Municipal Tax Code Commission
Agency Contact Information
Arizona Department of Revenue- Municipal Tax Code Commission
Authority
The Municipal Tax Code Commission was established by Laws 1988, Chapter 107. Current statutory authority is found at A.R.S. §§42-6051 through 42-6056.
Function
Imposition of city transaction privilege taxes (sales tax) is separate and distinct from the imposition of the state sales tax. The Model City Tax Code (Code) is a uniform sales and use tax act that has been adopted by most cities in Arizona. Although intended to facilitate uniformity among city taxes, the Code allows cities to either tax or exempt certain items that are not part of the model language of the Code. JLBC 2022 Tax Handbook.
The Municipal Tax Code Commission (Commission) consists of nine appointed members who are mayors or members of the governing bodies of those cities and towns that have adopted the Code. The Director or designee of the Arizona Department of Revenue (ADOR) serves an ex officio member. Appointed members serve for three-year terms.
The Commission was created to promote uniformity and consistency among the tax bases of the municipalities through the Model City Tax Code, to provide a forum for taxpayers and municipalities to present recommendations for changes to the code, and to listen to general taxpayer concerns. (Laws 2023, Chapter 192, Section 4, Purpose).
The Commission follows detailed statutory guidelines and timeframes to review proposed changes to the Code and to conduct hearings. Statute also prescribes ADOR responsibilities including a requirement for the agency to maintain the official master version of the Code.
History
Background
The Model City Tax Code (Code) was drafted to promote uniformity and consistency among sales taxes levied by various Arizona cities and towns. The Code was based on recommendations of a legislative study committee on municipal sales tax to address concerns about the variation among local taxes; provide a degree of conformity; and retain the ability of individual cities and towns to determine items subject to tax or exemption. MCTC website.
Proposals to modify or amend the Code may be submitted to the Commission by any city, town, taxpayer, or ADOR. The Commission is required to review and comment on proposed modifications or amendments and may hold public hearings to review and receive comments on the proposed changes. The Commission may also require modifications to the proposed language. If the Commission approves a change to the Code, those changes must be adopted by all cities and towns.
If a city changes a tax rate, Commission review is not required, however, the city or town is required to notify the Commission and ADOR within 10 days and the change must be reflected in the official copy. Since July 1, 2012, ADOR is required to maintain the official copy of the Code and post it on the Department’s website. A.R.S. §42-6051.
ADOR provides staff support and meeting accommodations for the Commission and is required to post proposed amendments, meeting notices, and meeting agendas. ADOR is also responsible for maintaining a mailing list of interested parties and delivering meeting notices according to prescribed time frames, either by electronic or physical means. In addition, ADOR is required to provide a legal analysis of a proposed amendment to the Commission. If an amendment is adopted, ADOR is required to update the official copy of the Code within ten days.
Session Laws
The Commission was created by Laws 1988, Chapter 107 and consisted of four appointed members and the Director of ADOR who served as chairman. The Commission was required to meet at least two times each year and to prepare annual reports and a final report in July 1992.
Each city and town imposing a transaction privilege tax was required to adopt the Model City Tax Code of 1988. The measure outlined the process to adopt and amend the Code which included time frames, public hearings, and notice requirements. The Commission was required to keep a master record of all amendments to the Code and to make copies available to the public on request.
The 1988 measure, written as session law, included a delayed repeal date of July 1, 1992.
Laws 1990, Chapter 168 established detailed notice and hearing requirements for proposed changes to the Code.
Laws 1991, Chapter 160 codified the language of the 1988 measure and eliminated the termination date of 1992. The provisions were fundamentally the same as those enacted in 1988 and amended in 1990. The measure also included a requirement for those cities and towns that adopted the MCTC before 1991 to file a copy of any changes made to the Code since it was adopted.
Laws 1994, Chapter 331 expanded the number of members on the Commission to seven and removed the ADOR director as a member.
Law 1995, Chapter 200 added the ADOR director as an ex-officio member of the Commission and required ADOR to provide staff support and meeting accommodations for the Commission.
Laws 2000, Chapter 297 expanded the membership of the Commission to nine, modified the qualifications for membership, and required the Commission to meet six times per year rather than twice a year. The measure also required ADOR to send meeting notices to interested persons. Cities and towns were required, rather than allowed, to adopt changes to the MCTC that were approved by the Commission. Finally, the measure established the Municipal Tax Hearing Office.
Laws 2020, Chapter 71 rewrote the process and procedures to amend the MCTC and modified Commission and ADOR responsibilities. The measure also addressed the frequency of Commission meetings, requiring meetings to be held at the call of the chairman, rather than on a prescribed statutory schedule.
The Arizona Auditor General conducted a performance audit of the Municipal Tax Code Commission in 2022 which included several recommendations. See Report 22-108.
Laws 2023, Chapter 192 modified the process to adopt changes to the Model City Tax Code and requires a two-thirds vote of the Commission to adopt an amendment to the Code if it either: 1) repeals an exemption from taxation or 2) expands the types of business activities that are considered taxable. The measure also continued the Commission until July 1, 2027.
Sources
- Arizona Revised Statutes
- Session Laws
- Laws 1988, Chapter 107
- Laws 1990, Chapter 168
- Laws 1991, Chapter 160
- Laws 1994, Chapter 331
- Laws 1995, Chapter 200
- Laws 2000, Chapter 297
- Laws 2020, Chapter 71
- Laws 2023, Chapter 192
Model City Tax Code website
Arizona Department of Revenue website
Arizona Memory Project Arizona State Tax Commission agency collection
Arizona Memory Project Arizona Department of Revenue agency collection
Sunset Review, Arizona Municipal Tax Code Commission, 2019
Model City Tax Code website
State of Arizona tax handbook 2022
Related collections at Arizona State Archives
- Record Group 169 – Department of Revenue