ARIZONA
HOUSE OF REPRESENTATIVES
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SB 1293: department of revenue; administrative efficiency |
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PRIME SPONSOR: Senator Farnsworth D, LD 16 BILL STATUS: House Engrossed
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Relating to modifying DOR procedures.
Provisions
Returns / Notifications
1. Allows DOR to send specified notices by and perform various actions through electronic means. (Sec. 15-20, 23, 29, 31, 39-43, 57-59)
2. Allows DOR to issue a notice of tax deficiency by electronic portal in lieu of mail beginning the later occurring date of either January 1, 2019 or when the department establishes the electronic portal, subject to the following conditions:
a. DOR is to notify the taxpayer via e-mail on the same day the notice is posted to the electronic portal.
i. Requires the taxpayer to provide DOR with an email address and notice of any changes to the email address.
b. The date of receipt for a notice provided by electronic portal is the later of the date the notice is posted or the date the notification is received by the taxpayer.
c. Does not apply to individual income tax. (Sec. 17)
3. Permits a taxpayer filing a return to electronically to input the information from a document into the electronic filing program in lieu of providing the actual document to DOR.
a. DOR may request a copy of the document with the return and make necessary adjustments to reflect the document and may deny any deduction, credit or withholding that the document is intended to substantiate, if the taxpayer does not provide the document within the specified period. (Sec. 17)
4. Establishes that any documents submitted with a return that are not required, authorized or requested by DOR are not part of the record and may be destroyed, unless DOR finds the documents of more than de minimis value.
a. Establishes that any facsimiles of original documents where the department reasonably expects the taxpayer has retained any originals are presumed to be of de minimis value.
b. Requires DOR to notify the taxpayer within 10 days of its intent to destroy the document in the instance documents are found of more than de minimis value.
c. Requires DOR to comply if a taxpayer requests the return of documents included in the notice.
i. If the taxpayer requests a return of any documents, the Director may impose shipping costs on the taxpayer.
d. Permits DOR to dispose of the documents if the taxpayer gives consent or does not request a return within 30 days. (Sec. 16)
5. Permits, rather than requires, DOR to impose civil penalties on a taxpayer who is required to make payments by electronic funds and fails to do so. (Sec. 22)
6. Requires a taxpayer to file withholding returns electronically by the later occurring date of either January 1, 2020 or when DOR establishes an electronic filing program. (Sec. 44)
7. Permits DOR to abate fees if it is determined that the conduct that caused the penalty was due to reasonable cause and not willful neglect. (Sec. 27)
8. Defines electronically send, electronic portal and email. (Sec. 15, 17)
Tax Exempt Organizations
9. Removes authority of DOR to disclose a tax-exempt organization’s application for exemption and affiliated documents to public inspection. (Sec. 25-26)
10. Exempts religious institutions, non-profit organizations included in a group exemption letter and organizations considered non-profit and exempt from notification requirements under IRC from providing a letter of determination to establish non-profit. (Sec. 38)
11. Removes the requirement for tax-exempt organizations to file a return with DOR, with the following exception:
a. Requires a nonprofit medical marijuana dispensary to file a return a tax return consisting of the organization's gross receipts, expenses, balance sheet and other information DOR may prescribe by rule and be submitted before May 15th each year. (Sec. 56)
12. Removes the requirement that an employer furnish a statement to DOR of the amount withheld from an employee and paid to a charity or STO. (Sec. 45)
13. Modifies and repeals areas of statute regarding tax-exempt organizations to conform to the IRC, with the exception of insurance companies subject to premium income tax and nonprofit medical marijuana dispensaries. (Sec. 50-54)
Vehicle Use Tax
14. Allows municipal and state use taxes to simultaneously be collected at the time of vehicle registration or transfer of title. (Sec. 11)
15. Requires DOR to provide ADOT with the means necessary to calculate the use taxes to be collected, including use tax rates applicable to each jurisdiction levying a use tax. (Sec. 11)
16. Establishes that the vehicle use tax provisions of this Act apply to taxable periods beginning on the first day of the month following the general effective date. (Sec. 61)
Miscellaneous
17. Repeals the subtraction from gross income for amounts deposited in a long-term health care savings account and the addition to gross income for amounts withdrawn from the account and not used on long-term healthcare expenses. (Sec. 48-49)
18. Contains a technical conditional enactment clause. (Sec. 60)
19. Contains a legislative intent clause. (Sec. 62)
20. Contains an effective date of January 1, 2019. (Sec. 61)
21. Makes clarifying, technical and conforming changes. (1-59)
Current Law
If a taxpayer fails to file a return required or DOR is not satisfied with the return or payment, DOR is to provide written notice of its determination of a deficiency by mail, and the deficiency, plus penalties and interest, is final 45 days after the date of the receipt of the notice to the tax payer (A.R.S. 42-1108). The penalty imposed on a taxpayer that fails to make and file a return before the due date is 4.5% of the tax required to be shown or $25 dollars, whichever is greater. The penalty is to be added to the tax for each month or fraction of a month elapsing between the due date of the return and the date on which it is filed (A.R.S. 42-1125).
A.R.S § 42-1201 specifies that various organizations, such as nonprofits, are exempt from taxation in addition to those exempt under the internal revenue code. Nonprofit organization status may be established by a letter of determination issued in the organization's name by the IRS or DOR recognizing the organization's tax-exempt status (A.R.S § 41-11154). A.R.S § 43-1242 requires tax-exempt organizations to file a return annually at a time and in a manner prescribed by DOR, with the exception of specified organizations. The return is to include the organization's gross receipts, expenses, balance sheet and any other information DOR may prescribe. A return preparer is to keep copies of the return and affiliated documents for 4-6 years (A.R.S 42 § 1105).
A registering officer of ADOT is able to collect state use tax at the time of application for a transfer of title or vehicle registration. ADOT is to notify DOR of taxes collected and deposit tax monies collected in the state general fund at the end of each month (A.R.S § 28-2056).
Additional Information
Use tax is assessed on items purchased in other states and brought into Arizona for storage, use, or consumption and for which no tax or a tax at a lesser rate has been paid in another state. Use tax is imposed on all transactions in which TPT was not.
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Fifty-third Legislature SB 1293
Second Regular Session Version 3: House Engrossed
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