State SealARIZONA HOUSE OF REPRESENTATIVES

 

SB 1409: TPT; prime contracting; alteration; replacement

PRIME SPONSOR: Senator Fann, LD 1

BILL STATUS: Ways & Means

 

Legend: TPT – transaction privilege tax Amendments – BOLD and Stricken (Committee)

Abstract

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteRelating to alterations under the prime contracting TPT classification.

Provisions

1.       Removes alterations from those projects exempted from the prime contracting classification for state and municipal TPT purposes. (Sec. 1,2)

2.       Specifies the prime contracting classification does not include any work or operations performed by a person that is not required to be licensed by the registrar of contractors. (Sec. 1)

3.       Removes the definition of alteration, in addition to all applicable statutory language. (Sec. 1)

4.       Includes alteration projects in the definition of modification, for the purposes of being taxed under the prime contracting classification.

5.       Clarifies replacements include the removal and installation of a single system or multiple systems of like function. (Sec. 1)

6.       Becomes effective on January 1, 2019.

a.       Clarifies contracts or obligations entered into prior to December 31, 2018 are to be treated consistently with tax laws in effect prior to December 31, 2018. (Sec. 3)

Current Law

The prime contracting classification of TPT, comprised of the business of prime contracting and the dealership of manufactured buildings.  The TPT base for prime contracting is 65% of the gross proceeds of sale or gross income derived from the business.

Projects limited to the maintenance, repair, replacement or alteration of a property are currently exempt under the prime contracting classification.  Tools and other materials purchased for these activities are taxed at point of sale, under the retail classification.  Alterations include any activity or action that causes a direct physical change to existing property.  Alteration projects may be taxed under the retail or prime contracting classification, depending the property type and the size and scope of the project.  Smaller alterations are taxed under the retail classification, while larger alterations are considered modifications and are taxed under the prime contracting classification. (A.R.S. § 42-5075).

 

 

 

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Fifty-third Legislature                  SB 1409

Second Regular Session                               Version 1: Ways & Means

 

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