Honeywell v. Maricopa County

Citation: Honeywell Information Systems, Inc. v. Maricopa County, 118 Ariz. 171, 575 P.2d 801 (Ariz. App. 1978).

Honeywell Information Systems, Inc. contended that the Maricopa County Assessor overvalued thirty-nine items of computer equipment for 1973 taxes by including intangibles such as computer programs, classroom instruction and support engineering services in the overall valuation. Honeywell paid the taxes under protest and appealed the assessment to the State Board of Property Tax Appeals ("Board"). The Board upheld the valuation fixed by the Assessor. On appeal to the Superior Court, the court affirmed the Board's ruling.

The court of appeals reversed and remanded, holding that Honeywell, which had one "bundled" price for its hardware and software, was knowingly and systematically discriminated against by the Assessor in the valuation of Honeywell's computer equipment, since other computer companies, who had "unbundled" prices, were not assessed for their software.

The court further held that computer software is intangible property and, as such, should be excluded in determining the value of tangible computer equipment. The court concluded that a valuation by taxing authorities based on a bundled catalog list price is excessive when it includes software, and that in arriving at a determination of the fair market value of computer equipment, discounts from the catalog price must be considered.