fees paid
by the taxpayer or by a contractor providing services to the taxpayer and the total
development fees credited in exchange for the construction of, contribution to or
dedication of real property for providing public infrastructure, public safety or other
public services necessary to the development. The real property must be the subject of
the development fees.

(c) "Development fees" means fees imposed to offset capital costs of providing
public infrastructure, public safety or other public services to a development and
authorized pursuant to section 9-463.05, section 11-1102 or title 48 regardless of the
jurisdiction to which the fees are paid.

D. A city, town or other taxing jurisdiction shall not levy a transaction
privilege, sales, use, franchise or other similar tax or fee, however denominated, in
excess of one-tenth of one per cent of the value of the entire product mined, smelted,
extracted, refined, produced or prepared for sale, profit or commercial use, on persons
engaged in the business of mineral processing, except to the extent that the tax is
computed on the gross proceeds or gross income from sales at retail.

E. In computing the tax base, any city, town or other taxing jurisdiction shall not
include in the gross proceeds of sales or gross income:

1. A manufacturer's cash rebate on the sales price of a motor vehicle if the buyer
assigns the buyer's right in the rebate to the retailer.

2. The waste tire disposal fee imposed pursuant to section 44-1302.

F. A city or town shall not levy a use tax on the storage, use or consumption of
tangible personal property in the city or town by a school district or charter school.