HB2559 - 541R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 28-142, Arizona Revised Statutes, is amended to read:

START_STATUTE28-142. Livery vehicle, taxi, transportation network company vehicle, transportation network company, peer‑to‑peer car sharing company, shared vehicle and limousine regulation; state preemption; definition

A. The regulation of transportation network companies and peer‑to‑peer car sharing companies and the regulation and use of livery vehicles, taxis, transportation network company vehicles, transportation network companies shared vehicles and limousines are of statewide concern. Livery vehicles, taxis, transportation network company vehicles, shared vehicles and limousines and their use and transportation network companies and peer-to-peer car sharing companies that are regulated pursuant to this title are not subject to further regulation by a county, city, town or other political subdivision of this state, except that a public airport operator that operates a public airport pursuant to section 28‑8421, 28‑8423 or 28‑8424 or a public body operating a public airport may establish the number of livery vehicles, taxis, transportation network company vehicles, transportation network companies, peer‑to‑peer car sharing companies, shared vehicles or limousines that may conduct business at a public airport or may set additional or more restrictive requirements for the conduct of that business at a public airport.

B. For the purposes of this section, "Shared vehicle" has the same meaning prescribed in section 28‑9601. END_STATUTE

Sec. 2. Title 28, Arizona Revised Statutes, is amended by adding chapter 31, to read:

CHAPTER 31

PEER-TO-PEER CAR SHARING

ARTICLE 1. GENERAL PROVISIONS

START_STATUTE28-9601. Definitions

In this chapter, unless the context otherwise requires:

1. "Car sharing delivery period" means the period of time during which a shared vehicle is being delivered to the location of the car sharing start time as documented by the governing car sharing program agreement.

2. "Car Sharing Period" means the period of time that begins with the car sharing delivery period or the car sharing start time if there is no car sharing delivery period and ends at the car sharing termination time.

3. "Car Sharing Program Agreement":

(a) means the terms and conditions that apply to a shared vehicle owner and a shared vehicle driver and that govern the use of a shared vehicle through a peer-to-peer car sharing program.

(b) Does not include a rental agreement as defined in section 20‑331.

4. "Car Sharing Start Time" means the time when a shared vehicle becomes subject to the control of the shared vehicle driver at or after the time that the reservation of the shared vehicle is scheduled to begin as documented in the records of a peer–to–peer car sharing program.

5. "Car Sharing Termination Time" means The time when a shared vehicle is returned to the location designated by a shared vehicle owner through a peer-to-peer car sharing program and The earliest of the following:

(a) The agreed period of time established for the use of a shared vehicle in the governing car sharing program agreement expires.

(b) The intent to terminate the use of the shared vehicle is verifiably communicated by the shared vehicle driver to the shared vehicle owner.

(c) The shared vehicle owner or the shared vehicle owner's authorized designee takes possession and control of the shared vehicle.

6. "Peer-to-Peer Car Sharing":

(a) means the authorized use of a shared vehicle by an individual other than the shared vehicle owner through a peer-to-peer car sharing program.

(b) does not include a rental vehicle or vehicle as defined in section 20‑331.

7. "Peer-to-Peer Car Sharing Program":

(a) means a business platform that connects vehicle owners with drivers to enable the sharing of vehicles for financial consideration.

(b) Does not mean a rental company as defined in section 20‑331.

8. "Shared vehicle":

(a) means a vehicle that is all of the following:

(i) Available for sharing through a peer‑to‑peer car sharing program.

(ii) Used nonexclusively for peer‑to‑peer car sharing activity pursuant to a peer‑to‑peer car sharing program agreement.

(iii) Used by the vehicle's owner for personal use outside of peer‑to‑peer car sharing.

(b) Does not include a rental vehicle or vehicle as defined in section 20‑331.

9. "Shared Vehicle Driver" means an individual who is authorized to drive a shared vehicle under a car sharing program agreement.

10. "Shared Vehicle Owner" means the registered owner of a shared vehicle that is made available for sharing through a peer-to-peer car sharing program. END_STATUTE

START_STATUTE28-9602. Insurance requirements; liability; indemnification

A. A peer-to-peer car sharing program shall ensure that during each car sharing period the shared vehicle owner and the shared vehicle driver are insured under a motor vehicle liability insurance policy that:

1. Recognizes that the vehicle insured under the policy is made available and used through a peer-to-peer car sharing program.

