Bill Text: AZ SB1720 | 2021 | Fifty-fifth Legislature 1st Regular | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Peer-to-peer car sharing

Spectrum: Partisan Bill (Republican 1-0)

Status: (Passed) 2021-04-09 - Chapter 220 [SB1720 Detail]

Download: Arizona-2021-SB1720-Introduced.html

 

 

 

REFERENCE TITLE: peer-to-peer car sharing

 

 

 

 

State of Arizona

Senate

Fifty-fifth Legislature

First Regular Session

2021

 

 

 

SB 1720

 

Introduced by

Senator Fann

 

 

AN ACT

 

amending title 28, Arizona Revised Statutes, by adding chapter 31; amending sections 42-5005, 42-5009, 42-5014, 42-5040 and 42-5071; relating to transportation.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 


Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 28, Arizona Revised Statutes, is amended by adding chapter 31, to read:

CHAPTER 31

PEER-TO-PEER CAR SHARING

ARTICLE 1. GENERAL PROVISIONS

START_STATUTE28-9601. Definitions

In this chapter, unless the context otherwise requires:

1. "Car sharing delivery period" means the period of time during which a shared vehicle is being delivered to the location of the car sharing start time as documented by the governing car sharing program agreement.

2. "Car sharing period" means the period of time that begins with the car sharing delivery period or the car sharing start time if there is no car sharing delivery period and ends at the car sharing termination time.

3. "CAR SHARING PROGRAM AGREEMENT":

(a) MEANS THE TERMS AND CONDITIONS THAT APPLY TO A SHARED VEHICLE OWNER AND A SHARED VEHICLE DRIVER AND THAT GOVERN THE USE OF A SHARED VEHICLE THROUGH A PEER-TO-PEER CAR SHARING PROGRAM.

(b) DOES NOT INCLUDE A RENTAL AGREEMENT AS DEFINED IN SECTION 20-331.

4. "Car sharing start time" means the time when a shared vehicle becomes subject to the control of the shared vehicle driver at or after the time that the reservation of the shared vehicle is scheduled to begin as documented in the records of a peer–to–peer car sharing program.

5. "Car sharing termination time" means the earliest of the following:

(a) The agreed period of time established for the use of a shared vehicle in the governing car sharing program agreement expires and the shared vehicle is delivered to a location that is specified in the governing car sharing program agreement.

(b) When the shared vehicle is returned to a location as alternatively agreed on by the shared vehicle owner and shared vehicle driver as communicated through a peer-to-peer car sharing program.

(c) The shared vehicle owner or the shared vehicle owner's designee takes possession and control of the shared vehicle.

6. "Individual-owned shared vehicle" means either:

(a) If the shared vehicle is purchased in this state, a shared vehicle for which the owner certifies that the transaction privilege tax was paid on the purchase of the shared vehicle.

(b) If the shared vehicle is not purchased in this state, a shared vehicle for which the owner certifies that the applicable sales or use tax was paid in the jurisdiction in which the shared vehicle was purchased if that jurisdiction levies a sales or use tax on the purchase of motor vehicles.

7. "Peer-to-peer car sharing":

(a) Means the authorized use of a shared vehicle by an individual other than the shared vehicle owner through a peer-to-peer car sharing program.

(b) Does not include:

(i) A rental vehicle as defined in section 20-331.

(ii) The business of renting vehicles to renters under a rental agreement as defined in section 20-331.

(iii) The business of renting motor vehicles without drivers that is subject to a surcharge pursuant to section 28-5810.

(iv) A motor vehicle lease or rental THAT IS SUBJECT TO A SURCHARGE pursuant to section 5-839 or 48-4234.

8. "Peer-to-peer car sharing program":

(a) Means a business platform that connects vehicle owners with drivers to enable the sharing of vehicles for financial consideration.

(b) Does not include:

(i) A rental company as defined in section 20-331.

(ii) A person or entity that is engaged in the business of renting motor vehicles without drivers and that collects a surcharge pursuant to section 28-5810.

9. "Shared vehicle":

(a) Means a vehicle that is available for sharing through a peer-to-peer car sharing program.

(b) Does not include a rental vehicle or vehicle as defined in section 20-331.

10. "Shared vehicle driver" means an individual who has been authorized to drive the shared vehicle by the shared vehicle owner under a car sharing program agreement.

11. "Shared vehicle owner" means the registered owner, or a person or entity designated by the registered owner, of a vehicle that is made available for sharing to shared vehicle drivers through a peer-to-peer car sharing program.

12. "Shared vehicle transaction":

(a) Means the authorized use of a shared vehicle by an individual other than the shared vehicle's owner through a peer-to-peer car sharing program.

(b) Does not include:

(i) A rental agreement as defined in section 20-331.

(ii) The business of renting motor vehicles without drivers that is subject to a surcharge pursuant to section 28-5810.

(iii) The business of leasing or renting for less than one year motor vehicles for hire without a driver as described in section 5-839, subsection C if the shared vehicle is an individual-owned shared vehicle.

(iv) A motor vehicle lease or rental that is subject to a surcharge pursuant to section 48-4234. END_STATUTE

START_STATUTE28-9602. Insurance requirements

A. Except as otherwise provided in subsections B and C of this section, a peer-to-peer car sharing program shall assume the liability of a shared vehicle owner for bodily injury or property damage that occurs to a third party during the car sharing period in an amount that is stated in the car sharing program agreement and that is not less than the minimum amount of coverage required by section 28-4009.

B. A peer-to-peer car sharing program is not liable for bodily injury or property damage to a third party in an amount that is more than the minimum amount of coverage required by section 28-4009 if either of the following occurs:

1. The shared vehicle owner makes an intentional or fraudulent material misrepresentation or omission to the peer-to-peer car sharing program before the car sharing period in which the loss occurs and the bodily injury or property damage is to a third party.

2. The shared vehicle owner acts in concert with the shared vehicle driver who fails to return the shared vehicle pursuant to the car sharing program agreement.

C. Notwithstanding the car sharing termination time, the assumption of liability under subsection a of this section applies to bodily injury and property damage to third parties as required by section 28-4009.

D. A peer-to-peer car sharing program shall ensure that during each car sharing period the shared vehicle owner and the shared vehicle driver are insured under a motor vehicle liability insurance policy or other applicable insurance policy that provides insurance coverage in an amount not less than the minimum amount of coverage required by section 28-4009 and that either:

1. Recognizes that the vehicle insured under the policy is made available and used through a peer-to-peer car sharing program.

