Unpublished Tax Court Decisions


Citizens Telecommunications Co. v. Ariz. Depít of Rev., TX 1998-000716 (Tax Ct. 2006)

Enterprise Leasing Co. v. Ariz. Depít of Rev., TX 2003-000551 (Tax Ct. 2006)

Ariz. Depít of Rev. v. Frank Barrett, TX 2004-000298 (Tax Ct. 2006)

Ariz. Depít of Rev. v. Frank Barrett, TX 2004-000298 (Tax Ct. 2006)

Chamberlain v. Ariz. Depít of Rev., TX 2004-000723 (Tax Ct. 2006)

Camelback Esplanade Association v. Maricopa County, TX 2003-000170 (Tax Ct. 2006)

Jenkins v. Ariz. Dep't of Rev., TX 2004-000924 (Tax Ct. 2006)

Maricopa County v. TWC-Chandler and the SBOE, TX 2003-000198 (Tax Ct. 2006) 

Ariz. Depít of Rev. v. RIM Southwest Corp., TX 2003-000735 (Tax Ct. 2005) 

Ariz. Depít of Rev. v. Questar Southern Trails Pipeline, TX 2003-000743 (Tax Ct. 2006) 

Ariz. Depít of Rev. v. Questar Southern Trails Pipeline, TX 2003-000743 (Tax Ct. 2006)  

Solimeno v. Maricopa County, TX 2003-000765 (Tax Ct. 2006)  

Praedium IV Century Plaza LLC v. Maricopa County, TX 2004-000161 (Tax Ct. 2006)  

Sun City Grand Community Association v. Maricopa County, TX 2004-000799 (Tax Ct. 2006)  

Duke Energy Arlington Valley LLC, et al. v. Ariz. Dep't of Rev., TX 2005-050206 (Tax Ct. 2006)  

Hohn v. La Paz County, TX 2005-050371 (Tax Ct. 2006)  

Phoenix Suns Limited Partnership v. Ariz. Dep't of Rev. TX 2004-000066 (Tax Ct. 2005)  

Leisure Development Inc. v. City Of Flagstaff,   TX 2004-000182 (Tax Ct. 2006)  

Ariz. Dep't of Rev. v. RCM Business Systems Inc. TX 2004-000487 (Tax Ct. 2005)  

Empire Southwest LLC v. Ariz. Depít of Rev. TX 2004-000593 (Tax Ct. 2006)  

Town of Gilbert and Town of Paradise Valley v. Coxcom Inc., TX 2004-000722  (Tax Ct. 2006)  

Michael Devine v. Ariz. Depít of Rev. TX 2005-050091 (Tax Ct. 2006)  

Ariz. Depít of Rev. v. Monarch Brewery LLC, TX 2005-050104 (Tax Ct. 2006)  

Ariz. Depít of Rev. v. Accurate CAD Svcs., TX 2004-000561 (Tax Ct. 2005)  

Walgreen Arizona Drug Company v. State of Arizona, TX 2001-00032 (Tax Ct. 2002)

Walgreen collected its daily sales revenue and used it for most disbursements and payments needed in its operations.  To the extent it had money left over, it invested it in short term interest or dividend paying investments and marketable securities.  For purposes of the sales factor under the Arizona version of the Uniform Division of Income for Tax Purposes Act, Walgreens argued that the excess revenue that was invested, as well as the interest and dividends earned on that investment constitute gross receipts and should be included in the denominator of the sales factor.  The Court agreed with the Department that the return on investment was not gross receipts but that the dividends and interest earned on the investment of the excess revenue should be so included, pursuant to A.R.S. ß 43-1137. 

Arizonans Against Unfair Tax Schemes v. Betsey Bayless, CV 2000-012971 (Tax Ct. 2001)

The Upjohn Co. v. State of Arizona, TX 1997-000438 (Tax Ct. 2001)  

The Court concluded that Upjohn's activities in Arizona went beyond the minimum exempted under Public Law 86-272, 15 U.S.C. ß 381, subjecting Upjohn to Arizona income tax jurisdiction.  The Court also held that the Arizona Department of Revenue's previous audit where it concluded that Upjohn did not need to file combined income tax returns, did not estop the Department from subsequently requiring Upjohn to file such returns, pursuant to Valencia Energy Co., v. Ariz. Dep't of Rev., 191 Ariz. 565, 959 P.2d 1256 (1998).

