872 P.2d 201 (Ariz.Tax 1994), TX 92-01014, Turf Paradise, Inc. v. Arizona Dept. of Revenue
|Docket Nº:||TX 92-01014.|
|Citation:||872 P.2d 201, 178 Ariz. 246|
|Party Name:||TURF PARADISE, INC. v. ARIZONA DEPARTMENT OF REVENUE.|
|Case Date:||March 30, 1994|
|Court:||Tax Court of Arizona|
[178 Ariz. 247] Dorothy Baran, Phoenix, for plaintiff.
Attorney Gen. by Michelle M. White, Phoenix, for defendant.
Turf Paradise, Inc. is in the business of racing horses. It owns horse racing tracks and, under a permit from the state, conducts racing meets at various times during the year. The State imposes a transaction privilege tax based upon the gross proceeds from the business. The issue in this case is whether the purse Turf Paradise pays to a winning horse owner is part of Turf Paradise's gross proceeds from the business of horse racing. 1
In the Fall of 1989 Turf Paradise filed a claim with the Department of Revenue for a tax refund. It claimed that from 1985 through 1989 it paid more in transaction privilege taxes than it should have. It argued that during those years the Department included in Turf Paradise's "gross proceeds" money it held in trust to pay awards (purses) to winning horse owners. The Department denied the claim, then conducted an audit of Turf Paradise's books and records. The audit resulted in the issuance of an amended assessment. Turf Paradise protested both the denial of the refund and the added assessment through the administrative process and lost at each turn. It then brought both issues to this Court. The Department filed a motion to dismiss the appeal of the amended assessment. The Court granted that motion and the only issue remaining is the denial of the refund. On that point, both sides have filed motions for summary judgment.
Much of the horse racing in Arizona is controlled by statute, A.R.S. § 5-101, et seq. Section 5-111 details how the money wagered is to be distributed. The pertinent part states:
During the period of a permit for horse or harness racing, the state shall receive, two per cent of the gross amount ... of the total amount handled in the regular pari-mutuel pools.... The permittee shall retain the balance of the total amount deducted pursuant to subsection C of this section. Of the amount retained by the permittee, less the amount payable to the permittee for capital improvements ..., breakage ..., applicable state, county and city transaction privilege or other taxes ... fifty per...
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