Section R15-5-905. Products Shipped Out of Arizona

A.      A person engaged in the business of mining that ships a non- metalliferous mineral product out-of-state without making a sale in Arizona shall include in the tax base the market value of the nonmetalliferous mineral product before it enters inter- state commerce.

B.       Unless otherwise provided in subsection (D), the taxpayer shall calculate the market value of a nonmetalliferous mineral product shipped out-of-state in the following manner:

1.        Establish the total selling price of the product outside Ari- zona.

2.        Deduct, from the total selling price, costs incurred out-of- state that increase the value of the product. These costs include:

a.         The cost of actual freight paid, as provided in R15- 5-908, to the point of sale outside Arizona;

b.        The refining or processing cost incurred before the first sale; and

c.         The cost of sales commissions, paid or accrued, in connection with the sale.

C.      The market value of the product shipped out-of-state shall not include the cost of processing if the processor has paid the Ari- zona transaction privilege tax on the gross proceeds of sales or gross income derived from the processing. (See R15-5-904.)

D.      A taxpayer may compute the market value of a nonmetallifer- ous mineral product shipped out-of-state in any manner that accurately reflects the value of the nonmetalliferous mineral product at the point it enters interstate commerce if the tax- payer gives prior written notification to the Department and the Department approves the computation method.

Historical Note

Amended effective March 18, 1981 (Supp. 81-2).

Amended effective June 18, 1987 (Supp. 87-2). Amended by final rulemaking at 6 A.A.R. 2952, effective July 18, 2000 (Supp. 00-3).