First Regular Session H.B. 2188
PROPOSED
SENATE AMENDMENTS TO H.B. 2188
(Reference to House engrossed bill)
Strike everything after the enacting clause and insert:
"Section 1. Title 28, Arizona Revised Statutes, is amended by adding chapter 31, to read:
CHAPTER 31
PEER-TO-PEER CAR SHARING
ARTICLE 1. GENERAL PROVISIONS
28-9601. 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. "Personal use" means the shared vehicle owner did not claim the exemption from transaction privilege tax on the motor vehicle's purchase under section 42‑5061, subsection A, paragraph 23.
9. "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.
10. "Shared Vehicle Driver" means an individual who is authorized to drive a shared vehicle under a car sharing program agreement.
11. "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.
28-9602. Insurance requirements; liability; indemnification
A. Except as otherwise provided in this subsection, a peer‑to‑peer car sharing program shall assume liability of a shared vehicle owner for bodily injury or property damage to a third party or uninsured and underinsured motorist or personal injury protection losses during the car sharing period in an amount that is stated in the car sharing program agreement and that is not less than the minimum amount of coverage required by section 28‑4009. This subsection does not apply if the shared vehicle owner makes an intentional or fraudulent material misrepresentation to the peer‑to‑peer car sharing program before the car sharing period in which the loss occurs.
B. 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 28‑4009.
C. 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.
D. The insurance required by this section is primary during each car sharing period.
E. If insurance is maintained by a shared vehicle owner or shared vehicle driver pursuant to subsection C of this section and has lapsed or does not provide the required coverage:
1. Insurance that is maintained by a peer‑to‑peer car sharing program shall provide the coverage required by subsection B of this section beginning with the first dollar of a claim.
2. The peer‑to‑peer car sharing program shall defend a claim.
F. Coverage under a motor vehicle liability insurance policy that is maintained by a peer‑to‑peer car sharing program is not dependent on a personal motor vehicle liability insurer first denying a claim.
G. A peer‑to‑peer car sharing program may not:
1. Offer or sell insurance EXCEPT in conjunction with and incidental to car sharing program agreements.
2. Advertise, represent or otherwise portray itself or any of its employees or agents as licensed insurers or insurance producers, unless the peer‑to‑peer car sharing program is a licensed insurer or insurance producer.
3. Pay a person any COMPENSATION, fee or commission that is dependent on the placement of insurance under a peer‑to‑peer car sharing program's license issued pursuant to title 20.
H. Subsection G of this SECTION does not prohibit production payments or incentive payments to an employee if the payments are not dependent on the sale of insurance.
I. 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.
28-9603. 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.
28-9604. Authorized insurer exclusions
An authorized insurer that writes motor vehicle liability insurance in this State may deny coverage and is not required 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.
28-9605. 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 cancel, void or rescind 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 cancel, void, 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.
C. A motor vehicle insurer may limit the number of vehicles that the motor vehicle insurer will insure on a single policy if the vehicles are made available for sharing through a peer‑to‑peer car sharing program.
28-9606. 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 that are required by this section for at least two years.
28-9607. 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.
28-9608. 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 policy may seek contribution or 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 the policy.
28-9609. 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 require a Peer-to-Peer Car Sharing Program to maintain the insurance coverage mandated by section 28‑9602.
28-9610. 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 may not provide coverage for a shared vehicle.
6. An emergency telephone number for roadside assistance and other customer service inquiries.
28-9611. Car sharing program agreement; licensed driver; data retention
A. A peer‑to‑peer car sharing program may not enter into a car sharing program agreement with a driver unless the driver who will operate the shared vehicle:
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.
28-9612. 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 shared vehicle 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 car sharing period.
28-9613. 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 shared vehicle owner has received an actual notice of a safety recall on the shared vehicle, the shared vehicle owner may not make the shared 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.
28‑9614. Public airports; regulation of peer‑to‑peer car sharing
This chapter does not prohibit or restrict a public airport from implementing rules or licensing requirements or from assessing fees or charges that apply to shared vehicle transactions that are conducted at the public airport.
28‑9615. Surcharges; exemption
A peer‑to‑peer car sharing program, a shared vehicle owner and a shared vehicle driver are exempt from the surcharges established by sections 5‑839, 28‑5810 and 48‑4234.
Sec. 2. Section 42-5005, Arizona Revised Statutes, is amended to read:
42-5005. Transaction privilege tax and municipal privilege tax licenses; fees; renewal; revocation; violation; classification
A. Every person who receives gross proceeds of sales or gross income on which a transaction privilege tax is imposed by this article and who desires to engage or continue in business shall apply to the department for an annual transaction privilege tax license accompanied by a fee of twelve dollars $12. A person shall not engage or continue in business until the person has obtained a transaction privilege tax license.
B. A person desiring to engage or continue in business within a city or town that imposes a municipal privilege tax shall apply to the department of revenue for an annual municipal privilege tax license accompanied by a fee of up to fifty dollars $50, as established by ordinance of the city or town. The person shall submit the fee with each new license application. The person may not engage or continue in business until the person has obtained a municipal privilege tax license. The department must collect, hold, pay and manage the fees in trust for the city or town and may not use the monies for any other purposes.
C. A transaction privilege tax license is valid only for the calendar year in which it is issued, but it may be renewed for the following calendar year. There is no fee for the renewal of the transaction privilege tax license. The transaction privilege tax license must be renewed at the same time and in the manner as the municipal privilege tax license renewal.
D. A municipal privilege tax license is valid only for the calendar year in which it is issued, but it may be renewed for the following calendar year by the payment of a license renewal fee of up to fifty dollars $50. The renewal fee is due and payable on January 1 and is considered delinquent if not received on or before the last business day of January. The department must collect, hold, pay and manage the fees in trust for the city or town and may not use the monies for any other purposes.