2. Provides insurance coverage in an amount not less than the minimum amount of coverage required by section 28‑4033.

B. The insurance required by this section may be satisfied by motor vehicle liability insurance that is maintained by any of the following or a combination of all of the following:

1. A shared vehicle owner.

2. A shared vehicle driver.

3. A peer-to-peer car sharing program.

c. The insurance required by this section is primary during each car sharing period.

d. This Chapter does not limit either of the following:

1. The liability of the peer-to-peer car sharing program for any act or omission of the peer-to-peer car sharing program that results in injury to any person as a result of the use of a shared vehicle.

2. The ability of the peer-to-peer car sharing program to, by contract, seek indemnification from the shared vehicle owner or the shared vehicle driver for economic loss sustained by the peer-to-peer car sharing program resulting from a breach of the terms and conditions of the car sharing program agreement. END_STATUTE

START_STATUTE28-9603. Notice to owner of vehicle with lien

A. When a person becomes a shared vehicle owner on a peer-to-peer car sharing program, the peer-to-peer car sharing program shall notify the shared vehicle owner that if the shared vehicle has a lien, using the shared vehicle through a peer-to-peer car sharing program, including using the shared vehicle without physical damage coverage, may violate the terms of the contract with the lienholder.

B. The peer‑to‑peer car sharing program shall provide the notice prescribed in subsection A of this section before the shared vehicle owner makes a shared vehicle available for peer‑to‑peer car sharing on the peer‑to‑peer car sharing program. END_STATUTE

START_STATUTE28-9604. Authorized insurer exclusions

An authorized insurer that writes motor vehicle liability insurance in this State may exclude any coverage and the duty to defend or indemnify any claim afforded under a shared vehicle owner's personal motor vehicle liability insurance policy. this chapter does not invalidate or limit an exclusion contained in a motor vehicle liability insurance policy, including an insurance policy in use or approved for use that excludes coverage for motor vehicles made available for rent, sharing or hire or for any business use. END_STATUTE

START_STATUTE28-9605. Denial or cancellation of insurance for shared vehicles prohibited; exception

A. Except as provided in subsection b of this section, a motor vehicle insurer may not deny, cancel, void, terminate, rescind or refuse to renew a policy of personal private passenger motor vehicle liability insurance of a shared vehicle owner solely on the basis that the vehicle covered under the policy has been made available for sharing through a peer-to-peer car sharing program.

b. A motor vehicle insurer may deny, cancel, void, terminate, rescind or refuse to renew a policy of personal private passenger motor vehicle liability insurance covering a shared vehicle if the applicant or policyholder of the policy of personal private passenger motor vehicle liability insurance fails to provide complete and accurate information about the use of the shared vehicle through the peer-to-peer car sharing program as requested by the motor vehicle insurer during the application or renewal process of the personal private passenger motor vehicle liability insurance policy. END_STATUTE

START_STATUTE28-9606. Shared vehicle records; retention

A peer-to-peer car sharing program shall collect and verify records relating to the use of a shared vehicle, including times used, fees paid by the shared vehicle driver and monies received by the shared vehicle owner, and provide that information on request to the shared vehicle owner, the shared vehicle owner's insurer or the shared vehicle driver's insurer to facilitate a claim coverage investigation. The peer-to-peer car sharing program shall retain the records for at least two years. END_STATUTE

START_STATUTE28-9607. Vicarious liability exemption

A peer-to-peer car sharing program and a shared vehicle owner are exempt from vicarious liability pursuant to 49 United States Code section 30106 and under any state or local law that imposes liability solely based on vehicle ownership. END_STATUTE

START_STATUTE28-9608. Insurance claims; shared vehicles; indemnification

A motor vehicle insurer that defends or indemnifies a claim against a shared vehicle that is excluded under the terms of the motor vehicle insurer's policy may seek indemnification from the motor vehicle insurer of the peer-to-peer car sharing program if the claim is both:

1. made against the shared vehicle owner or the shared vehicle driver for loss or injury that occurs during the car sharing period.

2. excluded under the terms of its policy. END_STATUTE

START_STATUTE28-9609. Insurable interests

A. Notwithstanding any other law, a peer-to-peer car sharing program has an insurable interest in a shared vehicle during the car sharing period.

b. This section does not impose liability on a Peer-to-Peer Car Sharing Program to maintain the coverage mandated by section 28‑9602. END_STATUTE

START_STATUTE28-9610. Car sharing program agreement disclosures

Each car sharing program agreement made in this State shall disclose to the shared vehicle owner and the shared vehicle driver:

1. Any right of the peer-to-peer car sharing program to seek indemnification from the shared vehicle owner or the shared vehicle driver for economic loss sustained by the peer-to-peer car sharing program resulting from a breach of the terms and conditions of the car sharing program agreement.

