(a) Any taxpayer who failed to pay any of the taxes imposed by this Chapter which were due or found to
be due before the delinquency date shall be subject to and shall pay interest upon such tax until paid. From and after October 1, 2005, the interest rate
shall be determined in the same manner and at the same times as prescribed by Section 6621 of the United States Internal Revenue Code and compounded annually
under the method described in subsection (1) below. The rate of interest for both overpayments and underpayments for all taxpayers is the federal short-term
rate, determined pursuant to Section 6621(b) of the Internal Revenue Code, plus three percentage points. The interest rate prior to October 1, 2005 shall be
one percent (1%) per month. Said interest may be neither waived by the Tax Collector nor abated by the Hearing Officer except as it might relate to a tax
abated as provided by Section ____-570.
(1) On January 1 of each year any interest outstanding as of that date that was
accrued from and after October 1, 2005 is thereafter considered a part of the principal amount of the tax and accrues interest pursuant
to this section.
(2) Interest accrued prior to October 1, 2005 shall not be added to the principal.
(b) In addition
to interest assessed under subsection (a) above, any taxpayer who
failed to pay any of the taxes imposed by this Chapter which were
due or found to be due before the delinquency date shall be subject
to and shall pay any or all of the following civil penalties, in addition
to any other penalties prescribed by this Chapter:
(1) A taxpayer
who fails to timely file a return for a tax imposed by this Chapter
shall pay a penalty of five percent (5%) of the tax for each month
or fraction of a month elapsing between the delinquency date of
the return and the date on which it is filed, unless the taxpayer
shows that the failure to timely file is due to reasonable cause
and not due to willful neglect. This penalty shall not exceed twenty-five
percent (25%) of the tax due.
(2) A taxpayer
who fails to pay the tax within the time prescribed shall pay a
penalty of ten percent (10%) of the unpaid tax, unless the taxpayer
shows that the failure to timely pay is due to reasonable cause
and not due to willful neglect. If the taxpayer is also subject
to a penalty under subsection (b)(1) above for the same tax period,
the total penalties under subsection (b)(1) and this subsection
shall not exceed twenty-five percent (25%) of the tax due.
(3) A taxpayer
who fails or refuses to file a return within thirty (30) days of
having received a written notice and demand from the Tax Collector
shall pay a penalty of twenty-five percent (25%) of the tax, unless
the taxpayer shows that the failure is due to reasonable cause and
not due to willful neglect or the Tax Collector agrees to a longer
time period.
(4) If the cause
of a tax deficiency is determined by the Tax Collector to be due
to negligence, but without regard for intent to defraud, the taxpayer
shall pay a penalty of ten percent (10%) of the amount of deficiency.
If the taxpayer is also subject to a penalty under subsection (b)(1)
or (b)(2) above for the same tax period, the total penalties imposed
under subsection (b)(1), (b)(2) and this subsection shall not exceed
twenty-five percent (25%) of the tax due.
(5) If the cause
of a tax deficiency is determined by the Tax Collector to be due
to civil fraud or evasion of the tax, the taxpayer shall pay a penalty
of fifty percent (50%) of the amount of deficiency.
(c) Penalties
and interest imposed by this Section are due and payable upon notice
by the Tax Collector.
(d) If, following
an audit, penalties attributable to the audit period are to be assessed
pursuant to subsection (b)(1) or (b)(2) above, the Tax Collector,
before assessing such penalties, must take into consideration any
information or explanations provided by the taxpayer as to why the
return was not timely filed and/or the tax was not timely paid. If
such information and/or explanations are provided by the taxpayer,
and the Tax Collector nevertheless decides to assess penalties pursuant
to subsection (b)(1) or (b)(2) above, then, at the time the penalties
are assessed, the Tax Collector must provide the taxpayer with a detailed
written explanation of the basis for the Tax Collector's determination
that the information and/or explanations provided by the taxpayer
did not constitute reasonable cause.
(e) The assessment
of the penalties prescribed by subsections (b)(3) through (b)(5) above
must be approved on a case-by-case basis by the Tax Collector prior
to such assessment. In addition, any assessment which includes penalties
based upon subsection (b)(3), (b)(4), or (b)(5) above must be accompanied
by a statement signed by the Tax Collector setting forth in detail
the basis for the Tax Collector's determination that the penalties
are warranted under the circumstances.
(f) The Tax Collector
shall waive or adjust penalties imposed by subsections (b)(1) and
(b)(2) above upon a finding that:
(1) in the past,
the taxpayer has consistently filed and paid the taxes imposed by
this Chapter in a timely manner; or
(2) the amount
of the penalty is greatly disproportionate to the amount of the
tax; or
(3) the failure
of a taxpayer to file a return and/or pay any tax by the delinquency
date was caused by any of the following circumstances which must
occur prior to the delinquency date of the return or payment in
question:
(A) the return
was timely filed but was inadvertently forwarded to another taxing
jurisdiction.
(B) erroneous
or insufficient information was furnished the taxpayer by the
Tax Collector or his employee or agent.
(C) death
or serious illness of the taxpayer, member of his immediate family,
or the preparer of the reports immediately prior to the due date.
(D) unavoidable
absence of the taxpayer immediately prior to the due date.
(E) destruction,
by fire or other casualty, of the taxpayer's place of business
or records.
(F) prior
to the due date, the taxpayer made application for proper forms
which could not be furnished in sufficient time to permit a timely
filing.
(G) the taxpayer
was in the process of pursuing an active protest of the tax in
question in another taxing jurisdiction at the time the tax and/or
return was due.
(H) the taxpayer
establishes through competent evidence that the taxpayer contacted
a tax advisor who is competent on the specific tax matter and,
after furnishing necessary and relevant information, the taxpayer
was incorrectly advised that no tax was owed and/or the filing
of a return was not required.
(I) the taxpayer
has never been audited by a City for the tax or on the issue in
question and relied, in good faith, on a state exemption or interpretation.
(J) the taxpayer
can provide some public record (court case, report in a periodical,
professional journal or publication, etc.) stating that the transaction
is not subject to tax.
(K) the Arizona
Department of Revenue, based upon the same facts and circumstances,
abated penalties for the same filing period.
A taxpayer
may also request a waiver or adjustment of penalty for a reason
thought to be equally substantive to those reasons itemized above.
All requests for waiver or adjustment of penalty must be in writing
and shall contain all pertinent facts and other reliable and substantive
evidence to support the request. In all cases, the burden of proof
is upon the taxpayer.
(g) No request
for waiver of penalty under subsection (f) above may be granted unless
written request for waiver is received by the Tax Collector within
forty-five (45) days following the imposition of penalty. Any taxpayer
aggrieved by the refusal to grant a waiver under subsection (f) above
may appeal under the provisions of Section -570 provided that a petition
of appeal or request for an extension is submitted to the Tax Collector
within forty-five (45) days of the taxpayer's receipt of notice by
the City that waiver has been denied.
(h) For the purpose
of this Section, "reasonable cause" shall mean that the taxpayer exercised
ordinary business care and prudence, i.e., had a reasonable
basis for believing that the tax did not apply to the business activity
or the storage or use of the taxpayer's tangible personal property
in this City.
(i) For the
purpose of this Section, "negligence" shall be characterized chiefly
by inadvertence, thoughtlessness, inattention, or the like, rather
than an "honest mistake". Examples of negligence include:
(1) the taxpayer's
failure to maintain records in accordance with Article III of this
Chapter;
(2) repeated
failures to timely file returns; or
(3) gross ignorance
of the law.
