CORRECTED Jan 18 2011
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REFERENCE TITLE: corporate income tax; sales factor |
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State of Arizona House of Representatives Fiftieth Legislature First Regular Session 2011
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HB 2069 |
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Introduced by Representatives Harper, Burges, Senator Murphy: Representative Dial
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AN ACT
Amending section 43-1139, Arizona Revised Statutes; amending section 43-1139, Arizona Revised Statutes, as amended by this act; relating to corporate income tax; providing for conditional enactment.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 43-1139, Arizona Revised Statutes, is amended to read:
43-1139. Allocation of business income
A. Except as provided in subsection B of this section, the taxpayer shall elect to apportion all business income to this state for taxable years beginning from and after as follows:
1. December 31, 2006 through December 31, 2007 by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is two times the property factor plus two times the payroll factor plus six times the sales factor, and the denominator of which is ten.
2. December 31, 2007 through December 31, 2008 by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is one and one‑half times the property factor plus one and one‑half times the payroll factor plus seven times the sales factor, and the denominator of which is ten.
3. December 31, 2008 by either:
1. For taxpayers located outside nonattainment area A and Area B, as defined in section 49-541, by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by the sales factor.
2. For all other taxpayers, by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus eight times the sales factor, and the denominator of which is ten.
B. All business income of a taxpayer engaged in air commerce shall be apportioned to this state by multiplying the income by a fraction, the numerator of which is the revenue aircraft miles flown within this state for flights beginning or ending in this state and the denominator of which is the total revenue aircraft miles flown by the taxpayer's aircraft everywhere. This subsection applies to each taxpayer, including a combined group filing a combined return or an affiliated group electing to file a consolidated return under section 43‑947, if fifty per cent or more of that taxpayer's gross income is derived from air commerce. For the purposes of this subsection:
1. "Air commerce" means transporting persons or property for hire by aircraft in interstate, intrastate or international transportation.
2. "Revenue aircraft miles flown" has the same meaning prescribed by the United States department of transportation uniform system of accounts and reports for large certificated air carriers (14 Code of Federal Regulations part 241).
Sec. 2. Section 43-1139, Arizona Revised Statutes, as amended by section 1 of this act, is amended to read:
43-1139. Allocation of business income
A. Except as provided in subsection B of this section, the taxpayer shall elect to apportion all business income to this state as follows for taxable years beginning from and after December 31, 2016 by either:
1. For taxpayers located outside nonattainment area A and Area B, as defined in section 49-541, by either:
(a) 1. Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) 2. Multiplying the income by the sales factor.
2. For all other taxpayers, by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus eight times the sales factor, and the denominator of which is ten.
B. All business income of a taxpayer engaged in air commerce shall be apportioned to this state by multiplying the income by a fraction, the numerator of which is the revenue aircraft miles flown within this state for flights beginning or ending in this state and the denominator of which is the total revenue aircraft miles flown by the taxpayer's aircraft everywhere. This subsection applies to each taxpayer, including a combined group filing a combined return or an affiliated group electing to file a consolidated return under section 43‑947, if fifty per cent or more of that taxpayer's gross income is derived from air commerce. For the purposes of this subsection:
1. "Air commerce" means transporting persons or property for hire by aircraft in interstate, intrastate or international transportation.
2. "Revenue aircraft miles flown" has the same meaning prescribed by the United States department of transportation uniform system of accounts and reports for large certificated air carriers (14 Code of Federal Regulations part 241).
Sec. 3. Section 43-1139, Arizona Revised Statutes, is amended to read:
43-1139. Allocation of business income
A. Except as provided in subsection B of this section, the taxpayer shall elect to apportion all business income to this state for taxable years beginning from and after December 31, 2016 by either:
1. December 31, 2006 through December 31, 2007 by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is two times the property factor plus two times the payroll factor plus six times the sales factor, and the denominator of which is ten.
2. December 31, 2007 through December 31, 2008 by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is one and one‑half times the property factor plus one and one‑half times the payroll factor plus seven times the sales factor, and the denominator of which is ten.
3. December 31, 2008 by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus eight times the sales factor, and the denominator of which is ten.
1. Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
2. Multiplying the income by the sales factor.
B. All business income of a taxpayer engaged in air commerce shall be apportioned to this state by multiplying the income by a fraction, the numerator of which is the revenue aircraft miles flown within this state for flights beginning or ending in this state and the denominator of which is the total revenue aircraft miles flown by the taxpayer's aircraft everywhere. This subsection applies to each taxpayer, including a combined group filing a combined return or an affiliated group electing to file a consolidated return under section 43‑947, if fifty per cent or more of that taxpayer's gross income is derived from air commerce. For the purposes of this subsection:
1. "Air commerce" means transporting persons or property for hire by aircraft in interstate, intrastate or international transportation.
2. "Revenue aircraft miles flown" has the same meaning prescribed by the United States department of transportation uniform system of accounts and reports for large certificated air carriers (14 Code of Federal Regulations part 241).
Sec. 4. Economic impact analysis
A. By electing to apply an enhanced sales factor formula in allocating business income under section 43-1139, subsection A, paragraph 1, subdivision (b), Arizona Revised Statutes, as amended by section 1 of this act, a corporation agrees to participate in an economic impact analysis conducted by the joint legislative budget committee. The department of revenue shall cooperate with the joint legislative budget committee by providing the identity of those corporations.
B. The joint legislative budget committee shall produce a report of the economic impact analysis on or before July 1, 2016 that includes:
1. The number of corporations that elect to use the enhanced sales factor.
2. The number and value of investments made by those corporations.
C. The report shall not disclose the identity of any taxpayer or the nature, source, amount or status of any taxpayer's income, returns, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, withholding tax paid or liabilities for deficiencies, penalties or interest under titles 42 and 43, Arizona Revised Statutes.
D. The joint legislative budget committee shall provide copies of the report to the governor's office of strategic planning and budgeting, the secretary of state and any other person who requests a copy of the report.
Sec. 5. Conditional enactment
A. Section 1 of this act is effective and applies retroactively to taxable years beginning from and after December 31, 2011, but only if both of the following conditions occur before December 15, 2016:
1. On or after June 1, 2011, one or more corporations must publicly announce, and report in writing to the joint legislative budget committee and the governor's office of strategic planning and budgeting, one or more capital investment projects located outside nonattainment area A and area B, as defined in section 49-541, Arizona Revised Statutes, individually or collectively cumulating capital costs in excess of _______________ dollars in the aggregate for all reporting corporations. Each report must:
(a) Include the date the project will begin.
(b) Include the location of the project.
(c) Describe the construction, reconstruction, expansion, installation of new equipment, tooling or retooling.
(d) Include the estimated cost of the project.
(e) Include the estimated completion date of the project.
(f) State the number of contractors expected to be employed during the project.
(g) Estimate the expected construction employment and the long-term employment on the completed project.
2. No later than December 15, 2016, one or more corporations reporting under paragraph 1 of this subsection must publicly notify the joint legislative budget committee and the governor's office of strategic planning and budgeting that one or more reported projects, individually or collectively cumulating capital costs in excess of one billion dollars in the aggregate, have commenced, as evidenced by the actual start of new construction, reconstruction or expansion or the installation of new equipment.
B. The joint legislative budget committee and the governor's office of strategic planning and budgeting shall jointly:
1. Publish annually a list of corporations and projects that are reported and undertaken for purposes of this section.
2. On or before December 31, 2016, notify in writing the director of the department of revenue and the director of legislative council if the conditions prescribed by subsection A of this section have occurred and the date they occurred or if the conditions prescribed by subsection A of this section have not occurred.
C. On or before December 31 of each year, each corporation that made capital investment commitments under subsection A, paragraph 1 of this section shall make a written report on the status of each project, including the progress, the projected costs of completion, the amounts actually spent to date and any changes and updates in the project that have occurred. Copies of the reports shall be provided to the joint legislative budget committee, the governor's office of strategic planning and budgeting, the department of revenue, the county assessor of the county in which the project is located and the secretary of state.
Sec. 6. Effective date
A. If section 43-1139, Arizona Revised Statutes, as amended by section 1 of this act, takes effect as provided by section 5 of this act, section 2 of this act is effective and applies to taxable years beginning from and after December 31, 2016, and section 3 of this act does not take effect.
B. If section 43-1139, Arizona Revised Statutes, as amended by section 1 of this act, does not take effect as provided by section 5 of this act, section 3 of this act is effective and applies to taxable years beginning from and after December 31, 2016, and section 2 of this act does not take effect.