Page 24, between lines 5 and 6, insert:
"Sec. 14. Section
42-1001, Arizona Revised Statutes, is amended to read:
START_STATUTE42-1001. Definitions
In this
title, unless the context otherwise requires:
1. "Board"
or "state board" means either the state board of tax appeals or the
state board of equalization, as applicable.
2. "Court"
means the tax court or superior court, whichever is applicable.
3. "Department"
means the department of revenue.
4. "Director"
means the director of the department.
5.
“ELECTRONICALLY SEND” OR “SEND ELECTRONICALLY” MEANS TO SEND BY EITHER EMAIL OR
THE USE OF AN ELECTRONIC PORTAL.
6.
“EMAIL” MEANS AN ELECTRONIC TRANSMISSION OF A MESSAGE TO AN EMAIL ADDRESS. IF
THE MESSAGE CONTAINS CONFIDENTIAL INFORMATION THEN “EMAIL” MEANS THE ELECTRONIC
TRANSMISSION OF A MESSAGE TO AN EMAIL ADDRESS USING ENCRYPTION SOFTWARE THAT
REQUIRES THE RECEIVER TO ENTER A PASSWORD BEFORE THE MESSAGE CAN BE RETRIEVED
AND VIEWED.
7.
“ELECTRONIC PORTAL” MEANS A SECURE LOCATION ON A WEBSITE ESTABLISHED BT THE
DEPARTMENT THAT REQUIRES THE RECEIVER TO ENTER A PASSWORD TO ACCESS.
5. 8. "Internal
revenue code" means the United States internal revenue code of 1986, as
amended and in effect as of January 1, 2017, including those provisions that
became effective during 2016 with the specific adoption of their retroactive effective
dates but excluding all changes to the code enacted after January 1,
2017." END_STATUTE
Renumber to conform
Page 25,
line 30, after "document" insert
"AS DEFINED IN SECTION 42-1101.01"
Line 32,
strike "by the department" insert ", UNLESS IT IS, AT THE DEPARTMENT’S REASONABLE DISCRETION, OF MORE
THAN DE MINIMiS VALUE. FACSIMILES OF ORIGINAL DOCUMENTS WHERE THE DEPARTMENT
REASONABLY EXPECTS THE TAXPAYER HAS RETAINED ANY ORIGINALS SHALL BE PRESUMED TO
BE OF DE MINIMIS VALUE FOR PURPOSES OF THIS SECTION. IF THE DEPARTMENT
DETERMINES THAT ANY DOCUMENT THAT IS NOT REQUIRED, AUTHORIZED OR REQUESTED BY
THE DEPARTMENT PURSUANT TO this SUBSECTION IS OF MORE THAN DE MINIMIS VALUE,
THEN WITHIN TEN DAYS OF RECEIPT THE DEPARTMENT SHALL NOTIFY THE TAXPAYER IN
WRITING OR BY ELECTRONIC MEANS OF ITS INTENT TO DESTROY THE DOCUMENT. IF THE
TAXPAYER REQUESTS THE RETURN OF ANY DOCUMENT INCLUDED IN THE NOTICE, THE
DEPARTMENT SHALL IMMEDIATELY COMPLY, ALTHOUGH THE DIRECTOR MAY REQUIRE THE
TAXPAYER PAY ANY SHIPPING COSTS TO RETURN THE DOCUMENT. IF THE TAXPAYER DOES
NOT REQUEST THE RETURN OF THE DOCUMENTS WITHIN THIRTY DAYS OF THE DATE ON THE
NOTICE OR THE TAXPAYER CONSENTS TO THE DESTRUCTION OF THE DOCUMENTS, WHICHEVER
OCCURS FIRST, THE DEPARTMENT MAY DESTROY THE DOCUMENTS INCLUDED IN THE NOTICE"
Page 33,
between lines 12 and 13, insert:
"Sec. 20. Section
42-1125, Arizona Revised Statutes, is amended to read:
START_STATUTE42-1125. Civil
penalties; definition
A. If
a taxpayer fails to make and file a return for a tax administered pursuant to
this article on or before the due date of the return or the due date as
extended by the department, unless it is shown that the failure is due to
reasonable cause and not due to wilful neglect, four and one‑half percent
of the tax required to be shown on such return shall 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. The total penalty shall not
exceed twenty‑five percent of the tax found to be remaining due. The
penalty so added to the tax is due and payable on notice and demand from the
department. For the purpose of computing the penalty imposed under
this subsection, the amount required to be shown as tax on a return shall be
reduced by the amount of any part of the tax that is paid on or before the
beginning of such month and by the amount of any credit against the tax that
may be claimed on the return. If the amount required to be shown as
tax on a return is less than the amount shown as tax on such return, the penalty described
in this subsection shall be applied by substituting such lower amount.