2. That a motor vehicle liability insurance policy issued to the shared vehicle owner for the shared vehicle or to the shared vehicle driver does not provide a defense or indemnification for any claim asserted by the peer-to-peer car sharing program.

3. That the peer-to-peer car sharing program's insurance coverage on the shared vehicle owner and the shared vehicle driver is in effect only during each car sharing period and that, for any use of the shared vehicle by the shared vehicle driver after the car sharing termination time, the shared vehicle driver and the shared vehicle owner might not have insurance coverage.

4. The daily rate, fees and insurance, if applicable, or protection package costs that are charged to the shared vehicle owner or the shared vehicle driver.

5. That the shared vehicle owner's motor vehicle liability insurance might not provide coverage for a shared vehicle.

6. An emergency telephone number for roadside assistance and other customer service inquiries. END_STATUTE

START_STATUTE28-9611. Car sharing program agreement; licensed driver; data retention

A. A person may not enter into a car sharing program agreement with a driver unless the driver:

1. Holds a driver license issued by the department that authorizes the driver to operate the class of the shared vehicle.

2. Is a nonresident who both:

(a) Has a driver license issued by the state or country of the driver's residence that authorizes the driver in that state or country to drive vehicles of the class of the shared vehicle.

(b) Is at least the same age as that required of a resident to drive.

3. Otherwise is specifically authorized by the department to drive vehicles of the class of the shared vehicle.

B. A peer-to-peer car sharing program shall keep a record of:

1. The name and address of each shared vehicle driver.

2. The driver license number of the shared vehicle driver.

3. The date and place of issuance of the shared vehicle driver's driver license. END_STATUTE

START_STATUTE28-9612. Responsibility for equipment

A peer-to-peer car sharing program has sole responsibility for any equipment, including a global positioning system or other special equipment, that is put in or on a shared vehicle to monitor or facilitate the car sharing transaction and shall agree to indemnify and hold harmless the shared vehicle owner for any damage to or theft of the equipment during the car sharing period if the shared vehicle owner does not cause the damage or theft. The peer-to-peer car sharing program may seek indemnity from the shared vehicle driver for any loss or damage to the equipment that occurs during the sharing period. END_STATUTE

START_STATUTE28-9613. Safety recalls

A. When a vehicle owner becomes a shared vehicle owner on a peer‑to‑peer car sharing program and before the shared vehicle owner makes a shared vehicle available for peer‑to‑peer car sharing on the peer‑to‑peer car sharing program, the peer-to-peer car sharing program shall verify that the shared vehicle does not have any safety recalls on the shared vehicle for which the repairs are not made.

B. If a vehicle owner has received an actual notice of a safety recall on the owner's vehicle, the vehicle owner may not make the vehicle available as a shared vehicle until the safety recall repair is made.

C. If a shared vehicle owner receives a notice of a safety recall on the shared vehicle while the shared vehicle is made available on the peer‑to‑peer car sharing program, the shared vehicle owner shall remove the shared vehicle from availability on the peer-to-peer car sharing program as soon as practicable after receiving the notice of the safety recall. The shared vehicle owner may not make the shared vehicle available on the peer‑to‑peer car sharing program until the safety recall repair is made.

D. If a shared vehicle owner receives a notice of a safety recall while the shared vehicle is in the possession of a shared vehicle driver, as soon as practicable after receiving the notice of the safety recall, the shared vehicle owner shall notify the peer-to-peer car sharing program about the safety recall so that the shared vehicle owner may make the safety recall repair. END_STATUTE

START_STATUTE28-9614. Transaction privilege tax prohibited

A peer‑to‑peer car sharing company, a shared vehicle owner and a shared vehicle driver are exempt from transaction privilege tax pursuant to sections 42‑5062 and 42‑6004 on income derived from transactions in which a peer‑to‑peer car sharing company or a shared vehicle driver are providing peer‑to‑peer car sharing services. END_STATUTE

Sec. 3. Section 42-5062, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5062. Transporting classification

A. The transporting classification is comprised of the business of transporting for hire persons, freight or property by motor vehicle, railroads or aircraft from one point to another point in this state. The transporting classification does not include:

1. Transporting for hire persons, freight or property by:

(a) Motor carriers subject to a fee prescribed in title 28, chapter 16, article 4.

