PEORIA, Ariz. — A Valley martial arts school received a surprising bill in the mail for past due taxes dating back to 2017.
"$37,000 is a lot of money and that's what my bill was," Howard Munding said.
Despite paying his taxes, the owner of Peoria Championship Martial Arts told 12News he was blindsided by a notice in the mail saying he owed money for an amusement tax that went unpaid since 2017.
Munding told 12News he didn't know the amusement tax applied to his business.
“That’s where a lot of people’s heartburn was because we applied for our business licenses, we renewed them every year. We had no idea that this was even a thing," Munding said.
Munding is not alone. Dance, gymnastic and other martial arts studios also reported receiving notices from the city.
“There’s been a lot of sleepless nights for myself and other business owners trying to figure out what are we going to do," Munding said. “I went out and started applying for a second mortgage on my house to be able to pay these taxes because that would have been cheaper than paying the interest and penalties.”
Under the Arizona amusement tax code, cities like Peoria have the option to tax any business charging admission for exhibitions, amusement or entertainment among other things.
The amusement tax is 2.8%.
Peoria Mayor Jason Beck and other council members proposed an ordinance that would erase the back taxes and start charging the amusement tax in the new year if passed.
Councilmembers Denette Dunn and Brad Shafer told 12News they stand with Peoria's small businesses.
The Peoria Chamber of Commerce has been fighting for a resolution alongside these businesses.
“While this is a great, quick compromise for these businesses, we still want to work with our state legislators to ensure that the tax code language is clear," Peoria Chamber of Commerce President and CEO Rhonda Carlson said.
If the ordinance passes, Munding said he won't have to close his business.
“We don’t want anybody else to wind up in this situation. This is something that affects the entire state. Let’s get this changed, let’s get this solidified so everyone knows what the rules are so everyone can comply," Munding said.
On Tuesday night, the Peoria City Council approved the ordinance establishing an official effective date for specific business types required, under state tax code, to pay the Transaction Privilege Tax (TPT) under the Amusement classification. The new effective date for paying this tax is Jan. 1, 2024.
The decision now means back taxes would be erased for the affected businesses and the city will start charging the amusement tax in the new year.
Here's a link to the full presentation:
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