Bill
Number: S.B. 1364
Murphy Floor Amendment
Amendment drafted by: Bill Ritz
FLOOR AMENDMENT EXPLANATION
The Murphy Floor Amendment is a substitute to the Finance amendment to provide a 3-year statute of limitations for audits not based on federal data.
MURPHY FLOOR AMENDMENT
SENATE AMENDMENTS TO S.B. 1364
(Reference to printed bill)
Page 1, lines 7, 8 strike "four three" insert "four"
Between lines 9 and 10 insert:
“B. NOTWITHSTANDING SUBSECTION A OF THIS SECTION, ANY NOTICE OF ADDITIONAL TAX DUE REGARDING INDIVIDUAL INCOME TAX ADJUSTMENTS THAT ARE NOT BASED ON FEDERAL INFORMATION SHALL BE PREPARED ON FORMS PRESCRIBED BY THE DEPARTMENT AND MAILED WITHIN THREE YEARS AFTER THE REPORT OR RETURN IS REQUIRED TO BE FILED OR WITHIN THREE YEARS AFTER THE REPORT OR RETURN IS FILED, WHICHEVER PERIOD EXPIRES LATER. FOR PURPOSES OF THIS SUBSECTION, “BASED ON FEDERAL INFORMATION” MEANS THAT THE ADJUSTMENT IS NECESSARY BECAUSE THE INDIVIDUAL REPORTED DIFFERENT AMOUNTS ON THEIR FEDERAL RETURN THAN WAS REPORTED ON THEIR ARIZONA RETURN IN AREAS IN WHICH THE ARIZONA AMOUNT IS CONTINGENT ON FEDERAL LAW.”
Reletter to conform
Line 42, strike "four three" insert "four"
Page 2, lines 11 and 20, strike "four three" insert "four"
Line 30, strike "b" insert "c"
Between lines 42 and 43, insert:
"Sec. 2. Section 42-2059, Arizona Revised Statutes, is amended to read:
42-2059. No additional audits or proposed assessments; exceptions
A. When the department completes an audit or the findings of a managed audit are accepted by the director or approved on appeal and a deficiency has been completely determined under section 42‑1108 or chapter 1, article 6 of this title, the taxpayer's liability for the particular tax for the period subjected to the audit is fixed and determined, and no additional audit may be conducted except under the following circumstances:
1. If a taxpayer files a claim for refund under section 42‑1251, subsection B or any other provision authorizing a claim for refund. Any departmental audit of the claim is limited to the issues presented on the claim for refund.
2. Changes or corrections required to be reported to the department by section 43‑327. The department may audit any such reports or any periods for which a report was required notwithstanding this section and may determine a tax deficiency or a refund.
3. An audit of state transaction privilege or use tax does not preclude a subsequent audit for a city or town. An audit of transaction privilege or use tax for a city or town does not preclude a subsequent audit for this state.
4. If the taxpayer failed to disclose material information during the audit, or has falsified books or records or otherwise engaged in an action that prevented the department from conducting an accurate audit, the applicability of this subsection may be part of a subsequent protest and may be contested by the taxpayer pursuant to chapter 1, article 6 of this title.
5. If a managed audit is completed under the terms of a limited managed audit agreement, the department may audit the issues not covered by the limited managed audit agreement within the statute of limitations prescribed by section 42‑1104.
6. FOR INDIVIDUAL INCOME TAX CHANGES OR CORRECTIONS based on FEDERAL INFORMATION, AS DEFINED IN SECTION 42-1104, SUBSECTION B, an audit may BE conducted AFTER AN ASSESSMENT HAS BEEN ISSUED WITHIN THE PERIOD SPECIFIED IN SECTION 42-1104, SUBSECTION B. THE DEPARTMENT’S AUDIT ADJUSTMENTS SHALL BE LIMITED TO CHANGES BASED ON FEDERAL INFORMATION.
B. If the department issues a notice of proposed assessment of taxes imposed by chapter 5, article 1 or 4 of this title or title 43, chapter 10, the department may not increase the amount of the proposed assessment except in one or more of the following circumstances:
1. The taxpayer has made a material misrepresentation of facts.
2. The taxpayer has failed to disclose a material fact to the auditor.
3. The department has requested information and the taxpayer fails to provide that information to the department.
4. After issuing the notice of proposed assessment but before the assessment becomes final the tax court, court of appeals or supreme court issues a decision, the application of which causes the tax initially proposed to increase.
5. THE PROPOSED ASSESSMENT WAS FOR INDIVIDUAL INCOME TAX and WAS ISSUED WITHIN THE PERIOD REQUIRED IN SECTION 42-1104, SUBSECTION B, AND THE CHANGES ARE BASED ON FEDERAL INFORMATION AS DEFINED IN SECTION 42-1104, SUBSECTION B.
C. Subsection B of this section does not apply to changes or corrections that are required to be reported to the department by section 43‑327."
Amend title to conform