ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fifth Legislature

First Regular Session

Senate: FIN DP 10-0-0-0| APPROPS DP 8-0-2-0| 3rd Read 27-0-3-0

SB 1110: TPT; exemptions; Indian tribes

Sponsor: Senator Mesnard, LD 17

Committee on Ways & Means

Overview

Exempts specified sales and contracting activities to and by Indian Tribes, tribally owned businesses, tribal entities and affiliated Indians from state and municipal Transaction Privilege Tax (TPT).

History

TPT is currently levied by the state of Arizona for the privilege of conducting business in the state under 16 separate business classifications. TPT is imposed on the gross proceeds of sales or gross income on taxable sales. All gross receipts are subject to tax under one of the TPT business classifications unless specifically excluded or exempted by statute. Exemptions and deductions under one TPT classification may not be used under another classification unless specifically provided for by law.

The Department of Revenue (DOR) issued Arizona Transaction Privilege Tax Ruling 95-11 (TPR 95-11) in April 1995 relating to the imposition of TPT on activities performed on Indian reservations in Arizona. TPR 95-11 states that an affiliated Indian or an affiliated Indian vendor engaged in business activities on the reservation are not subject to TPT. Additionally, non-Indian or non-affiliated Indian retailers engaged in business activities located on a reservation are not subject to tax if the activity is performed for an affiliated Indian. Business activities performed for an affiliated Indian by retailers located off the reservation are subject to TPT. However, sales of tangible personal property to an affiliated Indian are not subject to TPT if the solicitation, delivery and payment of the goods take place on the Indian reservation.

The sale of a motor vehicle to an enrolled member of an Indian tribe who resides on the Indian reservation established for the tribe is exempt from TPT. (A.R.S.§ 42-5061.A.28.b)

Provisions

1. Exempts, from TPT and affiliated taxes, the gross proceeds of sales or gross income derived from:

a) Business activities performed by an Indian tribe, a tribally owned business, a tribal entity or an affiliated Indian, if the business activity takes place on an Indian reservation;

b) Business activities performed by non-affiliated Indians or non-Indian vendors on an Indian reservation for an Indian tribe, a tribal entity or an affiliated Indian;

c) Contracting activities performed on an Indian reservation by an Indian tribe, a tribally owned business, a tribal entity or an affiliated Indian;

d) Contracting activities performed for an Indian tribe, a tribally owned business, a tribal entity or an affiliated Indian on an Indian reservation by a non-affiliated Indian or non-Indian contractor;

e) Retail sales of tangible personal property to an Indian tribe, a tribally owned business, a tribal entity or an affiliated Indian if the sale of the tangible personal property takes place on an Indian reservation; and

f) The sale of a motor vehicle to an enrolled member of an Indian tribe who resides on an Indian reservation established for that tribe. (Sec. 4)

2. Defines affiliated Indian, Indian reservation and Indian tribe. (Sec. 4)

3. Deems a sale as having take place on an Indian reservation if the tangible personal property is ordered from and delivered on an Indian reservation. (Sec. 4)

4. Requires non-affiliated Indians and non-Indian vendors to maintain sufficient documentation of their taxable and non-taxable gross proceeds and gross income to enable DOR to determine which transactions are subject to TPT. (Sec. 4)

5. Specifies that any gross proceeds and gross income that cannot be identified as non-taxable, using the documentation maintained by the non-affiliated Indians and non-affiliated vendors, is considered taxable. (Sec. 4)

6. Contains a conditional enactment. (Sec. 6)

7. Makes technical and conforming changes.

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11. SB 1110

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