(b) Light motor vehicles subject to a fee under title 28, chapter 15, article 4.

(d) Transportation network company drivers on transactions involving transportation network services as defined in section 28‑9551.

(e) Vehicle for hire companies that are issued permits pursuant to section 28‑9503.

(f) Vehicle for hire drivers operating under a company permit issued pursuant to section 28‑9503 on transactions involving vehicle for hire services.

(g) Peer‑to‑peer car sharing companies or shared vehicle drivers, as defined in section 28‑9601, on transactions involving peer‑to‑peer car sharing as defined in section 28‑9601.

2. The business of transporting for hire persons traveling in air commerce by aircraft if taxation of the business is preempted by federal law.

3. Ambulances or ambulance services provided under title 48 or certified pursuant to title 36, chapter 21.1 or provided by a city or town in a county with a population of less than one hundred fifty thousand persons as determined in the most recent United States decennial census.

4. Public transportation program services for the dial-a-ride programs and special needs transportation services.

5. Transporting freight or property for hire by a railroad operating exclusively in this state if the transportation comprises a portion of a single shipment of freight or property, involving more than one railroad, either from a point in this state to a point outside this state or from a point outside this state to a point in this state. For the purposes of this paragraph, "a single shipment" means the transportation that begins at the point at which one of the railroads first takes possession of the freight or property and continues until the point at which one of the railroads relinquishes possession of the freight or property to a party other than one of the railroads.

6. Arranging transportation as a convenience or service to a person's customers if that person is not otherwise engaged in the business of transporting persons, freight or property for hire. This exception does not apply to businesses that dispatch vehicles pursuant to customer orders and send the billings and receive the payments associated with that activity, including when the transportation is performed by third‑party independent contractors. For the purposes of this paragraph, "arranging" includes billing for or collecting transportation charges from a person's customers on behalf of the persons providing the transportation.

B. The tax base for the transporting classification is the gross proceeds of sales or gross income derived from the business, except that the following shall be deducted from the tax base:

1. The gross proceeds of sales or gross income derived from transporting for hire persons, freight or property by a railroad pursuant to a contract with another railroad that is also considered to be engaged in the businesses of transporting persons, freight or property for hire if the other railroad is liable for the tax on gross proceeds of sales or gross income attributable to the transportation.

2. The gross proceeds of sales or gross income derived from business activity that is properly included in any other business classification under this article and that is taxable to the person engaged in that classification, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.

3. The gross proceeds of sales or gross income derived from a business activity that is arranged by the person who is subject to tax under this section and that is not taxable to the person conducting the activity due to an exclusion, exemption or deduction under this section or section 42‑5073, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.

4. The gross proceeds of sales or gross income derived from business activity that is arranged by a person who is subject to tax under this section and that is taxable to another person under this section who conducts the activity, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.

5. The gross proceeds of sales or gross income derived from transporting fertilizer by a railroad from a point in this state to another point in this state. END_STATUTE

Sec. 4. Section 42-5071, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5071. Personal property rental classification; definitions

A. The personal property rental classification is comprised of the business of leasing or renting tangible personal property for a consideration. The tax does not apply to:

1. Leasing or renting films, tapes or slides used by theaters or movies, which are engaged in business under the amusement classification, or used by television stations or radio stations.

2. Activities engaged in by the Arizona exposition and state fair board or county fair commissions in connection with events sponsored by such entities.

3. Leasing or renting tangible personal property by a parent corporation to a subsidiary corporation or by a subsidiary corporation to another subsidiary of the same parent corporation if taxes were paid under this chapter on the gross proceeds or gross income accruing from the initial sale of the tangible personal property. For the purposes of this paragraph, "subsidiary" means a corporation of which at least eighty percent of the voting shares are owned by the parent corporation.

4. Operating coin‑operated washing, drying and dry cleaning machines or coin‑operated car washing machines at establishments for the use of such machines.

5. Leasing or renting tangible personal property for incorporation into or comprising any part of a qualified environmental technology facility as described in section 41‑1514.02. This paragraph shall apply for ten full consecutive calendar or fiscal years following the initial lease or rental by each qualified environmental technology manufacturer, producer or processor.

