Retail Sales: Measure of Tax; Burden of Proof; Exclusions

*This information is for Model City Tax Code purposes only.

Model City Tax Code Section 460 is amended effective October 1, 2019.

(a) The tax rate shall be at an amount equal to _______ percent (___%) of the gross income from the business activity upon every person engaging or continuing in the business of selling tangible personal property at retail. 
(b) The burden of proving that a sale of tangible personal property is not a taxable retail sale shall be upon the person who made the sale. 
(c) Exclusions. For the purposes of this Chapter, sales of tangible personal property shall not include: 

(1) sales of stocks, bonds, options, or other similar materials. 
(2) sales of lottery tickets or shares pursuant to Article I, Chapter 5, Title 5, Arizona Revised Statutes. 
(3) sales of platinum, bullion, or monetized bullion, except minted or manufactured coins transferred or acquired primarily for their numismatic value as prescribed by Regulation. 
(4) gross income derived from the transfer of tangible personal property which is specifically included as the gross income of a business activity upon which another Section of this Article imposes a tax, shall be considered gross income of that business activity, and are not includable as gross income subject to the tax imposed by this Section. 
(5) sales by professional or personal service occupations where such sales are inconsequential elements of the service provided. 
(6) sales of cash equivalents. The gross proceeds of sales or gross income derived from the redemption of any cash equivalent by the holder as a means of payment for goods or services that are taxable under this article is subject to the tax. "cash equivalents" means items or intangibles, whether or not negotiable, that are sold to one or more persons, through which a value denominated in money is purchased in advance and may be redeemed in full or in part for tangible personal property, intangibles or services. Cash equivalents include gift cards, stored value cards, gift certificates, vouchers, traveler's checks, money orders or other instruments, orders or electronic mechanisms, such as an electronic code, personal identification number or digital payment mechanism, or any other prepaid intangible right to acquire tangible personal property, intangibles or services in the future, whether from the seller of the cash equivalent or from another person. Cash equivalents do not include either of the following: 

(A) items or intangibles that are sold to one or more persons, through which a value is not denominated in money. 
(B) prepaid calling cards or prepaid authorization numbers for telecommunications services made taxable by subsection (g) of this section. 

(d) (Reserved) 

++(Local Option #V: 

(d) Notwithstanding the provisions of subsection (a) above, when the gross income from the sale of a single item of tangible personal property exceeds __________  dollars ($________), the _______ percent (___%) tax rate shall apply to the first $________. Above $________, the measure of tax shall be at a rate of _______  percent (___%).)++ 
(e) When this City and another Arizona city or town with an equivalent excise tax could claim nexus for taxing a retail sale, the city or town where the permanent business location of the seller at which the order was received shall be deemed to have precedence, and for the purposes of this Chapter such city or town has sole and exclusive right to such tax. 
(f) The appropriate tax liability for any retail sale where the order is received at a permanent business location of the seller located in this City or in an Arizona city or town that levies an equivalent excise tax shall be at the tax rate of the city or town of such seller's location. 
(g) Retail sales of prepaid calling cards or prepaid authorization numbers for telecommunications services, including sales of reauthorization of a prepaid card or authorization number, are subject to tax under this Section. 
(h) Membership, admission, or other fees charged by limited access retailers are considered part of taxable gross income of the business activity of selling tangible personal property at retail. 
(i) Sales of merchandise acquired on consignment are taxable as retail sales. In cases where the merchant is acting as an agent on behalf of another dealer, sales of the consigned merchandise are taxable to the principal, provided the merchant makes full disclosure to customers that he is acting only as an agent for the named principal. However, when the principal is not deemed to be a dealer, such sales are considered to be those of the merchant and are taxable to him. 
(j) A person who engages in manufacturing, baling, crating, boxing, barreling, canning, bottling, sacking, preserving, processing or otherwise preparing for sale or commercial use any livestock, agricultural or horticultural product or any other product, article, substance or commodity and who sells the product of such business at retail in this state is deemed, as to such sales, to be engaged in business classified under the retail classification. This subsection does not apply to: 

1. Agricultural producers who are owners, proprietors or tenants of agricultural lands, orchards, farms or gardens where agricultural products are grown, raised or prepared for market and who are marketing their own agricultural products. 
2. Businesses classified under the: 

(A) Advertising classification. 
(B) Construction contracting classifications 
(C) Job printing classification. 
(D) Manufactured buildings classification. 
(E) Publishing and periodical distribution classification. 
(F) Restaurants and bars classification. 
(G) Telecommunications classification. 
(H) Transporting for hire classification. 
(I) Utility services classification. 
(J) Wastewater removal services classification.