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House Engrossed |
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State of Arizona House of Representatives Fifty-second Legislature First Regular Session 2015
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HOUSE BILL 2617 |
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AN ACT
Amending title 41, chapter 6, Arizona Revised Statutes, by adding article 5.1; amending section 43-222, Arizona Revised Statutes; amending title 43, chapter 10, article 5, Arizona Revised Statutes, by adding section 43-1077; amending title 43, chapter 11, article 6, Arizona Revised Statutes, by adding section 43-1177; relating to income tax credits.
(TEXT OF BILL BEGINS ON NEXT PAGE)
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. REGULATORY RELIEF TAX CREDIT
41-1058. Definitions
In this article, unless the context otherwise requires:
1. "Claimant" means a small business either:
(a) On which any tax authorized by title 20, 28, 42 or 43 is imposed, levied or assessed.
(b) That owns 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 extra regulation. Creditable expense does not include the normal cost of tax compliance, including accounting and preparing and filing tax returns.
3. "Regulating entity" means this state or an agency, department, commission or other budget unit of this state, except the corporation commission.
4. "Regulation" or "extra 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 a small business take action that is likely to cause substantially more economic costs than benefits as demonstrated by quantitative and qualitative evidence supplied by the claimant.
5. "Small business" means, notwithstanding section 41-1001:
(a) A sole proprietorship.
(b) A partnership that is required to file a return under title 43, chapter 14.
(c) A limited liability partnership that has filed a statement of qualification under section 29-1101.
(d) A limited liability company formed under title 29, chapter 4.
(e) An S corporation, as defined in section 1361 of the internal revenue code.
(f) Any other corporation incorporated in this state that has fewer than fifty full-time employees.
6. "Taxable year" means a claimant's taxable year for paying individual or corporate income tax, as applicable, under title 43.
41-1058.01. Allowance of income tax 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 extra regulation incurred by a small business after December 31, 2016. A claim for credit made under this article is in lieu, and constitutes a waiver, of litigation or pursuing judicial remedies and appeals against the responsible regulating entity for damages or costs arising from the regulation.
B. A credit is not allowed 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. One thousand dollars.
D. The amount of credits that are approved under this article may not exceed an annual aggregate of five hundred thousand dollars. For the purpose of computing the maximum aggregate dollar value of claims allowed under this subsection, a claim approved pursuant to section 41-1058.02, regardless of the approved amount, is considered 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.
41-1058.02. Administration of credit; claim form; approval or denial of claim; credit certificate; public register of claims
A. The governor's regulatory review council shall administer this article.
B. The council shall develop an electronic claim form for submission to the council by the claimant. The claim form shall 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 resulting in 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 may deny the claim until the claimant is in full compliance.
D. On receiving a 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. Approves the claim, the council shall notify the department of revenue.
2. Denies the claim, the council shall also deny any subsequent claims with respect to the same regulation based on substantially similar factual circumstances.
G. If at any time during any proceeding described in 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 to all pending claims 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 for the taxable year in which the council approves the claim as provided by section 43-1077 or 43-1177, 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 shall 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. If a regulation is repealed or modified in any way to affect the associated creditable expenses, the council shall annotate the register accordingly.
41-1058.03. 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 excessive regulation.
2. Maintain and, on request, provide to the public annual data on the number of claims filed with the council, the number of claims accepted for review, the number of claims approved in whole or in part and the total amount of monies credited pursuant to this article, in an electronic format, both aggregated and disaggregated and categorized according to regulation and responsible regulating entity, without the personal identifying information of any taxpayer.
Sec. 2. Section 43-222, Arizona Revised Statutes, is amended to read:
43-222. 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 43-1077, 43‑1079.01, 43‑1087, 43‑1088, 43‑1167.01, and 43‑1175 and 43-1177.
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, 43‑1083.01, 43‑1083.04, 43‑1084, 43‑1162, 43‑1162.01, 43‑1164.01, 43‑1164.05, 43‑1170.01 and 43-1184 and, beginning in 2019, sections 43‑1083.03 and 43‑1164.04.
Sec. 3. Title 43, chapter 10, article 5, Arizona Revised Statutes, is amended by adding section 43-1077, to read:
43-1077. Regulatory relief tax credit
A. For taxable years beginning from and after December 31, 2016, a credit is allowed against the taxes imposed by this title for creditable expenses of regulation incurred by a taxpayer after December 31, 2016 as approved and certified pursuant to title 41, chapter 6, article 5.1.
B. The credit is allowed for the taxable year in which the governor's regulatory review council approves the taxpayer's claim pursuant to section 41-1058.02.
C. The amount of the credit is the approved amount determined and certified pursuant to section 41-1058.02. To claim the credit, the taxpayer shall submit with the income tax return a copy of the credit certificate issued to the taxpayer pursuant to section 41-1058.02, subsection H.
D. 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 tax liability in up to five consecutive subsequent taxable years, but not exceeding the claimant's income tax liability in each subsequent taxable year.
Sec. 4. Title 43, chapter 11, article 6, Arizona Revised Statutes, is amended by adding section 43-1177, to read:
43-1177. Regulatory relief tax credit
A. For taxable years beginning from and after December 31, 2016, a credit is allowed against the taxes imposed by this title for creditable expenses of regulation incurred by a taxpayer after December 31, 2016 as approved and certified pursuant to title 41, chapter 6, article 5.1.
B. The credit is allowed for the taxable year in which the governor's regulatory review council approves the taxpayer's claim pursuant to section 41-1058.02.
C. The amount of the credit is the approved amount determined and certified pursuant to section 41-1058.02. To claim the credit, the taxpayer shall submit with the income tax return a copy of the credit certificate issued to the taxpayer pursuant to section 41-1058.02, subsection H.
D. 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 tax liability in up to five consecutive subsequent taxable years, but not exceeding the claimant's income tax liability in each subsequent taxable year.
Sec. 5. Purpose
Pursuant to section 43-223, Arizona Revised Statutes, the legislature enacts sections 43-1077 and 43-1177, Arizona Revised Statutes, to promote job creation and a business-friendly economic development environment throughout this state and to encourage the repeal, rescission or moderation of excessive 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.
Sec. 6. Effective date
This act is effective and applies to taxable years beginning from and after December 31, 2015.