Aileen H. Char Life Interest 629 Investment, et al. v. Maricopa County, et al., TX 1998-000413 (Tax Ct. 2001)

Under former A.R.S. ß 42-247, property valuations that were appealed were rolled over on the tax role in the year following the appeal, regardless of the result of the appeal.  This authority only authorized a rollover of a property valuation for the year subsequent to the appeal.  The Court concluded that in 1996, Maricopa County rolled over 8,000 property valuations of multifamily residential class properties with only 983 of them having been appealed in 1996.  The Court concluded that the non-appeal rollovers were in violation of the provisions of A.R.S. ß 42-247.  It also held that multifamily residential property was a valid classification for determining whether the Uniformity Clause of the Arizona Constitution had been violated and that the rolling over of properties was intentional and systematic discrimination by the County and a violation of the Uniformity Clause. 

Navajo County v. Property Tax Oversight Commission, TX 2001-000007 (Tax Ct. 2001)

Navajo County challenged the Property Tax Oversight Commission's ruling that its raising of property tax rates to compensate for settlements of litigation for indigent health care violated the levy limits of the Arizona Constitution.  The Court agreed and rejected the County's argument that the litigation costs were involuntary and unforeseen and, thus, an exception to the levy limits under Maricopa County v. Property Tax Oversight Commission, 188 Ariz., 214, 933 P.2d 1289 (Ct. App. 1997). 

Arizona River Runners, et al. v. Ariz. Depít of Rev., TX 99-00151, et al. (Tax Ct. 2000)


The taxpayers filed refund claims for sales taxes paid under the amusement classification, claiming they could keep the refunds for themselves and not return them to their customers. The Court upheld the Departmentís position that it could not grant any refunds unless they were returned to the persons that actually paid the tax to the taxpayers. Relying mainly on the Arizona Supreme Court case of State Tax Commission v. Garrett, the Court held that returning refunds to the customers was required under the transaction privilege tax system.

Southern Pacific Transportation Co., Inc. v. State of Arizona and Town of Clifton, TX 1998-000774 (Tax Ct. 2000)

The taxpayer argued that the Department could not tax it under the transportation classification, since its railroad transporting of copper ore went into New Mexico and was an exempt interstate activity. The Court held that Arizona/intrastate portion of the travel was subject to tax but needed to be apportioned to exclude mileage outside of Arizona. It also held that the apportioned tax could be applied retroactively.

Hurley Trucking Co. v. State of Arizona, TX 98-00271 (Tax Ct. 1999)  

Hurley argued that it was exempt from state motor carrier and use fuel taxes on streets and highways located on easements and right-of-ways over land owned by the federal government.  This was based on an interpretation of the definition of "in this state" at A.R.S. ß 28-1551.5.  The Court determined that the original definition of this term supported the taxpayer's position and that the Arizona Legislature could not retroactively amend the term to deprive the taxpayer of its right to a tax refund.

Quality Underground of Arizona, Inc. v. Ariz. Depít of Rev., TX 97-00067 (Tax Ct. 1999)

The Court determined that the plaintiff, a contractor, was liable for the transaction privilege tax on prime contracting under A.R.S. ß 42-5075.  The Plaintiff was unable to demonstrate that the contracting job was within the control of a prime contractor nor that the prime contractor, of whom the taxpayer was allegedly working, had a contract with the owner for the total construction project. The taxpayer also could not demonstrate that the prime contractor had receipts paid to it by the other party to the construction contract.

Estate of Helen H. Ladewig, et al. v. Ariz. Dep't of Rev., TX 97-00075 (Tax Ct. 1999)

Prior to its repeal in 1990, A.R.S. ß 43-1052 provided a deduction for dividends received from corporations whose principal business was attributable to Arizona.  No such deduction was provided for dividends from corporations whose principal business was outside of Arizona.  The Court held that such treatment was a violation of the Commerce Clause of the United States Constitution.  (In another part of this proceeding, the Court determined that one taxpayer, which had exhausted its administrative remedies, could bring a class action and represent such a class, even if all other taxpayers in the class had not exhausted their administrative remedies.) 

Ormsbee Drilling Co. v. State of Arizona, TX 98-00787 (Tax Ct. 1999)

The taxpayer, a Colorado drilling company, was audited by the Department of Revenue. It argued that it relied on the audit and assumed that it was taxable for periods that the Department so claimed.  Subsequently, but after the applicable statute of limitations had expired, the taxpayer filed refund claims for the tax it paid the Department for the audit period.  Even though the Department later admitted that the tax was not due, the Court held that the Department was not equitably estopped from denying the refund claims due the late filing of the refund claims. The taxpayerís reliance on the Departmentís conduct was not reasonable.