E. A licensee that remains in business after the municipal privilege tax license has expired is subject to the payment of the license renewal fee and the civil penalty prescribed in section 42‑1125, subsection R.
F. If the applicant is not in arrears in payment of any tax imposed by this article, the department shall issue a license authorizing the applicant to engage and continue in business on the condition that the applicant complies with this article. The license number shall be continuous.
G. The transaction privilege tax license and the municipal privilege tax license are not transferable on a complete change of ownership or change of location of the business. For the purposes of this subsection:
1. "Location" means the business address appearing in the application for the license and on the transaction privilege tax or municipal privilege tax license.
2. "Ownership" means any right, title or interest in the business.
3. "Transferable" means the ability to convey or change the right or privilege to engage or continue in business by virtue of the issuance of the transaction privilege tax or municipal privilege tax license.
H. When the ownership or location of a business on which a transaction privilege tax or municipal privilege tax is imposed has been changed within the meaning of subsection G of this section, the licensee shall surrender the license to the department. The license shall be reissued to the new owners or for the new location on application by the taxpayer and payment of the twelve‑dollar $12 fee for a transaction privilege tax license and a fee of up to fifty dollars $50 per jurisdiction for a municipal privilege tax license. The department must collect, hold, pay and manage the fees in trust for the city or town and may not use the monies for any other purposes.
I. A person who is engaged in or conducting a business in two or more locations or under two or more business names shall procure a transaction privilege tax license for each location or business name regardless of whether all locations or business names are reported on a consolidated return under a single transaction privilege tax license number. This requirement shall not be construed as conflicting with section 42‑5020.
J. A person who is engaged in or conducting a business in two or more locations or under two or more business names shall procure a municipal privilege tax license for each location or business name regardless of whether all locations or business names are reported on a consolidated return.
K. A person who is engaged in or conducting business at two or more locations or under two or more business names and who files a consolidated return under a single transaction privilege tax license number as provided by section 42‑5020 is required to pay only a single municipal privilege tax license renewal fee for each local jurisdiction pursuant to subsection D of this section. A person who is engaged in or conducting business at two or more locations or under two or more business names and who does not file a consolidated return under a single license number is required to pay a license renewal fee for each location or license in a local jurisdiction.
L. For the purposes of this chapter and chapter 6 of this title:
1. Through December 31, 2018, an online lodging marketplace, as defined in section 42‑5076, may register with the department for a license for the payment of taxes levied by this state and one or more counties, cities, towns or special taxing districts, at the election of the online lodging marketplace, for taxes due from an online lodging operator on any online lodging transaction facilitated by the online lodging marketplace, subject to sections 42‑5076 and 42‑6009.
2. Beginning from and after December 31, 2018, an online lodging marketplace, as defined in section 42‑5076, shall register with the department for a license for the payment of taxes levied by this state and one or more counties, cities, towns or special taxing districts for taxes due from an online lodging operator on any online lodging transaction facilitated by the online lodging marketplace, subject to sections 42-5076 and 42-6009.
M. For the purposes of this chapter and chapter 6 of this title, a person who is licensed pursuant to title 32, chapter 20 and who files an electronic consolidated tax return for individual real properties under management on behalf of the property owners may be licensed with the department for the payment of taxes levied by this state and by any county, city or town with respect to those properties. There is no fee for a license issued pursuant to this subsection.
N. For the purposes of this chapter, a peer‑to‑peer car sharing program shall obtain a license from the department for the payment of taxes levied by this state and one or more counties, cities, towns or special taxing districts that are due from a shared vehicle owner for any shared vehicle transaction facilitated by the peer‑to‑peer car sharing program. For the purposes of this subsection, "peer‑to‑peer car sharing program" and "shared vehicle owner" have the same meanings prescribed in section 28‑9601.
N. O. If a person violates this article or any rule adopted under this article, the department upon hearing may revoke any transaction privilege tax or municipal privilege tax license issued to the person. The department shall provide ten days' written notice of the hearing, stating the time and place and requiring the person to appear and show cause why the license or licenses should not be revoked. The department shall provide written notice to the person of the revocation of the license. The notices may be served personally or by mail pursuant to section 42‑5037. After revocation, the department shall not issue a new license to the person unless the person presents evidence satisfactory to the department that the person will comply with this article and with the rules adopted under this article. The department may prescribe the terms under which a revoked license may be reissued.
O. P. The department may revoke any transaction privilege tax or municipal privilege tax license issued to any person who fails for thirteen consecutive months to make and file a return required by this article on or before the due date or the due date as extended by the department unless the failure is due to a reasonable cause and not due to wilful neglect.
P. Q. A person who violates any provision of this section is guilty of a class 3 misdemeanor.
Sec. 3. Section 42-5009, Arizona Revised Statutes, is amended to read:
42-5009. Certificates establishing deductions; liability for making false certificate; definitions
A. A person who conducts any business classified under article 2 of this chapter may establish entitlement to the allowable deductions from the tax base of that business by both:
1. Marking the invoice for the transaction to indicate that the gross proceeds of sales or gross income derived from the transaction was deducted from the tax base.
2. Obtaining a certificate executed by the purchaser indicating the name and address of the purchaser, the precise nature of the business of the purchaser, the purpose for which the purchase was made, the necessary facts to establish the appropriate deduction and the tax license number of the purchaser to the extent the deduction depends on the purchaser conducting business classified under article 2 of this chapter and a certification that the person executing the certificate is authorized to do so on behalf of the purchaser. The certificate may be disregarded if the seller has reason to believe that the information contained in the certificate is not accurate or complete.
