HomeMy WebLinkAboutIGA with Arizona Department of RevenueINTERGOVERNMENTAL AGREEMENT BETWEEN
THE ARIZONA DEPARTMENT OF REVENUE AND
THE CITY/TOWN OF Fountain Hills, AZ
THIS INTERGOVERNMENTAL AGREEMENT ("Agreement") is entered into this
5th day of December , 2023, by and between the Arizona Department of Revenue
("Department") and the City/Town of Fountain Hills , an Arizona municipal corporation
("City/Town"). This Agreement shall supersede and replace all previous intergovernmental
agreements, including amendments thereto, entered into by the Department and City/Town
regarding the administration, collection, audit, and/or licensing of transaction privilege tax, use
tax, severance tax, jet fuel excise and use taxes, and rental occupancy taxes (collectively referred
to as "Taxes") imposed by the State, City/Town, and other Arizona municipalities.
RECITALS
WHEREAS, A.R.S. Title 11, Chapter 7, Article 3 (A.R.S. § 11-952 et seq.) authorizes two
(2) or more public agencies to enter into intergovernmental agreements to contract for services, if
authorized by their legislative or governing bodies.
WHEREAS, A.R.S. § 42-6001 et seq. was amended effective January 1, 2015 to provide
that the Department shall collect and administer any transaction privilege and affiliated excise
taxes imposed by any Arizona municipality and that the Department and each municipality shall
enter into an intergovernmental contract or agreement pursuant to A.R.S. § 11-952 to provide a
uniform method of administration, collection, audit, and licensing of transaction privilege and
affiliated excise taxes imposed by the State and Arizona municipalities.
WHEREAS, City/Town has taken appropriate action by ordinance, resolution, or
otherwise, pursuant to the laws applicable to the governing body of City/Town, to approve and
authorize City/Town to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the Department and City/Town
enter into this Agreement as follows:
1. Definitions
1.1 A.R.S. means the Arizona Revised Statutes.
1.2 Adoption of an Ordinance means final approval by majority vote of the
City/Town council.
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1.3 Ambassador Program means the Department's provided structure and support of
curriculum related to tax administration and compliance education.
1.4 Arizona Management System means the State's professional, results -driven
management system that focuses on customer value and vital mission outcomes for
citizens. The system is based on principles of Lean, a proven people -centered
approach that has delivered effective results in both public and private sectors. Lean
focuses on customer value, continuous improvement and engaged employees to
improve productivity, quality, and service.
1.5 Audit means an examination and verification of accounts and records to determine
taxpayer compliance with A.R.S. Title 42 and the Model City Tax Code, or any
other assessment issued pursuant to A.R.S. § 42-1108.
1.6 City Services means the Department's team or successor unit thereof that assists
Arizona municipalities with administrative functions and all other activities related
to transaction privilege tax licensing, collection, and compliance of any kind. In
this Agreement, all references to electronic communications with City Services
shall be directed to the team's address at citiesunit@azdor.gov.
1.7 Closing Agreement means an agreement to settle a tax liability pursuant to A.R.S.
§ 42-1113.
1.8 Collection means activities to collect established liabilities for transaction privilege
taxes, fees, and related penalties and interest that are due and owing.
1.9 Confidentiality Standards means the standards set forth in A.R.S. § 42-2001 et
seq., Model City Tax Code § 510, Appendix A of this Agreement, and such other
written standards mutually agreed to by the Department and City/Town, and which
will be incorporated into Appendix A of this Agreement.
1.10 Development Fees has the same meaning prescribed in A.R.S. § 42-5075(B).
1.11 Desk Review means any assessment issued pursuant to A.R.S. § 42-1109(B).
1.12 Federal Tax Information ("FTI") means Federal income tax returns or return
information the Department receives from the Internal Revenue Service, including
any information created by the Department derived from that information.
Documents obtained from a taxpayer or State income tax returns are not considered
Federal Tax Information. The scope of this Agreement does not permit the
Department to share FTI with any Arizona municipality.
1.13 Independent Contractor means any individual or entity with which City/Town
may enter into an agreement to perform transaction privilege tax administration,
collection, audit, licensing, and any other related duties described in this Agreement
or A.R.S. § 42-6001 et seq.
1.14 Model City Tax Code means the document defined in A.R.S. § 42-6051.
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1.15 Municipal Tax or Municipal Taxes means collectively the transaction privilege
and affiliated excise taxes, including use tax, severance tax, jet fuel excise and use
tax, and rental occupancy tax imposed by City/Town in accordance with the Model
City Tax Code and similar taxes imposed by City/Town pursuant to a City/Town
code section outside the Model City Tax Code that are collected via the standard
transaction privilege tax return. Unless the context provides otherwise, this
definition includes municipal privilege tax, municipal privilege tax license fees, and
all related penalties, interest and other similar charges collected by the Department
on behalf of an Arizona municipality.
1.16 Options Chart means any chart contained in a section of the Model City Tax Code
which identifies the various approved standard Options adopted by an Arizona
municipality.
1.17 Primary Point of Contact ("PPOC") means a designated City/Town
representative with the primary responsibility for communicating with the
Department and their respective staff on any matters described within this
Agreement. The PPOC must be an individual qualified to receive Tax Information
under Section 2.1 of this Agreement and be included on the Master Authorization
List referenced in Section 2.3 of this Agreement.
1.18 Profile means a dedicated section of the Model City Tax Code that provides
specific information for each Arizona municipality, including contact information,
applicable tax rates, and amendments and provisions unique to City/Town.
1.19 Standard Audit Life Cycle Process Map means a document containing the
decisions and procedures adopted by the Department and Arizona municipalities
from the assignment of audits through final resolution consistent with this
Agreement and the Arizona Management System principle of continuous
improvement. This document shall be reviewed by the Department and Arizona
municipalities as needed, not less than annually, with any changes memorialized in
a revised map. In the event of a disagreement regarding proposed changes, the
Standard Audit Life Cycle Process Map shall be referred to SMART for resolution.
1.20 Standard Authorization List Update Process Map means a document containing
the decisions and procedures adopted by the Department and Arizona
municipalities to keep an updated list of current employees and contractors who are
authorized to receive Tax Information consistent with this Agreement and with the
Arizona Management System principle of continuous improvement. This document
shall be reviewed by the Department and Arizona municipalities as needed, not less
than annually, with any changes memorialized in a revised map. In the event of a
disagreement regarding proposed changes, the Standard Authorization List Update
Process Map shall be referred to SMART for resolution.
1.21 Standard Inter -Jurisdictional Transfer Process Map means a document
containing the decisions and procedures adopted by the Department and Arizona
municipalities to document and authorize the transfer of erroneously reported or
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allocated tax from one (1) municipality to another based upon a municipality's
request or during the audit process consistent with this Agreement and with the
Arizona Management System principle of continuous improvement. This document
shall be reviewed by the Department and Arizona municipalities as needed, not less
than annually, with any changes memorialized in a revised map. In the event of a
disagreement regarding proposed changes, the Standard Inter -Jurisdictional
Transfer Process Map shall be referred to SMART for resolution.
1.22 State means the State of Arizona.
1.23 State & Municipal Audit Resolution Team ("SMART") means an advisory
committee responsible for resolving issues as set forth in Section 15 of this
Agreement.
1.24 State Tax or State Taxes means transaction privilege tax and affiliated excise
taxes, including use tax, severance tax, and jet fuel excise and use taxes imposed
by the State of Arizona or its counties.
1.25 Tax Information means information deemed confidential taxpayer information
protected from disclosure pursuant to A.R.S. § 42-2001 et seq. or Model City Tax
Code § 510 concerning the business financial affairs or operations of a taxpayer as
it relates to Municipal Taxes or State Taxes. Tax Information includes all financial
information related to transaction privilege taxes obtained from any source related
to an individual taxpayer and all such aggregate financial information related to any
group of identified or identifiable taxpayers.
(a) Examples of Tax Information include without limitation:
(1) Any information provided by the Department to City/Town derived
from any source including tax returns, reports, tax license
applications, and the New License Report or License Update Report;
and
(2) Any information received by, recorded by, prepared by, furnished
to, or collected by the Department or City/Town with respect to a
transaction privilege tax return or the termination or possible
existence of liability of any person for any transaction privilege tax
and related penalty or interest, such as the taxpayer's identity; the
nature, source, or amount of the taxpayer's income, payments,
receipts, deductions, exemptions, credits, assets, liabilities, net
worth, tax liability, taxes withheld, deficiencies, over -assessments,
or tax payments; or whether the taxpayer's account was, is being, or
will be examined or subject to audit, desk review, investigation,
collection, or processing.
(b) Taxpayer identifying information obtained by City/Town from any source
not identified in Section 1.25(a) of this Agreement is not Tax Information
for purposes of this Agreement.
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1.26 Voluntary Disclosure Agreement means a document used in a voluntary
disclosure program designed for eligible taxpayers with exposure for tax liability
and/or civil penalties arising from a failure to report and/or pay all Taxes due which
allows the taxpayer to come into voluntary compliance.
2. Authorized Access Lists
2.1 Statutory Authority: The disclosure of information relating to State Taxes and
Municipal Taxes is governed by A.R.S. § 42-2001 et seq., and, for reporting periods
prior to January 1, 2015, by Model City Tax Code § 510.