B. If
a taxpayer fails or refuses to file a return on notice and demand by the department,
the taxpayer shall pay a penalty of twenty‑five percent of the tax, which
is due and payable on notice and demand by the department, in addition to any
penalty prescribed by subsection A of this section, unless it is shown that the
failure is due to reasonable cause and not due to wilful
neglect. This penalty is payable on notice and demand from the
department.
C. If
a taxpayer fails or refuses to furnish any information requested in writing by
the department, the department may add a penalty of twenty‑five percent
of the amount of any deficiency tax assessed by the department concerning the
assessment of which the information was required, unless it is shown that the
failure is due to reasonable cause and not due to wilful neglect.
D. If
a person fails to pay the amount shown as tax on any return within the time
prescribed, a penalty of one‑half of one percent, not to exceed a total
of ten percent, shall be added to the amount shown as tax for each month or
fraction of a month during which the failure continues, unless it is shown that
the failure is due to reasonable cause and not due to wilful neglect. If the
department determines that the person's failure to pay was due to reasonable
cause and not due to wilful neglect and that a payment agreement pursuant to
section 42‑2057 is appropriate, the department shall not impose the
penalty unless the taxpayer fails to comply with the payment agreement. If the
taxpayer is also subject to a penalty under subsection A of this section for
the same tax period, the total penalties under subsection A of this section and
this subsection shall not exceed twenty‑five percent. For the
purpose of computing the penalty imposed under this subsection:
1. The
amount shown as tax on a return shall be reduced by the amount of any part of
the tax that is paid on or before the beginning of that month and by the amount
of any credit against the tax that may be claimed on the return.
2. If
the amount shown as tax on a return is greater than the amount required to be shown
as tax on that return, the penalty shall be applied by substituting the lower
amount.
E. If
a person fails to pay any amount required to be shown on any return that is not
so shown within twenty‑one calendar days after the date of notice and
demand, a penalty of one‑half of one percent, not to exceed a total of
ten percent, shall be added to the amount of tax for each month or fraction of
a month during which the failure continues, unless it is shown that the failure
is due to reasonable cause and not due to wilful neglect. If the taxpayer is
also subject to penalty under subsection A of this section for the same tax
period, the total penalties under subsection A of this section and this
subsection shall not exceed twenty‑five percent. For the purpose
of computing the penalty imposed under this subsection, any amount required to
be shown on any return shall be reduced by the amount of any part of the tax
that is paid on or before the beginning of that month and by the amount of any
credit against the tax that may be claimed on the return.
F. In
the case of a deficiency, for which a determination is made of an additional
amount due, that is due to negligence but without intent to defraud, the person
shall pay a penalty of ten percent of the amount of the deficiency.
G. If
part of a deficiency is due to fraud with intent to evade tax, fifty percent of
the total amount of the tax, in addition to the deficiency, interest and other
penalties provided in this section, shall be assessed, collected and paid as if
it were a deficiency.
H. If
the amount, whether determined by the department or the taxpayer, required to
be withheld by the employer pursuant to title 43, chapter 4 is not paid to the
department on or before the date prescribed for its remittance, the department
may add a penalty of twenty‑five percent of the amount required to be
withheld and paid, unless it is shown that the failure is due to reasonable
cause and not due to wilful neglect.
I. A
person who, with or without intent to evade any requirement of this article or
any lawful administrative rule of the department of revenue under this article,
fails to file a return or to supply information required under this article or
who, with or without such intent, makes, prepares, renders, signs or verifies a
false or fraudulent return or statement or supplies false or fraudulent
information shall pay a penalty of not more than one thousand
dollars. This penalty shall be recovered by the department of law in
the name of this state by an action in any court of competent jurisdiction.
J. If
the taxpayer files what purports to be a return of any tax administered
pursuant to this article but that is frivolous or that is made with the intent
to delay or impede the administration of the tax laws, that person shall pay a
penalty of five hundred dollars.
K. If
any person who is required to file or provide an information return under this
title or title 43 or who is required to file or provide a return or report
under chapter 3 of this title fails to file the return or report at the
prescribed time or in the manner required, or files a return or report that
fails to show the information required, that person shall pay a penalty of one
hundred dollars for each month or fraction of a month during which the failure
continues unless it is shown that the failure is due to reasonable cause and
not due to wilful neglect. The total penalties for each return or report under
this subsection shall not exceed five hundred dollars.
