PROPOSED
HOUSE OF REPRESENTATIVES AMENDMENTS TO H.B. 2521
(Reference to printed bill)
Page 7, strike lines 25 through 45
Strike pages 8 through 11
Page 12, strike lines 1 through 31
Renumber to conform
Line 33, strike "Sections 42-5007 and" insert "Section"; strike "are" insert "is"
Page 15, strike lines 39 through 45
Page 16, strike lines 1 through 17, insert:
"L. The department shall prescribe a form for a certificate to be used by a person that is not subject to tax under section 42‑5075 when the person is engaged by a contractor person that is subject to tax under section 42‑5075 or 42-5077 for a construction project that is taxable under section 42‑5075 or 42-5077. The certificate permits the person purchasing tangible personal property to be incorporated or fabricated by the person into any real property, structure, highway, street or bridge construction project, development or improvement to provide documentation to a retailer that the sale of tangible personal property qualifies for the deduction under section 42‑5061, subsection A, paragraph 27, subdivision (b). A prime contractor shall obtain the certificate from the department and shall provide a copy to any such person working on the project. The prime contractor shall obtain a new certificate for each project to which this subsection applies. For the purposes of this subsection, the following apply:
1. The person that is not subject to tax under section 42‑5075 may use the certificate issued pursuant to this subsection only with respect to tangible personal property that will be incorporated into a project for which the gross receipts are subject to tax under section 42‑5075.
2. The department shall issue the certificate to the prime contractor on receiving sufficient documentation to establish that the prime contractor meets the requirements of this subsection."
Page 16, line 31, strike "or fabricated" insert "or fabricated"
Strike lines 32 and 33, insert "real property, structure, highway, street or bridge construction project, development or improvement."
Page 18, between lines 41 and 42, insert:
"4. One percent of the tax base as computed for the business of every person engaging or continuing in the state in the prime contracting classification described in section 42-5077."
Renumber to conform
Page 19, line 19, strike "4" insert "5"
Line 43, strike "prime contractors" insert "prime contractors"
Page 20, line 5, strike "contractors" insert "contractors"; after "42-5075" insert "or 42-5077"
Strike lines 32 through 44
Strike pages 21 through 26
Page 27, strike lines 1 through 7
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Strike lines 26 through 36, insert:
"C. The amount to be paid to a city, town or county under subsection A of this section is the total amount of state transaction privilege tax revenues collected under section 42‑5010, subsection A from persons conducting business under section 42‑5075 42-5077 derived from contracts to construct buildings and associated improvements for the benefit of a manufacturing facility. The total amount paid to all cities, towns and counties under this subsection shall not exceed a maximum of fifty million dollars."
Page 28, line 43, after "to" strike remainder of line
Strike lines 44 and 45
Page 29, strike lines 1 through 3
Line 4, strike "facility" insert "a prime contractor as identified under paragraph 6 of this subsection resulting from an audit adjustment or claim for credit or refund of taxes described in subsection C of this section"
Strike lines 12 through 19, insert:
"9. 8. State that the city, town or county agrees that if, on notification by the department, the state treasurer ceases payments because of the condition described in subsection G H of this section, the city, town or county has no claim to additional payments if the department subsequently pays amounts to a prime contractor identified in an agreement with any city, town or county, as described in paragraph 6 of this subsection, due to an audit adjustment or claim for credit or refund of taxes described in subsection C of this section."
Renumber to conform
Page 38, strike lines 1 through 30, insert:
"51. Sales of tangible personal property to be incorporated or installed as part of environmental response or remediation activities under section 42‑5075, subsection B, paragraph 6."
Renumber to conform
Page 40, strike lines 1 through 7
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Page 46, strike line 7, insert
"(h) Prime contracting classification."
Reletter to conform
Page 50, line 6, after the period strike remainder of line
Strike lines 7 and 8, insert:
"42-5071. Personal property rental classification; definitions
A. The personal property rental classification is comprised of the business of leasing or renting tangible personal property for a consideration. The tax does not apply to:
1. Leasing or renting films, tapes or slides used by theaters or movies, which are engaged in business under the amusement classification, or used by television stations or radio stations.
2. Activities engaged in by the Arizona exposition and state fair board or county fair commissions in connection with events sponsored by such entities.
