Model City Tax Code

The official Model City Tax Code (MCTC) is now maintained by the Arizona Department of Revenue.  The MCTC is the result of more than ten year's work on local privilege tax administration. This electronic version is another step in the evolution of this valuable document. The electronic version consists of many of the same pieces as the book version of the MCTC; this includes the text containing both model options and local options, a chart displaying which options each particular city or town has chosen, and other specific information pertaining to each city and town.

This document is designed to assist the business community in determining which items are taxed by each individual city and town and which items are exempt from taxation. The publishing of the MCTC online is another step towards the goal of better communication.

The MCTC was originally drafted in response to a recommendation adopted by a legislatively created municipal sales tax study commission. During the hearings held by that commission, business representatives expressed concern about the wide divergence in local transaction privilege taxes and the resulting difficulty in compliance. This is particularly true for multi-jurisdictional taxpayers who are paying tax not only to the state but also to two or more cities and towns throughout the state.

The twin goals of the MCTC are, while providing a greater degree of uniformity, to also retain the right of individual cities and towns to determine the items taxed as well as the exemptions to be granted thereby leaving the determination of the local tax base up to the individual city or town council.

The MCTC was not prepared in isolation by city tax representatives. Business interests as represented by the Arizona Chamber of Commerce and Industry and a committee of tax attorneys who are retained by major taxpayers to do their privilege tax work both reviewed as well as commented on the code. This is the continued practice as amendments are made to the code. Tax professionals representing major taxpayers are consulted through the Arizona Tax Research Association and the Arizona Chamber of Commerce and Industry. All proposed changes to the MCTC are received by the Municipal Tax Code Commission (Commission) and a public hearing is held to consider any information and testimony presented to consider adopting the proposed amendment. If the Commission adopts the proposed amendment, the Department of Revenue will update the official copy of the MCTC to reflect the amendment adopted by the Commission. The information reported in this document relating to individual cities and towns has been obtained by the Department of Revenue from each of the cities and towns.

If you have any questions concerning the master version of the MCTC or any of the charts included, please contact us.

 

Arizona Department of Revenue

City Services Team

Email: [email protected]