2.2 Qualified Recipients of Information: The Department and City/Town shall only
disclose Tax Information related to State Tax and Municipal Tax pursuant to this
Agreement to individuals authorized by law as described in Section 2.1 of this
Agreement, including those authorized persons listed on the Authorized Access
Lists provided by the Department and Arizona municipalities. Questions related to
a listed Department recipient may be directed to City Services at
citiesunit(a,azdor.gov. Questions related to a listed Arizona municipal recipient
may be directed to the PPOC of the pertinent Arizona municipality.
2.3 Department's Authorized Access List: Pursuant to Section 2.4(c) of this
Agreement, the Department shall maintain, update, and provide a current statewide
Master Authorization List of names, job titles, and contact information of the
Department staff and Arizona municipal representatives who are authorized by law
as described in Section 2.1 of this Agreement to receive State Tax and Municipal
Tax information from the Department or Arizona municipalities, as defined in the
Standard Authorization List Update Process Map. Updates shall be provided on not
less than a monthly basis. The Department shall promptly notify Arizona
municipalities of any individual whose authorization to receive State Tax and
Municipal Tax information has been revoked for any reason.
2.4 City/Town's Authorized Access List: City/Town shall maintain, update, and
provide a current Authorized Access List of names, job titles, and contact
information for all persons acting on behalf of City/Town authorized by law as
described in Section 2.1 of this Agreement to receive State Tax and Municipal Tax
information as defined in the Standard Authorization List Update Process Map.
(a) City/Town shall indicate one PPOC on the Authorized Access List to
resolve any administrative issues with the Authorized Access List. At its
discretion, City/Town may also indicate an additional individual as a back-
up or alternate PPOC.
(b) City/Town shall ensure all personnel on the Authorized Access List meet
the requirements indicated in the Confidentiality Standards (Appendix A)
including completing all required confidentiality training certification and
recertification as required from time to time, within the time required by the
Department.
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(c) Upon execution of this Agreement and on the first day of each calendar
quarter thereafter, City/Town shall email to City Services at
citiesunit@a,azdor.gov a current Authorized Access List of its staff and
representatives authorized to receive State Tax and Municipal Tax
information from the Department and Arizona municipalities, including
additions and deletions, changes in job titles, and contact information.
City/Town's PPOC shall promptly notify the Department of any person
whose authorization to receive State Tax and Municipal Tax information is
revoked for any reason.
(d) The Department shall review City/Town's Authorized Access List. If the
Department finds that any person on the list has not completed the required
confidentiality training in a timely manner or does not meet the
Confidentiality Standards in Appendix A of this Agreement, the
Department shall notify the City/Town PPOC to resolve the issue. The
Department shall not include that person on the Master Authorization List
until the issues have been resolved to the satisfaction of the Department.
2.5 Independent Contractors:
(a) City/Town may at times choose to enter into a contract with an Independent
Contractor to perform the transaction privilege tax administration,
collection, audit, desk review, licensing, and other duties described in this
Agreement or A.R.S. § 42-6001 et seq.
(b) In accordance with A.R.S. §§ 42-1004 and 42-6002, no contract with an
Independent Contractor may be entered into on a contingency fee basis for
the performance of any transaction privilege tax related functions, including
but not limited to license inspections, audits, desk reviews, or collections.
(c) Within ten (10) business days of ratification of this Agreement, or
subsequent execution of such a contract between City/Town and an
Independent Contractor, City/Town shall provide a copy of each such
contract to the City Services electronically at citiesunit(a azdor.gov.
(d) City/Town shall notify the Department of the expiration, termination, or
amendment of any agreement with such Independent Contractors within ten
(10) business days of such event.
(e) In this Agreement it is presumed that any reference to a municipal employee
such as a license inspector, auditor, desk reviewer, collector, supervisor,
etc., also refers to an Independent Contractor performing that function on
behalf of the Department or City/Town.
(f) An Independent Contractor is subject to all training requirements,
authorization limitations, and other privileges and restrictions incorporated
into this Agreement or provided in statute in the same form and manner as
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(g)
such conditions apply to an employee performing the same function on
behalf of the Department or City/Town.
When an Independent Contractor issues any correspondence to a taxpayer
on behalf of the Department or City/Town, the Independent Contractor shall
expressly identify all of the following on such correspondence: the
Independent Contractor's name; the name of the Independent Contractor's
firm, if applicable; the Independent Contractor's status as a license
inspector, auditor, desk reviewer, or collector acting on behalf of the
Department or City/Town; the Independent Contractor's mailing address,
telephone number, and e-mail address; and the telephone number and e-mail
address of a specific person who is an employee of the Department or
City/Town capable of responding to the issues raised in the correspondence
for the Department or City/Town.
(h) The Department and/or City/Town may pursue any remedy authorized by
this Agreement or by statute for a violation of this Section by an
Independent Contractor.
2.6 Sharing of Authorized Access Lists: The Department shall share the
Department's Authorized Access List and the Authorized Access Lists for all
Arizona municipalities provided to the Department on the Core SFTP site. The
Department shall update the lists on a monthly basis with information provided by
each Arizona municipality, or as needed to immediately remove any person whose
authorized access has been revoked by the Department or an Arizona municipality.
3. Disclosure of Information by Citv/Town to the Department or Another Arizona
Municipality
3.1 Disclosure and Use of Municipal Tax Information: Any Tax Information
released by City/Town to the Department or another Arizona municipality may only
be used by persons authorized to receive such Tax Information for tax
administration and collection purposes and may not be disclosed to the public in
any manner that does not comply with A.R.S. § 42-2003, and/or Model City Tax
Code § 510 for reporting periods prior to January 1, 2015. All Tax Information shall
be stored and destroyed in accordance with the Confidentiality Standards
(Appendix A).
3.2 Municipal Ordinances: City/Town shall provide the Department with a copy of
its Municipal Tax Code or any City/Town ordinances imposing the taxes to be
collected hereunder within ten (10) calendar days of a request for such information
from the Department. This information shall be sent to City Services electronically
at citiesunit@,azdor.gov.
(a) Tax Code Changes: City/Town shall provide notice to the Department of
any tax code change with a copy of any ordinance adopted by City/Town
that imposes or modifies the Municipal Taxes or municipal privilege tax
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license fees to be collected hereunder within ten (10) calendar days of
adoption of the ordinance. This information shall be sent to City Services
electronically at citiesunit@a,azdor.gov.
(1)
City/Town agrees that any ordinance that changes a tax rate, Option
selection, or includes the addition or removal of a unique Model City
Tax Code exception shall take effect on the first day of the month
that is at least sixty (60) calendar days after the City/Town council
adopts the change. City/Town and the Department recognize there
may be occasions when the City/Town council establishes an
effective date less than sixty (60) calendar days after adoption. If
City/Town chooses to propose an ordinance with an effective date
that is less than sixty (60) calendar days after adoption, City/Town
shall notify the Department as soon as possible after that choice is
made.
(2) The Department shall incorporate all ordinance changes into the
official copy of the Model City Tax Code within ten (10) calendar
days of receipt of notice from City/Town. The copy provided to the
Department may be an electronic copy but shall reflect the identical
language contained in the version adopted by the City/Town and
shall contain the required signatures indicating council approval.
The Department shall notify City/Town when the tax code change
has been incorporated and City/Town is responsible for confirming
the change has been correctly entered in the official copy of the
Model City Tax Code.
(4) Pursuant to A.R.S. § 42-6052, if City/Town fails to notify the
Department of a tax code change within ten (10) calendar days after
City/Town council approval, the ordinance shall be considered null
and void. All tax code changes described in this Section shall have
no effect until reflected in the official copy of the Model City Tax
Code.
(3)
(b) Annexation Ordinances: Within fifteen (15) calendar days following the
adoption of an annexation ordinance, one (1) copy of the ordinance and
notification of the effective date of such ordinance shall be sent to the
Department via email at GIS@a,azdor.gov and City Services at
citiesunitQazdor.gov. City/Town may provide the Department with a list of
businesses subject to Municipal Taxes known to be located in the annexed
area.
(c) Review of the Model City Tax Code: City/Town shall be responsible for
reviewing the information contained on its Profile, the Options Charts, tax
rates for City/Town, and other information specific to City/Town contained
in the official copy of the Model City Tax Code and ensuring it is correct.
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City/Town affirms that it has an ongoing obligation to notify City Services
of any changes needed to such information at citiesunit@azdor.gov.
3.3 Development Fees: Upon request by the Department to City/Town's PPOC,
City/Town shall provide to the Department any information regarding
Development Fees imposed by City/Town under A.R.S. § 9-463.05 to assist the
Department with the auditing of taxpayers and the ordinary billing and collection
of taxes.
3.4 Prior Audits: Upon request by the Department, City/Town shall allow inspections
and copies of any City/Town tax audits conducted prior to January 1, 2015.
3.5 Other Information: City/Town shall provide other relevant information necessary
for tax administration and collection purposes as requested by the Department.
4. Disclosure of Information by Department to City/Town
4.1 Statutory Authority: The Department may disclose information relating to State
Taxes and Municipal Taxes to City/Town pursuant to A.R.S. § 42-2003 if the
information relates to a taxpayer who is or may be taxable by a county, city, or town
or who may be subject to audit by the Department pursuant to A.R.S. § 42-6002.
