(a) For the purposes
of this Section, the following definitions shall apply:
(1) "Federally
Exempt Organization" means an organization which has received
a determination of exemption, or qualifies for such exemption, under
26 U.S.C. Section 501(c) and rules and regulations of the Commissioner
of Internal Revenue pertaining to same, but not including a "governmental
entity", "non-licensed business", or "public educational entity".
(2) "Governmental
Entity" means the Federal Government, the State of Arizona,
any other state, or any political subdivision, department, or agency
of any of the foregoing; provided further that persons contracting
with such a governmental entity to operate any part of a governmentally
adopted and controlled program to provide urban mass transportation
shall be deemed a governmental entity in all activities such person
performs when engaged in said contract.
(3) "Non-Licensed
Business" means any person conducting any business activity
for gain or profit, whether or not actually realized, which person
is not required to be licensed for the conduct or transaction of
activities subject to the tax imposed under this Chapter.
(4) "Proprietary
Club" means any club which has qualified or would otherwise
qualify as an exempt club under the provisions of 26 U.S.C. Section
501(c)(7), (8), and (9), notwithstanding the fact that some or all
of the members may own a proprietary interest in the property and
assets of the club.
(5) "Public
Educational Entity" means any educational entity operated
pursuant to any provisions of Title 15, Arizona Revised Statutes.
(b) Transactions
which, if conducted by any other person, would produce gross income
subject to tax under this Chapter shall not be subject to the imposition
of such tax if conducted entirely by a public educational entity;
governmental entity, except "proprietary activities" of municipalities
as provided by Regulation; or non-licensed business.
(c) Transactions
which, if conducted by any other person, would produce gross income
subject to the tax under this Chapter shall not be subject to the
imposition of such tax if conducted entirely by a federally exempt
organization or proprietary club with the following exceptions:
(1) Transactions
involving proprietary clubs and organizations exempt under 26 U.S.C.
Section 501(c)(7), (8), and (9), where the gross revenue of the
activity received from persons other than members and bona fide
guests of members is in an amount in excess of fifteen percent (15%)
of total gross revenue, as prescribed by Regulation. In the event
this fifteen percent (15%) limit is exceeded, the entire gross income
of such entity shall be subject to the applicable tax.
(2) Gross income
from unrelated business income as that term is defined in 26 U.S.C.
Section 512, including all statutory definitions and determinations,
the rules and regulations of the Commissioner of Internal Revenue,
and his administrative interpretations and guidelines.
(3) (Reserved)
++(Local Option
#KK:
(3) Fund raising
activities of charitable, religious, or educational organizations
which include events for which admission is charged where attendance
exceeds ten thousand (10,000) shall be deemed regularly conducted
business activity for the purposes of this Chapter.)++
(d) Except as
may be provided elsewhere in this Chapter, transactions where customers
are exempt organizations, proprietary clubs, public educational entities,
governmental entities, or non-licensed businesses shall be deemed
taxable transactions for the purpose of the imposition of taxes under
this Chapter, notwithstanding that property so acquired may in fact
be resold or leased by the acquiring person to others. In the case
of sales, rentals, leases, or licenses to proprietary clubs or exempt
organizations, the vendor may be relieved from the responsibility
for reporting and paying tax on such income only by obtaining from
its vendee a verified statement that includes:
(1) a statement
that when the property so acquired is resold, rented, leased, or
licensed, that the otherwise exempt vendee chooses, or is required,
to pay City Privilege Tax or an equivalent excise tax on its gross
income from such transactions and does in fact file returns on same;
and
(2) the Privilege
License number of the otherwise exempt vendee; and
(3) such other
information as the Tax Collector may require.
(e) Franchisees
or concessionaires operating businesses for or on behalf of any exempt
organization, governmental entity, public educational entity, proprietary
club, or non-licensed business shall not be considered to be such
an exempt organization, club, entity, or non-licensed business, but
shall be deemed to be a taxpayer subject to the provisions of this
Chapter, except as provided in the definition of governmental entity,
regarding urban mass transit.
**((f)
In any case, if a federally exempt organization, proprietary club,
or non-licensed business rents, leases, licenses, or purchases any
tangible personal property for its own storage or use, and no City
Privilege or Use Tax or equivalent excise tax has been paid on such
transaction, said organization, club, or business shall be liable
for the Use Tax upon such acquisitions or use of such property.
Model Option
#15: (f) (Reserved))**
