HB2592 - 511R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 41, chapter 6, Arizona Revised Statutes, is amended by adding article 5.1, to read:

ARTICLE 5.1. UNIVERSAL REGULATORY TAX CREDIT

START_STATUTE41-1058. Definitions

In this article, unless the context otherwise requires:

1. "Claimant" means either:

(a) The individual or private organization on which any tax authorized by title 20, 28, 42 or 43 is imposed, levied or assessed.

(b) The owner of property against which tax is assessed pursuant to title 42.

2. "Creditable expense" means any actual business expense that is incurred as a direct result of regulation. Creditable expense does not include the normal cost of tax compliance, including accounting, preparation and filing tax returns.

3. "Regulation" means any legislation, administrative rule or executive action by this state or its agencies to which all of the following apply:

(a) The regulation does not protect health and safety.

(b) The regulation does not protect against civil or criminal fraud.

(c) The regulation mandates that businesses take action that is likely to cause substantially more economic costs than benefits as demonstrated by quantitative and qualitative evidence supplied by the claimant.

4. "Taxable year" means a claimant's taxable year for paying individual or corporate income tax, as applicable, under title 43. END_STATUTE

START_STATUTE41-1058.01. Allowance of credit

A. A credit is allowed against income tax liability assessed pursuant to title 43, chapter 10 or 11 for the creditable expenses due to regulation incurred by a business entity after December 31, 2014. A claim for credit under this article is in lieu of, and constitutes a waiver of, litigation or pursuing judicial remedies and appeals against the responsible regulatory entity for damages and costs.

B. A credit is not allowed under this section unless creditable expenses total more than two hundred dollars in the taxable year. A claimant is allowed only one credit for creditable expenses with respect to only one regulation of only one regulating entity in a taxable year.

C. Subject to subsection D of this section, the amount of credit under this section is the lesser of:

1. The total amount of creditable expenses incurred by a claimant in the taxable year for which the tax liability is computed and assessed.

2. Four thousand dollars.

D. The amount of credits that are approved under this article shall not exceed in the annual aggregate:

1. In calendar years 2015 and 2016, $400,000.

2. Beginning with calendar year 2017, $800,000.

E. For the purposes of computing the maximum aggregate dollar value of claims allowed under subsection D of this section, a claim approved by the governor's regulatory review council, regardless of the approved amount, shall be deemed to be the maximum value allowed by subsection C, paragraph 2 of this section, and no further claim by that claimant may be approved for that calendar year against any regulating entity. END_STATUTE

START_STATUTE41-1058.02. Claiming the credit; electronic claim form; approval or denial of claim; credit certificate; public register

A. The governor's regulatory review council shall administer this article.

B. The council shall develop a single universal electronic claim form for electronic submission to the council by the claimant. The claim form must include the following information:

1. The name of the claimant.

2. The name, title, business address, telephone number and e-mail address of the individual submitting the claim.

3. Evidence of business activity, such as a "doing business as" name, business location, description of business, taxpayer identification number or transaction privilege tax license number and other information necessary to determine whether the claimant is actually engaged in bona fide business activity.

4. An identification of the regulation causing the claim and the corresponding amount of creditable expenses attributable to the regulation.

5. The name of the regulating entity directly responsible for enacting, adopting or enforcing the regulation.

6. A waiver and acknowledgement that by filing the claim and seeking recovery under this article, the claimant waives and will not litigate or pursue judicial remedies or appeals against:

(a) The responsible regulating entity for damages or costs arising from the regulation.

(b) The council or any other entity responsible for evaluating, ruling on, paying or denying remedies for claims made pursuant to this article.

7. Any other information required by the council to evaluate and rule on the validity of the claim.

8. A declaration or verification that the claim is true, complete and accurate to the claimant's best knowledge and belief and made under penalty of perjury.

C. A claimant may file a claim for a credit under this article at any time during the year using the electronic claim form prescribed by the council. If the claimant fails to submit a complete, correct and timely claim form, the council shall deny the claim until the claimant is in full compliance. The council at any time may limit or discontinue the receipt of new claims for the purpose of proper and adequate management of and attention to currently existing claims.

D. On receiving a complete, correct and timely claim, the council shall immediately determine whether there is capacity under the aggregate maximum dollar amount prescribed by section 41-1058.01, subsection D to accommodate the claimed amount of creditable expenses.

E. If the council determines that capacity exists under the aggregate maximum dollar amount and that the claim appears to have good faith merit on its face, the council may:

1. Forward a copy of the claim, as formal notice, to the responsible regulating entity identified in the claim.

2. Request a written response to the claim with supporting documentation.

F. Within sixty days after the claimant's submission of the claim, the council shall make an initial evaluation and determination to approve or deny the entire claim as submitted and notify both the claimant and, if a responsible regulating entity was notified pursuant to subsection E of this section, the responsible regulating entity of the decision by certified mail, return receipt requested. If the council:

1. Fails to make a decision within sixty days after the submission of the claim, the claim is considered to be approved for processing as provided by paragraph 2 of this subsection.

2. Approves the claim, the council shall notify the department of revenue.

3. Denies the claim, the council shall deny subsequent claims with respect to the same regulation based on substantially similar factual circumstances.

G. If at any time during any proceeding described by subsection D, E or F of this section the council determines that the maximum annual amount of credits prescribed by section 41-1058.01, subsection D has been awarded, the council shall notify all parties, and further proceedings are terminated and no further credits may be awarded with respect to the calendar year.