3. Leasing or renting tangible personal property by a parent corporation to a subsidiary corporation or by a subsidiary corporation to another subsidiary of the same parent corporation if taxes were paid under this chapter on the gross proceeds or gross income accruing from the initial sale of the tangible personal property. For the purposes of this paragraph, "subsidiary" means a corporation of which at least eighty percent of the voting shares are owned by the parent corporation.
4. Operating coin‑operated washing, drying and dry cleaning machines or coin‑operated car washing machines at establishments for the use of such machines.
5. Leasing or renting tangible personal property for incorporation into or comprising any part of a qualified environmental technology facility as described in section 41‑1514.02. This paragraph shall apply for ten full consecutive calendar or fiscal years following the initial lease or rental by each qualified environmental technology manufacturer, producer or processor.
6. Leasing or renting aircraft, flight simulators or similar training equipment to students or staff by nonprofit, accredited educational institutions that offer associate or baccalaureate degrees in aviation or aerospace related fields.
7. Leasing or renting photographs, transparencies or other creative works used by this state on internet websites, in magazines or in other publications that encourage tourism.
8. Leasing or renting certified ignition interlock devices installed pursuant to the requirements prescribed by section 28‑1461. For the purposes of this paragraph, "certified ignition interlock device" has the same meaning prescribed in section 28‑1301.
9. The leasing or renting of space to make attachments to utility poles, as follows:
(a) By a person that is engaged in business under section 42‑5063 or 42‑5064 or that is a cable operator.
(b) To a person that is engaged in business under section 42‑5063 or 42‑5064 or that is a cable operator.
10. Leasing or renting billboards that are designed, intended or used to advertise or inform and that are visible from any street, road or other highway.
B. The tax base for the personal property rental classification is the gross proceeds of sales or gross income derived from the business, but the gross proceeds of sales or gross income derived from the following shall be deducted from the tax base:
1. Reimbursements by the lessee to the lessor of a motor vehicle for payments by the lessor of the applicable fees and taxes imposed by sections 28‑2003, 28‑2352, 28‑2402, 28‑2481 and 28‑5801, title 28, chapter 15, article 2 and article IX, section 11, Constitution of Arizona, to the extent such amounts are separately identified as such fees and taxes and are billed to the lessee.
2. Leases or rentals of tangible personal property that, if it had been purchased instead of leased or rented by the lessee, would have been exempt under:
(a) Section 42‑5061, subsection A, paragraph 8, 9, 12, 13, 25, 29, 49 or 53 52.
(b) Section 42‑5061, subsection B, except that a lease or rental of new machinery or equipment is not exempt pursuant to section 42‑5061, subsection B, paragraph 13 if the lease is for less than two years.
(c) Section 42‑5061, subsection I, paragraph 1.
(d) Section 42‑5061, subsection M.
3. Motor vehicle fuel and use fuel that are subject to a tax imposed under title 28, chapter 16, article 1, sales of use fuel to a holder of a valid single trip use fuel tax permit issued under section 28‑5739 and sales of aviation fuel that are subject to the tax imposed under section 28‑8344.
4. Leasing or renting a motor vehicle subject to and on which the fee has been paid under title 28, chapter 16, article 4.
5. Amounts received by a motor vehicle dealer for the first month of a lease payment if the lease and the lease payment for the first month of the lease are transferred to a third‑party leasing company.
C. Sales of tangible personal property to be leased or rented to a person engaged in a business classified under the personal property rental classification are deemed to be resale sales.
D. In computing the tax base, the gross proceeds of sales or gross income from the lease or rental of a motor vehicle does not include any amount attributable to the car rental surcharge under section 5‑839, 28‑5810 or 48‑4234.
E. Until December 31, 1988, leasing or renting animals for recreational purposes is exempt from the tax imposed by this section. Beginning January 1, 1989, the gross proceeds or gross income from leasing or renting animals for recreational purposes is subject to taxation under this section. Tax liabilities, penalties and interest paid for taxable periods before January 1, 1989 shall not be refunded unless the taxpayer requesting the refund provides proof satisfactory to the department that the monies paid as taxes will be returned to the customer.
F. For the purposes of this section:
1. "Cable operator" has the same meaning prescribed by section 9‑505.