2. Does not exclude the use of a shared vehicle by a shared vehicle driver.

E. The insurance required by this section may be satisfied by motor vehicle liability insurance that is maintained by any of the following or a combination of all of the following:

1. A shared vehicle owner.

2. A shared vehicle driver.

3. A peer-to-peer car sharing program.

F. The insurance required pursuant to subsections d and e of this section is primary during each car sharing period.

G. The peer-to-peer car sharing program shall assume primary liability for a claim if all of the following occur:

1. The peer-to-peer car sharing program provides the insurance required by this section in whole or in part.

2. A dispute exists as to who was in control of the shared vehicle at the time of the loss.

3. The peer-to-peer car sharing program for any reason fails to provide the information required by section 28-9605.

H. If insurance is maintained by a shared vehicle owner or a shared vehicle driver pursuant to subsection e of this section and that insurance has lapsed or does not provide the required coverage:

1. Insurance that is maintained by a peer-to-peer car sharing program shall provide the coverage required by subsection d of this section beginning with the first dollar of a claim.

2. The peer-to-peer car sharing program has a duty to defend a claim except a claim to which subsection b of this section applies.

I. The shared vehicle's insurer shall indemnify the peer-to-peer car sharing program to the extent of its obligation, if any, under the applicable insurance policy if it is determined that the shared vehicle owner was in control of the shared vehicle at the time of the loss.

J. Coverage under a motor vehicle liability insurance policy that is maintained by a peer-to-peer car sharing program is not dependent on a motor vehicle liability insurer first denying a claim under any other motor vehicle insurance policy.

K. A peer-to-peer car sharing program may not:

1. Offer or sell insurance except in conjunction with and incidental to car sharing program agreements.

2. Advertise, represent or otherwise portray itself or any of its employees or agents as licensed insurers or insurance producers, unless the peer-to-peer car sharing program is a licensed insurer or insurance producer.

3. Pay a person any compensation, fee or commission that is dependent on the placement of insurance under a peer-to-peer car sharing program's license issued pursuant to title 20.

4. Make a car sharing program agreement contingent on the shared vehicle driver purchasing insurance through the peer-to-peer car sharing program.

L. Notwithstanding any other law, this chapter does not prohibit a peer-to-peer car sharing program from recovering its insurance costs incurred in satisfying its obligations pursuant to this section from a shared vehicle owner or shared vehicle driver.

M. Subsection K of this section does not prohibit production payments or incentive payments to an employee if the payments are not dependent on the sale of insurance.

N. This chapter does not limit either of the following:

1. The liability of the peer-to-peer car sharing program for any act or omission of the peer-to-peer car sharing program that results in injury to any person as a result of the use of a shared vehicle through a peer-to-peer car sharing program.

2. The ability of the peer-to-peer car sharing program to, by contract, seek indemnification from the shared vehicle owner or the shared vehicle driver for economic loss sustained by the peer-to-peer car sharing program resulting from a breach of the terms and conditions of the car sharing program agreement. END_STATUTE

START_STATUTE28-9603. Notice to owner of vehicle with lien

After a vehicle owner registers as a shared vehicle owner on a peer-to-peer car sharing program and before the shared vehicle owner makes a shared vehicle available for car sharing on the peer-to-peer car sharing program, if there is a lien on the shared vehicle, the peer-to-peer car sharing program shall notify the shared vehicle owner of both of the following:

1. Using the shared vehicle through a peer-to-peer car sharing program might violate the terms of the shared vehicle owner's contract with the lienholder.

2. The contract with the lienholder might impose specific requirements for physical damage coverage. END_STATUTE

START_STATUTE28-9604. Authorized insurer exclusions

A. An authorized insurer that writes motor vehicle liability insurance in this state may exclude any and all coverage and the duty to defend or indemnify any claim against a shared vehicle owner's personal motor vehicle liability insurance policy, including:

1. Bodily injury coverage.

2. Property damage coverage.

3. Uninsured motorist coverage.

4. Underinsured motorist coverage.

5. Medical payments coverage.

6. Comprehensive coverage.

7. Collision coverage.

B. This chapter does not invalidate or limit an exclusion contained in a motor vehicle liability insurance policy, including an insurance policy in use or approved for use that excludes coverage for vehicles made available for rent, sharing or hire or for any business use. END_STATUTE

START_STATUTE28-9605. Shared vehicle records; retention

A peer-to-peer car sharing program shall collect and verify records relating to the use of a shared vehicle, including times used, fees paid by the shared vehicle driver and monies received by the shared vehicle owner, and shall provide that information on request to the shared vehicle owner, the shared vehicle owner's insurer or the shared vehicle driver's insurer to facilitate a claim coverage investigation.  The peer-to-peer car sharing program shall retain these records for at least two years. END_STATUTE

START_STATUTE28-9606. Vicarious liability exemption

A peer-to-peer car sharing program and a shared vehicle owner are exempt from vicarious liability consistent with 49 united states code section 30106 under any state or local law that imposes liability solely based on vehicle ownership. END_STATUTE

START_STATUTE28-9607. Insurance claims; shared vehicles; indemnification

A motor vehicle insurer that defends or indemnifies a claim involving a shared vehicle that is excluded under the terms of the motor vehicle policy may seek contribution or indemnification from the motor vehicle insurer of the PEER-to-peer car sharing program if the claim is both:

1. Made against the shared vehicle owner or the shared VEHICLE driver for loss or injury that occurs during the car sharing period.

2. Excluded under the terms of the motor vehicle policy. END_STATUTE

START_STATUTE28-9608. Insurable interests

A. Notwithstanding any other law, a peer-to-peer car sharing program has an insurable interest in a shared vehicle during the car sharing period.

B. This section does not require a peer-to-peer car sharing program to maintain the insurance coverage required by section 28-9602.

C. A peer-to-peer car sharing program may purchase and maintain as the named insured one or more motor vehicle insurance policies that provide coverage for any of the following:

1. Liabilities assumed by the peer-to-peer car sharing program under a car sharing program agreement.

2. Any liability of the shared vehicle owner.

3. Damage or loss to the shared vehicle or for any liability of the shared vehicle driver. END_STATUTE

START_STATUTE28-9609. Car sharing program agreement disclosures

Each car sharing program agreement made in this state shall disclose the following to the shared vehicle owner and the shared vehicle driver:

1. That the peer-to-peer car sharing program has a right to seek indemnification from the shared vehicle owner or the shared vehicle driver for economic loss sustained by the peer-to-peer car sharing program resulting from a breach of the terms and conditions of the car sharing program agreement.

2. That a motor vehicle liability insurance policy issued to the shared vehicle owner for the shared vehicle or to the shared vehicle driver does not provide a defense or indemnification for any claim asserted by the peer-to-peer car sharing program.

3. That the peer-to-peer car sharing program's insurance coverage on the shared vehicle owner and the shared vehicle driver is in effect only during each car sharing period and that, for any use of the shared vehicle by the shared vehicle driver after the car sharing termination time, the shared vehicle driver and the shared vehicle owner might not have insurance coverage.