L. If
it appears to the superior court that proceedings before it have been
instituted or maintained by a taxpayer primarily for delay or that the
taxpayer's position is frivolous or groundless, the court may award damages in
an amount not to exceed one thousand dollars to this state. Damages so awarded
shall be collected as a part of the tax.
M. A
person who is required under section 43‑413 to furnish a statement to an
employee and who wilfully furnishes a false or fraudulent statement, or who
wilfully fails to furnish a statement required by section 43‑413, is for
each such failure subject to a penalty of fifty dollars.
N. A
person who is required to collect or truthfully account for and pay a tax
administered pursuant to this article, including any luxury privilege tax, and
who wilfully fails to collect the tax or truthfully account for and pay the
tax, or wilfully attempts in any manner to evade or defeat the tax or its
payment, is, in addition to other penalties provided by law, liable for a
penalty equal to the total amount of the tax evaded, not collected or not
accounted for and paid. Except as provided in subsections U, V and W of this
section, no other penalty under this section relating to failure to pay tax may
be imposed for any offense to which this subsection applies.
O. For
reporting periods beginning from and after February 28, 2011, if a taxpayer who
is required under section 42‑1129 to make payment by electronic funds
transfer fails to do so, that taxpayer shall pay a penalty of five percent of
the amount of the payment not made by electronic funds transfer unless it is
shown that the failure is due to reasonable cause and not due to wilful
neglect. For the reporting periods beginning on July 1, 2015, the penalty in
this subsection applies to any taxpayer who is required under section 42‑3053
to make payment by electronic funds transfer and fails to do so unless it is
shown that the failure is due to reasonable cause and not due to wilful
neglect.
P. Unless
due to reasonable cause and not to wilful neglect:
1. A
person who fails to provide that person's taxpayer identification number in any
return, statement or other document as required by section 42‑1105,
subsection A shall pay a penalty of five dollars for each such failure.
2. A
person, when filing any return, statement or other document for compensation on
behalf of a taxpayer, who fails to include that person's own taxpayer
identification number and the taxpayer's identification number shall pay a
penalty of fifty dollars for each such failure.
3. A
person, when filing any return, statement or other document without
compensation on behalf of a taxpayer, who fails to include that person's own
taxpayer identification number and the taxpayer's identification number is not
subject to a penalty.
No
other penalty under this section may be imposed if the only violation is
failure to provide taxpayer identification numbers.
Q. If
a taxpayer fails to pay the full amount of estimated tax required by title 43,
chapter 5, article 6, a penalty is assessed equal to the amount of interest
that would otherwise accrue under section 42‑1123 on the amount not paid
for the period of nonpayment, not exceeding ten percent of the amount not
paid. The penalty prescribed by this subsection is in lieu of any
other penalty otherwise prescribed by this section and in lieu of interest
prescribed by section 42‑1123.
R. Beginning
January 1, 2015, if a taxpayer continues in business without timely renewing a
municipal privilege tax license as prescribed in section 42‑5005,
subsection D, a civil penalty of up to twenty-five dollars shall be added to
the renewal fee for each jurisdiction.
S. The
department of law, with the consent of the department of revenue, may
compromise any penalty for which it may bring an action under this section.
T. Penalties
shall not be assessed under subsection D of this section on additional amounts
of tax paid by a taxpayer at the time the taxpayer voluntarily files an amended
return. This subsection does not apply if:
1. The
taxpayer is under audit by the department.
2. The
amended return was filed on demand or request by the department.
U. In
addition to other penalties provided by law, a person who knowingly and
intentionally does not comply with any requirement under chapter 3 of this
title relating to cigarettes tobacco
products shall pay a penalty of one thousand dollars. A person who
knowingly and intentionally does not pay any luxury tax that relates to cigarettes tobacco products imposed by
chapter 3 of this title shall pay a penalty that is equal to ten percent of the
amount of the unpaid tax.
V. A
manufacturer or importer or a distributor, as defined in section 42‑3001,
who knowingly and intentionally sells or possesses cigarettes with false
manufacturing labels or cigarettes with counterfeit tax stamps, or who obtains
cigarettes through the use of a counterfeit license, shall pay the following
penalties:
1. For
a first violation involving two thousand or more cigarettes, one thousand
dollars.
2. For
a subsequent violation involving two thousand or more cigarettes, five thousand
dollars.