4.2 Restrictions on Use and Disclosure to Unauthorized Parties: Any Tax
Information disclosed by the Department to City/Town is subject to all restrictions
provided for in A.R.S. § 42-2003. Tax Information shall only be used by persons
authorized to receive such Tax Information for internal tax administration purposes,
including audit, desk review, collection, and licensing activity, and may not be
disclosed to the public or any unauthorized party in any manner that does not
comply with the Confidentiality Standards (Appendix A).
4.3 Liability for Improper Disclosure: The disclosure of confidential information
concerning Arizona taxes is governed by A.R.S. § 42-2001 et seq., which strictly
controls the accessibility and use of this information. Individuals who receive
confidential information relating to State Taxes and Municipal Taxes from the
Department are subject to the penalties provided in A.R.S. § 42-2004 and other
applicable statutes if they misuse or improperly disclose this information to
unauthorized individuals.
4.4 Reporting Potential Disclosure Violations/Incidents: The Department shall not
withhold Tax Information from City/Town provided that City/Town complies with
A.R.S. § 42-2001 et seq., and the Confidentiality Standards (Appendix A).
(a) If City/Town or the Department has information to suggest City/Town or
any of its duly authorized representatives has violated A.R.S. § 42-2001 et
seq. or the Confidentiality Standards (Appendix A), City/Town or the
Department shall immediately notify City Services at citiesunitAazdor.gov,
the Department's Disclosure Officer at DisclosureOfficerAazdor.gov, and
the Department's Information Security Team at InfoSecAazdor.gov.
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(b) City/Town and the Department shall fully cooperate with the Department's
Disclosure Officer and Information Security Team in investigating the
alleged violation and shall promptly address any identified issues.
(c) The Department's Disclosure Officer and Information Security Team:
(1) Shall send written notice to City/Town's PPOC detailing the alleged
breach as understood by the Department and request a response to
the allegation within twenty (20) calendar days of the date of the
letter, and
(2) May inspect City/Town's records, facilities, and equipment to
determine whether there has been a violation, and
(3)
Shall review the written response from City/Town and consider the
information contained therein and all relevant circumstances
surrounding the alleged violation prior to issuing any determination,
and
(4) Shall issue a written determination delivered by certified mail to
City/Town regarding the alleged violation within sixty (60) calendar
days of the date of City/Town's response letter. If the Department
determines that a violation has occurred, the Department shall
indicate whether a suspension of information is warranted and the
length of the suspension. During the period of suspension,
City/Town shall not access information maintained or created by the
Department related to City/Town.
(d) If the Department makes a written determination to suspend sharing of
information, City/Town may, within ten (10) calendar days of receiving the
written determination, submit a written request to SMART requesting the
group review the determination as provided in Section 15 of this
Agreement.
(e) If there is a suspension of Tax Information sharing with City/Town, the
Department shall maintain all information collected or created during the
suspension period related to City/Town that would otherwise have been
shared with City/Town and shall assist City/Town with accessing the
accumulated information for City/Town immediately upon termination of
the suspension.
(f) Under no circumstances shall the suspension of any right to receive Tax
Information adversely impact the Department's delivery or transfer of any
City/Town revenues in any manner.
4.5 Information to be Provided: The Department shall provide information pursuant
to A.R.S. § 42-6001(B). The Department shall provide such information as outlined
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in Appendix B and elsewhere in this Agreement, which shall only be modified in
accordance with Section 4.7 of this Agreement.
(a) The Department shall not provide Federal Tax Information to City/Town.
(b) In addition to the information detailed in Appendix B of this Agreement,
the Department shall disclose, upon request, the following information to
City/Town:
(1) Department tax audits, including all information related to all
Arizona municipalities included in the tax audit; and
(2) Other relevant information necessary for City/Town's tax
administration and collection purposes, including all information
necessary to verify that City/Town received all revenues collected
by the Department on behalf of City/Town.
4.6 Storage and Destruction of Tax Information: All Tax Information provided by
the Department to City/Town shall be managed, stored, protected, and destroyed in
accordance with the Confidentiality Requirements (Appendix A).
4.7 Specificity of Data: Pursuant to A.R.S. § 42-6001, the Department and City/Town
agree that the data fields identified in Appendix B of this Agreement and the JT-1,
TPT-2, and TPT-EZ forms in Appendix C of this Agreement (also provided online
at www.azdor.gov) meet the specificity requirements of City/Town. The data fields
identified in Appendix B and the forms in Appendix C may be revised or replaced
only by mutual agreement of the Department and Arizona municipalities, with any
unresolved issues being referred to SMART for final determination.
4.8. Notwithstanding any provision to the contrary, nothing in this Section shall prevent
the Department from complying with state information security requirements in the
situation of a data breach or similar event.
5. Audit
The Department shall administer audit functions with City/Town in accordance with the
Standard Audit Life Cycle Process Map and with the following provisions.
5.1 Training: All auditors, desk reviewers, and supervisors shall be trained in
accordance with the policies of the Department. Auditors and desk reviewers who
have not completed the training may only work in conjunction with a trained auditor
or supervisor and cannot be the only auditor or desk reviewer assigned to the audit
or desk review. The Department shall do all the following:
(a) Provide semi-annual audit and desk review training in accordance with
A.R.S. § 42-6002(C) and be responsible for the costs of the training, limited
to any cost for procuring the site and training materials;
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(b)
Notify City/Town of any training sessions at least thirty (30) calendar days
before the date of the training session;
(c) Permit City/Town auditors, desk reviewers, and supervisors to attend any
scheduled training as space permits at any designated training location;
(d) Provide additional training, as needed, to inform auditors, desk reviewers,
and supervisors regarding changes in State law, the Model City Tax Code,
audit and desk review procedures, or Department policy.
5.2 Conflicts of Interest:
(a) An auditor, desk reviewer, supervisor, or Independent Contractor trained
and authorized to conduct an audit or desk review, in addition to the
restrictions provided under A.R.S. Title 38, Chapter 3, Article 8, § 38-501
et seq., shall not conduct any of the following prohibited acts:
(1)
Represent a taxpayer in any tax matter against the Department or
City/Town while employed by or in an Independent Contractor
relationship with the Department or City/Town.
(2) Attempt to use his/her official position to secure any valuable thing
or valuable benefit for himself/herself or his/her family members.
(3)
Represent a taxpayer before the Department or City/Town
concerning any matter in which he/she personally participated for a
period of one year after he/she ends employment or the Independent
Contractor relationship with the Department or City/Town.
(4) Use information he/she acquires in the course of the official duties
as an auditor, desk reviewer, supervisor, or Independent Contractor
in a manner inconsistent with his/her official duties without prior
written approval from the Department.
For a period of one (1) calendar year after he/she ends employment
by or an Independent Contractor relationship with the Department
or City/Town, work in the same firm as a person who represents a
taxpayer against the Department or City/Town unless the firm
institutes a formal screen or ethical wall to prevent any sharing of
information between the person and the remainder of the firm.
Documentation of such formal screen or ethical wall shall be
provided by the firm to the Department or City/Town upon request.
(6) Receive compensation from a source other than City/Town or
pursuant to an agreement with City/Town for the performance of
any work or transaction performed expressly on behalf of
City/Town.
(5)
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(7)
Make any representation of being an employee or contractor of
City/Town or the Department in marketing and promotional
materials soliciting work or transactions to be performed on behalf
of a taxpayer or potential taxpayer.
(b) In addition to any other remedies available to the Department and
City/Town by statute and under the terms of this Agreement, the
Department may revoke an individual's authority to audit or perform desk
reviews on behalf of the Department or City/Town and prohibit the use of
any auditor, desk reviewer, supervisor, or Independent Contractor who
violates this provision.
5.3 Audits and Desk Reviews:
(a) City/Town may request the Department conduct an audit or desk review of
any taxpayer engaged in business in City/Town, including a taxpayer whose
business activity is subject to tax by City/Town but is not subject to tax by
the State. The Department and Arizona municipalities shall collaboratively
establish and maintain minimum justification standards and procedures
City/Town shall adhere to when submitting an audit or desk review request.
(b) City/Town may conduct an audit or desk review of a taxpayer engaged in
business only in City/Town. Before commencing such audit, City/Town
shall submit a Field Audit Request Form. Before commencing such desk
review, City/Town shall submit the request using the Desk Review
Approval Excel Sheet. The Department shall provide City/Town with a
determination of approval or denial of the request within ten (10) calendar
days of the notice from City/Town.
(c) Except as permitted below, the Department shall conduct all audits and desk
reviews of taxpayers having locations in two (2) or more Arizona
municipalities. A City/Town auditor may participate in any audit or desk
review City/Town requested the Department to perform.
(d) City/Town shall notify the Department if it wants to conduct an audit or
desk review of a taxpayer having locations in two (2) or more Arizona
municipalities and whose business activity is subject to tax by City/Town
but is not subject to tax by the State. The Department shall authorize such
audits or desk reviews, to be overseen by the Department, unless there is
already an audit or desk review of the taxpayer in process, scheduled, or
planned, or the Department determines the audit or desk review selection is
discriminatory, an abuse of process, or poses other similar defects. The
Department shall notify City/Town of its determination within ten (10)
calendar days. No initial audit or desk review contact may occur between
City/Town and a taxpayer until the Department approves the audit or desk
review notice.
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(e) In the case of taxpayers doing business in more than one (1) Arizona
municipality:
(1) City/Town may request the Department conduct an audit or desk
review of a taxpayer having locations in two (2) or more Arizona
municipalities and whose primary business is subject to both
Municipal Taxes and State Taxes.
