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HomeMy WebLinkAboutOrd 2009-10ORDINANCE NO. 09 -I0 AN ORDINANCE -" OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, RELATING TO THE PRIVILEGE LICENSE TAX; ADOPTING "THE 2009 AMENDMENTS TO THE TAX CODE OF THE TOWN OF FOUNTAIN HILLS" BY REFERENCE; ESTABLISHING AN EFFECTIVE DATE; PROVIDING FOR SEVERABILITY AND PROVIDING PENALTIES FOR VIOLATIONS. BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS as follows: SECTION 1. That certain document known as "2009 Amendments to the Tax Code of the Town of Fountain Hills" (the "2009 Amendments "), three copies of which are on file in the office of the Town Clerk of the Town of Fountain Hills, Arizona, which docu111C11t was made a public record by Resolution No. 2009 -33 of the Town of Fountain Hills, Arizona, is hereby referred to, adopted and made a part hereof as if fully set out in this Ordinance. SECTION 2. That any person found guilty of violating any provision of the 2009 Amendments shall be guilty of a class one misdemeanor. Each day that a violation continues shall be a separate offense punishable as herein above described. SECTION 3. That, if any section, subsection, sentence, clause, phrase or portion of this Ordinance or the 2009 Amendments is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance or the 2009 Amendments. SECTION 4. The provisions of Sections 1 through 3 of the 2009 Amendments shall be effective from and after September 1, 2006. The provisions of Sections 4 and S of the 2009 Amendments shall be effective from and after July 1, 2008. PASSED AND ADOPTED BY the Mayor and Council of the Town of Fountain Hills, Arizona, August 20, 2009. FOR THE TOWN OF FOUNTAIN HILLS: T. Schlum, Mayor REVIEWED BY: qlGvo-�� Richard L. Davis, Town Manager 1079450.1 ATTESTED TO: r IN 7EAVIRWO-1 e . id�/A`Town Clerk APPROVED AS TO FORM: 0 MAZ2S Andrew J. McGuire, Town Attorney TO: Manager, Clerks, Finance Directors FROM: Liisa Laikko, Member Services Associate SUBJECT: TAX CODE AMENDMENT FOR ADOPTION Enclosed are a new set of amendments for your tax code; these are the 2009 Tax Code Amendments. Final approval of the amendments occurred at the February meeting of the Municipal Tax Code Commission. We urge your adoption of the amendments as soon as possible. To assist in the adoption, we have tailored the ordinance to the current provisions of your Code including numbering. The amendment is designed to be adopted by reference and an adopting ordinance and resolution are also enclosed. A summary of the amendment provisions has also been included as a part of this package. We hope this document will assist in explaining the amendment to your mayor and council. Following adoption of the amendment, please send us a copy of your adopting ordinance and we will in turn make the conforming changes to your tax code and send the revisions to you. Please let me know if there is anything we can do to assist you in this effort. We thank you for your assistance in this effort. OUTLINE OF PROPOSED CONFORMING CHANGES TO MODEL CITY TAX CODE The attached Model City Tax Code changes, summarized below, were approved by the Municipal Tax Code Commission in February. Sections 1 -3 These sections incorporate last year's legislative changes to A.R.S. 42 -6004, modifying the Development Fee exemption found in MCTC Sections 415, 416, and 417. These changes serve to clarify the exemptions, and are the result of a cooperative effort between the UAC and taxpayer advocates to craft language that was administratively workable without altering the legislative intent of the original exemption. These sections have a retroactive effective date of September 1, 2006 to coincide with the original exemption. Section 4 This is a technical correction, adding the exemption for Solar Energy devices to Section 450, Rental of Tangible Personal Property, allowing for the exempt leasing of solar energy devices. This section was inadvertently left out when the same exemption was added to the Contracting, Retail, and Use tax activities last year. This change has a retroactive effective date of July 1, 2008 to align it with the other matching exemptions. Section 5 This is also a technical correction, removing the reference to residency requirements in Regulation 350.3 that was overlooked when similar language was removed from the definition of "Out -of -State sales" in Section 100 last year. This change is also retroactive to July 1, 2008 to align it with the original definition change. Effective Date The provisions of sections 1 through 3 shall be effective from and after September 1, 2006. The provisions of sections 4 and 5 shall be effective from and after July 1, 2008. 