COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES AMENDMENTS TO H.B. 2479
(Reference to printed bill)
Page 2, line 37, after "include" strike remainder of line insert "a"
Line 38, strike the first comma
Page 4, line 43, strike "words" insert "works"
Page 5, line 26, strike "provision" insert "provide"
Line 38, strike "http" insert "hypertext transfer protocol"
Line 40, strike "The operation of one or more data centers that enable" insert "Providing"
Line 41, strike "to access" insert ", and those authorized by the person's customers, with access to"
Line 42, strike "connected"
Strike line 43, insert "located within a data center environment operated by the person."
Page 6, line 2, strike "the building" insert "space to operate one or more servers"
Line 5, after "customers" insert ", and those authorized by the person's customers,"
Line 7, after "servers" insert "located"; strike "colocation facility" insert "data center environment"; strike "owned" insert "operated"
Line 17, strike "subscription-based"
Line 19, strike "through the internet or wirelessly" insert "remotely accessed"
Line 21, strike "subscription" insert "service"; after "include" insert "the right to"; strike "products" insert "goods"
Page 6, line 39, after "the" insert "right to"
Page 7, line 29, after "1." insert "The"; strike "or" insert a comma; after "proceeds" insert ", purchase price or sales price"
Lines 30 and 31, strike "or" insert a comma; after "licensing" insert ", purchasing or using"
Line 38, after "files" insert "such as cache files"
Between lines 40 and 41, insert:
"2. Prewritten computer software and specified digital goods transferred electronically may be taxed only as provided by sections 42‑5061 and 42-6015."
Renumber to conform
Strike pages 8 through 12
Page 13, strike lines 1 through 18
Renumber to conform
Page 14, strike line 5
Line 6, strike "(a)" insert "1."
Line 8, strike "(b)" insert "2."
Line 9, after the period insert "In the absence of a delivery address, the purchaser's billing address may be used for the purposes of this paragraph."
Strike lines 10 through 27
Line 32, after the comma insert "selling, renting or"
Line 33, after "selling" insert ", renting or licensing for use of"
Page 32, between lines 28 and 29, insert:
"Sec. 5. Section 42-5151, Arizona Revised Statutes, is amended to read:
42-5151. Definitions
In this article, unless the context otherwise requires:
1. "Ancillary services" means those services so designated in federal energy regulatory commission order 888 adopted in 1996 that include the services necessary to support the transmission of electricity from resources to loads while maintaining reliable operation of the transmission system according to good utility practice.
2. "Electric distribution service" means distributing electricity to retail electric customers through the use of electric distribution facilities.
3. "Electric generation service" means providing electricity for sale to retail electric customers but excluding electric distribution or transmission services.
6. 4. "Electricity" means electric energy, electric capacity or electric capacity and energy.
7. 5. "Electricity supplier" means a person, whether acting in a principal, agent or other capacity, that offers to sell electricity to a retail electric customer in this state.
4. 6. "Electric transmission service" means transmitting electricity to retail electric customers or to electric distribution facilities so classified by the federal energy regulatory commission or, to the extent permitted by law, so classified by the Arizona corporation commission.
5. 7. "Electric utility services" means the business of providing electric ancillary services, electric distribution services, electric generation services, electric transmission services and other services related to providing electricity.
8. "Natural gas" means natural or artificial gas, and includes methane and propane gas, the natural gas commodity, natural gas pipeline capacity or natural gas commodity and pipeline capacity.
9. "Natural gas utility services" means the business of selling natural gas or providing natural gas transportation services or other services related to providing natural gas.
10. "Notice" means written notice served personally or by certified mail and addressed to the last known address of the person to whom such notice is given.
11. "Other services" includes metering, meter reading services, billing and collecting services.
12. "Person" means an individual, firm, partnership, joint venture, association, corporation, estate, trust, receiver or syndicate, this state or a county, city, municipality, district or other political subdivision or agency thereof.
13. "Prewritten computer software" has the same meaning prescribed in section 42-5001.
13. 14. "Purchase" means any transfer, exchange or barter, conditional or otherwise, in any manner or by any means, of tangible personal property for a consideration, including transactions by which the possession of property is transferred but the seller retains the title as security for payment.
14. 15. "Purchase price" or "sales price" means the total amount for which tangible personal property is sold, including any services that are a part of the sale, valued in money, whether paid in money or otherwise, and any amount for which credit is given to the purchaser by the seller without any deduction on account of the cost of the property sold, materials used, labor or services performed, interest charged, losses or other expenses, but does not include:
(a) Discounts allowed and taken.
(b) Charges for labor or services in installing, remodeling or repairing.
(c) Freight costs billed to and collected from a purchaser by a retailer for tangible personal property which that, on the order of the retailer, is shipped directly from a manufacturer or wholesaler to the purchaser.
(d) Amounts attributable to federal excise taxes imposed by 26 United States Code section 4001, 4051 or 4081 on sales of heavy trucks and trailers and automobiles or on sales of use fuel, as defined in section 28‑5601.
(e) The value of merchandise that is traded in on the purchase of new or pre‑owned merchandise when the trade‑in allowance is deducted from the sales price of the new or pre‑owned merchandise before the completion of the sale.
15. 16. "Retail electric customer" means a person who purchases electricity for that person's own use, including use in that person's trade or business, and not for resale, redistribution or retransmission.
17. "Retailer" includes:
(a) Every person engaged in the business of making sales of tangible personal property for storage, use or other consumption or in the business of making sales at auction of tangible personal property owned by that person or others for storage, use or other consumption. If in the opinion of the department it is necessary for the efficient administration of this article to regard any salesmen, representatives, peddlers or canvassers as the agents of the dealers, distributors, supervisors or employers under whom they operate or from whom they obtain the tangible personal property sold by them, regardless of whether they are making sales on their own behalf or on behalf of such dealers, distributors, supervisors or employers, the department may so regard them and may regard the dealers, distributors, supervisors or employers as retailers for purposes of this article.
(b) A person who solicits orders for tangible personal property by mail if the solicitations are substantial and recurring or if the retailer benefits from any banking, financing, debt collection, telecommunication, television shopping system, cable, optic, microwave or other communication system or marketing activities occurring in this state or benefits from the location in this state of authorized installation, servicing or repair facilities.
16. 18. "Retail natural gas customer" means a person who purchases natural gas for that person's own use, including use in that person's trade or business, and not for resale, redistribution or retransmission.
18. 19. "Solar daylighting" means a device that is specifically designed to capture and redirect the visible portion of the solar beam, while controlling the infrared portion, for use in illuminating interior building spaces in lieu of artificial lighting.
19. 20. "Solar energy device" means a system or series of mechanisms designed primarily to provide heating, to provide cooling, to produce electrical power, to produce mechanical power, to provide solar daylighting or to provide any combination of the foregoing by means of collecting and transferring solar generated energy into such uses by either active or passive means, including wind generator systems that produce electricity. Solar energy systems may also have the capability of storing solar energy for future use. Passive systems shall clearly be designed as a solar energy device, such as a trombe wall, and not merely as a part of a normal structure, such as a window.
21. "Specified digital goods" has the same meaning prescribed in section 42-5001.
20. 22. "Storage" means keeping or retaining tangible personal property purchased from a retailer for any purpose except sale in the regular course of business or subsequent use solely outside this state. For the purposes of this paragraph, sale in the regular course of business does not include the transfer of title or possession of coal back and forth between an owner or operator of a power plant and a person who is responsible for refining coal if both of the following apply:
(a) The transfer of title or possession of the coal is for the purpose of refining the coal.
(b) The title or possession of the coal is transferred back to the owner or operator of the power plant after completion of the coal refining process. For the purposes of this subdivision, "coal refining process" means the application of a coal additive system that aids the reduction of power plant emissions during the combustion of coal and the treatment of flue gas.
21. 23. "Taxpayer" means:
(a) Any retailer or person storing, using or consuming tangible personal property of which the storage, use or consumption of which is subject to the tax imposed by this article when such the tax was not paid to a retailer.
(b) Any vendor of prewritten computer software or specified digital goods transferred electronically or person using such items of which the use is subject to the tax imposed by this article if the tax was not paid to a vendor.
24. "Transferred electronically" has the same meaning prescribed in section 42-5001.
22. 25. "Use or consumption" means the exercise of any right or power over tangible personal property, prewritten computer software or specified digital goods transferred electronically, incidental to owning the property except holding for sale or selling the property in the regular course of business. For the purposes of this paragraph, selling the property in the regular course of business does not include the transfer of title or possession of coal back and forth between an owner or operator of a power plant and a person who is responsible for refining coal if both of the following apply:
(a) The transfer of title or possession of the coal is for the purpose of refining the coal.
(b) The title or possession of the coal is transferred back to the owner or operator of the power plant after completion of the coal refining process. For the purposes of this subdivision, "coal refining process" means the application of a coal additive system that aids the reduction of power plant emissions during the combustion of coal and the treatment of flue gas.
23. 26. "Utility business" means a person that is engaged in the business of providing electric utility services to retail electric customers or natural gas utility services to retail natural gas customers.
Sec. 6. Title 42, chapter 5, article 4, Arizona Revised Statutes, is amended by adding section 42-5155.01, to read:
42-5155.01. Levy of tax; prewritten computer software and specified digital goods transferred electronically; rate; purchaser's liability
A. An excise tax is levied and imposed on the use or consumption in this state of prewritten computer software and specified digital goods transferred electronically as a percentage of the acquisition price.
B. The tax imposed by this section applies to any purchaser that purchases prewritten computer software or specified digital goods transferred electronically for resale but subsequently uses or consumes the items.
C. The tax rate is the rate of tax prescribed by section 42-5010, subsection A as applied to retailers.
D. In addition to the rate prescribed by subsection C of this section, an additional rate increment of six-tenths of one percent is imposed and shall be collected through June 30, 2021. The taxpayer shall pay taxes pursuant to this subsection at the same time and in the same manner as under subsection C of this section. The department shall separately account for the revenues collected with respect to the rate imposed pursuant to this subsection, and the state treasurer shall pay all of those revenues in the manner prescribed by section 42-5029, subsection E.
E. Each person using or consuming prewritten computer software or specified digital goods transferred electronically in this state is liable for the tax. The person's liability is not extinguished until the tax has been paid to this state.
F. A receipt from a vendor that maintains a place of business in this state or from a vendor that is authorized by the department to collect the tax, under rules adopted by the department, and that is for the purposes of this article regarded as a retailer maintaining a place of business in this state, given to the purchaser as provided in section 42‑5161 is sufficient to relieve the purchaser from further liability for the tax to which the receipt refers.
G. All exemptions under section 42-5159 apply to the tax under this section as if the prewritten computer software and specified digital goods transferred electronically were tangible personal property.
H. A person who uses or consumes prewritten computer software or specified digital goods transferred electronically on which a tax is imposed by this article and on which the tax has not been collected by a registered vendor shall pay the tax as provided by this article, but each vendor maintaining a place of business in this state and making sales of prewritten computer software or specified digital goods transferred electronically for use or consumption in this state shall collect the tax from the purchaser or user unless the property is exempt under this article or the purchaser or user pays the tax directly to the department as provided by section 42-5167.
I. Each vendor engaged in the business of selling, leasing, or licensing the use of prewritten computer software or specified digital goods transferred electronically of which the use or consumption is subject to the tax imposed by this article, and each person who acquires any such property for use or consumption in this state, and for which the tax is not paid to the vendor, shall file a return with the department on or before the twentieth day of the month next succeeding the month in which the property is brought into this state for use or consumption. The return shall be on a form prescribed by the department and shall show the amount of property sold, leased or licensed for use or consumption or acquired for use or consumption in this state during the preceding month. The return shall be verified by oath or affirmation of the vendor or person making the report, or the person's agent, and shall be accompanied by payment of the tax shown to be due. The return and tax are delinquent if not received by the department on or before the business day preceding the last business day of the month when due.
J. Notwithstanding subsection I of this section, a person who is required to file a return under article 1 of this chapter may report and pay the tax liability under this article on the same return and filing basis as the taxes reported under article 1 of this chapter.
K. For good cause the department may extend the time for making a return and paying the tax, but the time for filing the return may not be extended beyond the first day of the third month next succeeding the regular due date of the return.
Sec. 7. Section 42-5167, Arizona Revised Statutes, is amended to read:
42-5167. Use tax direct payment
A. A person may elect to pay use taxes directly to the department under this article if the person:
1. Applies to the department for a use tax direct payment permit. The application must be on a form prescribed by the department setting forth the name under which the applicant transacts or intends to transact business, the location of the place or places of business where the applicant intends to make direct payment of use taxes and any other information that the department may require. The application must be signed, in the case of:
(a) A natural person, by the owner.
(b) An association or partnership, by a member or partner.
(c) A corporation, by an executive officer or another person specifically authorized by the corporation to sign the application.
2. Agrees to self‑assess and pay directly to the department any use tax liability incurred under this article.
3. Certifies to the department that the person purchased for the person's own use any combination of tangible personal property, prewritten computer software or specified digital goods transferred electronically at a cost of five hundred thousand dollars or more, in the aggregate, during the immediately preceding calendar year.
B. The department shall issue a use tax direct payment permit to any applicant that meets the requirements of subsection A of this section.
C. If the department deems it necessary to protect the revenues to be collected under this section, it may require a person to file a bond to secure the payment of such amounts pursuant to section 42‑1102.
D. A person who holds a valid use tax direct payment permit shall:
1. Self‑assess and pay directly to the department use taxes due under this article for all tangible personal property, prewritten computer software and specified digital goods transferred electronically that are subject to use tax.
2. Report the tax on a tax return prescribed by the department.
E. A holder of a use tax direct payment certificate permit may issue a use tax direct payment certificate to any retailer or seller, subject to all of the following:
1. The certificate shall be in a form prescribed by the department and must be signed by and bear the name, address and permit number of the holder of the use tax direct payment permit.
2. The certificate is effective until the permit holder revises or withdraws the certificate or until the retailer or seller receives actual notice that the department has revoked the permit.
3. The certificate relieves the retailer or seller of the duty to collect use tax only if taken in good faith from a person who holds a use tax direct payment permit. The department may periodically publish on its web site website a list of taxpayers by name with tax identification numbers who have been issued direct payment permits. A purchaser holding a direct payment permit who issues a use tax direct payment certificate that is accepted in good faith by a retailer or seller of tangible personal property or a vendor of prewritten computer software or specified digital goods transferred electronically shall be liable for use tax and related interest and penalties with respect to any transaction that the department subsequently determines properly subjects the vendor to the transaction privilege tax and not use tax. The vendor shall be relieved of the duty to pay transaction privilege tax on such transactions.
4. In addition to any use tax liabilities, a holder of a use tax direct payment permit that gives a use tax direct payment certificate to a retailer or seller is subject to the same penalty provisions that apply to a retailer or seller."
Renumber to conform
Page 32, line 33, after "on" insert "sales, rentals or"
Lines 38 and 39, strike "based on the certificate provided pursuant to section 42‑5009, subsection R"
Page 34, line 10, after "from" insert "sales, rentals and"
Line 13, after "tax" insert "and use tax"
Line 17, after "taxes" insert "and use taxes"
After line 24, insert:
"Sec. 11. Effective date
This act is effective from and after the last day of the month of the general effective date of the fifty-third legislature, second regular session."
Amend title to conform