(2) City/Town may request authorization from the Department for
City/Town to conduct an audit or desk review of a taxpayer having
locations in two (2) or more Arizona municipalities and whose
primary business is subject to both Municipal Taxes and State
Taxes.
(f)
(g)
(3)
Requests pursuant to (e)(1) or (e)(2) shall be made using the
Department's Field Audit Request Form or the Desk Review
Approval Excel Sheet, as appropriate. The Department shall notify
City/Town of its decision regarding the request within ten (10)
calendar days of receipt of the request.
The Department may deny, in writing, City/Town's request for the
Department to conduct an audit or desk review within ten (10) calendar days
of receiving the request for any of the following reasons:
(1)
An audit or desk review is already in process or is scheduled or
planned for the taxpayer within six (6) months of the request;
(2) The requested audit or desk review would interfere with strategic
tax administration planning;
(3)
The audit or desk review selection is discriminatory, an abuse of
process, or poses other similar defects;
(4) The request lacks sufficient information for the Department to
determine whether it is appropriate;
(5) The Taxpayer was audited within the previous two (2) years;
(6) The Department lacks sufficient resources to conduct the audit or
desk review;
The scope or subject of the audit or desk review does not justify the
use of Department resources.
If the Department denies a request to conduct an audit or desk review for
the reasons provided in (f)(6) or (f)(7), and the audit or desk review is not
for a taxpayer that only has a business location in City/Town, then
City/Town may request to conduct the audit or desk review itself under the
(7)
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supervision of the Department. No initial audit or desk review contact may
occur between City/Town and a taxpayer until City/Town receives written
Department approval.
(h) Any decision by the Department denying City/Town's request to conduct
any audit or desk review may be referred to SMART in accordance with
Section 15 of this Agreement.
(i) All audits or desk reviews conducted by City/Town shall be in accordance
with standard audit procedures defined in the Department audit manual and
the Standard Audit Life Cycle Process Map. All auditors and desk reviewers
shall be trained in accordance with Section 5.1 of this Agreement.
(j) The Department may appoint a Department manager to supervise any audit
or desk review conducted by City/Town.
(k) All audits shall include all taxing jurisdictions in the State regardless of
which jurisdiction's auditors participate in the audit. All desk reviews must
include all taxing jurisdictions for which there is information provided by
the taxpayer.
(1) The Department shall issue all audit or desk review assessments on behalf
of all affected taxing jurisdictions in a single notice to the taxpayer.
(m) The Department shall issue amendments to audit or desk review
assessments on behalf of all affected taxing jurisdictions in a single notice
to the taxpayer.
5.4 Claims for Refund:
(a) When a taxpayer files a request for refund, including refunds requested by
filing amended returns, the Department shall process the request and review
it for mathematical errors or for the failure of the taxpayer to properly
compute the tax based on the taxable income reported on the return or
refund request.
(b) The Department shall notify City/Town of all refund requests that are
reviewed and approved involving City/Town's Municipal Taxes within
thirty (30) calendar days of processing the refund. City/Town may request
an audit of the taxpayer as set forth in Section 5.3 of this Agreement.
(c) The Department may assign a Department auditor to review requests for
refunds. The Department shall notify City/Town of all refunds under review
by an auditor pertaining to a taxpayer who engages in business within
City/Town within thirty (30) calendar days of initiating the review and may
request that City/Town assist with such reviews, with acceptance of such
request at the discretion of City/Town. The Department may assign a refund
request to a City/Town for review, with acceptance of such assignment at
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the discretion of City/Town. The Department may only assign refund
requests to City/Town if taxes paid to City/Town are included in the refund
request.
(d) City/Town is responsible for payment of all amounts to be refunded to
taxpayers for Municipal Tax incorrectly paid to City/Town. The
Department may offset a remittance to City/Town under this Agreement to
cover the amounts of allowed Municipal Tax refunds paid by the
Department.
(e) The Department shall issue refund approvals/denials on behalf of all taxing
jurisdictions in a single notice to the taxpayer. City/Town may request
copies of such determinations.
5.5 Protests: Taxpayer protests of audit assessments, desk review assessments, and
refund denials shall be directed to the Department. Protests of audit assessments,
desk review assessments, and refund denials shall be administered pursuant to
A.R.S. Title 42, Chapter 1, Article 6. The Department shall notify City/Town of
any protests within thirty (30) calendar days of receipt of the protest.
5.6 Status Reports: The Department shall keep all Arizona municipalities apprised of
the status of each protested matter involving the imposition of Municipal Taxes.
City/Town may request to be on a distribution list for monthly status reports by
contacting City Services at citiesunitazdor.gov.
6. Voluntary Disclosure Agreements
The Department may enter into a Voluntary Disclosure Agreement with a taxpayer. A
Voluntary Disclosure Agreement may limit the years subject to audit and waive penalties.
If the taxpayer discloses to the Department that it owes Municipal Taxes to City/Town, the
Department shall notify City/Town of the Department's intent to enter into a Voluntary
Disclosure Agreement and the Department shall provide the taxpayer's identity within
thirty (30) calendar days of the identity being disclosed to Department. City/Town may
subsequently request an audit of a taxpayer subject to a Voluntary Disclosure Agreement
pursuant to Section 5.3 of this Agreement.
7. License Compliance
7.1 License Issuance and Renewal: The Department shall issue new municipal
privilege tax licenses and shall annually renew such licenses for City/Town
Municipal Tax. The Department shall provide City/Town with information about
all persons obtaining and renewing municipal privilege tax licenses as set forth in
Appendix B of this Agreement.
7.2 License Checks: The Department and City/Town shall coordinate efforts to
conduct mutual tax license compliance checks through canvassing and other
compliance methods.
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7.3 Confidentiality: Any tax license information City/Town obtains from the
Department is confidential and may only be disclosed as authorized by A.R.S. §
42-2003. Any tax license information City/Town obtains through its own efforts
may be disclosed as allowed by City/Town ordinance or policy.
7.4 Changes to License Fees: Within ten (10) business days following the adoption of
an ordinance (or official acknowledgment of an ordinance approved by voters in an
election) creating or modifying a municipal privilege tax license fee, one (1) copy
of the ordinance and notification of the effective date of such ordinance shall be
sent to City Services at citiesunit(a azdor.gov. The Department shall not be
obligated to begin collection of the new or modified tax license fee any sooner than
sixty (60) calendar days after the date the Department received the ordinance from
City/Town.
8. Closing Agreements
The Department shall notify City/Town before entering into a Closing Agreement and shall
seek a range of settlement authority from City/Town related to the tax levied and imposed
by City/Town in accordance with the Standard Audit Life Cycle Process.
9. Responsibility for Representation in Litigation
9.1 Administrative Proceedings: Pursuant to A.R.S. § 42-6002, the Department shall
coordinate the litigation and defense of assessments and refund denials in any
administrative appeals before the Office of Administrative Hearings or the Director
of the Department regardless of the jurisdiction that conducted the audit, desk
review, or refund review in accordance with the Standard Audit Life Cycle Process
Map. The Department shall diligently defend the interests of City/Town and
City/Town shall assist the Department in such representation as requested by either
party.
9.2 Further Appeals: The Arizona Attorney General is responsible for defending the
assessment or refund denial at the Board of Tax Appeals, the Arizona Tax Court,
and all higher courts. City/Town shall assist the Attorney General in such
representation and litigation as requested by the Attorney General's Office in
accordance with the Standard Audit Life Cycle Process Map.
9.3 Mutual Cooperation: The Department and City/Town agree they shall cooperate
in the appeal and litigation processes and shall ensure their auditors, desk reviewers,
supervisors, and other necessary employees are available to assist the Department
and the Attorney General through informal interviews, providing documents and
records, preparing for depositions, attending depositions and trial as witnesses, and
assisting in trial/hearing preparation, as needed.
9.4 Administrative Decisions: The Department shall provide a copy of all
administrative hearing level decisions regarding State Taxes and Municipal Taxes,
including Director's decisions issued by the Department, to City/Town within ten
(10) business days after issuance of the decision if City/Town requests to be
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included on a distribution list created by the Department for the purposes of
disseminating such decisions. City/Town may request to be on the distribution list
by contacting City Services at citiesunit(cr�azdor.gov. Administrative decisions
contain Tax Information and must be stored and destroyed in accordance with the
Confidentiality Standards (Appendix A).
10. Collection of Municipal Taxes
10.1 Tax Returns: Taxpayers who are subject to City/Town Municipal Taxes are
required to pay such taxes to the Department utilizing a form prescribed by the
Department.
10.2 Delinquent Tax Collections: Pursuant to A.R.S. § 42-6001, the Department shall
collect any delinquent Municipal Tax imposed by City/Town recorded on the
Department's tax accounting system. In the event this Agreement is terminated, the
Department shall continue to collect delinquent Municipal Taxes recorded on the
Department's accounting system on behalf of City/Town and distribute any such
amounts collected to City/Town.
10.3 City/Town Assistance in Delinquent Tax Collections: To expand the
Department's State Tax and Municipal Tax collection efforts by leveraging
City/Town resources, City/Town may choose to provide collection efforts by
deploying City/Town collectors to work in conjunction with the Department on the
following terms:
(a) Training: All City/Town collectors authorized to collect obligations in
cooperation with the Department shall be trained in accordance with the
policies of the Department. Training shall be provided in the same manner
as set forth in Section 5.1 of this Agreement.