2009 AMENDMENTS TO THE TAX CODE OF THE TOWN OF FOUNTAIN HILLS Section 1. Section 8A-415 of the Tax Code of the Town of Fountain Hills is amended to read: Sec. 8A -415. Construction contracting: construction contractors. (a) The tax rate shall be at an amount equal to two and six - tenths percent (2.6 %) of the gross income from the business upon every construction contractor engaging or continuing in the business activity of construction contracting within the Town. (1) However, gross income from construction contracting shall not include charges related to groundwater measuring devices required by A.R.S. Section 45 -604. (2) (Reserved) (3) gross income from construction contracting shall not include gross income from the sale of manufactured buildings taxable under Section 8A427. (4) For taxable periods beginning from and after July 1, 2008, the portion of gross proceeds of sales or gross income attributable to the actual direct costs of providing architectural or engineering services that are incorporated in a contract is not subject to tax under this Section. For the purposes of this subsection, "direct costs" means the portion of the actual costs that are directly expended in providing architectural or engineering services. (b) Deductions and exemptions. (1) Gross income derived from acting as a "subcontractor" shall be exempt from the tax imposed by this Section. (2) All construction contracting gross income subject to the tax and not deductible herein shall be allowed a deduction of thirty -five percent (35 %). (3) The gross proceeds of sales or gross income attributable to the purchase of machinery, equipment or other tangible personal property that is exempt from or deductible from privilege or use tax under: (A) Section 8A -465, subsections (g) and (p) (B) Section 8A -660, subsections (g) and (p) shall be exempt or deductible, respectively, from the tax imposed by this Section. (4) The gross proceeds of sales or gross income that is derived from a contract entered into for the installation, assembly, repair or maintenance of income - producing capital equipment, as defined in Section 8A -110, that is deducted from the retail classification pursuant to Section 8A- 465(g) that does not become a permanent attachment to a building, highway, road, railroad, excavation or manufactured building or other structure, project, development or improvement shall be exempt from the tax imposed by this Section. If the ownership of the realty is separate from the ownership of the income - producing capital equipment, the determination as to permanent attachment shall be made as if the ownership was the same. The deduction provided in this paragraph does not include gross proceeds of sales or gross income from that portion of any contracting activity which consists of the development of, or modification to, real property in order to facilitate the installation, assembly, repair, maintenance or removal of the income - producing capital equipment. For purposes of this paragraph, "permanent attachment" means at least one of the following: (A) to be incorporated into real property. (B) to become so affixed to real property that it becomes part of the real property. (C) to be so attached to real property that removal would cause substantial damage to the real property from which it is removed. (5) The gross proceeds of sales or gross income received from a contract for the construction of an environmentally controlled facility for the raising of poultry for the production of eggs and the sorting, or cooling and packaging of eggs shall be exempt from the tax imposed under this Section. (6) The gross proceeds of sales or gross income that is derived from the installation, assembly, repair or maintenance of cleanrooms that are deducted from the tax base of the retail classification pursuant to Section 8A 465, subsection (g) shall be exempt from the tax imposed under this Section. (T) The gross proceeds of sales or gross income that is derived from a contract entered into with a person who is engaged in the commercial production of livestock, livestock products or agricultural, horticultural, viticultural or floricultural crops or products in this State for the construction, alteration, repair, improvement, movement, wrecking or demolition or addition to or subtraction from any building, highway, road, excavation, manufactured building or other