W. The
civil penalties in this section are in addition to any civil penalty under
chapter 3, article 10, 11 or 12 of this title.
X. Notwithstanding
subsection A of this section, the penalty imposed on a taxpayer that fails to
make and file a return for tax administered pursuant to chapter 5 or 6 of this
title on or before the due date of the return or the due date as extended by
the department, unless it is shown that the failure is due to a reasonable
cause and not due to wilful neglect, is four and one‑half
five percent of the tax required to be shown on the
return, or twenty-five dollars, whichever is greater. The
penalty shall 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.
The total penalty may not exceed twenty‑five percent of the tax found to
be remaining due, or one hundred dollars, whichever is greater.
Y. Notwithstanding
subsection B of this section, the penalty imposed on a taxpayer that fails to
file a return pursuant to chapter 5 or 6 of this title on notice and demand by
the department is twenty‑five percent of the tax, or one hundred dollars,
whichever is greater. The penalty is due and payable on notice and demand by
the department, in addition to any penalty prescribed by subsection A of this
section, unless it is shown that the failure is due to a reasonable cause and
not due to wilful neglect.
Z. For
the purposes of this section, and only as applied to the taxes imposed by
chapter 5, articles 1 through 6 and chapter 6, articles 1, 2 and 3 of this
title, "reasonable cause" means a reasonable basis for the taxpayer
to believe that the tax did not apply to the business activity or the storage,
use or consumption of the taxpayer's tangible personal property in this state. END_STATUTE
Sec. 21. Section
42-1129, Arizona Revised Statutes, is amended to read:
START_STATUTE42-1129. Payment
of tax by electronic funds transfer
A. The
department may require by rule, consistent with the state treasurer's cash
management policies, that any tax administered pursuant to this article, except
individual income tax, be paid on or before the payment date prescribed by law
in monies that are immediately available to the state on the date of the
transfer as provided by subsection B of this section by any taxpayer that owes:
1. Twenty
thousand dollars or more for any taxable year ending before January 1, 2019.
2. Ten
thousand dollars or more for any taxable year beginning from and after December
31, 2018 through December 31, 2019.
3. Five
thousand dollars or more for any taxable year beginning from and after December
31, 2019 through December 31, 2020.
4. Five
hundred dollars or more for any taxable year beginning from and after December
31, 2020.
B. A
payment in immediately available monies shall be made by electronic funds
transfer, with the state treasurer's approval, that ensures the availability of
the monies to this state on the date of payment.
C. A
taxpayer may apply to the director, on a form prescribed by the department, for
an annual waiver from the electronic payment requirement prescribed by
subsection B of this section. The application must be received by
the department on or before December 31. The director may grant the waiver,
which may be renewed, if any of the following applies:
1. The
taxpayer has no computer.
2. The
taxpayer has no internet access.
3. Any
other circumstance considered to be worthy by the director including
the taxpayer having a sustained record of timely payments and no delinquent tax
account with the department.
D. The taxpayer shall furnish evidence as prescribed by the
department that the an electronic
payment was remitted on or before the due date.
E. A taxpayer who is required to make payment by electronic
funds transfer but who fails to do so is may
be subject to the civil penalties prescribed by section 42‑1125,
subsection O.
F. A
failure to make a timely payment in immediately available monies as prescribed
pursuant to this section is subject to the civil penalties prescribed by
section 42‑1125, subsection D." END_STATUTE
Renumber to conform
Page 53, line 7, strike "or the department of
revenue"
Line 9,
after "that" insert":
(a)"
Between line
12 and 13, insert:
"(b) IF THE NONPROFIT ORGANIZATION IS INCLUDED
IN A GROUP EXEMPTION LETTER BY THE INTERNAL REVENUE SERVICE, THE GROUP
EXEMPTION LETTER SATISFIES THE REQUIREMENT UNDER this paragraph PROVIDED THE
CENTRAL ORGANIZATION THAT RECEIVED THE GROUP EXEMPTION FROM THE INTERNAL
REVENUE SERVICE PROVIDES A LETTER CERTIFYING THAT THE NONPROFIT ORGANIZATION IS
INCLUDED IN THE GROUP EXEMPTION.
(c) AN ORGANIZATION
THAT MEETS THE REQUIREMENTS OF SECTION 501(c)(3) OF THE
INTERNAL REVENUE CODE BUT THAT IS EXEMPT FROM THE NOTIFICATION REQUIREMENTS
PURSUANT TO SECTION 508(c) OF THE INTERNAL REVENUE CODE
SHALL NOT BE REQUIRED TO PROVIDE A LETTER OF DETERMINATION FROM THE INTERNAL
REVENUE SERVICE."