(b) Conflict of Interest: A collector trained and authorized under this provision
to perform collections activity shall not conduct any of the following
prohibited acts:
(1) Represent a taxpayer in any tax matter against the Department or
City/Town while employed by City/Town.
(2) Attempt to use his/her official position to secure any valuable thing
or valuable benefit for himself/herself or his/her family members.
(3)
Represent a taxpayer before the Department or City/Town
concerning any matter in which he/she personally participated for a
period of one (1) calendar year after he/she ends employment with
City/Town.
(4) Use information he/she acquires in the course of the official duties
as a collector in a manner inconsistent with his/her official duties
without prior written approval from the Department.
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(5)
For a period of one (1) calendar year after he/she ends employment
with City/Town, work in the same firm as a person who represents
a taxpayer against the Department or City/Town unless the firm
institutes formal barriers to prevent any sharing of information
between the trained collector and the remainder of the firm.
(c) Revocation: The Department may revoke the authorization of City/Town
or of any individual City/Town employee to collect obligations under this
Section. A revocation determination may be subject to review by SMART
upon request by the individual or City/Town.
10.4 State of Arizona Liquor License Affidavit: City/Town may request that the
Department issue a liquor license affidavit. The Department shall respond to the
request via secured e-mail to indicate the status of completion of the request with a
note stating complete, in -process, or unable to complete.
10.5 Uncollectible/Discretionary Write-offs: The Department shall share the annual
list of uncollectible/discretionary write-offs of City/Town's Municipal Taxes prior
to the write-off event at the end of the fiscal year. City/Town shall have forty-five
(45) calendar days to submit feedback.
10.6 Remittance: All amounts collected by the Department for City/Town's Municipal
Taxes under this Agreement shall be remitted to City/Town weekly on the basis of
actual collections. To the extent possible, the Department shall initiate the
electronic payment by Noon on the Monday after the end of the week in which the
collections were received by the Department. If the Monday falls on a holiday,
payment will be initiated by Noon on the Tuesday after the end of the week in which
the collections were received by the Department. Remittance shall be made in the
form of immediately available funds transferred electronically to the bank account
designated by City/Town.
10.7 Abatement: Pursuant to A.R.S. § 42-1004, the Department, with the approval of
the Attorney General, may abate tax under certain circumstances including
Municipal Taxes. During the ordinary course of business, the Department may
determine that certain taxpayer accounts shall be closed or cancelled. The
Department shall seek input from City/Town or SMART before abating Municipal
Taxes or closing accounts with Municipal Taxes due. The Department may request
a telephonic meeting of SMART if time or circumstances require immediate action.
10.8 Funds Owed to City/Town: At all times and under all circumstances, payments
remitted by a taxpayer to the Department for City/Town Municipal Taxes shall be
considered property of City/Town. The Department may not retain or fail to remit
such funds to City/Town for any reason not specifically set forth in this Agreement
including, but not limited to, during the course of a dispute between City/Town and
the Department.
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10.9 Adjustments to Reported Taxes: If the Department determines that a payment
remitted by a taxpayer incorrectly identifies the city or town to which the payment
should be made, the Department may temporarily hold the payment until the
distribution of the payment is corrected to ensure the appropriate city or town
receives the payment. If a payment by the Department has been made to an incorrect
City/Town, the Department and affected Arizona municipalities shall follow the
Standard Inter -Jurisdictional Transfer Process Map.
10.10 Collection Reports: The Department shall keep all Arizona municipalities
apprised of the status of every open case in a collection status involving the
imposition of Municipal Taxes. City/Town may request to be on a distribution list
for monthly status reports by contacting Cities Collections at
citiescollection@azdor.gov.
11. Taxpayer Rulings and Uniformity
The Department shall be responsible for issuing the official responses to taxpayer ruling
requests and requests for interpretation of the Model City Tax Code. City/Town
acknowledges that pursuant to A.R.S. § 42-6005(B), when the state statutes and Model
City Tax Code are the same and where the Department has issued written guidance, the
Department's interpretation is binding on Arizona municipalities and interpretation of
Model City Tax Code. The Department acknowledges that in all other situations,
interpretation of the Model City Tax Code is the sole purview of Municipal Tax Code
Commission or its designee. This Section is not intended to affect procedures for appeals
and litigation as outlined in Section 5.5 and Section 9 of this Agreement.
12. Financing Collection of Taxes
The costs incurred by the Department in administering this Agreement shall be financed
through the State general fund appropriation to the Department. This provision does not
relieve City/Town of any financial obligation imposed by statute.
13. Inter -Jurisdictional Transfers ("IJTs")
The Department shall administer Inter -Jurisdictional Transfers of Municipal Tax monies
in accordance with the Standard Inter -Jurisdictional Transfer Process Map. The affected
Arizona municipalities shall agree on any amounts to be transferred before notifying the
Department of such amounts to be transferred under this Section.
14. Education and Outreach Efforts
To further its focus on serving taxpayers and its commitment to funding Arizona's future
through enhanced customer service, continuous improvement, and innovation, the
Department is expanding its outreach and education program to connect with all citizens
of Arizona by strategically working with taxpayer and industry groups, tax practitioners,
and Arizona's municipalities to ensure consistent tax education is widely available.
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Any City/Town may further this mission, at its own expense, in providing education and
outreach to taxpayers. Education and outreach programs and content shall be consistent
with applicable law and the Department's written guidance.
Increased education and outreach efforts undertaken by the Department and Arizona
municipalities will ensure collaborative partnerships beneficial to both parties, emphasize
an ongoing two-way exchange of information, enhance communication on issues of
common interest, and promote cooperation in areas of overlapping special projects.
Therefore, upon request, City/Town shall provide information to the Department
concerning such education and outreach efforts.
The Department shall implement an Ambassador Program, whereby the Department
provides curriculum, structure, and support for education related to tax administration and
compliance. City/Town shall be provided a standard work process when participating in
Department -led educational events.
15. State & Municipal Audit Resolution Team ("SMART")
15.1 Members: The SMART committee shall consist of four (4) primary (voting)
members representing municipal taxing jurisdictions and four (4) primary (voting)
members representing the Department. There shall also be two (2) alternate
members representing each party, who are non -voting representatives unless
required to vote due to the absence, recusal, or disqualification of a primary (voting)
member. All primary and alternate members are required to attend all meetings
unless excused.
15.2 Selection: The Director of the Department shall appoint Department employees to
serve as primary and alternate members representing the Department. Arizona
municipalities shall collectively appoint municipal employees to serve as primary
and alternate members representing the Arizona municipalities. The members
representing either party may be changed at any time following the standard work
process agreed upon by both parties.
15.3 Meetings: SMART shall meet monthly unless there is no business to be conducted.
Additional meetings can be scheduled as necessary to timely discuss issues
presented.
15.4 Issues: The Department or City/Town may refer issues to SMART for resolution
including but not limited to:
(a) Decisions by the Department to not audit a taxpayer;
(b) Amendments to Department audit procedures or manuals;
(c) Closing Agreements or a range of settlement authority;
(d) Abatement or account closure in collections;
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(e) Suspension.of disclosure of Tax Information to City/Town;
(f) Disagreements regarding proposed changes to the process maps defined in
Sections 1.19, 1.20, and 1.21 of this Agreement;
(g) Revocation of collection authority; and
(h) Other issues as authorized by the Director of the Department or agreed upon
by the parties, subject to the limitations described in Section 29 of this
Agreement.
15.5 Recommendations: SMART shall make recommendations to the Director of the
Department or Director's designee. If the recommendation is approved by at least
five (5) members of SMART, the Director shall accept the recommendation of
SMART. If SMART cannot reach a recommendation agreeable to at least five (5)
members of the group, the Director or Director's designee may act as they deem to
be in the best interests of all parties. Notwithstanding the above, upon request by
City/Town, the Director shall submit their decision to the Attorney General's Office
for review.
15.6 Voting: Any voting member of the committee may request the vote be held by
secret ballot.
15.7 Procedures: SMART shall develop procedures concerning the operation of the
committee consistent with this Agreement.
16. Funding of Additional Auditors by City/Town
16.1 Funding: At the sole discretion of City/Town, City/Town may contribute funding
to the Department to pay for additional auditors to assist the Department in the
performance of audits of Municipal Tax owed to City/Town. Such additional
auditors funded by City/Town shall at all times be deemed to be employees of the
Department and under no circumstances shall be deemed to be employees or agents
of City/Town. It is the Parties' intention that any City/Town funding provided
pursuant to this Section shall be used to increase the resources and capabilities of
the Department to perform Municipal Tax audits and not to subsidize or replace
State funding required for audit and collection of taxes.
16.2 Use of Funds: City/Town funding for additional auditors under this Section shall
be used to fund the auditors' salaries and related expenses and shall not be used to
pay for Department office space, utilities, equipment, supplies, or similar kinds of
overhead.
16.3 Pool of Funds: The Department may pool any City/Town funding with any other
similar funding provided by other Arizona municipalities to pay for additional
auditors dedicated to serving those jurisdictions. The Department shall separately
account for such funds in its annual budget.
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16.4 Accounting: The Department shall provide an annual accounting to City/Town, by
August 31 each year describing how City/Town funding was used during the prior
fiscal year.