2. "Utility pole" means any wooden, metal or other pole used for utility purposes and the pole's appurtenances that are attached or authorized for attachment by the person controlling the pole."
Page 50, line 12, strike the second "section" insert "sections"; after "42-5077" insert "and 42-5078"
Line 21, after the period insert "The highway, street and bridge construction classification does not include the business of prime contracting as classified pursuant to section 42-5077."
Page 53, between lines 36 and 37, insert:
"42-5077. Prime contracting classification; definitions
A. The prime contracting classification is comprised of the business of prime contracting.
B. The prime contracting classification does not include:
1. The business of highway, street and bridge construction, alteration or repair as classified pursuant to section 42-5075.
2. Subcontractors if the subcontractor can demonstrate that the job was within the control of a prime contractor or contractors and that the prime contractor is liable for the tax on the gross income, gross proceeds of sales or gross receipts attributable to the job and from which the subcontractor was paid.
C. The tax base for the prime contracting classification is sixty‑five percent of the gross proceeds of sales or gross income derived from the business.
D. For the purposes of this section:
1. "Contracting" means engaging in business as a contractor.
2. "Contractor" is synonymous with the term "builder" and means any person or organization that undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does personally or by or through others, modify any building, railroad, excavation or structure, project, development or improvement, or to do any part of such a project, including the erection of scaffolding or other structure or works in connection with such a project, and includes subcontractors and specialty contractors. For all purposes of taxation, this definition governs without regard to whether or not the contractor is acting in fulfillment of a contract.
3. "Prime contracting" means engaging in business as a prime contractor.
4. "Prime contractor" means a contractor who supervises, performs or coordinates the modification of any building, railroad, excavation, or structure, project, development or improvement, including the contracting, if any, with any subcontractors or specialty contractors and who is responsible for the completion of the contract. A person who owns real property, who engages one or more contractors to modify that real property and who does not itself modify that real property is not a prime contractor within the meaning of this paragraph regardless of the existence of a contract for sale or the subsequent sale of that real property."
Page 53, line 37, strike "42-5077" insert "42-5078"
Page 54, strike lines 42 through 45
Strike pages 55 through 58
Page 59, strike lines 1 through 31
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Page 66, strike lines 42 through 45
Page 67, strike lines 1 through 26, insert:
"47. Tangible personal property purchased to be incorporated or installed as part of environmental response or remediation activities under section 42‑5075, subsection B, paragraph 6."
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Page 69, strike lines 7 through 13
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Page 70, line 2, after the period strike remainder of line
Strike line 3
Page 74, strike lines 33 and 34
Page 77, line 8, after "the" strike remainder of line
Strike line 9, insert "prime contracting classification pursuant to section 42-5077 and the manufactured building dealer classification pursuant to section 42-5078."
Page 85, line 27, strike "prime"
Strike lines 28 and 29, insert "highway, street and bridge construction contractors, prime contractors and owner builders manufactured building dealers who are classified under sections 42-5075, and 42-5076 42-5077 and 42-5078"
Strike lines 36 through 45
Strike page 86
Page 87, strike lines 1 through 33
Renumber to conform
Page 89, between lines 27 and 28, insert:
"Sec. 19. Report
A. On or before December 31, 2020, the department of revenue shall prepare and distribute a report to the governor, the president of the senate and the speaker of the house of representatives regarding the implementation, effect and experience from the enactment of the prime contracting transaction privilege tax classification pursuant to section 42-5077, Arizona Revised Statutes, as added by this act, in conjunction with the imposition of transaction privilege tax with respect to retail sales of materials, supplies, equipment and other tangible personal property purchased by contractors.
B. The report shall include comparisons of:
1. Revenue produced before and after the effective date of this act.
2. The revenues designated as distribution base pursuant to section 42-5010, Arizona Revised Statutes, for the purposes of section 42-5029, subsection D, Arizona Revised Statutes, before and after the effective date of this act.
3. Administration and compliance observations and issues before and after the effective date of this act.
4. Other matters and recommendations.
C. The department shall provide copies of the report to the chairpersons of the senate finance committee and the house of representatives ways and means committee, the secretary of state and any member of the public who requests a copy."
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Page 90, line 19, strike "29" insert "22"
Strike lines 36 through 40
Amend title to conform