ARIZONA STATE SENATE
RESEARCH STAFF
|
CAROLYN SPERONI |
|
LEGISLATIVE RESEARCH ANALYST APPROPRIATIONS COMMITTEE Telephone: (602) 926 -3171 |
APPROPRIATIONS COMMITTEE
DATE: February 21, 2018
SUBJECT: Strike everything amendment to S.B. 1099, relating to estimated TPT payments; liability threshold
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Purpose
Increases the annual total transaction privilege tax (TPT) liability required by a business entity to invoke the requirement to pay an estimated tax payment in June.
Background
Statute requires that a business entity that has an annual total TPT liability of $1 million or more, or can reasonably anticipate such liability in the current year, to report on a form prescribed by ADOR and pay an estimated tax payment each June. That estimated tax payment shall equal either: 1. One-half of the actual TPT tax liability plus one-half of any telecommunications service excise tax and county excise tax liability for May of the current calendar year; or 2. The actual TPT tax liability plus any telecommunications service excise tax and county excise tax liability for the first 15 days of June of the current calendar year.
When the estimated payments program was first enacted in 1989, these payments provided a one-time increase of state revenues by advancing a portion of the next fiscal year's revenues into the current fiscal year.
Prior to FY 2007, the threshold for estimated payments was $100,000. Laws 2006, Chapter 351 increased the threshold to $1 million. Laws 2010, Seventh Special Session, Chapter 12 lowered the threshold for estimated TPT payments to $100,000 for FY 2010 through 2012.
It is estimated that the state General Fund impact as a result of this legislation would be as follows:
|
|
[$ millions] |
|
|
|
TPT Payment Threshold |
Revenue Impact |
|
2019 |
1.5 |
(15.1) |
|
2020 |
2.0 |
(3.26) |
|
2021 |
3.0 |
(14.56) |
|
2022 |
4.0 |
(8.00) |
|
2023 |
5.0 |
(9.80) |
Provisions
1. Increases the annual total tax liability required by a business entity to invoke the requirement to pay an estimated tax payment in June to:
|
Year |
Total Tax Liability |
|
2019 |
$1.5 million or more |
|
2020 |
$2 million or more |
|
2021 |
$3 million or more |
|
2022 |
$4 million or more |
|
2023 and each year thereafter |
$5 million or more |
2. Becomes effective on the general effective date.
Revision
· Updated fiscal impact estimates.