17. Satellite Offices for Department Auditors
17.1 Funding: City/Town, at its own expense and at its sole discretion, may provide one
(1) or more satellite offices and associated amenities for use by Department
employees to provide audit and/or customer service to taxpayers. Use of such
facilities by Department employees shall be at the sole discretion of the
Department. Nothing in this Section shall require the Department to make use of
such facilities provided by City/Town.
17.2 Requirements: Any Department employee using a City/Town satellite office must
meet reasonable requirements of City/Town related to the use of the facility.
City/Town shall be responsible for notifying the Department of any concerns and
the Department shall be responsible for taking appropriate actions to resolve those
concerns.
17.3 Termination: Once a satellite office is established, City/Town shall provide at least
one hundred eighty (180) calendar days' written notice to the Department prior to
the termination or relocation of a satellite office. The Department may discontinue
the use of a satellite office at any time upon notice to City/Town and shall promptly
remove all Department property.
17.4 License: All requirements of City/Town and the Department related to the satellite
office shall be outlined in a mutually acceptable form of license and subject to
separate approval.
17.5 Workers' Compensation for Satellite Offices and Certain Site Visits: If
employees of City/Town or Department are working at the facility of the other
public agency pursuant to this Agreement, it is agreed that:
(a) Each employee will be deemed an employee of both public agencies for the
purposes of A.R.S. § 23-1022(D) and Arizona workers' compensation laws.
(b) Each employee's primary employer (i.e., the State of Arizona for a
Department employee, and City/Town for a City/Town employee or
Independent Contractor) shall be solely liable for the payment of workers'
compensation benefits.
(c) Each public agency for which employees of City/Town or Department are
working at the facility of the other public agency under this Agreement shall
post a notice complying with A.R.S. § 23-1022(E).
(d) In all circumstances other than as provided in the foregoing, nothing in this
Agreement shall be construed to result in any person being the officer,
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agent, employee, or servant of either party when such person, absent this
Agreement and the performance thereof, would not in law have such status.
18. Non -availability of Funds
Every payment obligation of the Department and City/Town pursuant to this Agreement is
conditioned upon the availability of funds appropriated or allocated for the payment of
such obligation, except for the rendering of funds to City/Town paid by a taxpayer for
Municipal Taxes or municipal privilege tax license fees of City/Town. If funds are not
appropriated, allocated, and available, or if the appropriation is changed resulting in funds
no longer being available for the continuance of this Agreement, this Agreement may be
terminated at the end of the period for which funds are available. No liability shall accrue
to the State or City/Town, as applicable, in the event this provision is exercised and the
State or City/Town, as applicable, shall not be obligated or liable for any future payments
or for any damages as a result of termination under this Section. The termination of this
Agreement shall not entitle the Department to retain any Municipal Tax collected on behalf
of City/Town pursuant to this Agreement.
19. Waiver
Nothing in this Agreement should be interpreted as City/Town relinquishing its legal rights
under the Arizona Constitution or other applicable law, nor that City/Town is conceding
the administration and collection of its Municipal Tax is not of a local interest or should
not be under local control.
20. Cancellation
The requirements of A.R.S. § 38-511 apply to this Agreement. The Department or
City/Town may cancel this Agreement, without penalty or further obligation, if any person
significantly involved in initiating, negotiating, securing, drafting, or creating this
Agreement on behalf of the Department or City/Town is, at any time while this Agreement
or any extension is in effect, an employee, agent, or consultant of the other party with
respect to the subject matter of this Agreement. The obligation of the Department to remit
City/Town taxes shall survive cancellation.
21. Notice
(a) When any Notice to City/Town is required under the terms of this Agreement, such
Notice shall be sent by electronic correspondence to:
David J. Pock, Chief Financial Officer dpock@fountainhillsaz.gov
(b) When any Notice to the Department is required under the terms of this Agreement,
such Notice shall be sent by electronic correspondence to City Services at
citiesunitna,azdor.gov.
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22. Non-discrimination
ADOR and City/Town shall comply with Executive Order 2023-01, which prohibits
discrimination based on race, color, sex, pregnancy, childbirth or medical conditions
related to pregnancy or childbirth, political or religious affiliation or ideas, culture, creed,
social origin or condition, genetic information, sexual orientation, gender identity or
expression, national origin, ancestry, age, disability, military service or veteran status, or
marital status, by persons performing state contracts or subcontracts. ADOR and
City/Town also agree to comply with Executive Orders 2003-22 and 2009-09 as amended
by Executive Order 2023-01, all other applicable State and Federal employment laws,
rules, and regulations, including the Americans with Disabilities Act of 1990. ADOR and
the City/Town shall also comply with Executive Order 2023-09 prohibiting race -based hair
discrimination.
23. Compliance with Immigration Laws and A.R.S. & 41-4401
23.1 The Department and City/Town shall comply with all Federal immigration laws
and regulations relating to employees and warrants compliance with A.R.S. § 23-
214 which reads in part: "After December 31, 2007, every employer, after hiring
an employee, shall verify the employment eligibility of the employee through the
E-Verify program."
23.2 A breach of compliance with immigration laws and regulations shall be deemed a
material breach of this Agreement and may be grounds for the immediate
termination of this Agreement.
23.3 The Department and City/Town retain the legal right to confirm the authorized
presence and work authorization of any employee who works under this Agreement
to ensure the Department and City/Town are complying with the applicable Federal
immigration laws and regulations, and State statutes as set forth above.
24. Audit of Records
City/Town and the Department shall retain all data, books, and other records ("Records")
relating to this Agreement for at least six (6) years
(a) after termination of this Agreement, and
(b)
following each annual renewal thereof.
All Records shall be subject to inspection by the Department at reasonable times. Upon
request, the Department and City/Town shall produce any or all such records. This
Agreement is subject to A.R.S. § 35-214 and A.R.S. § 35-215.
25. Amendments
Any amendments to the enumerated provisions or Appendices A, B, and C of this
Agreement must be executed in writing in accordance with the provisions of this
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Agreement. The Standard Process Maps described within certain enumerated provisions
are not themselves part of this Agreement.
26. Mutual Cooperation
In the event of a disagreement between the parties regarding the terms, provisions, and
requirements of this Agreement, or in the event of the occurrence of any circumstances
bearing upon or affecting this Agreement, parties hereby agree to mutually cooperate to
resolve the said disagreement or deal with the said circumstance.
27. Arbitration
To the extent required by A.R.S. § 12-1518 and as provided for in A.R.S. § 12-133, the
parties agree to resolve any dispute arising out of this Agreement by arbitration. The parties
agree that any lawsuit filed by City/Town relating to the issues outlined in Section 19 of
this Agreement is not considered to be a dispute arising out of this Agreement.
28. Implementation
The implementation and execution of the provisions of this Agreement shall be the
responsibility of the Director of the Department or his/her designee and the Mayor of
City/Town, his/her designee, or another party with designated authority pursuant to
applicable law or City/Town charter to act on behalf of City/Town.
29. Limitations
Nothing in this Agreement shall be construed as limiting or expanding the statutory
responsibilities of the parties in performing functions beyond those granted to them by law,
or as requiring the parties to expend any sum in excess of their appropriations.
30. Duration
30.1 The term of this Agreement shall commence from the latest date as indicated in
Section 33 of this Agreement and continue in force through December 31st of the
following calendar year unless canceled or terminated as provided herein. The term
of this Agreement shall automatically be extended for successive one (1) year terms
commencing on January 1st and ending on December 31st of each year thereafter
unless canceled or terminated as provided herein.
30.2 Amendments to this Agreement that are negotiated and agreed to by a simple
majority of the review committee referenced in Section 30.9 of this Agreement shall
thereafter be executed by the parties hereto by a separate signed amendment and
incorporated herein to be effective during the term of this Agreement and any
extensions.
30.3 This Agreement may be canceled or terminated effective on December 31st of any
year by either party by providing written notice no later than sixty (60) calendar
days prior to the expiration of the term then in effect.
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30.4 This Agreement shall expire on December 31 st of any year the Department is
subject to sunset review by the legislature. Upon expiration, cancellation, or
termination, any subsequent Agreement must be ratified through signature by both
parties.
30.5 If State legislation enacted subsequent to the date of this Agreement substantially
affects the performance of this Agreement by either party or substantially
diminishes the benefits either party would receive under this Agreement, either
party may then terminate this Agreement by giving at least thirty (30) calendar
days' notice to the other party. The termination shall become effective immediately
upon the expiration of the notice period unless otherwise agreed to by the parties.
30.6 Notwithstanding any provision to the contrary herein, both parties may by mutual
agreement provide for the termination of this Agreement upon such terms and at
such time as is mutually agreeable to them.
30.7 Any notice of termination shall be mailed and served on the other party in
accordance with Section 21 of this Agreement.
30.8 In the event of a partial or complete termination of this Agreement, if the parties
have shared or exchanged property the parties will return the property to its original
owner or dispose of it in a manner required by the original owner as described in
this Agreement.
30.9 During the term of this Agreement, the terms and conditions of this Agreement
shall undergo an annual review to be initiated no later than June 1st of each year.
The review shall be performed by a committee made up of equal parts
representatives of the Department and representatives of the municipal taxing
jurisdictions entering into an IGA with the Department for the administration and
collection of Municipal Taxes.