4. The daily rate, fees and insurance, if applicable, or protection package costs that are charged to the shared vehicle owner or the shared vehicle driver.

5. That the shared vehicle owner's motor vehicle liability insurance might not provide coverage for a shared vehicle.

6. An emergency telephone number for roadside assistance and other customer service inquiries.

7. Whether there are conditions that require a person to maintain a personal motor vehicle liability insurance policy with certain minimum applicable coverage limits on a primary basis in order for the person to become a shared vehicle driver.

8. That the shared vehicle owner's or the shared vehicle driver's motor vehicle liability insurance might already provide the coverage required by this chapter. END_STATUTE

START_STATUTE28-9610. Car sharing program agreement; licensed driver; data retention

A. A peer-to-peer car sharing program may enter into a car sharing program agreement only if the driver who will operate the shared vehicle:

1. Holds a driver license issued by the department that authorizes the driver to operate the class of the shared vehicle.

2. Is a nonresident who both:

(a) Has a driver license issued by the state or country of the driver's residence that authorizes the driver in that state or country to drive vehicles of the class of the shared vehicle.

(b) Is at least the same age as the age required of a resident to drive vehicles of the class of the shared vehicle.

3. otherwise is specifically authorized by the department to drive vehicles of the class of the shared vehicle.

B. A peer-to-peer car sharing program shall keep a record of:

1. The name and address of each shared vehicle driver.

2. The driver license number of the shared vehicle driver.

3. The date and place of issuance of the shared vehicle driver's driver license.END_STATUTE

START_STATUTE28-9611. Responsibility for equipment

A peer-to-peer car sharing program has sole responsibility for any equipment, including a global positioning system or other special equipment, that is put in or on a shared vehicle to monitor or facilitate the shared vehicle transaction and shall agree to indemnify and hold harmless the shared vehicle owner for any damage to or theft of the equipment during the car sharing period if the shared vehicle owner does not cause the damage or theft.  The peer-to-peer car sharing program may seek indemnity from the shared vehicle driver for any loss or damage to the equipment that occurs during the car sharing period. END_STATUTE

START_STATUTE28-9612. Safety recalls

A. AFTER a vehicle owner becomes a shared vehicle owner on a peer-to-peer car sharing program and before the shared vehicle owner makes a shared vehicle available for peer-to-peer car sharing on the peer-to-peer car sharing program, the peer-to-peer car sharing program shall:

1. Verify that the shared vehicle does not have any safety recalls on the shared vehicle for which the repairs are not made.

2. Notify the shared vehicle owner of the requirements prescribed by subsections b, c and d of this section.

B. If a vehicle owner has received an actual notice of a safety recall on the owner's vehicle, the vehicle owner may not make the vehicle available as a shared vehicle until the safety recall repair is made.

C. If a shared vehicle owner receives a notice of a safety recall on the shared vehicle while the shared vehicle is made available on the peer-to-peer car sharing program, the shared vehicle owner shall remove the shared vehicle from availability on the peer-to-peer car sharing program as soon as practicable. The shared vehicle owner may not make the shared vehicle available on the peer-to-peer car sharing program until the safety recall repair is made.

D. If a shared vehicle owner receives a notice of a safety recall while the shared vehicle is in the possession of a shared vehicle driver, as soon as practicable, the shared vehicle owner shall notify the peer-to-peer car sharing program about the safety recall so that the shared vehicle owner may make the safety recall repair.

START_STATUTE28-9613. Peer-to-peer car sharing program; individual-owned shared vehicle

if the shared vehicle is an individual-owned shared vehicle, A peer-to-peer car sharing program is not either of the following:

1. In the business of leasing or renting for less than one year motor vehicles for hire without a driver as described in section 5-839, subsection C.

2. Subject to the surcharge collected pursuant to section 48-4234. END_STATUTE

START_STATUTE28-9614. Public airports; shared vehicle transaction regulations

This chapter does not prohibit or restrict a public airport from implementing rules or licensing requirements or from assessing fees or charges that apply to shared vehicle transactions that are conducted at the public airport. END_STATUTE

START_STATUTE28-9615. Motor vehicle manufacturers; licensed motor vehicle dealers; rights, obligations and limitations not expanded or restricted

This chapter does not expand or restrict in any manner the respective rights, obligations and limitations of motor vehicle manufacturers and licensed motor vehicle dealers as set forth in chapter 10, article 5 of this title. END_STATUTE

START_STATUTE28-9616. Shared vehicle transactions; transaction privilege tax; exceptions; prohibition

A. A shared vehicle transaction is subject to the transaction privilege tax imposed pursuant to title 42, chapters 5 and 6.

B. A shared vehicle transaction is not subject to the rental vehicle surcharge established by section 28-5810.

C. A shared vehicle transaction is not subject to the surcharges established by sections 5-839 and 48-4234 if the shared vehicle owner certifies to the department of revenue, on a form prescribed by the department, that the shared vehicle is an individual-owned shared vehicle. The department of revenue shall verify that the vehicle is an individual-owned shared vehicle by determining whether transaction privilege tax was paid for the purchase of the vehicle.

D. A peer-to-peer car sharing program that accepts payment for a shared vehicle transaction in this state is subject to title 42, chapter 5 shall pay the taxes levied under title 42, chapters 5 and 6 if the peer-to-peer car sharing program's gross proceeds of sales gross income derived from the peer-to-peer car sharing program's business on its own behalf or on behalf of at least one shared vehicle owner with customers in this state pursuant to section 42-5071 is more than $100,000.

E. A peer-to-peer car sharing program may rely in good faith on the shared vehicle owner's representation that the shared vehicle is an individual-owned shared vehicle certified with the department of revenue pursuant to subsection C of this section.  If the peer-to-peer car sharing program relies in good faith on the shared vehicle owner's representation that the shared vehicle is an individual-owned shared vehicle certified with the department of revenue, the peer-to-peer car sharing program is not liable for any tax, penalty, fee or other sanction imposed on the shared vehicle owner.

F.  Except as provided in section 28-9614 and this section, a county, city, town or political subdivision of this state may not impose any additional taxes, fees or charges on the gross proceeds or gross income of a shared vehicle transaction. END_STATUTE

Sec. 2. Section 42-5005, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5005. Transaction privilege tax and municipal privilege tax licenses; fees; renewal; revocation; violation; classification

A. Every person who receives gross proceeds of sales or gross income on which a transaction privilege tax is imposed by this article and who desires to engage or continue in business shall apply to the department for an annual transaction privilege tax license accompanied by a fee of $12. A person shall not engage or continue in business until the person has obtained a transaction privilege tax license.