structure, project, development or improvement used directly and primarily to prevent, monitor, control or reduce air, water or land pollution shall be exempt from the tax imposed under this Section. (8) The gross proceeds of sales or gross income received from a post construction contract to perform post - construction treatment of real property for termite and general pest control, including wood destroying organisms, shall be exempt from tax imposed under this Section. (9) Through December 31, 2009, the gross proceeds of sales or gross income received from a contract for constructing any lake facility development in a commercial enhancement reuse district that is designated pursuant to A.R.S. § 9499.08 if the contractor maintains the following records in a form satisfactory to the Arizona Department of Revenue and to the Town: (A) The certificate of qualification of the lake facility development issued by the Town pursuant to A.R.S. § 9499.08, subsection D. (B) All state and local transaction privilege tax returns for the period of time during which the contractor received gross proceeds of sales or gross income from a contract to construct a lake facility development in a designated commercial enhancement reuse district, showing the amount exempted from state and local taxation. (C) Any other information considered to be necessary. (10) Development eFimpast fees included in a GGAMFUGtien OF development reAtF st- ferpayrnent iAffastrastuFe, publis safeE}f and eNieFpubi' 69FVOGes to a develepment-. ANY AMOUNT ATTRIBUTABLE TO DEVELOPMENT FEES THAT ARE INCURRED IN RELATION TO THE CONSTRUCTION, DEVELOPMENT OR IMPROVEMENT OF REAL PROPERTY AND PAID BY THE TAXPAYER AS DEFINED IN THE MODEL CITY TAX CODE OR BY A CONTRACTOR PROVIDING SERVICES TO THE TAXPAYER. FOR THE PURPOSES OF THIS PARAGRAPH: (A) THE ATTRIBUTABLE AMOUNT SHALL NOT EXCEED THE VALUE OF THE DEVELOPMENT FEES ACTUALLY IMPOSED. (B) THE ATTRIBUTABLE AMOUNT IS EQUAL TO THE TOTAL AMOUNT OF DEVELOPMENT FEES PAID BY THE TAXPAYER OR BY A CONTRACTOR PROVIDING SERVICES TO THE TAXPAYER AND THE TOTAL DEVELOPMENT FEES CREDITED IN EXCHANGE FOR THE CONSTRUCTION OF, CONTRIBUTION TO OR DEDICATION OF REAL PROPERTY FOR PROVIDING PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR OTHER PUBLIC SERVICES NECESSARY TO THE DEVELOPMENT. THE REAL PROPERTY MUST BE THE SUBJECT OF THE DEVELOPMENT FEES. (C) "DEVELOPMENT FEES" MEANS FEES IMPOSED TO OFFSET CAPITAL COSTS OF PROVIDING PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR OTHER PUBLIC SERVICES TO A DEVELOPMENT AND AUTHORIZED PURSUANT TO SECTION 9- 463.05, SECTION 11 -1102 OR TITLE 48 REGARDLESS OF THE JURISDICTION TO WHICH THE FEES ARE PAID. (11) For taxable periods beginning from and after July 1, 2008 AND ending before January 1, 2011, the gross proceeds of sales or gross income derived from a contract to provide and install a solar energy device. The contractor shall register with the department of revenue as a solar energy contractor. By registering, the contractor acknowledges that it will make its books and records relating to sales of solar energy devices available to the department of revenue and the city, as applicable, for examination. (c) Subcontractor means a construction contractor performing work for either: (1) a construction contractor who has provided the subcontractor with a written declaration that he is liable for the tax for the project and has provided the subcontractor his town Privilege License number. (2) an owner- builder who has provided the subcontractor with a written declaration that: (A) the owner - builder is improving the property for sale; and (B) the owner - builder is liable for the tax for such construction contracting activity; and (C) the owner - builder has provided the contractor his town Privilege License number. (3) a person selling new manufactured buildings who has provided the subcontractor with a written declaration that he is liable for the tax for the site preparation and set -up; and provided the subcontractor his Town Privilege License number. Subcontractor also includes a construction contractor performing work for another subcontractor as defined above. Section 2. Section BA-416 of the Tax Code of the Town of Fountain Hills is amended to read: Sec. 8A -416. Construction contracting: speculative builders. (a) The tax shall be equal to two and six - tenths percent (2.6 %) of the gross income from the business activity upon every person engaging or continuing in business as a speculative builder within the Town. (1) The gross income of