My Tucson: Business rentals taxing on Dept. of Revenue, too
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Pima County created thousands of jobs this month in a growing industry. Unfortunately, the new workers are tax collectors and the positions are unpaid.
May 16, county voters approved a new half-cent sales tax to finance the construction of some badly needed transportation infrastructure.
Almost all of the 20 taxable activities covered, of which retail sales is only one, are already subject to state sales or use tax.
However, one category - rental tax on business locations - hasn't been taxed by the state in more than a decade. Its inclusion in the county tax is creating headaches for citizens and for employees of the Arizona Department of Revenue.
This classification alone is necessitating thousands of applications for new state business licenses for the sole purpose of collecting a half-percent tax from tenants and sending it to Arizona on behalf of Pima County.
All these financial and compliance costs inevitably get passed on to consumers.
If you rent out commercial property in Pima County and are not otherwise licensed with ADOR, you are required to send in a state form and a $12 fee and you must start imposing the tax on rentals received after June 30. To make it a bit easier, the form is available online at www.AZTaxes.gov.
Although ADOR is making substantial efforts to contact property owners, including those out of state, not everyone will be reached. Yet ignorance will not justify failing to submit the appropriate monthly monies by the end of August.
Commercial landlords in Tucson, which has a 2 percent city rental tax, must also get a state license. Those who have one, together with property owners in Marana, Oro Valley, Sahuarita and South Tucson, where rental taxes are currently collected through ADOR, must still pay the $12 fee for a license update.
The state doesn't tax commercial rentals. But because its definition remains in Arizona law, wording was used in the proposal placed before voters in order to include the category - despite the headaches it created.
This language ensured the new rate would apply not to current taxable activities, but to those categories that were being taxed as of Jan. 1, 1990, when the rental tax was in effect. This enabled not only resurrection of this long-dead levy, but from a time when the rate was at its peak.
Legislation enabling the tax package went through the Legislature, but the specifics were left to the locals.
Several officials I spoke with said the legislation was enacted in good faith and were disappointed when they learned that the tax incorporated this new category. All said that this went outside of their intent.
State Rep. Marian McClure, a Tucson Republican, called the time and effort being expended for implementation "ridiculous."
Dan Zimke, public information officer for ADOR, confirmed that the new licensing requirement has created an unprecedented deluge of applications from Pima County property owners. Licenses that usually take just days to process are being delayed up to a month.
In a 1784 letter to James Madison, Thomas Jefferson asked, "Would it not be better to simplify the system of taxation rather than to spread it over such a variety of subjects and pass through so many hands?"
We continue to ignore the question.
Barney Brenner is the former owner of Barney's Auto Parts and past president of the Pima County Republican Club. E-mail: barneybrenner@cox.net.
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