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REFERENCE TITLE: telecommunications; broadband; accelerated depreciation |
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State of Arizona Senate Fifty-third Legislature First Regular Session 2017
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SB 1326 |
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Introduced by Senators Lesko: Cajero Bedford, Fann, Montenegro, Smith; Representative Leach
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AN ACT
Amending section 42-14403, Arizona Revised Statutes; relating to telecommunications companies.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 42-14403, Arizona Revised Statutes, is amended to read:
42-14403. Determining valuation; definitions
A. On or before August 31 of each year, the department shall determine the valuation as of January 1 of the property of all telecommunications companies operating in this state at its full cash value. Real estate shall be valued at market value, and personal property shall be valued on a unitary basis at its cost less depreciation. In addition, the taxpayer may submit documentation showing the need for, and the department shall consider, an additional adjustment to recognize obsolescence using standard appraisal methods and techniques.
B. For the purposes of this section:
1. Except as provided in paragraph 2 of this subsection, depreciation shall be computed on a straight line straight-line basis using the lives set forth as follows:
(a) Buildings with a twenty-five year twenty-five-year life.
(b) Cable with a fifteen year fifteen-year life.
(c) Telecommunications equipment with a five year five-year life.
(d) Any other telecommunications property that is not included in subdivisions (a), (b) and (c) of this paragraph with a seven year seven‑year life.
2. For qualifying broadband infrastructure, depreciation shall be computed as follows:
(a) Cable shall be computed on a straight-line basis using a ten‑year life.
(b) Additional depreciation shall be applied to personal property as follows:
(i) For the first tax year of assessment, the department shall use twenty-five percent of the scheduled depreciation value.
(ii) For the second tax year of assessment, the department shall use forty-one percent of the scheduled depreciation value.
(iii) For the third tax year of assessment, the department shall use fifty-seven percent of the scheduled depreciation value.
(iv) For the fourth tax year of assessment, the department shall use seventy-three percent of the scheduled depreciation value.
(v) For the fifth tax year of assessment, the department shall use eighty-nine percent of the scheduled depreciation value.
(vi) For the sixth tax year of assessment and each subsequent tax year of assessment thereafter, the department shall use the scheduled depreciation value.
2. 3. The computation prescribed in paragraph 1 of this subsection shall not reduce the valuation of property valued pursuant to paragraph 1, subdivision (a) of this subsection below twenty per cent percent of cost and shall not reduce the valuation of property valued pursuant to paragraph 1, subdivisions (b), (c) and (d) of this subsection below ten per cent percent of cost.
3. 4. For cellular or other wireless telecommunications companies, the taxable unit is the applicable metropolitan statistical area or rural statistical area and does not include the value of any license that is issued by the federal communications commission.
C. For the purposes of this section:
1. "Cost" means the original cost as reported on the company's books and records.
2. "Obsolescence" means a reduction in the value of an asset resulting from functional or economic obsolescence.
3. "Qualifying broadband infrastructure" means cable, telecommunications equipment and other tangible personal property capable of being used for or in connection with the transmission of data at a rate that is at least equal to four megabits per second in at least one direction, including multiplexers, routers, servers, fiber optics, coaxial cable and equipment supporting the transmission function first placed in service on or after January 1, 2013.
Sec. 2. Retroactivity
This act applies retroactively to valuation years beginning from and after December 31, 2016.