a speculative builder considered taxable shall include the total selling price from the sale of improved real property at the time of closing of escrow or transfer of title. (2) "Improved Real Propertv" means any real property: (A) upon which a structure has been constructed; or (B) where improvements have been made to land containing no structure (such as paving or landscaping); or (C) which has been reconstructed as provided by Regulation; or (D) where water, power, and streets have been constructed to the property line. (3) "Sale of Improved Real Property" includes any form of transaction, whether characterized as a lease or otherwise, which in substance is a transfer of title of, or equitable ownership in, improved real property and includes any lease of the property for a term of thirty (30) years or more (with all options for renewal being included as a part of the term). In the case of multiple unit projects, "sale" refers to the sale of the entire project or to the sale of any individual parcel or unit. (4) "Partially Improved Residential Real Property," as used in this Section, means any improved real property, as defined in subsection (a)(2) above, being developed for sale to individual homeowners, where the construction of the residence upon such property is not substantially complete at the time of the sale. (b) Exclusions. (1) In cases involving reconstruction contracting, the speculative builder may exclude from gross income the prior value allowed for reconstruction contracting in determining his taxable gross income, as provided by Regulation. (2) Neither the cost nor the fair market value of the land which constitutes part of the improved real property sold may be excluded or deducted from gross income subject to the tax imposed by this Section. (3) (Reserved) (4) A speculative builder may exclude gross income from the sale of partially improved residential real property as defined in (a)(4) above to another speculative builder only if all of the following conditions are satisfied: (A) The speculative builder purchasing the partially improved residential real property has a valid Town privilege license for construction contracting as a speculative builder; and (B) At the time of the transaction, the purchaser provides the seller with a properly completed written declaration that the purchaser assumes liability for and will pay all privilege taxes which would otherwise be due the Town at the time of sale of the partially improved residential real property; and (C) The seller also: (1) maintains proper records of such transactions in a manner similar to the requirements provided in this chapter relating to sales for resale; and (ii) retains a copy of the written declaration provided by the buyer for the transaction; and (iii) is properly licensed with the Town as a speculative builder and provides the Town with the written declaration attached to the Town privilege tax return where he claims the exclusion. (5) For taxable periods beginning from and after July 1, 2008, the portion of gross proceeds of sales or gross income attributable to the actual direct costs of providing architectural or engineering services that are incorporated in a contract is not subject to tax under this section. For the purposes of this subsection, "direct costs" means the portion of the actual costs that are directly expended in providing architectural or engineering services. (c) Tax liability for speculative builder s occurs at close of escrow or transfer of title , whichever occurs earlier, and is subject to the following provisions, relating to exemptions, deductions and tax credits: (1) Exemptions. (A) The gross proceeds of sales or gross income attributable to the purchase of machinery, equipment or other tangible personal property that is exempt from or deductible from privilege or use tax under: (i) Section 8A465, subsections (g) and (p) (ii) Section 8A -660, subsections (g) and (p) shall be exempt or deductible, respectively, from the tax imposed by this Section. (B) The gross proceeds of sales or gross income received from a contract for the construction of an environmentally controlled facility for the raising of poultry for the production of eggs and the sorting, or cooling and packaging of eggs shall be exempt from the tax imposed under this Section. (C) The gross proceeds of sales or gross income that is derived from the installation, assembly, repair or maintenance of cleanrooms that are deducted from the tax base of the retail classification pursuant to Section 8A -465, subsection (g) shall be exempt from the tax imposed under this section. (D) The gross proceeds of sales or gross income that is derived from a contract entered into with a person who is engaged in the commercial production of livestock, livestock products or agricultural, horticultural, viticultural or floricultural crops or products in this state for the construction, alteration, repair, improvement, movement, wrecking or demolition or addition to or subtraction from any building, highway, road, excavation, manufactured building or other structure, project, development or improvement used directly and primarily to prevent, monitor, control or reduce air, water or land pollution shall be exempt from the tax imposed under this Section. (E) ANY AMOUNT ATTRIBUTABLE TO DEVELOPMENT FEES THAT ARE INCURRED IN RELATION TO THE CONSTRUCTION, DEVELOPMENT OR IMPROVEMENT OF REAL PROPERTY AND PAID BY THE TAXPAYER AS DEFINED IN THE MODEL CITY TAX CODE OR BY A CONTRACTOR PROVIDING SERVICES TO THE TAXPAYER SHALL BE EXEMPT FROM THE TAX IMPOSED UNDER THIS SECTION. FOR THE PURPOSES OF THIS PARAGRAPH: (1) THE ATTRIBUTABLE AMOUNT SHALL NOT EXCEED THE VALUE OF THE DEVELOPMENT FEES ACTUALLY IMPOSED.. (II) THE ATTRIBUTABLE AMOUNT IS EQUAL TO THE TOTAL AMOUNT OF DEVELOPMENT FEES PAID BY THE TAXPAYER OR BY A CONTRACTOR PROVIDING SERVICES TO THE TAXPAYER AND THE TOTAL DEVELOPMENT FEES CREDITED IN EXCHANGE FOR THE CONSTRUCTION OF, CONTRIBUTION TO OR DEDICATION OF REAL PROPERTY FOR PROVIDING PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR OTHER PUBLIC SERVICES NECESSARY TO THE DEVELOPMENT. THE REAL PROPERTY MUST BE THE SUBJECT OF THE DEVELOPMENT FEES. (III) "DEVELOPMENT FEES" MEANS FEES IMPOSED TO OFFSET CAPITAL COSTS OF PROVIDING PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR OTHER PUBLIC SERVICES TO A DEVELOPMENT AND AUTHORIZED PURSUANT TO SECTION 9- 463.05, SECTION 11 -1102 OR TITLE 48 REGARDLESS OF THE JURISDICTION TO WHICH THE FEES ARE PAID. (2) Deductions. (A) All amounts subject to the tax shall be allowed a deduction in the amount of thirty-five percent (35 %). (B) The gross proceeds of sales or gross income that is derived from a contract entered into for the installation, assembly, repair or maintenance of income - producing capital equipment, as defined in Section 8A -110, that is deducted from the retail classification pursuant to Section 8A465(g), that does not become a permanent attachment to a building, highway, road, railroad, excavation or manufactured building or other structure, project, development or improvement shall be exempt from the tax imposed by this Section. If the ownership of the realty is separate from the ownership of the income - producing capital equipment, the determination as to permanent attachment shall be made as if the ownership was the same. The deduction provided in this paragraph does not include gross proceeds of sales or gross income from that portion of any contracting activity which consists of the development of, or modification to, real property in order to facilitate the installation, assembly, repair, maintenance or removal of the income - producing capital equipment. For purposes of this paragraph, "permanent attachment" means at least one of the following: (i) to be incorporated into real property. (ii) to become so affixed to real property that it becomes part of the real property. (iii) to be so attached to real property that removal would cause substantial damage to the real property from which it is removed. (C) For taxable periods beginning from and after july 1, 2008 and ending before January 1, 2011, the gross proceeds of sales or gross income derived from a contract to provide and install a solar energy device. The contractor shall register with the department of revenue as a solar energy contractor. By registering, the contractor acknowledges that it will make its books and records relating to sales of solar energy devices available to the department of revenue and the city, as applicable, for examination. (3) Tax credits. The following tax credits are available to owner - builders or speculative builder s, not to exceed the tax liability against which such credits apply, provided such credits are documented to the satisfaction of the tax collector: (A) A tax credit equal to the amount of town privilege or use tax, or the equivalent excise tax, paid directly to a taxing jurisdiction or as a separately itemized charge paid directly to the vendor with respect to the tangible personal property incorporated into the said structure or