Ariz. Must Refund Car Rental Tax, Judge Rules

The rental car taxes were helping to make debt payments on the University of Phoenix football stadium. Photo via Wikimedia.
The rental car taxes were helping to make debt payments on the University of Phoenix football stadium. Photo via Wikimedia.

An Arizona judge ruled that the state must refund a rental car tax that was declared unconstitutional last year, according to a report by The Arizona Republic.

This ruling by Judge Christopher Witten of Maricopa County Superior Court could cost the Arizona Department of Revenue tens of millions of dollars in refunds and reduce funding for the Arizona Sports and Tourism Authority, according to the report.

The Authority depends on revenue from the 3.25% rental car tax to make debt payments on the University of Phoenix stadium, to promote tourism and pay for Cactus League stadiums.

Arizona might have to pay around $160 million in refunds once all the claims are taken into account, Shawn Aiken, a Phoenix attorney representing Saban Rent-A-Car LLC, told the Republic. Saban Rent-A-Car filed its claim in 2010.

The refunds would go to approximately 105 Maricopa County rental car companies that collected the tax from customers, Aiken told the Republic.

Last summer, Judge Dean Fink said the rental car tax went against a state constitutional provision. Taxes imposed on the use of vehicles — on public streets — are restricted to funding road construction, maintenance and related purposes.

If the ruling is endorsed, the Authority could lose $12 million in revenue per year, or about a third of its yearly revenue, according to the report.

Judge Whitten said state law requires the Department of Revenue to repay the rental car companies, but it can recover the rental car revenue it already paid to the Sports and Tourism Authority, says the report.

Aiken said an appeal could take about two years to resolve.

Click here for the full Arizona Republic report: http://www.azcentral.com/story/news/local/arizona/2015/08/12/judge-arizona-must-refund-millions-rental-car-tax-pays-stadiums/31590919/

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