B. A person desiring to engage or continue in business within a city or town that imposes a municipal privilege tax shall apply to the department of revenue for an annual municipal privilege tax license accompanied by a fee of up to $50, as established by ordinance of the city or town. The person shall submit the fee with each new license application. The person may not engage or continue in business until the person has obtained a municipal privilege tax license.  The department must collect, hold, pay and manage the fees in trust for the city or town and may not use the monies for any other purposes.  The fee imposed by this subsection does not apply to a marketplace facilitator or remote seller that is only required to obtain a transaction privilege tax license pursuant to section 42-5043.

C. A transaction privilege tax license is valid only for the calendar year in which it is issued, but it may be renewed for the following calendar year. There is no fee for the renewal of the transaction privilege tax license. The transaction privilege tax license must be renewed at the same time and in the manner as the municipal privilege tax license renewal.

D. A municipal privilege tax license is valid only for the calendar year in which it is issued, but it may be renewed for the following calendar year by the payment of a license renewal fee of up to $50. The renewal fee is due and payable on January 1 and is considered delinquent if not received on or before the last business day of January.  The department must collect, hold, pay and manage the fees in trust for the city or town and may not use the monies for any other purposes.  The renewal fee imposed by this subsection does not apply to a marketplace facilitator or remote seller that is only required to obtain a transaction privilege tax license pursuant to section 42-5043.

E. A licensee that remains in business after the municipal privilege tax license has expired is subject to the payment of the license renewal fee and the civil penalty prescribed in section 42-1125, subsection R.

F. If the applicant is not in arrears in payment of any tax imposed by this article, the department shall issue a license authorizing the applicant to engage and continue in business on the condition that the applicant complies with this article. The license number shall be continuous.

G. The transaction privilege tax license and the municipal privilege tax license are not transferable on a complete change of ownership or change of location of the business. For the purposes of this subsection:

1. "Location" means the business address appearing in the application for the license and on the transaction privilege tax or municipal privilege tax license.

2. "Ownership" means any right, title or interest in the business.

3. "Transferable" means the ability to convey or change the right or privilege to engage or continue in business by virtue of the issuance of the transaction privilege tax or municipal privilege tax license.

H. When the ownership or location of a business on which a transaction privilege tax or municipal privilege tax is imposed has been changed within the meaning of subsection G of this section, the licensee shall surrender the license to the department. The license shall be reissued to the new owners or for the new location on application by the taxpayer and payment of the $12 fee for a transaction privilege tax license and a fee of up to $50 per jurisdiction for a municipal privilege tax license. The department must collect, hold, pay and manage the fees in trust for the city or town and may not use the monies for any other purposes.

I. A person who is engaged in or conducting a business in two or more locations or under two or more business names shall procure a transaction privilege tax license for each location or business name regardless of whether all locations or business names are reported on a consolidated return under a single transaction privilege tax license number. This requirement shall not be construed as conflicting with section 42-5020.

J. A person who is engaged in or conducting a business in two or more locations or under two or more business names shall procure a municipal privilege tax license for each location or business name regardless of whether all locations or business names are reported on a consolidated return.

K. A person who is engaged in or conducting business at two or more locations or under two or more business names and who files a consolidated return under a single transaction privilege tax license number as provided by section 42-5020 is required to pay only a single municipal privilege tax license renewal fee for each local jurisdiction pursuant to subsection D of this section.  A person who is engaged in or conducting business at two or more locations or under two or more business names and who does not file a consolidated return under a single license number is required to pay a license renewal fee for each location or license in a local jurisdiction.

L. For the purposes of this chapter and chapter 6 of this title:

1. Through December 31, 2018, an online lodging marketplace, as defined in section 42-5076, may register with the department for a license for the payment of taxes levied by this state and one or more counties, cities, towns or special taxing districts, at the election of the online lodging marketplace, for taxes due from an online lodging operator on any online lodging transaction facilitated by the online lodging marketplace, subject to sections 42-5076 and 42-6009.

2. Beginning from and after December 31, 2018, an online lodging marketplace, as defined in section 42-5076, shall register with the department for a license for the payment of taxes levied by this state and one or more counties, cities, towns or special taxing districts for taxes due from an online lodging operator on any online lodging transaction facilitated by the online lodging marketplace, subject to sections 42-5076 and 42-6009.

M. For the purposes of this chapter and chapter 6 of this title, a person who is licensed pursuant to title 32, chapter 20 and who files an electronic consolidated tax return for individual real properties under management on behalf of the property owners may be licensed with the department for the payment of taxes levied by this state and by any county, city or town with respect to those properties. There is no fee for a license issued pursuant to this subsection.

N. For the purposes of this chapter, a peer-to-peer car sharing program shall register with the department for a single license to pay taxes that are levied by this state and one or more counties, cities, towns or special taxing districts and that are due from a shared vehicle owner for a shared vehicle transaction facilitated by a peer-to-peer car sharing program. A peer-to-peer car sharing program shall remit the surcharges established pursuant to sections 5-839 and 48-4234 only if the peer-to-peer car sharing program allows shared vehicle transactions that involve a vehicle for which the shared vehicle owner has not certified to the department pursuant to section 28-9616, subsection C that it is an individual-owned shared vehicle. For the purposes of this subsection, "individual-owned shared vehicle", "peer-to-peer car sharing program", "shared vehicle owner" and "shared vehicle transaction" have the same meanings prescribed in section 28-9601.

N. o. If a person violates this article or any rule adopted under this article, the department upon hearing may revoke any transaction privilege tax or municipal privilege tax license issued to the person.  The department shall provide ten days' written notice of the hearing, stating the time and place and requiring the person to appear and show cause why the license or licenses should not be revoked. The department shall provide written notice to the person of the revocation of the license.  The notices may be served personally or by mail pursuant to section 42-5037.  After revocation, the department shall not issue a new license to the person unless the person presents evidence satisfactory to the department that the person will comply with this article and with the rules adopted under this article.  The department may prescribe the terms under which a revoked license may be reissued.

O. P. The department may revoke any transaction privilege tax or municipal privilege tax license issued to any person who fails for thirteen consecutive months to make and file a return required by this article on or before the due date or the due date as extended by the department unless the failure is due to a reasonable cause and not due to wilful neglect.

P. Q. A person who violates any provision of this section is guilty of a class 3 misdemeanor. END_STATUTE

Sec. 3. Section 42-5009, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5009. Certificates establishing deductions; liability for making false certificate; tax exclusion; definitions

A. A person who conducts any business classified under article 2 of this chapter may establish entitlement to the allowable deductions from the tax base of that business by both:

1. Marking the invoice for the transaction to indicate that the gross proceeds of sales or gross income derived from the transaction was deducted from the tax base.

