The Peoria City Council, Tuesday night, approved an ordinance establishing an official effective date for specific business types required, under state tax code, to pay the Transaction Privilege Tax (TPT) under the Amusement classification.
The new effective date for paying this tax is January 1, 2024.
Businesses impacted by this ordinance are dance, gymnastics, and martial arts studios that charge for dance, sports, athletic, or health-related instruction.
Currently, there are 18 businesses in Peoria that potentially fall under this classification.
A random audit conducted this summer discovered that a majority of these businesses were not paying this tax. The city has been working with these businesses to help them get whole on taxes owed, including waiving penalties and creating payment plans. Meanwhile, Mayor Jason Beck had been encouraging staff to identify a solution that minimized financial distress to these businesses while maintaining consistency with the tax code.
Arizona State Statute 42-6055 does provide a provision, which allows city’s that chose to utilize the state tax code to collect the Amusement Tax, to establish an effective date for tax collection.
Specifically, the statute reads that cities may, “amend the effective date of any provision of the code, or amend the effective date for application to any specified class of taxpayers of any provision of such code, to any date after the effective date of the original adoption of the code in any case where the…city or town determines that a prospective application of a provision may further substantial justice.”
Businesses selling any merchandise (t-shirts, uniforms, performance attire, etc….), at these establishments will be required to pay back sales taxes on those transactions.