ARIZONA
HOUSE OF REPRESENTATIVES
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SB 1405: corporate income tax allocation; sales |
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PRIME SPONSOR: Senator Fann, LD 1 BILL STATUS: House Engrossed
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Relating to sourcing of corporate income
from the sale of intangibles.
Provisions
1. Authorizes a taxpayer that is a multistate service provider to include sales from intangibles in its calculation of the percentage of revenues generated within or outside of Arizona, for the purposes of being able to elect the revenue sourcing method. (Sec. 1)
2. Defines sales from intangibles as sales derived from credit and charge card receivables, including fees, merchant discounts, interchanges, interest and related revenue. (Sec. 1)
3. Becomes effective on January 1, 2020. (Sec. 2)
4. Makes technical changes. (Sec. 1)
Current Law
For the purposes of corporate revenue sourcing, all sales, excluding tangible personal property, are considered to be in the state of Arizona if, 1) the income-producing activity is performed in this state, or 2) if the activity is performed both inside and outside of the state, but the largest proportion of activity is performed in the state. However, an exception is granted to multistate service providers. A multistate service provider is either: 1) a taxpayer that derives more than 85% of its sales from services provided to individuals outside of the state, or 2) a regionally accredited institution of higher education with at least one university campus in the state that has more than 2,000 students residing on campus. A multistate service provider is authorized to treat all sales in Arizona as being solely those sales from services in which the purchaser received the benefit in Arizona, excluding any sales in which the purchaser received the service outside of the state (A.R.S § 43-1147).
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Fifty-third Legislature SB 1405
Second Regular Session Version 3: House Engrossed
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