Peoria’s business community scored a win this week after a monthslong battle over the controversial amusement tax when the city council unanimously approved a measure Nov. 14 to essentially erase several years worth of back taxes for certain businesses.
The measure established an effective date for the transaction privilege tax on dance, martial arts and gymnastics studios within the city of Peoria that charge for related instruction.
Some businesses were audited and ordered to pay back taxes in the tens of thousands of dollars.
Approval of the measure will erase those back taxes and place the effective date as Jan. 1, 2024, allowing those businesses to start paying the amusement tax then, with no retroactive penalties.
Peoria Chamber of Commerce CEO and President Rhonda Carlson said this is a step in the right direction and is thankful to the city for its due diligence and finding a great compromise.
“This will prevent several of our small businesses from closing, which is a huge win for us as a chamber and a huge win for the city,” she said. “We look forward to working with the city on better informing the businesses moving forward.”
At issue was a number of businesses that said they owed several years worth of back taxes under section 12-410 of Peoria’s city code, referred to as an amusement tax.
The amusement tax was approved by Peoria voters in 2005. It requires certain businesses to pay 2.8% of their gross income for each customer for “providing amusement that begins in the city or takes place entirely within the city.”
The code includes businesses such as dance and martial arts studios as well as gymnastics instruction. Many local businesses affected by this tax fall into those categories that are strictly instructional with no ticketed performances or offerings.
The commonality among these merchants is they had no clue what the amusement tax was until a bill arrived claiming they had never paid it.
City Manager Henry Darwin said he believes after extensive dialogue and research, the city correctly applied and interpreted the tax code, but during the past few months, amusement tax payers offered several concerns and alternatives to the city’s interpretation of the code.
But Deputy City Manager Kevin Burke said, “Peoria’s ability to accommodate those suggestions is what I would term as having some limitations.”
Prior to the council meeting, Mayor Jason Beck encouraged staff to identify a solution that minimized financial distress to the businesses while maintaining consistency with the tax code.
In addressing this, city staff found section 42-6055 of the Arizona Revised Statutes has a provision that could appropriately apply to this situation, which authorizes any city or town to “amend the effective date for application to any specified class of taxpayers of any provision of the code,” provided “prospective application may further substantial justice.”
Several local businesses and the chamber met with Beck, Darwin, Councilmember Brad Shafer, and Sen. Anthony Kern and agreed to the provision.
Burke described it as a “fresh start,” and the businesses will remain categorized as they are.
“The proposal threads the difficult balance of treating all taxpayers consistently and recognizing sometimes the rules can create injustices,” Burke said. “It also furthers substantial justice particularly for the (dance, martial arts, gymnastics) students who had no option as to where to go.”
The effective date will apply to the specified categories of dance, gymnastics or martial arts studios engaged in instruction.
Burke said having instruction as part of the language is key.
“The instruction part is an important part because there are multiple facets of any business, but the idea of the retail portion of it, whether selling dance shoes or pads, that’s still retail. That’s no different than if you bought it on Amazon. That’s still subject to the retail tax. But the instruction piece, which is the majority of these business, gets the fresh start.”
Lora Wood, owner of LA Dance studio, said she is thankful for the city’s commitment to small businesses that were affected by the tax.
“The collected efforts in finding a solution that strikes a balance between the city’s growth and the well being of our small businesses are commendable,” she said. “It reflects a commitment to the prosperity and the harmony of our community.”
The chamber identified more than 40 businesses that operate dance, martial arts and gymnastics academies in Peoria and outreach to those businesses has shown that more than 70% were not aware of the tax and had never received prior communication from the city that they are considered an amusement, Carlson said.
Chamber officials believe these businesses that offer instruction should not be taxed under the amusement tax at all. Carlson said moving forward she hopes to work with state legislators to clear up confusion over the amusement tax.
“We will look to schedule a meeting with Kern and other legislators to see what progress we can make,” she said.
Philip Haldiman can be reached at phaldiman@iniusa.org, or on Twitter @philiphaldiman. We’d like to invite our readers to submit their civil comments, pro or con, on this issue. Email AZOpinions@iniusa.org.
Meet Philip Haldiman is an award-winning journalist who most recently took first place for investigative reporting in 2023 from Arizona Newspapers Association. He joined Independent Newsmedia, Inc., USA, in 2015, covering Sun City West his first year. Since 2016, he has covered the city of Peoria. Prior to coming to INI, he was a reporter with The Arizona Republic for seven years, covering numerous cities throughout the Valley. Before that, he was a freelance writer.
Community: Haldiman spearheads the Peoria Independent Hometown Heroes Awards program, honoring local individuals and businesses that give back to the community. He has hosted local candidate forums over the years and is a member of the Society of Professional Journalists. Haldiman also served as a member of the Journalism Program Community Advisory Board at Glendale Community College. Outside journalism, Haldiman served as a member of the city of Peoria Complete Count Committee for the Census, 2019-2020. Lastly, he has served as a member of his HOA governing board since 2021.
Education: Arizona State University with a BA in Journalism and Mass Communications and a BA in Theater.
Random Fact: Haldiman is a fourth-generation Arizonan as well as wrote and produced an autobiographical comic book about his time spent in Hollywood and his life as a cult film star.
Hobbies: He enjoys hiking Arizona’s mountainous landscapes and is currently working on a play for the stage.
By 
Comments
No comments on this item Please log in to comment by clicking here