Page 54,
between lines 38 and 39, insert:
"Sec. 42. Section
43-323, Arizona Revised Statutes, is amended to read:
START_STATUTE43-323. Place
and form of filing returns
A. All
returns required by this title shall be in such a form as the department may
from time to time prescribe and shall be filed with the department.
B. The
department shall prescribe a short form return for individual taxpayers who:
1. Are
eligible and elect to pay tax based on the optional tax tables pursuant to
section 43‑1012.
2. Elect
to claim the optional standard deduction pursuant to section 43‑1041.
3. Elect
not to file for credits against income tax liability other than those contained
in sections 43‑1072, 43‑1072.01 and 43‑1073.
4. Are
not required to add any income under section 43‑1021 and do not elect any
subtractions under section 43‑1022, except for the exemptions allowed
under section 43‑1023.
C. The
department may provide a simplified return form for individual taxpayers who:
1. Are
eligible and elect to pay tax based on the optional tax tables pursuant to
section 43‑1012.
2. Are
residents for the full taxable year.
3. File
as single individuals or married couples filing joint returns under section 43‑309.
4. Are
not sixty‑five years of age or older or blind at the end of the taxable
year.
5. Claim
no exemptions under section 43-1023 for the taxable year.
6. Elect
to claim the optional standard deduction under section 43‑1041.
7. Are
not required to add any income under section 43‑1021 and do not elect to
claim any subtractions under section 43‑1022 or file for any credits
under chapter 10, article 5 of this title, except the credits provided by
sections 43‑1072.01 and 43‑1073.
8. Do
not elect to contribute a portion of any tax refund as provided by any
provision of chapter 6, article 1 of this title. Notwithstanding any provision
of chapter 6, article 1 of this title, a simplified return form under this
subsection shall not include any space for the taxpayer to so contribute a
portion of a refund.
D. The
department shall prepare blank forms for the returns and furnish them on
request. Failure to receive or secure the form does not relieve any taxpayer
from making any return required.
E. An
individual income tax preparer who prepares more than ten original income tax
returns that are timely filed during any taxable year that begins from and
after December 31, 2017 shall file electronically all individual tax returns
prepared by that tax preparer, for that taxable year and each subsequent
taxable year. An individual income tax preparer may not charge a separate fee
to the taxpayer for filing a return using the department's electronic filing
program. This subsection does not apply if the taxpayer elects to have the
return filed on paper or if the return cannot be filed electronically for
reasons outside of the tax preparer's control.
F. Annual fiduciary fiduciary returns,
partnership returns, withholding returns and corporate
returns shall be filed electronically for taxable years beginning from and
after December 31, 2019, or when the department establishes an electronic
filing program, whichever is later. Any person who is required to
file electronically pursuant to this subsection may apply to the director, on a
form prescribed by the department, for an annual waiver from the electronic
filing requirement. The director may grant the waiver, which may be renewed
for one subsequent year, if any of the following applies:
1. The
taxpayer has no computer.
2. The
taxpayer has no internet access.
3. Any
other circumstance considered to be worthy by the director.
G. A
waiver is not required if the return cannot be electronically filed for reasons
beyond the taxpayer's control, including situations in which the taxpayer was
instructed by either the internal revenue service or the department of revenue
to file by paper." END_STATUTE
Renumber
to conform
Page 57,
between lines 4 and 5, insert:
"Sec. 44. Section
43-1021, Arizona Revised Statutes, is amended to read:
START_STATUTE43-1021. Addition
to Arizona gross income
In
computing Arizona adjusted gross income, the following amounts shall be added
to Arizona gross income:
1. A
beneficiary's share of the fiduciary adjustment to the extent that the amount
determined by section 43‑1333 increases the beneficiary's Arizona gross
income.
2. An
amount equal to the ordinary income portion of a lump sum distribution that was
excluded from federal adjusted gross income pursuant to the special rule for
individuals who attained fifty years of age before January 1, 1986 under Public
Law 99‑514, section 1122(h)(3).
3. The
amount of interest income received on obligations of any state, territory or
possession of the United States, or any political subdivision thereof, located
outside the state of Arizona, reduced, for taxable years beginning from and
after December 31, 1996, by the amount of any interest on indebtedness and
other related expenses that were incurred or continued to purchase or carry
those obligations and that are not otherwise deducted or subtracted in arriving
at Arizona gross income.
