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Jones Outdoor Adver., Inc. v. Ariz. Dep't of Revenue

Court of Appeals of Arizona, First Division

July 16, 2015

JONES OUTDOOR ADVERTISING, INC., an Arizona corporation, Plaintiff/Appellant,
v.
ARIZONA DEPARTMENT OF REVENUE, an agency of the State of Arizona, Defendant/Appellee

Appeal from the Arizona Tax Court. No. TX2013-000017. The Honorable Dean M. Fink, Judge.

For Plaintiff/Appellant: James M. Susa, Sesaly O. Stamps, DeConcini McDonald Yetwin & Lacy, P.C., Tucson.

For Defendant/Appellee: Jerry A. Fries, Raj Saker, Benjamin H. Updike, Arizona Attorney General's Office, Phoenix.

Judge Peter B. Swann delivered the opinion of the court, in which Presiding Judge Kent E. Cattani and Judge Lawrence F. Winthrop joined.

OPINION

Peter B. Swann, Judge

[¶1] Jones Outdoor Advertising, Inc. (" Jones" ) appeals from the tax court's grant of summary judgment in favor of the Arizona Department of Revenue (" Department" ), finding Jones liable for transaction privilege tax (" TPT" ) on its sale of billboard advertising under A.R.S. § 42-5071(A). For the following reasons, we reverse.

Page 604

FACTS AND PROCEDURAL HISTORY

[¶2] Jones is an outdoor advertising company that owns billboards throughout the state of Arizona. Jones contracts with customers that pay to display their messages on the billboards.

[¶3] The Department audited Jones's income arising from its billboard advertising business for the period from January 2008 to March 2011. The Department determined that Jones's business fell within the scope of A.R.S. § 42-5071(A), which imposes TPT on the leasing or renting of tangible personal property, and assessed TPT and interest against Jones in the amount of $275,047.20. After exhausting its administrative remedies, Jones filed a complaint in tax court. The parties filed cross-motions for summary judgment, and the tax court ruled in favor of the Department. Jones timely appeals from the tax court's judgment.

DISCUSSION

[¶4] Arizona's TPT is an " excise tax on the privilege or right to engage in an occupation or business in the State of Arizona." Ariz. Dep't of Revenue v. Mountain States Tel. & Tel. Co., 113 Ariz. 467, 468, 556 P.2d 1129, 1130 (1976). It is not a sales tax, but rather a tax on the gross receipts of an entity's business activities. See A.R.S. § 42-5008.

[¶5] The issue in this case is whether Jones's sale of billboard advertising constitutes " leasing or renting tangible personal property for a consideration." Id. The question requires us to interpret § 42-5071(A) and our review therefore is de novo. Energy Squared, Inc. v. Ariz. Dep't of Revenue, 203 Ariz. 507, 509, ¶ 15, 56 P.3d 686, 688 (App. 2002). Any ambiguity surrounding the scope and meaning of the statute must be resolved in favor ...


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