6. Leasing or renting aircraft, flight simulators or similar training equipment to students or staff by nonprofit, accredited educational institutions that offer associate or baccalaureate degrees in aviation or aerospace related fields.

7. Leasing or renting photographs, transparencies or other creative works used by this state on internet websites, in magazines or in other publications that encourage tourism.

8. Leasing or renting certified ignition interlock devices installed pursuant to the requirements prescribed by section 28‑1461. For the purposes of this paragraph, "certified ignition interlock device" has the same meaning prescribed in section 28‑1301.

9. The leasing or renting of space to make attachments to utility poles, as follows:

(a) By a person that is engaged in business under section 42‑5063 or 42‑5064 or that is a cable operator.

(b) To a person that is engaged in business under section 42‑5063 or 42‑5064 or that is a cable operator.

10. Leasing or renting billboards that are designed, intended or used to advertise or inform and that are visible from any street, road or other highway.

11. Peer‑to‑peer car sharing activities pursuant to title 28, chapter 31.

B. The tax base for the personal property rental classification is the gross proceeds of sales or gross income derived from the business, but the gross proceeds of sales or gross income derived from the following shall be deducted from the tax base:

1. Reimbursements by the lessee to the lessor of a motor vehicle for payments by the lessor of the applicable fees and taxes imposed by sections 28‑2003, 28‑2352, 28‑2402, 28‑2481 and 28‑5801, title 28, chapter 15, article 2 and article IX, section 11, Constitution of Arizona, to the extent such amounts are separately identified as such fees and taxes and are billed to the lessee.

2. Leases or rentals of tangible personal property that, if it had been purchased instead of leased or rented by the lessee, would have been exempt under:

(a) Section 42‑5061, subsection A, paragraph 8, 9, 12, 13, 25, 29, 49 or 53.

(b) Section 42‑5061, subsection B, except that a lease or rental of new machinery or equipment is not exempt pursuant to section 42‑5061, subsection B, paragraph 13 if the lease is for less than two years.

(d) Section 42‑5061, subsection M.

3. Motor vehicle fuel and use fuel that are subject to a tax imposed under title 28, chapter 16, article 1, sales of use fuel to a holder of a valid single trip use fuel tax permit issued under section 28‑5739 and sales of aviation fuel that are subject to the tax imposed under section 28‑8344.

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

5. Amounts received by a motor vehicle dealer for the first month of a lease payment if the lease and the lease payment for the first month of the lease are transferred to a third‑party leasing company.

C. Sales of tangible personal property to be leased or rented to a person engaged in a business classified under the personal property rental classification are deemed to be resale sales.

D. In computing the tax base, the gross proceeds of sales or gross income from the lease or rental of a motor vehicle does not include any amount attributable to the car rental surcharge under section 5‑839, 28‑5810 or 48‑4234.

E. Until December 31, 1988, leasing or renting animals for recreational purposes is exempt from the tax imposed by this section. Beginning January 1, 1989, the gross proceeds or gross income from leasing or renting animals for recreational purposes is subject to taxation under this section. Tax liabilities, penalties and interest paid for taxable periods before January 1, 1989 shall not be refunded unless the taxpayer requesting the refund provides proof satisfactory to the department that the monies paid as taxes will be returned to the customer.

F. For the purposes of this section:

1. "Cable operator" has the same meaning prescribed by section 9‑505.

2. "Utility pole" means any wooden, metal or other pole used for utility purposes and the pole's appurtenances that are attached or authorized for attachment by the person controlling the pole. END_STATUTE

Sec. 5. Section 42-6004, Arizona Revised Statutes, as amended by Laws 2018, chapter 17, section 1, chapter 249, section 6 and chapter 341, section 2, is amended to read:

START_STATUTE42-6004. Exemption from municipal tax; definitions

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. This paragraph does not apply to an organization that is owned, managed or controlled, in whole or in part, by a major league baseball team, or its owners, officers, employees or agents, or by a major league baseball association or professional golfing association, or its owners, officers, employees or agents, unless the organization conducted or operated exhibition events in this state before January 1, 2018 that were exempt from state transaction privilege tax under section 42‑5073.

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 motor vehicle dealer 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. Orthodontic devices dispensed by a dental professional who is licensed under title 32, chapter 11 to a patient as part of the practice of dentistry.

