Ariz. Admin. Code § R6-3-1720 - Exempting Certain Direct Sellers and Income Tax Preparers

A. Direct sellers. This subsection governs the determination of whether employment is exempt under A.R.S. § 23-617(22).

1. "Consumer goods" means tangible personal property normally used for personal, family, or household purposes, including property meant to be attached to or installed in any real property, regardless of whether such tangible property is actually attached or installed. Consumer goods do not include such things as:

a. Services,

b. Intangible property,

c. Real property, or

d. Goods held for resale or investment purposes.

2. When the solicitation or sale includes services or merchandise not within the definition of consumer goods, the exemption shall be allowed only if the services or merchandise not within the definition of consumer goods are incidental to the consumer goods and do not equal 50% or more of the total purchase price.

3. Compensation received by direct sellers may be "overrides" (commissions paid to direct sellers based on sales of other direct sellers) or "profits" (the difference between the price the direct seller pays for consumer goods purchased and the resale price the seller charges the consumer for the goods) as well as commissions.

4. "Primarily resulting" means that substantially all (80% or more) of the solicitations or sales of consumer goods are made by the direct seller "in person", "in the home" of the prospective consumer. Boiler room telephone-type operations will not fall within this exemption as they are not "in person" nor are they solicitations or sales consummated "in the home".

B. Income Tax Preparers. This subsection governs the determination of whether employment is exempt under A.R.S. § 23-617(23).

1. "Tax returns" means returns required to be filed under federal or state income tax laws.

2. "Related schedules and documents" means schedules and documents which accompany the tax returns, any forms prepared by the tax preparer in lieu of regular income tax forms, and information documents prepared from client interviews. Related schedules and documents do not include accounting records or financial statements.

3. "Preparation" of tax returns means obtaining necessary information from the taxpayer, deciding which tax rules apply and how, computing the tax, or completing the necessary forms. To qualify under the exemption, a tax preparer need not actually fill out or review the forms. However, preparation does not include the mere typing, reproducing, or reviewing of the forms.

4. The services of the tax preparer will not be exempt if such individual doing the work is subject to any controls, whether exercised or not, other than those required by the IRS. The IRS exercises control over tax preparers by imposing a penalty if the tax preparer:

a. Does not sign the return (manual signature).

b. Does not furnish an employer's ID number and a Social Security Number.

c. Does not show the business address where the return was completed.

d. Does not keep copies or records of a return for three years available for inspection by the IRS.

e. Does not provide a copy of the complete return to the taxpayer.

f. Negligently or intentionally disregards the rules and regulations for preparing tax returns.

g. Willfully understates tax liability (preparer must ask reasonable questions when the information furnished by the taxpayer seems to be incomplete or incorrect, and some deductions require specific documentation which a preparer must be satisfied actually exists).

h. Endorses a refund check (excepting bank tax preparers).

i. Does not file an annual information report, Form 5717, by July 31 of each year.

Notes

Ariz. Admin. Code § R6-3-1720

Adopted effective November 15, 1978 (Supp. 78-6). Amended effective December 20, 1995 (Supp. 95-4).