improvement to real property undertaken by the owner- builder or speculative builder. (B) A tax credit equal to the amount of privilege taxes paid to this Town, or charged separately to the speculative builder, by a construction contractor , on the gross income derived by said person from the construction of any improvement to the real property. (C) No credits provided herein may be claimed until such time that the gross income against which said credits apply is reported. Section 3. Section 8A-417 of the Tax Code of the Town of Fountain Hills is amended to read: Sec. 8A -417. Construction contracting: owner - builders who are not speculative builders. (a) At the expiration of twenty-four (24) months after improvement to the property is substantially complete, the tax liability for an owner - builder who is not a speculative builder shall be at an amount equal to two and six - tenths percent (2.6 %) of: (1) the gross income from the activity of construction contracting upon the real property in question which was realized by those construction contractors to whom the owner - builder provided written declaration that they were not responsible for the taxes as prescribed in Subsection 8A- 415(c)(2); and (2) the purchase of tangible personal property for incorporation into any improvement to real property, computed on the sales price. (b) For taxable periods beginning from and after July 1, 2008, the portion of gross proceeds of sales or gross income attributable to the actual direct costs of providing architectural or engineering services that are incorporated in a contract is not subject to tax under this section. For the purposes of this subsection, "direct costs" means the portion of the actual costs that are directly expended in providing architectural or engineering services. (c) The tax liability of this Section is subject to the following provisions, relating to exemptions, deductions and tax credits: (1) Exemptions. (A) The gross proceeds of sales or gross income attributable to the purchase of machinery, equipment or other tangible personal property that is exempt from or deductible from privilege or use tax under: (1) Section 8A -465, subsections (g) and (p) (ii) Section 8A -660, subsections (g) and (p) shall be exempt or deductible, respectively, from the tax imposed by this Section. (B) The gross proceeds of sales or gross income received from a contract for the construction of an environmentally controlled facility for the raising of poultry for the production of eggs and the sorting, or cooling and packaging of eggs shall be exempt from the tax imposed under this Section. (C) The gross proceeds of sales or gross income that is derived from the installation, assembly, repair or maintenance of cleanrooms that are deducted from the tax base of the retail classification pursuant to Section 8A465, subsection (g) shall be exempt from the tax imposed under this Section. (D) The gross proceeds of sales or gross income that is derived from a contract entered into with a person who is engaged in the commercial production of livestock, livestock products or agricultural, horticultural, viticultural or floricultural crops or products in this state for the construction, alteration, repair, improvement, movement, wrecking or demolition or addition to or subtraction from any building, highway, road, excavation, manufactured building or other structure, project, development or improvement used directly and primarily to prevent, monitor, control or reduce air, water or land pollution shall be exempt from the tax imposed under this Section. (E) sF ANY AMOUNT ATTRIBUTABLE TO DEVELOPMENT FEES THAT ARE INCURRED IN RELATION TO THE CONSTRUCTION, DEVELOPMENT OR IMPROVEMENT OF REAL PROPERTY AND PAID BY THE TAXPAYER AS DEFINED IN THE MODEL CITY TAX CODE OR BY A CONTRACTOR PROVIDING SERVICES TO THE TAXPAYER SHALL BE EXEMPT FROM THE TAX IMPOSED UNDER THIS SECTION. FOR THE PURPOSES OF THIS PARAGRAPH: (1) THE ATTRIBUTABLE AMOUNT SHALL NOT EXCEED THE VALUE OF THE DEVELOPMENT FEES ACTUALLY IMPOSED. (II) THE ATTRIBUTABLE AMOUNT IS EQUAL TO THE TOTAL AMOUNT OF DEVELOPMENT FEES PAID BY THE TAXPAYER OR BY A CONTRACTOR PROVIDING SERVICES TO THE TAXPAYER AND THE TOTAL DEVELOPMENT FEES CREDITED IN EXCHANGE FOR THE CONSTRUCTION OF, CONTRIBUTION TO OR DEDICATION OF REAL PROPERTY FOR PROVIDING PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR OTHER PUBLIC SERVICES NECESSARY TO THE DEVELOPMENT. THE REAL PROPERTY MUST BE THE SUBJECT OF THE DEVELOPMENT FEES. (ill) "DEVELOPMENT FEES" MEANS FEES IMPOSED TO