Jones Outdoor Advertising owns billboards located throughout Arizona. The Arizona Department of Revenue assessed Jones transaction privilege (sales) tax under the State’s personal property rental classification. Jones asserted that although its billboards were personal property, Jones did not lease or rent the billboards to its advertising customers. Jones also asserted that the State had repealed the sales tax on “advertising” many years ago and that the assessment violated that tax policy decision. The Court of Appeals held that the billboard company retains possession, use and control of the billboard during the term of the advertising agreement. Therefore, the billboards are not leased or rented to the customer because that requires exclusive possession, use and control by the lessee or renter. The Court also held that the assessment was contrary to the Legislature’s decision many years ago to repeal the statute that imposed the sales tax on advertising. The Court noted the repeal was for the specific purpose of removing the sales tax that had been imposed on all advertising companies for many years, including billboard companies. As a result, the assessment violated the tax policy of the State.
Jones Outdoor Advertising, Inc. v. Arizona Dep’t of Revenue, 1 CA-TX 14-0006 (7/16/15).
Authored by: James M. Susa





