872 P.2d 679 (Ariz.Tax 1994), TX 91-01599, State ex rel. Arizona Dept. of Revenue v. Phoenix Lodge No. 708, Loyal Order of Moose, Inc.

Docket Nº:TX 91-01599.
Citation:872 P.2d 679, 178 Ariz. 275
Party Name:STATE of Arizona, ex rel., ARIZONA DEPARTMENT OF REVENUE v. PHOENIX LODGE NO. 708, LOYAL ORDER OF MOOSE, INC.
Case Date:April 04, 1994
Court:Tax Court of Arizona
 
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Page 679

872 P.2d 679 (Ariz.Tax 1994)

178 Ariz. 275

STATE of Arizona, ex rel., ARIZONA DEPARTMENT OF REVENUE

v.

PHOENIX LODGE NO. 708, LOYAL ORDER OF MOOSE, INC.

No. TX 91-01599.

Tax Court of Arizona.

April 4, 1994

Page 680

[178 Ariz. 276] Atty. Gen. by Michelle M. White, Phoenix, for plaintiff.

Newmark Macpherson & Migray by Stephen C. Newmark, Phoenix, for defendant.

OPINION

SCHAFER, Judge.

Phoenix Lodge No. 708, Loyal Order of the Moose, Inc., is a non-profit, tax-exempt, fraternal organization. It provides charity for its members and also contributes to the community at-large. It also operates a hall. The hall contains a dining room that is used by members (and their families) only; it is not open to the public. The issue in this case is whether that dining room is a business for which the Lodge must pay a transaction privilege tax.

Facts

The Phoenix Lodge has 2,700 members. Each member pays an annual fee of $35.00; $8.00 goes to the international Moose organization and the remainder goes to run the Lodge. The Lodge hall consists of a lounge area, a dining room with 140 seats, a meeting room, an administrative office, parking spaces, and an outdoor recreational park. The dining room is open to members only, three to five days a week, two to three hours each day. Members sit at a table to eat, order off a menu, from a waitress, and are presented with a check at the end of the meal. The cook is a full-time employee, and volunteers and part-time workers take care of the rest of the dining room chores. The dining facility has all the accoutrements of a public restaurant--tables, linen, napkins, china, flatware, hostess/cashier station, busboy station, two fryers, a broiler, a stove, two convection ovens, steam table, refrigerators, freezers, a walk-in refrigerator, a dishwasher, and storage areas. The dining room has always lost money. The lounge, which is adjacent to the dining room and serves alcoholic beverages, is open seven days a week, 14 hours a day, and has always made money for the Lodge.

The Department of Revenue conducted an audit of the Lodge's books for tax years 1985 through 1988 and issued a deficiency assessment for transaction privilege taxes due on the dining room, the lounge and five other activities of the Lodge. The Lodge disputed the assessment and appealed through the administrative process. The entire assessment was canceled and...

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