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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 14491
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have a received a demand letter from the Arizona Dept. of

Customer Question

I have a received a demand letter from the Arizona Dept. of Revenue apparently on behalf of the city of Sedona for the Transactional Privilege Tax license (assessment of City Use Tax) based on the purchase of a motorhome. I believe this was triggered by the city of Sedona requiring us to have a business license for renting out our personal residence. This house has been rented out since Sept. 2009 when we moved to the UK. We purchased the motorhome in September 2014 during our annual home leave at the Hershey Pennsylvania RV show from A New York state dealer. The dealer and the finance company insisted that we use our last US address for registration and financing purposes, which was the Sedona address, but we had no intention of returning to Arizona. I was extremely annoyed that I had to pay the confiscatory taxes and registration fees to Arizona but we had already committed to the purchase of the motorhome.
When we retired and returned to the US this past February, we established residency in South Dakota including re-registered the motorhome there, so it has no connection at all to our so-called “business” in Sedona. The motorhome never even been there! We are living in it full time and plan to travel around North America (Arizona excluded, of course!)
So, do you agree that we should not have to pay this City Use Tax?
Thanks in advance for your advice/opinion
Dale & Glenda Nelson
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello,

The tax is based on the fact that you listed Arizona at the time of purchase for registration. The transaction privilege tax is imposed upon income or proceeds derived from engaging in a taxable business within the State of Arizona. The use tax is imposed upon the purchaser of tangible personal property which is used, stored, or consumed in Arizona when the sale was not subject to the transaction privilege tax.

As you listed Arizona as the address for the sale the use tax is imposed unfortunately. If you purchase a vehicle from an out-of-state dealer or manufacturer, the Department of Transportation will require, at the time of vehicle registration, proof that tax was paid in the state of purchase and that the amount of state tax paid is equal to or greater than the applicable Arizona use tax rate.

Most of the larger cities (including Sedona) license and collect the use tax independently.

Unfortuantely, I do not see where you can claim no use tax if you listed Sedona as the address.

Expert:  Robin D. replied 1 year ago.

I know you were hoping for a different answer and I sincerely ***** ***** could have told you differently.