31. Choice of Law
The laws and regulations of the State of Arizona shall govern the rights of the parties, the
performance of this Agreement, and any disputes arising from this Agreement.
32. Entire Agreement
This document, including the specific appendices attached hereto, and any approved
subcontracts, amendments, and modifications made thereto, shall constitute the entire
Agreement between the parties and shall supersede all other understandings, oral or
written.
33. Signature Authority
September 2023 Page 27 of 39
ADOR-Municipal 1GA for TPT Administration
33.1 By signing below, the signer certifies he or she has the authority to enter into this
Agreement on behalf of his or her respective party, and he or she has read the
foregoing and agrees to accept the provisions herein on said party's behalf.
33.2 This Agreement may be executed in counterpart.
rtment:
For City/Town:
b l
PP
z `z((
Si `
Signature g � ^ � r / 6 Pru�,`►Q
�
Robert Woods,
Date /
Cow`
Director
Signature
Ginny Dickey, Mayor
)'Z3
ate
Typed Name and Title
Arizona Department of Revenue
Typed Name and Title
Town of Fountain Hills
Entity Name
1600 W. Monroe St.
Entity Name
16705 E. Avenue of the Fountains
Address
Phoenix Arizona 85007
Address
Fountain Hills AZ 85268
City State Zip
City State Zip
RESERVED FOR THE ATTORNEY GENERAL:
RESERVED FOR CITY/TOWN ATTORNEY:
This agreement between
reviewed pursuant to A.R.S.
Assistant Attorney General
in proper form and is within
granted under the laws of
Arizona Department of Revenue
Attorney General.
KRIS
The Alto
public agencies has been
§ 11-952 by the undersigned
who has determined that it is
the powers and authority
the State of Arizona to the
represented by the
MAY•
• . •
This agreement between public agencies has
reviewed pursuant to A.R.S. § 11-952 by the undersigned
City/Town Attorney who has determined, on behalf
City/Town only, that it is in proper form and is within
powers and authority granted under the laws of the
of Arizona to the City/Town.
APPROVED AS TO FORM AND AUTHORITY:
BY:
been
of the
the
State
/1 Signature
BY: C•t"
Assistant Attorney General
Date: ah ?Ar
CITY/TOWN ATTORNEY
Date: Qecew,Ser 14 , 2o? q
September 2023 Page 28 of 39
ADOR-Municipal IGA for TPT Administration
APPENDIX A
ARIZONA DEPARTMENT OF REVENUE
CONFIDENTIALITY REQUIREMENTS
1. Confidential Information
1.1 "Confidential Information" is defined in A.R.S. § 42-2001. Confidential
Information may not be disclosed except as provided by statute. A.R.S. §§ 42-2001
through 42-2004.
1.2 "Tax Information" as defined in this Agreement is Confidential Information.
1.3 Disclosure of aggregated financial information. Under no circumstance shall
aggregated financial information related to transaction privilege taxes allow any
person who is not authorized to receive Tax Information to identify or discover the
financial information of an individual taxpayer.
(a) Except as provided in Section 1.3(b) of this Appendix, City/Town will
disclose aggregated financial information in accordance with the
Department's standard:
(1)
City/Town shall only disclose aggregated financial information
from not less than ten (10) taxpayers within the political boundaries
of City/Town.
(2) No individual taxpayer's financial information should be discernible
due to its relative size compared to other members of the aggregated
group. For example, if one of the taxpayers in the data set represents
90% or more of the data point, then that data point must not be
disclosed, regardless of the number of taxpayers.
(b) City/Town may disclose its aggregated financial information from less than
ten (10) taxpayers provided City/Town first determines the aggregated data
could not potentially reveal the financial information of an individual
taxpayer. Such a determination shall take all the following into
consideration:
(1) Ownership. All taxpayers with common ownership entities shall be
considered a single taxpayer for aggregation purposes; and
(2) Proportionality. No individual taxpayer's financial information
should be discernible due to its relative size compared to other
members of the aggregated group; and
September 2023 Page 29 of 39
ADOR-Municipal IGA for TPT Administration
1.
(3)
Any other factor that might allow any person who is not authorized
to receive Tax Information to identify or discover the financial
information of an individual taxpayer.
Protecting Information
2.1 City/Town must identify all places, both physical and logical, where City/Town
receives, processes, and stores Tax Information and create a plan to adequately
secure those areas.
2.2 Tax Information must be protected during transmission, storage, use, and
destruction. City/Town must have written policies, standards, and procedures to
document how it protects its information systems, including Tax Information so
that it conforms to the State of Arizona statutes A.R.S. §§ 42-2001 through 42-2004
and policies, standards, and procedures found on the Arizona Strategic Enterprise
Technology ("ASET") website at aset.az.gov/resources/policies-standards-and-
procedures or ASET's successor agency or website and Arizona Department of
Homeland Security's website at https://azdohs.gov/information-securitv-policies-
standards-and-procedures.
2.3 Department staff and authorized City/Town staff are prohibited from inspecting
Tax Information unless they have a business reason. Browsing through Tax
Information concerning friends, neighbors, family members, or people in the news
is strictly prohibited.
2.4 All removable media, including paper and CDs, containing Tax Information must
be secured when not in use and after normal business hours by placing all materials
in a locked drawer or cabinet. During use, Tax Information must be protected so
that it is not visible to members of the public or anyone without a business need for
the information.
2.5 All individuals accessing or storing Tax Information from an alternative work site
must enter into a signed agreement that specifies how the Tax Information will be
protected while at that site. Only trusted employees shall be permitted to access Tax
Information from alternative sites. Tax Information may not be accessed while in
public places such as restaurants, lounges, or pools.
2.6 Tax Information may not be discussed in elevators, restrooms, the cafeteria, or other
public areas. Terminals should be placed in such a manner that prohibits public
viewing of Tax Information.
2.7 When transporting confidential materials, the materials should be covered so that
others cannot see the Tax Information. When sending Tax Information by fax, a
cover sheet should always be used.
2.8 Any person with unsupervised access to Tax Information shall receive training on
the confidentiality laws and requirements to protect such information before being
given access to such information and annually thereafter. They must sign
September 2023 Page 30 of 39
ADOR-Municipal IGA for TPT Administration
certificates after the training acknowledging that they understand their
responsibilities. City/Town must keep records to document this training and
certification and submit a copy of the certification to the Department.
3. Disclosure of Information
3.1 Tax Information may only be disclosed as permitted by A.R.S. § 42-2003.
3.2 Tax Information is protected by statute and, therefore, shall not be disclosed in
response to a public records request except as authorized by law. A state agency,
including political subdivisions (City/Town), may deny inspection of public
records if the records are deemed confidential by statute. Berry v. State, 145 Ariz.
12, 13 699 P.2d 387, 388 (App. 1985).
3.3 A taxpayer may designate a person to whom Tax Information may be disclosed by
completing an Arizona Department of Revenue Form 285 or Form 285B, or such
other form that contains the authorizing information included in those forms.
City/Town may contact the Department's Disclosure Officer at
DisclosureOfficer a(�azdor.gov if there are any questions concerning this
requirement.
4. Retention and Disposal of Information
4.1 All records received from the Department must be kept for the duration of the
records retention period as listed in the official records retention schedules
approved by the Secretary of State Library Archives and Public Records Division
("LAPR") published on the LAPR website.
(a) The Department's custom records retention schedule is published on the
LAPR website at apps.azlibrary.gov/records/schedules.aspx.
(b) In the event of a legal hold (such as a litigation hold or investigative hold),
Department and/or City/Town may be required to retain records beyond the
retention period.
4.2 The Department and City/Town shall follow the legal requirements for reporting
the disposition and destruction of records to the Arizona State Library Archives, &
Public Records Division under A.R.S. § 41-151.19. Certificate of Records
Destruction Forms are found at: azlibrary.gov/arm/forms.
4.3 All removable media containing Tax Information must be returned to the
Department or sanitized before disposal or release from the control of City/Town.
4.4 Tax Information must be destroyed by shredding or burning the materials when the
retention period has been met and no legal holds are in place. Tax Information may
not be disposed of by placing the materials in the garbage or recycle bins.
Destruction of Tax Information may be performed by a third -party vendor.
September 2023 Page 31 of 39
ADOR-Municipal IGA for TPT Administration
City/Town must take appropriate actions to protect the Tax Information in transit
and storage before it is destroyed, such as periodic inspections of the vendor.
4.5 Computer system components and devices, such as copiers and scanners, which
have been used to store or process Tax Information may not be repurposed for non -
tax administration uses unless the memory or hard drive of the device is sanitized
to ensure under no circumstances Tax Information can be restored or recovered.
5. Information Security
5.1 Systems containing Tax Information must be protected in accordance with the State
of Arizona Policies, Standards, and Procedures that govern State data found at
https://azdohs.gov/information-security policies -standards -and -procedures,
particularly Policies and Standards 8000-8410 and the Arizona NIST Security
Baseline Controls.
5.2 City/Town is responsible for creating architectural diagrams of any systems
connecting to the Department's systems and depicting the flow of State Tax
Information. Architectural diagrams for systems connecting to the ADOR shall be
shared with the ADOR and updated after any architectural changes.