OFFSET CAPITAL COSTS OF PROVIDING PUBLIC INFRASTRUCTURE, PUBLIC SAFETY OR OTHER PUBLIC SERVICES TO A DEVELOPMENT AND AUTHORIZED PURSUANT TO SECTION 9- 463.05, SECTION 11 -1102 OR TITLE 48 REGARDLESS OF THE JURISDICTION TO WHICH THE FEES ARE PAID. (2) Deductions. (A) All amounts subject to the tax shall be allowed a deduction in the amount of thirty-five percent (35 %). (B) The gross proceeds of sales or gross income that is derived from a contract entered into for the installation, assembly, repair or maintenance of income - producing capital equipment, as defined in Section 8A -110, that is deducted from the retail classification pursuant to Section 8A- 465(g), that does not become a permanent attachment to a building, highway, road, railroad, excavation or manufactured building or other structure, project, development or improvement shall be exempt from the tax imposed by this Section. If the ownership of the realty is separate from the ownership of the income - producing capital equipment, the determination as to permanent attachment shall be made as if the ownership was the same. The deduction provided in this paragraph does not include gross proceeds of sales or gross income from that portion of any contracting activity which consists of the development of, or modification to, real property in order to facilitate the installation, assembly, repair, maintenance or removal of the income - producing capital equipment. For purposes of this paragraph, "permanent attachment' means at least one of the following: (i) to be incorporated into real property. (ii) to become so affixed to real property that it becomes part of the real property. (iii) to be so attached to real property that removal would cause substantial damage to the real property from which it is removed. (C) For taxable periods beginning from and after July 1, 2008 and ending before January 1, 2011, the gross proceeds of sales or gross income derived from a contract to provide and install a solar energy device. The contractor shall register with the department of revenue as a solar energy contractor. By registering, the contractor acknowledges that it will make its books and records relating to sales of solar energy devices available to the department of revenue and the city, as applicable, for examination. (3) Tax credits. The following tax credits are available to owner - builders and speculative builders, not to exceed the tax liability against which such credits apply, provided such credits are documented to the satisfaction of the tax collector: (A) A tax credit equal to the amount of town privilege or use tax, or the equivalent excise tax, paid directly to a taxing jurisdiction or as a separately itemized charge paid directly to the vendor with respect to the tangible personal property incorporated into the said structure or improvement to real property undertaken by the owner - builder or speculative builder . (B) A tax credit equal to the amount of privilege taxes paid to this Town, or charged separately to the speculative builder, by a construction contractor , on the gross income derived by said person from the construction of any improvement to the real property. (C) No credits provided herein may be claimed until such time that the gross income against which said credits apply is reported. (d) The limitation period for the assessment of taxes imposed by this Section is measured based upon when such liability is reportable, that is, in the reporting period that encompasses the twenty-fifth (25th) month after said unit or project was substantially complete. Interest and penalties, as provided in Section 8A -540, will be based on reportable date. (e) (Reserved) Section 4. Section 8A-450 of the Tax Code of the Town of Fountain Hills is amended to read: Sec. 8A -450. Rental, leasing, and licensing for use of tangible personal property. (a) The tax rate shall be at an amount equal to two and six - tenths percent (2.6 %) of the gross income from the business activity upon every person engaging or continuing in the business of leasing, licensing for use, or renting tangible personal property for a consideration, including that which is semi - permanently or permanently installed within the Town as provided by Regulation. (b) Special provisions relating to Iona -term motor vehicle leases. A lease transaction involving a motor vehicle for a minimum period of twenty -four (24) months shall be considered to have occurred at the location of the motor vehicle dealership, rather than the location of the place of business