B. A person who does not comply with subsection A of this section may establish entitlement to the deduction by presenting facts necessary to support the entitlement, but the burden of proof is on that person.
C. The department may prescribe a form for the certificate described in subsection A of this section. Under such rules as it may prescribe, the department may also describe transactions with respect to which a person is not entitled to rely solely on the information contained in the certificate provided for in subsection A of this section but must instead obtain such additional information as required by the rules in order to be entitled to the deduction.
D. If a seller is entitled to a deduction by complying with subsection A of this section, the department may require the purchaser that caused the execution of the certificate to establish the accuracy and completeness of the information required to be contained in the certificate that would entitle the seller to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article if the seller had not complied with subsection A of this section. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42‑5029.
E. If a seller is entitled to a deduction by complying with subsection B of this section, the department may require the purchaser to establish the accuracy and completeness of the information provided to the seller that entitled the seller to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article if the seller had not complied with subsection B of this section. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42‑5029.
F. The department may prescribe a form for a certificate used to establish entitlement to the deductions described in section 42‑5061, subsection A, paragraph 46 and section 42‑5063, subsection B, paragraph 3. Under rules the department may prescribe, the department may also require additional information for the seller to be entitled to the deduction. If a seller is entitled to the deductions described in section 42‑5061, subsection A, paragraph 46 and section 42‑5063, subsection B, paragraph 3, the department may require the purchaser who executed the certificate to establish the accuracy and completeness of the information contained in the certificate that would entitle the seller to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42‑5029.
G. If a seller claims a deduction under section 42‑5061, subsection A, paragraph 25 and establishes entitlement to the deduction with an exemption letter that the purchaser received from the department and the exemption letter was based on a contingent event, the department may require the purchaser that received the exemption letter to establish the satisfaction of the contingent event within a reasonable time. If the purchaser cannot establish the satisfaction of the event, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article if the seller had not been furnished the exemption letter. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42‑5029. For the purposes of this subsection, "reasonable time" means a time limitation that the department determines and that does not exceed the time limitations pursuant to section 42‑1104.
H. The department shall prescribe forms for certificates used to establish the satisfaction of the criteria necessary to qualify the sale of a motor vehicle for the deductions described in section 42‑5061, subsection A, paragraph 14, paragraph 28, subdivision (a) and paragraph 44 and subsection U. Except as provided in subsection J of this section, to establish entitlement to these deductions, a motor vehicle dealer shall retain:
1. A valid certificate as prescribed by this subsection completed by the purchaser and obtained prior to before the issuance of the nonresident registration permit authorized by section 28‑2154.
2. A copy of the nonresident registration permit authorized by section 28‑2154.
3. A legible copy of a current valid driver license issued to the purchaser by another state or foreign country that indicates an address outside of this state. For the sale of a motor vehicle to a nonresident entity, the entity's representative must have a current valid driver license issued by the same jurisdiction as that in which the entity is located.
4. For the purposes of the deduction provided by section 42‑5061, subsection A, paragraph 14, a certificate documenting the delivery of the motor vehicle to an out‑of‑state location.
I. Notwithstanding subsection A, paragraph 2 of this section, if a motor vehicle dealer has established entitlement to a deduction by complying with subsection H of this section, the department may require the purchaser who executed the certificate to establish the accuracy and completeness of the information contained in the certificate that entitled the motor vehicle dealer to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the motor vehicle dealer would have been required to pay under this article and under articles IV and V of the model city tax code as defined in section 42‑6051. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter and any tax imposed under article VI of the model city tax code as defined in section 42‑6051. The amount shall be treated as tax revenues collected from the motor vehicle dealer in order to designate the distribution base for purposes of section 42‑5029.
J. To establish entitlement to the deduction described in section 42‑5061, subsection A, paragraph 44, a public consignment auction dealer as defined in section 28‑4301 shall submit the valid certificate prescribed by subsection H of this section to the department and retain a copy for its records.
K. Notwithstanding any other law, compliance with subsection H of this section by a motor vehicle dealer entitles the motor vehicle dealer to the exemption provided in section 42‑6004, subsection A, paragraph 4.
L. The department shall prescribe a form for a certificate to be used by a person that is not subject to tax under section 42‑5075 when the person is engaged by a contractor that is subject to tax under section 42‑5075 for a project that is taxable under section 42‑5075. The certificate permits the person purchasing tangible personal property to be incorporated or fabricated by the person into any real property, structure, project, development or improvement to provide documentation to a retailer that the sale of tangible personal property qualifies for the deduction under section 42‑5061, subsection A, paragraph 27, subdivision (b). A prime contractor shall obtain the certificate from the department and shall provide a copy to any such person working on the project. The prime contractor shall obtain a new certificate for each project to which this subsection applies. For the purposes of this subsection, the following apply:
1. The person that is not subject to tax under section 42‑5075 may use the certificate issued pursuant to this subsection only with respect to tangible personal property that will be incorporated into a project for which the gross receipts are subject to tax under section 42‑5075.
2. The department shall issue the certificate to the prime contractor on receiving sufficient documentation to establish that the prime contractor meets the requirements of this subsection.
3. If any person uses the certificate provided under this subsection to purchase tangible personal property to be used in a project that is not subject to tax under section 42‑5075, the person is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article if the seller had not complied with subsection A of this section. Payment of the amount under this section exempts the person from liability for any tax imposed under article 4 of this chapter. The amount shall be sourced under section 42‑5040, subsection A, paragraph 2.
M. Notwithstanding any other law, compliance with subsection L of this section by a person that is not subject to tax under section 42‑5075 entitles the person to the exemption allowed by section 465, subsection (k) of the model city tax code when purchasing tangible personal property to be incorporated or fabricated by the person into any real property, structure, project, development or improvement.