2. Obtaining a certificate executed by the purchaser indicating the name and address of the purchaser, the precise nature of the business of the purchaser, the purpose for which the purchase was made, the necessary facts to establish the appropriate deduction and the tax license number of the purchaser to the extent the deduction depends on the purchaser conducting business classified under article 2 of this chapter and a certification that the person executing the certificate is authorized to do so on behalf of the purchaser. The certificate may be disregarded if the seller has reason to believe that the information contained in the certificate is not accurate or complete.

B. A person who does not comply with subsection A of this section may establish entitlement to the deduction by presenting facts necessary to support the entitlement, but the burden of proof is on that person.

C. The department may prescribe a form for the certificate described in subsection A of this section.  Under such rules as it may prescribe, the department may also describe transactions with respect to which a person is not entitled to rely solely on the information contained in the certificate provided for in subsection A of this section but must instead obtain such additional information as required by the rules in order to be entitled to the deduction.

D. If a seller is entitled to a deduction by complying with subsection A of this section, the department may require the purchaser that caused the execution of the certificate to establish the accuracy and completeness of the information required to be contained in the certificate that would entitle the seller to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article if the seller had not complied with subsection A of this section. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42-5029.

E. If a seller is entitled to a deduction by complying with subsection B of this section, the department may require the purchaser to establish the accuracy and completeness of the information provided to the seller that entitled the seller to the deduction.  If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article if the seller had not complied with subsection B of this section. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42-5029.

F. The department may prescribe a form for a certificate used to establish entitlement to the deductions described in section 42-5061, subsection A, paragraph 46 and section 42-5063, subsection B, paragraph 3. Under rules the department may prescribe, the department may also require additional information for the seller to be entitled to the deduction. If a seller is entitled to the deductions described in section 42-5061, subsection A, paragraph 46 and section 42-5063, subsection B, paragraph 3, the department may require the purchaser who executed the certificate to establish the accuracy and completeness of the information contained in the certificate that would entitle the seller to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter.  The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42-5029.

G. If a seller claims a deduction under section 42-5061, subsection A, paragraph 25 and establishes entitlement to the deduction with an exemption letter that the purchaser received from the department and the exemption letter was based on a contingent event, the department may require the purchaser that received the exemption letter to establish the satisfaction of the contingent event within a reasonable time. If the purchaser cannot establish the satisfaction of the event, the purchaser is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article if the seller had not been furnished the exemption letter. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter. The amount shall be treated as tax revenues collected from the seller in order to designate the distribution base for purposes of section 42-5029. For the purposes of this subsection, "reasonable time" means a time limitation that the department determines and that does not exceed the time limitations pursuant to section 42-1104.

H. The department shall prescribe forms for certificates used to establish the satisfaction of the criteria necessary to qualify the sale of a motor vehicle for the deductions described in section 42-5061, subsection A, paragraph 14, paragraph 28, subdivision (a) and paragraph 44 and subsection U. Except as provided in subsection J of this section, to establish entitlement to these deductions, a motor vehicle dealer shall retain:

1. A valid certificate as prescribed by this subsection completed by the purchaser and obtained prior to before the issuance of the nonresident registration permit authorized by section 28-2154.

2. A copy of the nonresident registration permit authorized by section 28-2154.

3. A legible copy of a current valid driver license issued to the purchaser by another state or foreign country that indicates an address outside of this state. For the sale of a motor vehicle to a nonresident entity, the entity's representative must have a current valid driver license issued by the same jurisdiction as that in which the entity is located.

4. For the purposes of the deduction provided by section 42-5061, subsection A, paragraph 14, a certificate documenting the delivery of the motor vehicle to an out-of-state location.

I. Notwithstanding subsection A, paragraph 2 of this section, if a motor vehicle dealer has established entitlement to a deduction by complying with subsection H of this section, the department may require the purchaser who executed the certificate to establish the accuracy and completeness of the information contained in the certificate that entitled the motor vehicle dealer to the deduction. If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable in an amount equal to any tax, penalty and interest that the motor vehicle dealer would have been required to pay under this article and under articles IV and V of the model city tax code as defined in section 42-6051. Payment of the amount under this subsection exempts the purchaser from liability for any tax imposed under article 4 of this chapter and any tax imposed under article VI of the model city tax code as defined in section 42-6051. The amount shall be treated as tax revenues collected from the motor vehicle dealer in order to designate the distribution base for purposes of section 42-5029.

J. To establish entitlement to the deduction described in section 42-5061, subsection A, paragraph 44, a public consignment auction dealer as defined in section 28-4301 shall submit the valid certificate prescribed by subsection H of this section to the department and retain a copy for its records.

K. Notwithstanding any other law, compliance with subsection H of this section by a motor vehicle dealer entitles the motor vehicle dealer to the exemption provided in section 42-6004, subsection A, paragraph 4.

L. The department shall prescribe a form for a certificate to be used by a person that is not subject to tax under section 42-5075 when the person is engaged by a contractor that is subject to tax under section 42-5075 for a project that is taxable under section 42-5075. The certificate permits the person purchasing tangible personal property to be incorporated or fabricated by the person into any real property, structure, project, development or improvement to provide documentation to a retailer that the sale of tangible personal property qualifies for the deduction under section 42-5061, subsection A, paragraph 27, subdivision (b). A prime contractor shall obtain the certificate from the department and shall provide a copy to any such person working on the project. The prime contractor shall obtain a new certificate for each project to which this subsection applies. For the purposes of this subsection, the following apply:

1. The person that is not subject to tax under section 42-5075 may use the certificate issued pursuant to this subsection only with respect to tangible personal property that will be incorporated into a project for which the gross receipts are subject to tax under section 42-5075.

2. The department shall issue the certificate to the prime contractor on receiving sufficient documentation to establish that the prime contractor meets the requirements of this subsection.

3. If any person uses the certificate provided under this subsection to purchase tangible personal property to be used in a project that is not subject to tax under section 42-5075, the person is liable in an amount equal to any tax, penalty and interest that the seller would have been required to pay under this article if the seller had not complied with subsection A of this section. Payment of the amount under this section exempts the person from liability for any tax imposed under article 4 of this chapter. The amount shall be sourced under section 42-5040, subsection A, paragraph 2.

M. Notwithstanding any other law, compliance with subsection L of this section by a person that is not subject to tax under section 42-5075 entitles the person to the exemption allowed by section 465, subsection (k) of the model city tax code when purchasing tangible personal property to be incorporated or fabricated by the person into any real property, structure, project, development or improvement.

N. The requirements of subsections A and B of this section do not apply to owners, proprietors or tenants of agricultural lands or farms who sell livestock or poultry feed that is grown or raised on their lands to any of the following:

1. Persons who feed their own livestock or poultry.

2. Persons who are engaged in the business of producing livestock or poultry commercially.

3. Persons who are engaged in the business of feeding livestock or poultry commercially or who board livestock noncommercially.