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. Leasing real property between affiliated companies, businesses, persons or reciprocal insurers. For the purposes of this paragraph:

(a) "Affiliated companies, businesses, persons or reciprocal insurers" means the lessor holds a controlling interest in the lessee, the lessee holds a controlling interest in the lessor, affiliated persons hold a controlling interest in both the lessor and the lessee, or an unrelated person holds a controlling interest in both the lessor and lessee.

(b) "Affiliated persons" means members of the individual's family or persons who have ownership or control of a business entity.

(c) "Controlling interest" means direct or indirect ownership of at least eighty percent of the voting shares of a corporation or of the interests in a company, business or person other than a corporation.

(d) "Members of the individual's family" means the individual's spouse and brothers and sisters, whether by whole or half blood, including adopted persons, ancestors and lineal descendants.

(e) "Reciprocal insurer" has the same meaning prescribed in section 20‑762.

11. The gross proceeds of sales or gross income derived from a contract for the installation, assembly, repair or maintenance of machinery, equipment or other tangible personal property that is described in section 42‑5061, subsection B and that has independent functional utility, pursuant to the following provisions:

(a) The deduction provided in this paragraph includes the gross proceeds of sales or gross income derived from all of the following:

(i) Any activity performed on machinery, equipment or other tangible personal property with independent functional utility.

(ii) Any activity performed on any tangible personal property relating to machinery, equipment or other tangible personal property with independent functional utility in furtherance of any of the purposes provided for under subdivision (d) of this paragraph.

(iii) Any activity that is related to the activities described in items (i) and (ii) of this subdivision, including inspecting the installation of or testing the machinery, equipment or other tangible personal property.

(b) The deduction provided in this paragraph does not include gross proceeds of sales or gross income from the portion of any contracting activity that consists of the development of, or modification to, real property in order to facilitate the installation, assembly, repair, maintenance or removal of machinery, equipment or other tangible personal property described in section 42‑5061, subsection B.

(c) The deduction provided in this paragraph shall be determined without regard to the size or useful life of the machinery, equipment or other tangible personal property.

(d) For the purposes of this paragraph, "independent functional utility" means that the machinery, equipment or other tangible personal property can independently perform its function without attachment to real property, other than attachment for any of the following purposes:

(i) Assembling the machinery, equipment or other tangible personal property.

(ii) Connecting items of machinery, equipment or other tangible personal property to each other.

(iii) Connecting the machinery, equipment or other tangible personal property, whether as an individual item or as a system of items, to water, power, gas, communication or other services.

(iv) Stabilizing or protecting the machinery, equipment or other tangible personal property during operation by bolting, burying or performing other dissimilar nonpermanent connections to either real property or real property improvements.

12. The leasing or renting of certified ignition interlock devices installed pursuant to the requirements prescribed by section 28‑1461. For the purposes of this paragraph, "certified ignition interlock device" has the same meaning prescribed in section 28‑1301.

13. Computer data center equipment sold to the owner, operator or qualified colocation tenant of a computer data center that is certified by the Arizona commerce authority under section 41‑1519 or an authorized agent of the owner, operator or qualified colocation tenant during the qualification period for use in the qualified computer data center. For the purposes of this paragraph, "computer data center", "computer data center equipment", "qualification period" and "qualified colocation tenant" have the same meanings prescribed in section 41‑1519.

14. The gross proceeds of sales or gross income derived from a contract with the owner of real property or improvements to real property for the maintenance, repair, replacement or alteration of existing property, except as specified in this paragraph. The gross proceeds of sales or gross income derived from a de minimis amount of modification activity does not subject the contract or any part of the contract to tax. For the purposes of this paragraph:

(a) Each contract is independent of another contract, except that any change order that directly relates to the scope of work of the original contract shall be treated the same as the original contract under this paragraph, regardless of the amount of modification activities included in the change order. If a change order does not directly relate to the scope of work of the original contract, the change order shall be treated as a new contract, with the tax treatment of any subsequent change order to follow the tax treatment of the contract to which the scope of work of the subsequent change order directly relates.

(b) Any term not defined in this paragraph that is defined in section 42‑5075 has the same meaning prescribed in section 42‑5075.