N. The requirements of subsections A and B of this section do not apply to owners, proprietors or tenants of agricultural lands or farms who sell livestock or poultry feed that is grown or raised on their lands to any of the following:
1. Persons who feed their own livestock or poultry.
2. Persons who are engaged in the business of producing livestock or poultry commercially.
3. Persons who are engaged in the business of feeding livestock or poultry commercially or who board livestock noncommercially.
O. A vendor who has reason to believe that a certificate prescribed by this section is not accurate or complete will not be relieved of the burden of proving entitlement to the exemption. A vendor that accepts a certificate in good faith will be relieved of the burden of proof and the purchaser may be required to establish the accuracy of the claimed exemption. If the purchaser cannot establish the accuracy and completeness of the information provided in the certificate, the purchaser is liable for an amount equal to the transaction privilege tax, penalty and interest that the vendor would have been required to pay if the vendor had not accepted the certificate.
P. Notwithstanding any other law, an online lodging operator, as defined in section 42‑5076, shall be entitled to an exclusion from any applicable taxes for any online lodging transaction, as defined in section 42‑5076, facilitated by an online lodging marketplace, as defined in section 42‑5076, for which the online lodging operator has obtained from the online lodging marketplace written notice that the online lodging marketplace is registered with the department to collect applicable taxes for all online lodging transactions facilitated by the online lodging marketplace, and transaction history documenting tax collected by the online lodging marketplace, pursuant to section 42‑5005, subsection L.
Q. The department shall prescribe the form of a certificate to be used by a person purchasing an aircraft to document eligibility for a deduction pursuant to section 42‑5061, subsection B, paragraph 7, subdivision (a), item (v) or an exemption pursuant to section 42‑5159, subsection B, paragraph 7, subdivision (a), item (v), relating to aircraft. The person must provide this certificate and documentation confirming that the operational control of the aircraft has been transferred or will be transferred immediately after the purchase to one or more persons described in section 42‑5061, subsection B, paragraph 7, subdivision (a), item (i), (ii), (iii) or (iv) or section 42‑5159, subsection B, paragraph 7, subdivision (a), item (i), (ii), (iii) or (iv). Operational control of the aircraft must be transferred for at least fifty percent of the aircraft's flight hours. If such operational control is not transferred for at least fifty percent of the aircraft's flight hours during the recapture period, the owner of the aircraft is liable for an amount equal to any tax that the seller or purchaser would have been required to pay under this chapter at the time of the sale, plus penalty and interest. The recapture period begins on the date that operational control of the aircraft is first transferred and ends on the later of the date the aircraft is fully depreciated for federal income tax purposes or five years after operational control was first transferred. For the purposes of this subsection, operational control of the aircraft must be within the meaning of federal aviation administration operations specification A008, or its successor, except that:
1. If it is determined that operational control has been transferred for less than fifty percent but more than forty percent of the aircraft's flight hours, the owner of the aircraft is liable for an amount equal to any tax that the seller or purchaser would have been required to pay under this chapter at the time of the sale, plus interest.
2. If the aircraft is sold during the recapture period, the seller is not liable for the amount determined pursuant to this subsection unless the operational control of the aircraft had not been transferred for at least fifty percent of the aircraft's flight hours at the time of the sale.
R. Notwithstanding any other law, a shared vehicle owner is entitled to an exclusion from any applicable taxes for any shared vehicle transaction that is facilitated by a peer‑to‑peer car sharing program and for which the shared vehicle owner has obtained from the peer‑to‑peer car sharing program a Written notice that the peer‑to‑peer car sharing program is licensed with the department to collect applicable taxes for all shared vehicle transactions that are facilitated by the peer‑to‑peer car sharing program.
S. For the purposes of this section, "peer‑to‑peer car sharing program" and "shared vehicle owner" have the same meanings prescribed in section 28-9601.
Sec. 4. Section 42-5014, Arizona Revised Statutes, is amended to read:
42-5014. Return and payment of tax; estimated tax; extensions; abatements
A. Except as provided in subsection B, C, D, E, or F or G of this section, the taxes levied under this article:
1. Are due and payable monthly in the form required by section 42‑5018 for the amount of the tax, to the department, on or before the twentieth day of the month next succeeding the month in which the tax accrues.
2. Are delinquent as follows:
(a) For taxpayers that are required or elect to file and pay electronically in any month, if not received by the department on or before the last business day of the month.
(b) For all other taxpayers, if not received by the department on or before the business day preceding the last business day of the month.
B. The department, for any taxpayer whose estimated annual liability for taxes imposed or administered by this article or chapter 6 of this title is between two thousand dollars $2,000 and eight thousand dollars $8,000, shall authorize such taxpayer to pay such the taxes on a quarterly basis. The department, for any taxpayer whose estimated annual liability for taxes imposed by this article is less than two thousand dollars $2,000, shall authorize such taxpayer to pay such the taxes on an annual basis. For the purposes of this subsection, the taxes due under this article:
1. For taxpayers that are authorized to pay on a quarterly basis, are due and payable monthly in the form required by section 42‑5018 for the amount of the tax, to the department, on or before the twentieth day of the month next succeeding the quarter in which the tax accrues.
2. For taxpayers that are authorized to pay on an annual basis, are due and payable monthly in the form required by section 42‑5018 for the amount of the tax, to the department, on or before the twentieth day of January next succeeding the year in which the tax accrues.
3. Are delinquent as follows:
(a) For taxpayers that are required or elect to file and pay electronically in any quarter, if not received by the department on or before the last business day of the month.
(b) For all other taxpayers that are required to file and pay quarterly, if not received by the department on or before the business day preceding the last business day of the month.
(c) For taxpayers that are required or elect to file and pay electronically on an annual basis, if not received by the department on or before the last business day of January.
(d) For all other taxpayers that are required to file and pay annually, if not received by the department on or before the business day preceding the last business day of January.
C. The department may require a taxpayer whose business is of a transient character to file the return and remit the taxes imposed by this article on a daily, a weekly or a transaction by transaction transaction‑by‑transaction basis, and those returns and payments are due and payable on the date fixed by the department without a grace period otherwise allowed by this section. For the purposes of this subsection, "business of a transient character" means sales activity by a taxpayer not regularly engaged in selling within the this state that is conducted from vehicles, portable stands, rented spaces, structures or booths, or concessions at fairs, carnivals, circuses, festivals or similar activities for not more than thirty consecutive days.
D. If the business entity under which a taxpayer reports and pays income tax under title 43 has an annual total tax liability under this article, article 6 of this chapter and chapter 6, article 3 of this title of one million dollars $1,000,000 or more, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this article, article 6 of this chapter or chapter 6, article 3 of this title are collected, or if the taxpayer can reasonably anticipate such liability in the current year, the taxpayer shall report on a form prescribed by the department and pay an estimated tax payment each June. Any other taxpayer may voluntarily elect to pay the estimated tax payment pursuant to this subsection. The payment shall be made on or before June 20 and is delinquent if not received by the department on or before the business day preceding the last business day of June for those taxpayers electing to file by mail, or delinquent if not received by the department on the business day preceding the last business day of June for those taxpayers electing to file in person. The estimated tax paid shall be credited against the taxpayer's tax liability under this article, article 6 of this chapter and chapter 6, article 3 of this title for the month of June for the current calendar year. The estimated tax payment shall equal either:
1. One‑half of the actual tax liability under this article plus one‑half of any tax liability under article 6 of this chapter and chapter 6, article 3 of this title for May of the current calendar year.
2. The actual tax liability under this article plus any tax liability under article 6 of this chapter and chapter 6, article 3 of this title for the first fifteen days of June of the current calendar year.
E. An online lodging marketplace, as defined in section 42‑5076, that is registered with the department pursuant to section 42‑5005, subsection L:
1. Shall remit to the department the applicable taxes payable pursuant to section 42‑5076 and chapter 6 of this title with respect to each online lodging transaction, as defined in section 42‑5076, facilitated by the online lodging marketplace.
2. Shall report the taxes monthly and remit the aggregate total amounts for each of the respective taxing jurisdictions.
3. Shall not be required to list or otherwise identify any individual online lodging operator, as defined in section 42‑5076, on any return or any attachment to a return.
F. A person who is licensed pursuant to title 32, chapter 20 and who is licensed with the department pursuant to section 42‑5005, subsection M shall:
1. File a consolidated return monthly with respect to all managed properties for which the licensee files an electronic consolidated tax return pursuant to section 42‑6013.
2. Remit to the department the aggregate total amount of the applicable taxes payable pursuant to this chapter and chapter 6 of this title for all of the respective taxing jurisdictions with respect to the managed properties.
G. A peer‑to‑peer car sharing program, as defined in section 28‑9601, that is licensed by the department pursuant to section 42‑5005, subsection N:
1. Shall electronically remit to the department the applicable taxes pursuant to section 42‑5071.
2. Shall electronically report the taxes monthly and remit the aggregate total amounts for each of the respective taxing jurisdictions.
3. Is not required to list or otherwise identify any individual shared vehicle owner, as defined in section 28‑9601, on any return or any attachment to a return. The peer‑to‑peer car sharing program shall retain tax information for each shared vehicle transaction and shall provide the information to the department at the department's request.
G. H. The taxpayer shall prepare a return showing the amount of the tax for which the taxpayer is liable for the preceding month, and shall mail or deliver the return to the department in the same manner and time as prescribed for the payment of taxes in subsection A of this section. If the taxpayer fails to file the return in the manner and time as prescribed for the payment of taxes in subsection A of this section, the amount of the tax required to be shown on the return is subject to the penalty imposed pursuant to section 42‑1125, subsection X, without any reduction for taxes paid on or before the due date of the return. The return shall be verified by the oath of the taxpayer or an authorized agent or as prescribed by the department pursuant to section 42‑1105, subsection B.
H. I. Any person who is taxable under this article and who makes cash and credit sales shall report such the cash and credit sales separately and on making application may apply for and obtain from the department an extension of time for payment of to pay taxes due on the credit sales. The department shall grant the extension shall be granted by the department under such rules as the department prescribes. When the extension is granted, the taxpayer shall thereafter include in each monthly report all collections made on such credit sales during the month next preceding and shall pay the taxes due at the time of filing such a report.
I. J. The returns required under this article shall be made on forms prescribed by the department and shall capture data with sufficient specificity to meet the needs of all taxing jurisdictions.
J. K. Any person who is engaged in or conducting business in two or more locations or under two or more business names shall file the return required under this article using an electronic filing program established by the department.
K. L. For taxable periods beginning from and after December 31, 2017, any taxpayer with an annual total tax liability under this chapter and chapter 6 of this title of twenty thousand dollars $20,000 or more, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this chapter or chapter 6 of this title are collected, or a taxpayer that can reasonably anticipate that liability in the current year, shall file the return required under this article using an electronic filing program established by the department.
L. M. For taxable periods beginning from and after December 31, 2018, any taxpayer with an annual total tax liability under this chapter and chapter 6 of this title of ten thousand dollars $10,000 or more, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this chapter or chapter 6 of this title are collected, or a taxpayer that can reasonably anticipate that liability in the current year, shall file the return required under this article using an electronic filing program established by the department.
M. N. For taxable periods beginning from and after December 31, 2019, any taxpayer with an annual total tax liability under this chapter and chapter 6 of this title of five thousand dollars $5,000 or more, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this chapter or chapter 6 of this title are collected, or a taxpayer that can reasonably anticipate that liability in the current year, shall file the return required under this article using an electronic filing program established by the department.
N. O. For taxable periods beginning from and after December 31, 2020, any taxpayer with an annual total tax liability under this chapter and chapter 6 of this title of five hundred dollars $500 or more, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this chapter or chapter 6 of this title are collected, or a taxpayer that can reasonably anticipate that liability in the current year, shall file the return required under this article using an electronic filing program established by the department.
O. P. Any taxpayer that is required to report and pay using an electronic filing program established by the department may apply to the director, on a form prescribed by the department, for an annual waiver from the electronic filing requirement. The director may grant a waiver, which may be renewed, if any of the following applies:
1. The taxpayer has no computer.
2. The taxpayer has no internet access.
3. Any other circumstance considered to be worthy by the director exists.
P. Q. A waiver is not required if the return cannot be electronically filed for reasons beyond the taxpayer's control, including situations in which the taxpayer was instructed by either the internal revenue service or the department of revenue to file by paper.
Q. R. The department, for good cause, may extend the time for making any return required by this article and may grant such reasonable additional time within which to make the return as it deems proper, but the time for filing the return shall not be extended beyond the first day of the third month next succeeding the regular due date of the return.
R. S. The department, with the approval of the attorney general, may abate small tax balances if the administration costs exceed the amount of tax due.
S. T. For the purposes of subsection D of this section, "taxpayer" means the business entity under which the business reports and pays state income taxes regardless of the number of offices at which the taxes imposed by this article, article 6 of this chapter or chapter 6, article 3 of this title are collected.
Sec. 5. Section 42-5029, Arizona Revised Statutes, is amended to read:
42-5029. Remission and distribution of monies; withholding; definition
A. The department shall deposit, pursuant to sections 35‑146 and 35‑147, all revenues collected under this article and articles 4, 5 and 8 of this chapter pursuant to section 42‑1116, separately accounting for:
1. Payments of estimated tax under section 42‑5014, subsection D.
2. Revenues collected pursuant to section 42‑5070.
3. Revenues collected under this article and article 5 of this chapter from and after June 30, 2000 from sources located on Indian reservations in this state.
4. Revenues collected pursuant to section 42‑5010, subsection G and section 42‑5155, subsection D.
5. Revenues collected pursuant to section 42‑5010.01 and section 42‑5155, subsection E.
B. The department shall credit payments of estimated tax to an estimated tax clearing account and each month shall transfer all monies in the estimated tax clearing account to a fund designated as the transaction privilege and severance tax clearing account. The department shall credit all other payments to the transaction privilege and severance tax clearing account, separately accounting for the monies designated as distribution base under sections 42‑5010, 42‑5164 and 42‑5205. Each month the department shall report to the state treasurer the amount of monies collected pursuant to this article and articles 4, 5 and 8 of this chapter.
C. On notification by the department, the state treasurer shall distribute the monies deposited in the transaction privilege and severance tax clearing account in the manner prescribed by this section and by sections 42‑5164 and 42‑5205, after deducting warrants drawn against the account pursuant to sections 42‑1118 and 42‑1254.
D. Of the monies designated as distribution base, and subject to the requirements of section 42‑5041, the department shall:
1. Pay twenty‑five percent to the various incorporated municipalities in this state in proportion to their population to be used by the municipalities for any municipal purpose.
2. Pay 38.08 percent to the counties in this state by averaging the following proportions:
(a) The proportion that the population of each county bears to the total state population.
(b) The proportion that the distribution base monies collected during the calendar month in each county under this article, section 42‑5164, subsection B and section 42‑5205, subsection B bear to the total distribution base monies collected under this article, section 42‑5164, subsection B and section 42‑5205, subsection B throughout the state for the calendar month.
3. Pay an additional 2.43 percent to the counties in this state as follows:
(a) Average the following proportions:
(i) The proportion that the assessed valuation used to determine secondary property taxes of each county, after deducting that part of the assessed valuation that is exempt from taxation at the beginning of the month for which the amount is to be paid, bears to the total assessed valuations used to determine secondary property taxes of all the counties after deducting that portion of the assessed valuations that is exempt from taxation at the beginning of the month for which the amount is to be paid. Property of a city or town that is not within or contiguous to the municipal corporate boundaries and from which water is or may be withdrawn or diverted and transported for use on other property is considered to be taxable property in the county for purposes of determining assessed valuation in the county under this item.
(ii) The proportion that the distribution base monies collected during the calendar month in each county under this article, section 42‑5164, subsection B and section 42‑5205, subsection B bear to the total distribution base monies collected under this article, section 42‑5164, subsection B and section 42‑5205, subsection B throughout the this state for the calendar month.
(b) If the proportion computed under subdivision (a) of this paragraph for any county is greater than the proportion computed under paragraph 2 of this subsection, the department shall compute the difference between the amount distributed to that county under paragraph 2 of this subsection and the amount that would have been distributed under paragraph 2 of this subsection using the proportion computed under subdivision (a) of this paragraph and shall pay that difference to the county from the amount available for distribution under this paragraph. Any monies remaining after all payments under this subdivision shall be distributed among the counties according to the proportions computed under paragraph 2 of this subsection.
4. After any distributions required by sections 42‑5030, 42‑5030.01, 42‑5031, 42‑5032, 42‑5032.01, and 42‑5032.02 and 42‑5032.03, and after making any transfer to the water quality assurance revolving fund as required by section 49‑282, subsection B, credit the remainder of the monies designated as distribution base to the state general fund. From this amount the legislature shall annually appropriate to:
(a) The department of revenue sufficient monies to administer and enforce this article and articles 5 and 8 of this chapter.
(b) The department of economic security monies to be used for the purposes stated in title 46, chapter 1.
(c) The firearms safety and ranges fund established by section 17‑273, fifty thousand dollars $50,000 derived from the taxes collected from the retail classification pursuant to section 42‑5061 for the current fiscal year.
E. If approved by the qualified electors voting at a statewide general election, all monies collected pursuant to section 42‑5010, subsection G and section 42‑5155, subsection D shall be distributed each fiscal year pursuant to this subsection. The monies distributed pursuant to this subsection are in addition to any other appropriation, transfer or other allocation of public or private monies from any other source and shall not supplant, replace or cause a reduction in other school district, charter school, university or community college funding sources. The monies shall be distributed as follows:
1. If there are outstanding state school facilities revenue bonds pursuant to title 15, chapter 16, article 7, each month one‑twelfth of the amount that is necessary to pay the fiscal year's debt service on outstanding state school improvement revenue bonds for the current fiscal year shall be transferred each month to the school improvement revenue bond debt service fund established by section 15‑2084. The total amount of bonds for which these monies may be allocated for the payment of debt service shall not exceed a principal amount of eight hundred million dollars exclusive of refunding bonds and other refinancing obligations.
2. After any transfer of monies pursuant to paragraph 1 of this subsection, twelve per cent of the remaining monies collected during the preceding month shall be transferred to the technology and research initiative fund established by section 15‑1648 to be distributed among the universities for the purpose of investment in technology and research‑based initiatives.
3. After the transfer of monies pursuant to paragraph 1 of this subsection, three per cent of the remaining monies collected during the preceding month shall be transferred to the workforce development account established in each community college district pursuant to section 15‑1472 for the purpose of investment in workforce development programs.
4. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one‑twelfth of the amount a community college that is owned, operated or chartered by a qualifying Indian tribe on its own Indian reservation would receive pursuant to section 15‑1472, subsection D, paragraph 2 if it were a community college district shall be distributed each month to the treasurer or other designated depository of a qualifying Indian tribe. Monies distributed pursuant to this paragraph are for the exclusive purpose of providing support to one or more community colleges owned, operated or chartered by a qualifying Indian tribe and shall be used in a manner consistent with section 15‑1472, subsection B. For the purposes of this paragraph, "qualifying Indian tribe" has the same meaning as defined in section 42‑5031.01, subsection D.
5. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one‑twelfth of the following amounts shall be transferred each month to the department of education for the increased cost of basic state aid under section 15‑971 due to added school days and associated teacher salary increases enacted in 2000:
(a) In fiscal year 2001‑2002, $15,305,900.
(b) In fiscal year 2002‑2003, $31,530,100.
(c) In fiscal year 2003‑2004, $48,727,700.
(d) In fiscal year 2004‑2005, $66,957,200.
(e) In fiscal year 2005‑2006 and each fiscal year thereafter, $86,280,500.
6. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, seven million eight hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments, to the department of education to be used for school safety as provided in section 15‑154 and two hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments to the department of education to be used for the character education matching grant program as provided in section 15‑154.01.
7. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, no more than seven million dollars may be appropriated by the legislature each fiscal year to the department of education to be used for accountability purposes as described in section 15‑241 and title 15, chapter 9, article 8.
8. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one million five hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments, to the failing schools tutoring fund established by section 15‑241.
9. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, twenty‑five million dollars shall be transferred each fiscal year to the state general fund to reimburse the general fund for the cost of the income tax credit allowed by section 43‑1072.01.
10. After the payment of monies pursuant to paragraphs 1 through 9 of this subsection, the remaining monies collected during the preceding month shall be transferred to the classroom site fund established by section 15‑977. The monies shall be allocated as follows in the manner prescribed by section 15‑977:
(a) Forty per cent shall be allocated for teacher compensation based on performance.
(b) Twenty per cent shall be allocated for increases in teacher base compensation and employee related expenses.
(c) Forty per cent shall be allocated for maintenance and operation purposes.
F. The department shall credit the remainder of the monies in the transaction privilege and severance tax clearing account to the state general fund, subject to any distribution required by section 42‑5030.01.
G. Notwithstanding subsection D of this section, if a court of competent jurisdiction finally determines that tax monies distributed under this section were illegally collected under this article or articles 5 and 8 of this chapter and orders the monies to be refunded to the taxpayer, the department shall compute the amount of such monies that was distributed to each city, town and county under this section. Each city's, town's and county's proportionate share of the costs shall be based on the amount of the original tax payment each municipality and county received. Each month the state treasurer shall reduce the amount otherwise distributable to the city, town and county under this section by one thirty‑sixth 1/36 of the total amount to be recovered from the city, town or county until the total amount has been recovered, but the monthly reduction for any city, town or county shall not exceed ten percent of the full monthly distribution to that entity. The reduction shall begin for the first calendar month after the final disposition of the case and shall continue until the total amount, including interest and costs, has been recovered.
H. On receiving a certificate of default from the greater Arizona development authority pursuant to section 41‑2257 or 41‑2258 and to the extent not otherwise expressly prohibited by law, the state treasurer shall withhold from the next succeeding distribution of monies pursuant to this section due to the defaulting political subdivision the amount specified in the certificate of default and immediately deposit the amount withheld in the greater Arizona development authority revolving fund. The state treasurer shall continue to withhold and deposit the monies until the greater Arizona development authority certifies to the state treasurer that the default has been cured. In no event may the state treasurer withhold any amount that the defaulting political subdivision certifies to the state treasurer and the authority as being necessary to make any required deposits then due for the payment of principal and interest on bonds of the political subdivision that were issued before the date of the loan repayment agreement or bonds and that have been secured by a pledge of distributions made pursuant to this section.
I. Except as provided by sections 42‑5033 and 42‑5033.01, the population of a county, city or town as determined by the most recent United States decennial census plus any revisions to the decennial census certified by the United States bureau of the census shall be used as the basis for apportioning monies pursuant to subsection D of this section.
J. Except as otherwise provided by this subsection, on notice from the department of revenue pursuant to section 42‑6010, subsection B, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city or town the amount of the penalty for business location municipal tax incentives provided by the city or town to a business entity that locates a retail business facility in the city or town. The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount of the penalty has been withheld. The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section. The state treasurer shall not withhold any amount that the city or town certifies to the department of revenue and the state treasurer as being necessary to make any required deposits or payments for debt service on bonds or other long‑term obligations of the city or town that were issued or incurred before the location incentives provided by the city or town.
K. On notice from the auditor general pursuant to section 9‑626, subsection D, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city the amount computed pursuant to section 9‑626, subsection D. The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount specified in the notice has been withheld. The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section.
L. Except as otherwise provided by this subsection, on notice from the attorney general pursuant to section 41‑194.01, subsection B, paragraph 1 that an ordinance, regulation, order or other official action adopted or taken by the governing body of a county, city or town violates state law or the Constitution of Arizona, the state treasurer shall withhold the distribution of monies pursuant to this section to the affected county, city or town and shall continue to withhold monies pursuant to this subsection until the attorney general certifies to the state treasurer that the violation has been resolved. The state treasurer shall redistribute the monies withheld pursuant to this subsection among all other counties, cities and towns in proportion to their population as provided by subsection D of this section. The state treasurer shall not withhold any amount that the county, city or town certifies to the attorney general and the state treasurer as being necessary to make any required deposits or payments for debt service on bonds or other long‑term obligations of the county, city or town that were issued or incurred before committing the violation.
M. For the purposes of this section, "community college district" means a community college district that is established pursuant to sections 15‑1402 and 15‑1403 and that is a political subdivision of this state and, unless otherwise specified, includes a community college tuition financing district established pursuant to section 15‑1409.
Sec. 6. Title 42, chapter 5, article 1, Arizona Revised Statutes, is amended by adding section 42-5032.03, to read:
42-5032.03. Distribution of revenues; tourism and sports authority; county stadium district; definition
A. After the distributions made pursuant to section 42‑5029, subsection D, paragraphs 1 through 3, from the amount designated as the distribution base pursuant to section 42‑5029, subsection D that is derived from the state transaction privilege tax collected from a peer‑to‑peer car sharing program under the personal property rental classification pursuant to section 42‑5071, the state treasurer shall pay the following amounts:
1. 3.5 percent of the gross proceeds or gross income from the peer‑to‑peer car sharing program received from transactions sourced to a county in which a tourism and sports authority is established pursuant to title 5, chapter 8 to that authority's general fund maintained pursuant to section 5‑832.
2. 3.5 percent of the gross proceeds or gross income from the peer‑to‑peer car sharing program received from transactions sourced to a county with a population of less than two million persons in which a county stadium district is established pursuant to title 48, chapter 26 to the county stadium district fund maintained for that district pursuant to section 48‑4231.
3. After the payments made pursuant to paragraphs 1 and 2 of this subsection, Any remaining monies to the state general fund.
B. For the purposes of this section, "peer‑to‑peer car sharing program" has the same meaning prescribed in section 28‑9601.
Sec. 7. Section 42-5040, Arizona Revised Statutes, is amended to read:
42-5040. Sourcing of certain transactions; definitions
A. Except as provided in section 42‑5075, retail sales of tangible personal property shall be sourced as follows:
1. To the seller's business location if the seller receives the order at a business location in this state.
2. Except as provided in section 42‑5008.01, to the purchaser's location in this state if the seller receives the order at a business location outside this state.
B. Shared vehicle transactions as prescribed in title 28, chapter 31 shall be sourced as follows:
1. To the permanent street address of the registered shared vehicle owner if the motor vehicle is registered in this state.
2. To the street address in this state where the shared vehicle owner resides while in this state if the motor vehicle is registered in another state or country.
B. C. For the purposes of Subsection A of this section, an order is received when all of the information necessary to accept the order has been received by or on behalf of the seller, regardless of where the order is accepted or approved. The place of business or residence of the purchaser does not determine where the order is received.
C. D. The gross receipts from leasing or renting tangible personal property shall be sourced as follows:
1. To the lessor's business location if the lessor has a business location in this state.
2. To the lessee's address if the lessor does not have a business location in this state. The gross receipts are taxable when the property is shipped, delivered or otherwise brought into this state for use in this state.
D. E. For the purposes of this section:
1. "Lessee's address" means the residential address of an individual lessee and the primary business address of any other lessee.
2. "Lessor's business location" means the business address that appears on the lessor's transaction privilege tax license.
3. "shared vehicle owner" has the same meaning prescribed in section 28‑9601.
Sec. 8. Section 42-5071, Arizona Revised Statutes, is amended to read:
42-5071. 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.
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.
(c) Section 42‑5061, subsection I, paragraph 1.
(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. The tax base of the personal property rental classification does not include the gross proceeds of sales or gross income received by a shared vehicle owner from any shared vehicle transaction for which the shared vehicle owner has received documentation from a licensed peer‑to‑peer car sharing program pursuant to section 42‑5005, subsection N that the peer‑to‑peer car sharing program has remitted or will remit the applicable tax to the department pursuant to section 42‑5014, subsection G. For the purposes of this subsection, "Peer‑to‑peer car sharing program" and "shared vehicle owner" have the same meanings prescribed in section 28‑9601.
F. G. 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."
Amend title to conform