O. A vendor who has reason to believe that a certificate prescribed by this section is not accurate or complete will not be relieved of the burden of proving entitlement to the exemption. A vendor that accepts a certificate in good faith will be relieved of the burden of proof and the purchaser may be required to establish the accuracy of the claimed exemption. If the purchaser cannot establish the accuracy and completeness of the information provided in the certificate, the purchaser is liable for an amount equal to the transaction privilege tax, penalty and interest that the vendor would have been required to pay if the vendor had not accepted the certificate.

P. Notwithstanding any other law, an online lodging operator, as defined in section 42-5076, shall be entitled to an exclusion from any applicable taxes for any online lodging transaction, as defined in section 42-5076, facilitated by an online lodging marketplace, as defined in section 42-5076, for which the online lodging operator has obtained from the online lodging marketplace written notice that the online lodging marketplace is registered with the department to collect applicable taxes for all online lodging transactions facilitated by the online lodging marketplace, and transaction history documenting tax collected by the online lodging marketplace, pursuant to section 42-5005, subsection L.

Q. The department shall prescribe the form of a certificate to be used by a person purchasing an aircraft to document eligibility for a deduction pursuant to section 42-5061, subsection B, paragraph 7, subdivision (a), item (v) or an exemption pursuant to section 42-5159, subsection B, paragraph 7, subdivision (a), item (v), relating to aircraft. The person must provide this certificate and documentation confirming that the operational control of the aircraft has been transferred or will be transferred immediately after the purchase to one or more persons described in section 42-5061, subsection B, paragraph 7, subdivision (a), item (i), (ii), (iii) or (iv) or section 42-5159, subsection B, paragraph 7, subdivision (a), item (i), (ii), (iii) or (iv).  Operational control of the aircraft must be transferred for at least fifty percent of the aircraft's flight hours. If such operational control is not transferred for at least fifty percent of the aircraft's flight hours during the recapture period, the owner of the aircraft is liable for an amount equal to any tax that the seller or purchaser would have been required to pay under this chapter at the time of the sale, plus penalty and interest. The recapture period begins on the date that operational control of the aircraft is first transferred and ends on the later of the date the aircraft is fully depreciated for federal income tax purposes or five years after operational control was first transferred. For the purposes of this subsection, operational control of the aircraft must be within the meaning of federal aviation administration operations specification A008, or its successor, except that:

1. If it is determined that operational control has been transferred for less than fifty percent but more than forty percent of the aircraft's flight hours, the owner of the aircraft is liable for an amount equal to any tax that the seller or purchaser would have been required to pay under this chapter at the time of the sale, plus interest.

2. If the aircraft is sold during the recapture period, the seller is not liable for the amount determined pursuant to this subsection unless the operational control of the aircraft had not been transferred for at least fifty percent of the aircraft's flight hours at the time of the sale.

R. Notwithstanding any other law, a shared vehicle owner is entitled to an exclusion from any applicable taxes for a shared vehicle transaction that is facilitated by a peer-to-peer car sharing program and for which the peer-to-peer car sharing program has collected and remitted applicable taxes.

S. For the purposes of this section, "peer-to-peer car sharing program", "shared vehicle owner" and "shared vehicle transaction" have the same meanings prescribed in section 28-9601. END_STATUTE

Sec. 4. Section 42-5014, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5014. Return and payment of tax; estimated tax; extensions; abatements; definitions

A. Except as provided in subsection B, C, D, E or F of this section, the taxes levied under this article:

1. Are due and payable monthly in the form required by section 42-5018 for the amount of the tax, to the department, on or before the twentieth day of the month next succeeding the month in which the tax accrues.

2. Are delinquent as follows:

(a) For taxpayers that are required or elect to file and pay electronically in any month, if not received by the department on or before the last business day of the month.

(b) For all other taxpayers, if not received by the department on or before the business day preceding the last business day of the month.

B. The department, for any taxpayer whose estimated annual liability for taxes imposed or administered by this article or chapter 6 of this title is between $2,000 and $8,000, shall authorize the taxpayer to pay the taxes on a quarterly basis. The department, for any taxpayer whose estimated annual liability for taxes imposed by this article is less than $2,000, shall authorize the taxpayer to pay the taxes on an annual basis.  For the purposes of this subsection, the taxes due under this article:

1. For taxpayers that are authorized to pay on a quarterly basis, are due and payable monthly in the form required by section 42-5018 for the amount of the tax, to the department, on or before the twentieth day of the month next succeeding the quarter in which the tax accrues.

2. For taxpayers that are authorized to pay on an annual basis, are due and payable monthly in the form required by section 42-5018 for the amount of the tax, to the department, on or before the twentieth day of January next succeeding the year in which the tax accrues.

3. Are delinquent as follows:

(a) For taxpayers that are required or elect to file and pay electronically in any quarter, if not received by the department on or before the last business day of the month.

(b) For all other taxpayers that are required to file and pay quarterly, if not received by the department on or before the business day preceding the last business day of the month.

(c) For taxpayers that are required or elect to file and pay electronically on an annual basis, if not received by the department on or before the last business day of January.

(d) For all other taxpayers that are required to file and pay annually, if not received by the department on or before the business day preceding the last business day of January.

C. The department may require a taxpayer whose business is of a transient character to file the return and remit the taxes imposed by this article on a daily, a weekly or a transaction-by-transaction basis, and those returns and payments are due and payable on the date fixed by the department without a grace period otherwise allowed by this section. For the purposes of this subsection, "business of a transient character" means sales activity by a taxpayer not regularly engaged in selling within this state that is conducted from vehicles, portable stands, rented spaces, structures or booths, or concessions at fairs, carnivals, circuses, festivals or similar activities for not more than thirty consecutive days.

D. If the business entity under which a taxpayer reports and pays income tax under title 43 has an annual total tax liability under this article, article 6 of this chapter and chapter 6, article 3 of this title of $1,000,000 or more in 2019, $1,600,000 or more in 2020, $2,300,000 or more in 2021, $3,100,000 or more in 2022 or $4,100,000 or more in 2023 and each year thereafter, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this article, article 6 of this chapter or chapter 6, article 3 of this title are collected, or if the taxpayer can reasonably anticipate such liability in the current year, the taxpayer shall report on a form prescribed by the department and pay an estimated tax payment each June.  Any other taxpayer may voluntarily elect to pay the estimated tax payment pursuant to this subsection. The payment shall be made on or before June 20 in the same manner as the taxpayer is required to make regular payments and is delinquent if not received by the department on or before the last business day of June if the taxpayer is required to make the payment by electronic means, or is delinquent on or before the business day preceding the last business day of June for those taxpayers allowed to file by mail or is delinquent if not received by the department on the business day preceding the last business day of June for those taxpayers allowed to file in person. The estimated tax paid shall be credited against the taxpayer's tax liability under this article, article 6 of this chapter and chapter 6, article 3 of this title for the month of June for the current calendar year. The estimated tax payment shall equal either:

1. One-half of the actual tax liability under this article plus one-half of any tax liability under article 6 of this chapter and chapter 6, article 3 of this title for May of the current calendar year.