(c) This paragraph does not apply to a contract that primarily involves surface or subsurface improvements to land and that is subject to title 28, chapter 19, 20 or 22 or title 34, chapter 2 or 6 even if the contract also includes vertical improvements. If a city or town imposes a tax on contracts that are subject to procurement processes under those provisions, the city or town shall include in the request for proposals a notice to bidders when those projects are subject to the tax. This subdivision does not apply to contracts with:

(i) Community facilities districts, fire districts, county television improvement districts, community park maintenance districts, cotton pest control districts, hospital districts, pest abatement districts, health service districts, agricultural improvement districts, county free library districts, county jail districts, county stadium districts, special health care districts, public health services districts, theme park districts or revitalization districts.

(ii) Any special taxing district not specified in item (i) of this subdivision if the district does not substantially engage in the modification, maintenance, repair, replacement or alteration of surface or subsurface improvements to land.

15. Monitoring services relating to an alarm system as defined in section 32‑101.

16. Tangible personal property, job printing or publications sold to or purchased by, or tangible personal property leased, rented or licensed for use to or by, a qualifying health sciences educational institution as defined in section 42‑5001.

17. The transfer of title or possession of coal back and forth between an owner or operator of a power plant and a person who is responsible for refining coal if both of the following apply:

(a) The transfer of title or possession of the coal is for the purpose of refining the coal.

(b) The title or possession of the coal is transferred back to the owner or operator of the power plant after completion of the coal refining process. For the purposes of this subdivision, "coal refining process" means the application of a coal additive system that aids the reduction of power plant emissions during the combustion of coal and the treatment of flue gas.

18. Tangible personal property incorporated or fabricated into a project described in paragraph 14 of this subsection, that is located within the exterior boundaries of an Indian reservation for which the owner, as defined in section 42‑5075, of the project is an Indian tribe or an affiliated Indian. For the purposes of this paragraph:

(a) "Affiliated Indian" means an individual native American Indian who is duly registered on the tribal rolls of the Indian tribe for whose benefit the Indian reservation was established.

(b) "Indian reservation" means all lands that are within the limits of areas set aside by the United States for the exclusive use and occupancy of an Indian tribe by treaty, law or executive order and that are recognized as Indian reservations by the United States department of the interior.

(c) "Indian tribe" means any organized nation, tribe, band or community that is recognized as an Indian tribe by the United States department of the interior and includes any entity formed under the laws of that Indian tribe.

19. The charges for the leasing or renting of space to make attachments to utility poles as follows:

(a) By a person that is engaged in the business of providing or furnishing electrical services or telecommunication services or that is a cable operator.

(b) To a person that is engaged in the business of providing or furnishing electrical services or telecommunication services or that is a cable operator.

20. Until March 1, 2017, the gross proceeds of sales or gross income derived from entry fees paid by participants for events that consist of a run, walk, swim or bicycle ride or a similar event, or any combination of these events.

21. The gross proceeds of sales or gross income derived from entry fees paid by participants for events that are operated or conducted by nonprofit organizations that are exempt from taxation under section 501(c)(3) of the internal revenue code and of which no part of the organization's net earnings inures to the benefit of any private shareholder or individual, if the event consists of a run, walk, swim or bicycle ride or a similar event, or any combination of these events.

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 on 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.

7. Any amount attributable to fees collected by transportation network companies issued a permit pursuant to section 28‑9552.

8. Transporting for hire persons by transportation network company drivers on transactions involving transportation network services as defined in section 28‑9551.

9. Transporting for hire persons by vehicle for hire companies that are issued permits pursuant to section 28‑9503.

10. Transporting for hire persons by vehicle for hire drivers on transactions involving vehicle for hire services as defined in section 28‑9501.

11. Transactions in which a peer‑to‑peer car sharing program or a shared vehicle driver as defined in section 28‑9601 are providing peer‑to‑peer car sharing as defined in section 28‑9601.

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 percent 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.

G. For the purposes of this section:

1. "Cable operator" has the same meaning prescribed in section 9‑505.

2. "Electrical services" means transmitting or distributing electricity, electric lights, current or power over lines, wires or cables.

3. "Telecommunication services" means transmitting or relaying sound, visual image, data, information, images or material over lines, wires or cables by radio signal, light beam, telephone, telegraph or other electromagnetic means.

4. "Utility pole" means any wooden, metal or other pole used for utility purposes and the pole's appurtenances that are attached or authorized for attachment by the person controlling the pole. END_STATUTE

Sec. 6. Section 42-6004, Arizona Revised Statutes, as amended by Laws 2018, chapter 17, section 1, chapter 249, section 6, chapter 263, section 3 and chapter 341, section 2, is amended to read: