ARIZONA HOUSE OF REPRESENTATIVES

HB 2003: coal mining; TPT; repeal

PRIME SPONSOR: Representative Finchem, LD 11

BILL STATUS: Chaptered

Abstract

Relating to exempting coal from TPT.

Provisions

1. Exempts the sale of coal from TPT. (Sec. 1-3)

2. Establishes a .5% county excise tax on the gross proceeds from the sale of coal that has been mined or extracted within the county boundaries.

a. Applies the same tax exemptions and statutory provisions as those established under the mining classification of TPT. (Sec. 4)

3. Prevents this Act from taking effect, unless the Navajo Nation Council approves the transfer of ownership of the Navajo Generating Station by a resolution, signed by the President of the Navajo Nation by January 1, 2023.

a. If applicable, requires the Navajo Nation to deliver the resolution to the Governor and the Director of DOR.

b. Directs DOR to notify the Director of Legislative Council by February 1, 2023 whether this condition was met. (Sec. 5)

4. Makes technical and conforming changes. (Sec. 1,2)

Current Law

Coal is exempt from tax under the retail and mining TPT classifications, in addition to municipal TPT when used or sold under specific circumstances. Coal, petroleum, coke, natural gas, virgin fuel oil and electricity sold to a qualified technology manufacturer, producer or processor and used directly for on-site power is exempt from TPT (A.R.S 42-5061). Coal is also exempt from taxation when the transfer of title or possession of the coal is for the purpose of refining the coal and 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 (A.R.S §§ 42-5072, 42-5151, 42-5159, 42-6004).

TPT is imposed on a vendor for the privilege of conducting business in Arizona. Under this tax, the seller is responsible for remitting to the state the entire amount of tax due based on the gross proceeds or gross income of the business. While the tax is commonly passed on to the consumer at the point of sale, it is ultimately the seller’s responsibility to remit the tax. TPT is broken down into 16 different classifications, one of which is the retail classification. The retail classification is comprised of businesses selling tangible personal property at retail (A.R.S. § 42-5061). The mining classification is comprised of the business of mining, quarrying or producing for sale, profit or commercial use any nonmetalliferous mineral product that has been mined, quarried or otherwise extracted within the boundaries of this state (A.R.S. § 42-5072).

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Fifty-third Legislature                  HB 2003

Second Regular Session                               Version 4: Chaptered

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