2. The actual tax liability under this article plus any tax liability under article 6 of this chapter and chapter 6, article 3 of this title for the first fifteen days of June of the current calendar year.

E. An online lodging marketplace, as defined in section 42-5076, that is registered with the department pursuant to section 42-5005, subsection L:

1. Shall remit to the department the applicable taxes payable pursuant to section 42-5076 and chapter 6 of this title with respect to each online lodging transaction, as defined in section 42-5076, facilitated by the online lodging marketplace.

2. Shall report the taxes monthly and remit the aggregate total amounts for each of the respective taxing jurisdictions.

3. Shall not be required to list or otherwise identify any individual online lodging operator, as defined in section 42-5076, on any return or any attachment to a return.

F. A person who is licensed pursuant to title 32, chapter 20 and who is licensed with the department pursuant to section 42-5005, subsection M shall:

1. File a consolidated return monthly with respect to all managed properties for which the licensee files an electronic consolidated tax return pursuant to section 42-6013.

2. Remit to the department the aggregate total amount of the applicable taxes payable pursuant to this chapter and chapter 6 of this title for all of the respective taxing jurisdictions with respect to the managed properties.

G. A peer-to-peer car sharing program that is licensed by the department pursuant to section 42-5005, subsection N:

1. Shall electronically remit to the department the applicable taxes pursuant to section 42-5071 and, if the peer-to-peer car sharing program allows owners of vehicles that are not individual-owned shared vehicles to use the peer-to-peer car sharing program, applicable surcharges pursuant to sections 5-839 and 48-4234.

2. Shall electronically report the taxes monthly and remit the aggregate total amounts for each respective taxing jurisdiction.

3. Is not required to list or otherwise identify an individual-owned shared vehicle on any return or any attachment to a return.  the peer-to-peer car sharing program shall retain surcharge and tax information for each peer-to-peer car sharing program transaction and shall provide the information to the department at the department's request.

H. The remittance of transaction privilege tax and any other tax applicable to the shared vehicle transaction by a peer-to-peer car sharing program fully satisfies any obligation of a shared vehicle owner to remit any taxes applicable to the shared vehicle transaction.

G. I. The taxpayer shall prepare a return showing the amount of the tax for which the taxpayer is liable for the preceding month, and shall mail or deliver the return to the department in the same manner and time as prescribed for the payment of taxes in subsection A of this section.  If the taxpayer fails to file the return in the manner and time as prescribed for the payment of taxes in subsection A of this section, the amount of the tax required to be shown on the return is subject to the penalty imposed pursuant to section 42-1125, subsection X, without any reduction for taxes paid on or before the due date of the return.  The return shall be verified by the oath of the taxpayer or an authorized agent or as prescribed by the department pursuant to section 42-1105, subsection B.

H. J. Any person who is taxable under this article and who makes cash and credit sales shall report the cash and credit sales separately and may apply for and obtain from the department an extension of time to pay taxes due on the credit sales. The department shall grant the extension under such rules as the department prescribes. When the extension is granted, the taxpayer shall thereafter include in each monthly report all collections made on such credit sales during the month next preceding and shall pay the taxes due at the time of filing such a report.

I. K. The returns required under this article shall be made on forms prescribed by the department and shall capture data with sufficient specificity to meet the needs of all taxing jurisdictions.

J. L. Any person who is engaged in or conducting business in two or more locations or under two or more business names shall file the return required under this article using an electronic filing program established by the department.

K. M. For taxable periods beginning from and after December 31, 2017, any taxpayer with an annual total tax liability under this chapter and chapter 6 of this title of $20,000 or more, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this chapter or chapter 6 of this title are collected, or a taxpayer that can reasonably anticipate that liability in the current year, shall file the return required under this article using an electronic filing program established by the department.

L. N. For taxable periods beginning from and after December 31, 2018, any taxpayer with an annual total tax liability under this chapter and chapter 6 of this title of $10,000 or more, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this chapter or chapter 6 of this title are collected, or a taxpayer that can reasonably anticipate that liability in the current year, shall file the return required under this article using an electronic filing program established by the department.

M. O. For taxable periods beginning from and after December 31, 2019, any taxpayer with an annual total tax liability under this chapter and chapter 6 of this title of $5,000 or more, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this chapter or chapter 6 of this title are collected, or a taxpayer that can reasonably anticipate that liability in the current year, shall file the return required under this article using an electronic filing program established by the department.

N. P. For taxable periods beginning from and after December 31, 2020, any taxpayer with an annual total tax liability under this chapter and chapter 6 of this title of $500 or more, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this chapter or chapter 6 of this title are collected, or a taxpayer that can reasonably anticipate that liability in the current year, shall file the return required under this article using an electronic filing program established by the department.

O. Q. Any taxpayer that is required to report and pay using an electronic filing program established by the department may apply to the director, on a form prescribed by the department, for an annual waiver from the electronic filing requirement.  The director may grant a waiver, which may be renewed, if any of the following applies:

1. The taxpayer has no computer.

2. The taxpayer has no internet access.

3. Any other circumstance considered to be worthy by the director exists.

P. R. A waiver is not required if the return cannot be electronically filed for reasons beyond the taxpayer's control, including situations in which the taxpayer was instructed by either the internal revenue service or the department of revenue to file by paper.

Q. S. The department, for good cause, may extend the time for making any return required by this article and may grant such reasonable additional time within which to make the return as it deems proper, but the time for filing the return shall not be extended beyond the first day of the third month next succeeding the regular due date of the return.

R. T. The department, with the approval of the attorney general, may abate small tax balances if the administration costs exceed the amount of tax due.

S. U. For the purposes of subsection D of this section, "taxpayer" means the business entity under which the business reports and pays state income taxes regardless of the number of offices at which the taxes imposed by this article, article 6 of this chapter or chapter 6, article 3 of this title are collected.

V. For the purposes of this section, "individual-owned shared vehicle", "peer-to-peer car sharing program", "SHARED VEHICLE OWNER" AND "SHAREd VEHICLE TRANSACTION" HAVE THE SAME MEANINGS PRESCRIBED IN SECTION 28-9601. END_STATUTE

Sec. 5. Section 42-5040, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5040. Sourcing of certain transactions involving tangible personal property; definitions

A. Except as provided in section 42-5075, retail sales of tangible personal property shall be sourced as follows:

1. To the seller's business location if the seller receives the order at a business location in this state.

2. Except as provided in section 42-5008.01, to the purchaser's location in this state if the seller receives the order at a business location outside this state or, if there is no delivery address, to the purchaser's billing address.

b. A shared vehicle transaction shall be sourced as follows:

1. To the permanent street address of the registered shared vehicle owner if the shared vehicle is registered in this state.

2. To the street address in this state where the shared vehicle owner resides while in this state if the shared vehicle is registered in another state or country.

B. C. For the purposes of subsection A of this section, an order is received when all of the information necessary to accept the order has been received by or on behalf of the seller, regardless of where the order is accepted or approved. The place of business or residence of the purchaser does not determine where the order is received.

C. D. The gross receipts from leasing or renting tangible personal property shall be sourced as follows:

1. To the lessor's business location if the lessor has a business location in this state.

2. To the lessee's address if the lessor does not have a business location in this state or, if there is no lessee's address, to the lessee's billing address. The gross receipts are taxable when the property is shipped, delivered or otherwise brought into this state for use in this state.

D. E. For the purposes of this section:

1. "Lessee's address" means the residential address of an individual lessee and the primary business address of any other lessee.

2. "Lessor's business location" means the business address that appears on the lessor's transaction privilege tax license.

3. "Shared vehicle" has the same meaning prescribed in section 28-9601.

4. "Shared vehicle owner" has the same meaning prescribed in section 28-9601.

5. "Shared vehicle transaction" has the same meaning prescribed in section 28-9601. END_STATUTE

Sec. 6. Section 42-5071, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5071. Personal property rental classification; definitions

A. The personal property rental classification is comprised of the business of leasing or renting tangible personal property for a consideration AND INCLUDES PEER-TO-PEER CAR SHARING.  The tax does not apply to:

1. Leasing or renting films, tapes or slides used by theaters or movies, which are engaged in business under the amusement classification, or used by television stations or radio stations.

2. Activities engaged in by the Arizona exposition and state fair board or county fair commissions in connection with events sponsored by such entities.

3. Leasing or renting tangible personal property by a parent business entity to a subsidiary business entity or by a subsidiary business entity to another subsidiary of the same parent business entity if taxes were paid under this chapter on the gross proceeds or gross income accruing from the initial sale of the tangible personal property.  For the purposes of this paragraph, "subsidiary" means a business entity of which at least eighty percent of the voting shares are owned by the parent business entity.

4. Operating coin-operated washing, drying and dry cleaning machines or coin-operated car washing machines at establishments for the use of such machines.

5. Leasing or renting tangible personal property for incorporation into or comprising any part of a qualified environmental technology facility as described in section 41-1514.02. This paragraph shall apply for ten full consecutive calendar or fiscal years following the initial lease or rental by each qualified environmental technology manufacturer, producer or processor.

6. Leasing or renting aircraft, flight simulators or similar training equipment to students or staff by nonprofit, accredited educational institutions that offer associate or baccalaureate degrees in aviation or aerospace related fields.

7. Leasing or renting photographs, transparencies or other creative works used by this state on internet websites, in magazines or in other publications that encourage tourism.

8. Leasing or renting certified ignition interlock devices installed pursuant to the requirements prescribed by section 28-1461.  For the purposes of this paragraph, "certified ignition interlock device" has the same meaning prescribed in section 28-1301.

9. The leasing or renting of space to make attachments to utility poles, as follows:

(a) By a person that is engaged in business under section 42-5063 or 42-5064 or that is a cable operator.

(b) To a person that is engaged in business under section 42-5063 or 42-5064 or that is a cable operator.

10. Leasing or renting billboards that are designed, intended or used to advertise or inform and that are visible from any street, road or other highway.

B. The tax base for the personal property rental classification is the gross proceeds of sales or gross income derived from the business, but the gross proceeds of sales or gross income derived from the following shall be deducted from the tax base:

1. Reimbursements by the lessee to the lessor of a motor vehicle for payments by the lessor of the applicable fees and taxes imposed by sections 28-2003, 28-2352, 28-2402, 28-2481 and 28-5801, title 28, chapter 15, article 2 and article IX, section 11, Constitution of Arizona, to the extent such amounts are separately identified as such fees and taxes and are billed to the lessee.

2. Leases or rentals of tangible personal property that, if it had been purchased instead of leased or rented by the lessee, would have been exempt under:

(a) Section 42-5061, subsection A, paragraph 8, 9, 12, 13, 25, 29, 49 or 53.

(b) Section 42-5061, subsection B, except that a lease or rental of new machinery or equipment is not exempt pursuant to section 42-5061, subsection B, paragraph 13 if the lease is for less than two years.

(c) Section 42-5061, subsection I, paragraph 1.

(d) Section 42-5061, subsection M.

3. Motor vehicle fuel and use fuel that are subject to a tax imposed under title 28, chapter 16, article 1, sales of use fuel to a holder of a valid single trip use fuel tax permit issued under section 28-5739 and sales of aviation fuel that are subject to the tax imposed under section 28-8344.

4. Leasing or renting a motor vehicle subject to and on which the fee has been paid under title 28, chapter 16, article 4.

5. Amounts received by a motor vehicle dealer for the first month of a lease payment if the lease and the lease payment for the first month of the lease are transferred to a third-party leasing company.

C. Sales of tangible personal property to be leased or rented to a person engaged in a business classified under the personal property rental classification are deemed to be resale sales.

D. In computing the tax base, the gross proceeds of sales or gross income from the lease or rental of a motor vehicle does not include any amount attributable to the car rental surcharge under section 5-839, 28-5810 or 48-4234.

E. Until December 31, 1988, leasing or renting animals for recreational purposes is exempt from the tax imposed by this section. Beginning January 1, 1989, the gross proceeds or gross income from leasing or renting animals for recreational purposes is subject to taxation under this section. Tax liabilities, penalties and interest paid for taxable periods before January 1, 1989 shall not be refunded unless the taxpayer requesting the refund provides proof satisfactory to the department that the monies paid as taxes will be returned to the customer.

F. The tax base of the personal property rental classification does not include the gross proceeds or gross income received by a shared vehicle owner from a shared vehicle transaction.

F. G. For the purposes of this section:

1. "Cable operator" has the same meaning prescribed in section 9-505 and includes a video service provider.

2. "pEER-TO-PEER CAR SHARING" HAS THE SAME MEANING PRESCRIBED IN SECTION 28-9601.

3. "peer-to-peer car sharing program" has the same meaning prescribed in section 28-9601.

4. "shared vehicle owner" has the same meaning prescribed in section 28-9601.

5. "Shared vehicle transaction" has the same meaning prescribed in section 28-9601.

2. 6. "Utility pole" means any wooden, metal or other pole used for utility purposes and the pole's appurtenances that are attached or authorized for attachment by the person controlling the pole. END_STATUTE

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