H. Any amount of a claim finally approved by the council under this section constitutes a credit against the claimant's income tax liability as provided by section 43-1082.01 or 43-1171, as applicable. The council shall issue to the claimant a credit certificate that includes the amount of the approved claim. To claim the CREDIT, the claimant must submit a copy of the credit certificate at the time of filing the taxpayer's income tax return under title 43.

I. The council shall maintain a public electronic register of claims filed under this section that indicates whether the claim was ultimately approved or denied, the location of the claim, the dollar amount of the claim and the approved amount of any credit, and the regulation and creditable expenses associated with each regulation by regulating entity and cited, classified and coded in uniform common nomenclature to expedite public access and application in individual circumstances. If a regulation is repealed or modified in any way to affect the associated creditable expenses, the council shall annotate the register accordingly. END_STATUTE

START_STATUTE41-1058.03. Administration; forms and procedures; public information

The council shall:

1. Adopt, publish and prescribe forms and procedures as necessary to effectuate the purposes of this article to encourage the repeal, RESCISSION or moderation of regulation.

2. Maintain and, on request, provide to the public annual data on the number of claims filed with the council, number of claims accepted for review, number of claims approved in whole or in part and total amount of monies credited pursuant to this article, in electronic format, both aggregated and disaggregated and categorized according to regulation, regulating entity and responsible state agency, without personal identifying information of any taxpayer. END_STATUTE

START_STATUTE41-1058.04. Debt financing and increased tax or fee revenue prohibited

A regulating entity that is responsible for a regulation that results in tax credits under this article shall not engage in debt financing or impose new or increased taxes or fees to offset the fiscal impact of any credit allowed under this article. END_STATUTE

Sec. 2. Section 43-222, Arizona Revised Statutes, is amended to read:

START_STATUTE43-222. Income tax credit review schedule

The joint legislative income tax credit review committee shall review the following income tax credits:

1. For years ending in 0 and 5, sections 43‑1079.01, 43‑1087, 43‑1088, 43‑1090.01, 43‑1167.01, 43‑1175 and 43‑1182.

2. For years ending in 1 and 6, sections 43‑1074.02, 43‑1083, 43‑1083.02, 43‑1085.01, 43‑1164.02, 43-1164.03 and 43‑1183.

3. For years ending in 2 and 7, sections 43‑1073, 43‑1079, 43‑1080, 43‑1085, 43‑1086, 43‑1089, 43‑1089.01, 43‑1089.02, 43-1089.03, 43‑1090, 43‑1164, 43‑1167, 43‑1169, 43‑1176 and 43‑1181.

4. For years ending in 3 and 8, sections 43‑1074.01, 43‑1081, 43‑1168, 43‑1170 and 43‑1178.

5. For years ending in 4 and 9, sections 43‑1076, 43‑1076.01, 43‑1081.01, 43-1082.01, 43‑1083.01, 43‑1084, 43‑1162, 43‑1162.01, 43‑1164.01, 43‑1170.01, 43-1171 and 43-1184 and, beginning in 2019, sections 43-1083.03 and 43‑1164.04. END_STATUTE

Sec. 3. Title 43, chapter 10, article 5, Arizona Revised Statutes, is amended by adding section 43-1082.01, to read:

START_STATUTE43-1082.01. Regulatory tax credit

A. For taxable years beginning from and after December 31, 2014, a credit is allowed against the taxes imposed by this title for creditable expenses of regulation incurred by a taxpayer after December 31, 2014 as approved and certified pursuant to title 41, chapter 6, article 5.1.

B. The amount of the credit is the approved amount determined and certified pursuant to section 41-1058.02. To claim the credit, the taxpayer must submit with the income tax return a copy of the credit certificate issued to the taxpayer pursuant to section 41-1058.02, subsection H.

C. If the amount of the credit exceeds the taxes due for the taxable year, the amount of the credit not used as an offset against the tax liability for that taxable year may be carried forward as a credit against up to five consecutive subsequent taxable years, but not exceeding the claimant's income tax liability in each subsequent taxable year.

D. The AMOUNT of credit under this section constitutes a debit against the state general fund appropriation to any state agency directly responsible for enacting, adopting or enforcing the regulation that resulted in the tax credit. Notwithstanding any other law, the department of revenue shall notify the department of administration to deduct and withhold the amount of the credit from monies otherwise appropriated to the agency in the current fiscal year. Monies affected by this subsection revert to the state general fund. END_STATUTE

Sec. 4. Title 43, chapter 11, article 6, Arizona Revised Statutes, is amended by adding section 43-1171, to read:

START_STATUTE43-1171. Regulatory tax credit

Sec. 5. Appropriation; governor's regulatory review council; exemption

A. The sum of $350,000 is appropriated from the state general fund in fiscal year 2014-2015 to the governor's regulatory review council for the administration of title 41, chapter 6, article 5.1, Arizona Revised Statutes, as added by this act, including four full-time equivalent employment positions. The council shall ensure that employees hired for those positions are knowledgeable or experienced in regulatory issues at all levels of government.

B. The appropriation made in subsection A of this section is exempt from the provisions of section 35-190, Arizona Revised Statutes, relating to lapsing of appropriations.

Sec. 6. Purpose

Pursuant to section 43-223, Arizona Revised Statutes, the legislature enacts sections 43-1082.01 and 43-1171, Arizona Revised Statutes, as added by this act, to promote job creation and a business-friendly economic development environment throughout this state and to encourage the repeal, rescission or moderation of government regulation that does not protect health and safety, that does not protect against civil or criminal fraud and that requires businesses to take action that is likely to cause substantially more economic costs than benefits, as demonstrated by quantitative and qualitative evidence.