of the lessor, even if the lessor's interest in the lease and its proceeds are sold, transferred, or otherwise assigned to a lease financing institution; provided further that the city or town where such motor vehicle dealership is located levies a Privilege Tax or an equivalent excise tax upon the transaction. (c) Gross income derived from the following transactions shall be exempt from Privilege Taxes imposed by this Section: (1) rental, leasing, or licensing for use of tangible personal property to persons engaged or continuing in the business of leasing, licensing for use, or rental of such property. (2) rental, leasing, or licensing for use of tangible personal property that is semi - permanently or permanently installed within another city or town that levies an equivalent excise tax on the transaction. (3) rental, leasing, or licensing for use of film, tape, or slides to a theater or other person taxed under Section 8A410, or to a radio station, television station, or subscription television system. (4) rental, leasing, or licensing for use of the following: (A) prosthetics. (B) income - producing capital equipment. (C) mining and metallurgical supplies. These exemptions include the rental, leasing, or licensing for use of tangible personal property which, if it had been purchased instead of leased, rented, or licensed by the lessee or licensee, would qualify as income - producing capital equipment or mining and metallurgical supplies. (5) rental, leasing, or licensing for use of tangible personal property to a qualifying hospital, qualifying community health center or a qualifying health care organization, except when the property so rented, leased, or licensed Is for use in activities resulting in gross income from unrelated business income as that term is defined in 26 U.S.C. Section 512 or rental, leasing, or licensing for use of tangible personal property in this State by a nonprofit charitable organization that has qualified under Section 501(c)(3) of the United States Internal Revenue Code and that engages in and uses such property exclusively for training, job placement or rehabilitation programs or testing for mentally or physically handicapped persons. (6) separately billed charges for delivery, installation, repair, and /or maintenance as provided by Regulation. (7) charges for joint pole usage by a person engaged in the business of providing or furnishing utility or telecommunication services to another person engaged in the business of providing or furnishing utility or telecommunication services. (8) (Reserved) (9) rental, leasing, or licensing of aircraft that would qualify as aircraft acquired for use outside the State, as prescribed by Regulation, if such rental, leasing, or licensing had been a sale. (10) rental, leasing and licensing for use of an alternative fuel vehicle if such vehicle was manufactured as a diesel fuel vehicle and converted to operate on alternative fuel and equipment that is installed in a conventional diesel fuel motor vehicle to convert the vehicle to operate on an alternative fuel, as defined in A.R.S. Section 1 -215. (11) RENTAL, LEASING, AND LICENSING FOR USE OF SOLAR ENERGY DEVICES, FOR TAXABLE PERIODS BEGINNING FROM AND AFTER JULY 1, 2008. THE LESSOR SHALL REGISTER WITH THE DEPARTMENT OF REVENUE AS A SOLAR ENERGY RETAILER. BY REGISTERING, THE LESSOR ACKNOWLEDGES THAT IT WILL MAKE ITS BOOKS AND RECORDS RELATING TO LEASES OF SOLAR ENERGY DEVICES AVAILABLE TO THE DEPARTMENT OF REVENUE AND TOWN, AS APPLICABLE, FOR EXAMINATION. Section 5. Regulation 8A -350.3 of the Tax Code of the Town of Fountain Hills is amended to read: Reg. 8A- 350.3. Recordkeeping: out-of -Town and out -of -State sales. (a) Out -of -Town Sales. Any person engaging or continuing in a business who claims out -of -Town sales shall maintain and keep accounting records or books indicating separately the gross income from the sales of tangible personal property from such out -of -Town branches or locations. (b) Out -of -State sales. Persons engaged in a business claiming out -of -State sales shall maintain accounting records or books indicating for each out -of -State sale the following documentation: (1) documentation of location of the buyer at the time of order placement; and (2) deGumentatien of residenry of the rrnined - .in- manneFone detemAiner'4 -0 PeFSOR ,� (32) shipping, delivery, or freight documents showing where the buyer took delivery; and (43) documentation of intended location of use or storage of the tangible personal property sold to such buyer.