5.3 Incident Reporting. City/Town is required to notify the Department in the event of
a suspected or actual unauthorized disclosure of Tax Information, data loss, breach,
or other security concern regarding Tax Information by reporting the incident to the
Department's: 1) City Services Manager by email at citiesunit@azdor.gov, 2)
Disclosure Officer by email at DisclosureOfficer@a,azdor.gov, and 3) Chief
Information Security Officer's Information Security Team by email at
InfoSec(a�azdor.gov.
5.4 The Department may send employees or auditors to inspect any of City/Town
information systems and/or facilities used to process, store, or transmit any
Department data at any time to ensure that Department information is adequately
protected. City/Town shall provide audit records and evidence of system and
application hardening to the department's information security team upon request.
Hardening evidence can include, but is not limited to: RiskSense, CIS benchmarks,
SCSEMs, STIGs, or other security best practices. If City/Town hires a third -party
for any system or information support, all security provisions apply.
6. Wireless Access (if accessinLI State Confidential Information from a wireless network)
City/Town must:
6.1 Establish restrictions, configuration/connection requirements, and implementation
guidance for wireless access.
6.2 Authorize wireless access to the information system prior to allowing such
connections.
September 2023 Page 32 of 39
ADOR-Municipal IGA for TPT Administration
6.3 Employ a wireless intrusion detection system to identify rogue wireless devices and
to detect attack attempts and potential compromises/breaches to the information
system.
39
September 2023 Page 33 of 39
ADOR-Municipal IGA for TPT Administration
APPENDIX B
REQUIRED REPORTS AND DATA FIELDS
At a minimum, the Department of Revenue shall provide the following reports which display all
of fields identified below, per report:
NEW LICENSE REPORT and LICENSE UPDATE REPORT
o Region Code
o Run Date
o Report Start Date
o Report End Date
o Update Date
o ID Type
o ID
o Account ID
o Entity Name
o Ownership Type
o License ID
o OTO/Applied For indicator
o Bankruptcy Indicator
o Filing Frequency
o Issue Date
o Account Start Date
o Business Start Date
o Arizona Start Date
o Doc Loc Nbr
o Accounting Method
o Close Date
o Close Code
o Business Description
o NAICS1
o NAICS2
o NAICS3
o NAICS4
o Mailing Street!
o Mailing Street2
o Mailing Street3
o Mailing City
o Mailing State
o Mailing ZIP
o Mailing Country
o Mailing Phone Number
o Mailing Address Add date
o Mailing Address End Date
September 2023 Page 34 of 39
ADOR-Municipal IGA for TPT Administration
o Audit Street 1
o Audit Street 2
o Audit Street 3
o Audit City
o Audit State
o Audit Zip
o Audit Country
o Audit Phone Number
o Audit Address Add Date
o Audit Address End Date
o Location Code
o Business Codes
o Location Name (DBA)
o Number of Units
o Location Street 1
o Location Street 2
o Location Street 3
o Location City
o Location State
o Location Zip
o Location Country
o Location Phone Number
o Location Start Date
o Location End Date
o Primary Location Street 1
o Primary Location Street 2
o Primary Location Street 3
o Primary Location City
o Primary Location State
o Primary Location Zip Code
o Primary Location Country
o Primary Location Phone Number
o Primary Location Start Date
o Primary Location End Date
o Owner Name
o Owner Title
o Owner Name 2
o Owner Title 2
o Owner Name 3
o Owner Title 3
CITY PAYMENT JOURNAL
o Run Date
o Report Start Date
o Report End Date
o GL Accounting Period
September 2023 Page 35 of 39
ADOR-Municipal IGA for TPT Administration
o Period End Date
o Payment received date
o Return received date
o Payment process date
o Return process date
o Filing Frequency
o License ID
o Entity Name
o Location Code
o Location Name (DBA)
o Location Street 1
o Location Street 2
o Location Street 3
o Location City
o Location State
o Location Zip
o Location Country
o NAICS
o Business Code
o Doc Loc Nbr
o Pmt Loc Nbr
o Gross Receipts
o Total Deductions
o Tax or Fee Collected
o P & I Collected
o Audit Collections
o Tran Type
o Tran Subtype
o Rev Type
CITY PAYMENT JOURNAL SUMMARY
o Region Code
o Run Date
o Report Start Date
o Report End Date
o GL Accounting Period
o Business Code
o Number of Accounts
o Collections
NO MONEY REPORT
o Region Code
o GL Accounting Period
o Period End Date
o Payment received date
o Return received date
September 2023 Page 36 of 39
ADOR-Municipal IGA for TPT Administration
o Payment process date
o Return process date
o Filing Frequency
o License ID
o Entity Name
o Location Code
o Location Name (DBA)
o Location Street 1
o Location Street 2
o Location Street 3
o Location City
o Location State
o Location Zip
o Location Country
o NAICS
o Business Code
o Doc Loc Nbr
o Pmt Loc Nbr
o Gross Receipts
o Total Deductions
o Tax or Fee Collected
o P & I Collected
o Audit Collections
o Tran Type
o Tran Subtype
DEDUCTION REPORT
o Region Code
o Run Date
o Report Start Date
o Report End Date
o GL Accounting Period
o Period End Date
o License ID
o Entity Name
o Location Code
o Location Name (DBA)
o Business Code
o Doc Loc Nbr
o Deduction Code
o Deduction Amount
o Tran Type
o Tran Subtype
o Rev Type
September 2023 Page 37 of 39
ADOR-Municipal IGA for TPT Administration
FUND DISTRIBUTION REPORT
o Region Code
o Run Date
o Report Start Date
o Report End Date
o GL Accounting Period
o Period End Date
o Payment Received Date
o Return Received Date
o Payment Processed Date
o Return Processed Date
o License ID
o Entity Name
o Location Code
o Location Name (DBA)
o Business Code
o Doc Loc Nbr
o Fund Allocation Code
o Amount Distributed
FUND DISTRIBUTION SUMMARY REPORT
o Region Code
o Run Date
o Report Start Date
o Report End Date
o GL Accounting Period
o Fund Allocation Code
o Amount Distributed
September 2023 Page 38 of 39
ADOR-Municipal IGA for TPT Administration
APPENDIX C
REQUIRED FORMS
1. JT-1 Joint Tax Application for a TPT License
ADOR Form 10196
2. TPT-2 Transaction Privilege, Use and Severance Tax Return (filing periods
beginning on or AFTER June 1.2016)
ADOR Form 11249
3. TPT-EZ Transaction Privilege, Use and Severance Tax Return
ADOR Form 11263
September 2023 Page 39 of 39
RESOLUTION 2023-43
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF FOUNTAIN
HILLS, ARIZONA APPROVING AND AUTHORIZING THE MAYOR TO
EXECUTE AN INTERGOVERNMENTAL AGREEMENT (IGA) BETWEEN THE
TOWN OF FOUNTAIN HILLS AND THE STATE OF ARIZONA DEPARTMENT
OF REVENUE FOR THE ADMINISTRATION, COLLECTION, AUDIT, AND
LICENSING OF TRANSACTION PRIVILEGE TAXES, USE TAXES,
SEVERANCE TAXES, JET FUEL EXCISE AND USE TAXES AND RENTAL
OCCUPANCY TAXES IMPOSED BY THE STATE, CITIES OR TOWNS.
RECITALS:
WHEREAS, Title 11, Chapter 7, Article 3 (A.R.S. § 11-952) authorizes two or more public
agencies to enter into intergovernmental agreements to contract for services if authorized by their
legislative or governing bodies; and
WHEREAS, A.R.S. § 42-6001 et seq. was amended effective January 1, 2015 to provide that the
Arizona Department of Revenue, hereinafter referred to as ADOR, shall enter into an
intergovernmental contract or agreement pursuant to A.R.S. § 11-952 to provide a uniform
method of administration, collection, audit and licensing of transaction privilege and affiliated
excise taxes imposed by the State, cities or towns; and
WHEREAS, representatives of ADOR and representatives of Arizona cities and towns, with
support from the League of Arizona Cities and Towns, have negotiated the terms of a new IGA to
take effect as described within that document, which can be adopted individually by each Arizona
city and town, and is the subject of this Resolution.
ENACTMENTS:
BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF FOUNTAIN HILLS, as follows:
SECTION 1. the Town Council of the Town of Fountain Hills, Arizona hereby approves the
Intergovernmental Agreement between the Town of Fountain Hills and the Arizona Department
of Revenue for the administration, collection, audit and licensing of transaction privilege taxes,
use taxes, severance taxes, jet fuel excise and use taxes and rental occupancy taxes imposed
by the State, cities or towns.
SECTION 2. The Mayor, or their duly authorized agent, shall notify ADOR of the City's desire to
enter into an IGA as required by ARS §42-6001, with an effective date as described within that
document, together with the encapsulated provisions for annual renewals.
SECTION 3. The Mayor, the Town Manager, the Town Clerk, and the Town Attorney are hereby
authorized and directed to take all steps necessary to carry out the purpose and intent of this
Resolution.
RESOLUTION 2023-43
PAGE 2
PASSED AND ADOPTED by the Mayor and Council of the Town of Fountain Hills, Arizona,
December 19, 2023.
FOR THE TOWN OF FOUNTAIN HILLS:
ATTESTED TO:
Ginny ickey, Mayor Linda Mendenhall, Town Clerk
REVIEWED BY:
Rachael Goo Town Manager
APPROVED AS TO FORM:
a�-
Aaron D. Arnson, Pierce Coleman PLLC
Town Attorney