One Camelback, Inc. v. Maricopa County, TX 97-00584 (Tax Ct. 1999)

In reviewing the property tax valuation of commercial property, the Court held that groundwater pollution under the property affected its valuation by stigmatizing and affecting a prospective buyerís perception of the risks associated with the property.   It reduced the valuation assigned to the property by the County.

ADOR v. Stewart, TX ________________ (Tax Ct. 1999) 

Ramon L. Rangel v. Ariz. Depít of Rev., TX 98-00394 (consol.) (Tax Ct. 1999)

Arizona residents are allowed an income tax credit for net income taxes imposed by another state or country. Net income taxes have been held, by the Arizona courts, to be taxes that allow deductions, exclusions, and other adjustments in calculating the tax base. The Tax Court held that the Mexican tax provisions were essentially a gross income tax system and denied the taxpayers any credits for Mexican taxes paid.

Prescott v. State, TX 95-00131 (Tax Ct. 1999)

The Court held that it was not a violation of the taxpayerís right of equal protection that it was audited by the Department when other similarly situated taxpayers were audited at different times or not at all. Only intentional or arbitrary conduct would qualify.  Furthermore, the Court concluded that the taxpayer was not similarly situated with others it claimed were in its class. The Court also found that there was no reasonable cause for not paying the appropriate tax, and thus eliminating penalties imposed as a result, when the taxpayer was expressly told by the Department that it had to pay the tax.

Walden Books Co., Inc. v. Ariz. Dep't of Rev., TX 97-00870 (Tax Ct. 1999)


The Department assessed transaction privilege tax on Walden Books' preferred reader program, where its customers paid a small consideration for the right to get, inter alia, a discount on book purchases. Walden Books contended that the program was a service and the income from the program not subject to tax. The Court held for Walden Books, rejecting the Department's position that the program was a marketing tool for selling books and that the income from the program was from the business of making retail sales.

Ariz. Outdoor Advertisers, Inc. v. Ariz. Dep't of Rev., TX 97-00454 (Tax Ct. 1998)

The Department contended that the taxpayer was subject to the transaction privilege tax on the commercial leasing of real property through the rental of its billboards. Arizona Outdoor Advertisers established that the billboards were modular and built expressly to be assembled and disassembled for transport to other sites. The billboards were frequently moved every 30 to 60 days as part of a rotating plan. In addition, the billboards were treated as personal property for property tax purposes. The Court held that the billboards were personal property and not subject to the leasing tax.

State of Arizona v. The Brannan Sand and Gravel Co., No. TX 96-00012 (Tax Ct. 1998)

Brannan failed to timely appeal its protest of a sales tax assessment to the Director of the Department, the case became final and the Department sued to collect the amount due. The Court rejected Brannanís position that it could argue that the tax was not due in the collection action, holding that its failure to exhaust its administrative remedies deprived the Court of jurisdiction to review the propriety of the tax.

Ariz. Dep't of Rev. v. Care Computer Sys., Inc.,  TX 95-00642 (Tax Ct. 1997)

(THIS CASE WAS REVERSED BY THE ARIZONA COURT OF APPEALS.  SEE Ariz. Dep't of Rev. v. Care Computer Sys., Inc.)

Care, a Washington company, sold computer hardware and software to Arizona nursing home customers.  Its contact with Arizona during the audit period consisted of 180 mail order transactions, the leasing of software and one personal computer for several months, short visits to Arizona by its salesman on the average of once a year and visits of its training personnel to Arizona for approximately 20 days per year.  The Court rejected the Department's assessment of sales tax on Care's sales, contending that it did not have sufficient nexus with the state to justify the assertion of taxing jurisdiction over Care.

City of Phoenix v. Lawrence L. Noel, TX 88-00677 (Tax Ct. 1990)

The Court determined that the taxpayer was subject to the City of Phoenix contracting tax, rejecting his argument that his construction company was the prime contractor on the project and liable for the tax.  No credible evidence was presented to establish that it was a development corporation, as opposed to Mr. Noel himself, that was the prime contractor and responsible for the tax. 








© 1996 Michael G. Galloway

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