4. The
excess of a partner's share of partnership taxable income required to be included
under chapter 14, article 2 of this title over the income required to be
reported under section 702(a)(8) of the internal revenue code.
5. The
excess of a partner's share of partnership losses determined pursuant to
section 702(a)(8) of the internal revenue code over the losses allowable under
chapter 14, article 2 of this title.
6. Any
amount of agricultural water conservation expenses that were deducted pursuant
to the internal revenue code for which a credit is claimed under section 43‑1084.
7. The
amount by which the depreciation or amortization computed under the internal
revenue code with respect to property for which a credit was taken under
section 43‑1080 exceeds the amount of depreciation or amortization
computed pursuant to the internal revenue code on the Arizona adjusted basis of
the property.
8. The
amount by which the adjusted basis computed under the internal revenue code
with respect to property for which a credit was claimed under section 43‑1080
and that is sold or otherwise disposed of during the taxable year exceeds the
adjusted basis of the property computed under section 43‑1080.
9. The
amount by which the depreciation or amortization computed under the internal
revenue code with respect to property for which a credit was taken under either
section 43‑1081 or 43‑1081.01 exceeds the amount of depreciation or
amortization computed pursuant to the internal revenue code on the Arizona
adjusted basis of the property.
10. The
amount by which the adjusted basis computed under the internal revenue code
with respect to property for which a credit was claimed under section 43‑1074.02,
43‑1081 or 43‑1081.01 and that is sold or otherwise disposed of
during the taxable year exceeds the adjusted basis of the property computed
under section 43‑1074.02, 43‑1081 or 43‑1081.01, as
applicable.
11. The
deduction referred to in section 1341(a)(4) of the internal revenue code for
restoration of a substantial amount held under a claim of right.
12. The
amount by which a net operating loss carryover or capital loss carryover
allowable pursuant to section 1341(b)(5) of the internal revenue code exceeds
the net operating loss carryover or capital loss carryover allowable pursuant
to section 43‑1029, subsection F.
13. Any
wage expenses deducted pursuant to the internal revenue code for which a credit
is claimed under section 43‑1087 and representing net increases in
qualified employment positions for employment of temporary assistance for needy
families recipients.
14. The
amount of any depreciation allowance allowed pursuant to section 167(a) of the
internal revenue code to the extent not previously added.
15. With respect to property for which an
expense deduction was taken pursuant to section 179 of the internal revenue
code in a taxable year beginning before January 1, 2013, the amount in excess
of twenty‑five thousand dollars.
16. 15. The amount of a nonqualified withdrawal, as defined in
section 15‑1871, from a college savings plan established pursuant to
section 529 of the internal revenue code that is made to a distributee to the
extent the amount is not included in computing federal adjusted gross income,
except that the amount added under this paragraph shall not exceed the
difference between the amount subtracted under section 43‑1022 in prior
taxable years and the amount added under this section in any prior taxable
years.
17. 16. The
amount of discharge of indebtedness income that is deferred and excluded from
the computation of federal adjusted gross income in the current taxable year pursuant
to section 108(i) of the internal revenue code as added by section 1231 of the
American recovery and reinvestment act of 2009 (P.L. 111‑5).
18. 17. The amount of any previously deferred original issue
discount that was deducted in computing federal adjusted gross income in the
current year pursuant to section 108(i) of the internal revenue code as added
by section 1231 of the American recovery and reinvestment act of 2009 (P.L. 111‑5),
to the extent that the amount was previously subtracted from Arizona gross
income pursuant to section 43‑1022, paragraph 23 22.
19. 18. Amounts
that are considered to be income under section 43‑1032, subsection D
because the amount is withdrawn from a long‑term health care savings
account and not used to pay the taxpayer's long‑term health care
expenses.
20. 19. If
a subtraction is or has been taken by the taxpayer under section 43‑1024,
in the current or a prior taxable year for the full amount of eligible access
expenditures paid or incurred to comply with the requirements of the Americans
with disabilities act of 1990 (P.L. 101‑336) or title 41, chapter 9,
article 8, any amount of eligible access expenditures that is recognized under
the internal revenue code, including any amount that is amortized according to
federal amortization schedules, and that is included in computing taxable
income for the current taxable year.
21. 20. For
taxable years beginning from and after December 31, 2017, the amount of any net
capital loss included in Arizona gross income for the taxable year that is
derived from the exchange of one kind of legal tender for another kind of legal
tender. For the purposes of this paragraph:
(a) "Legal
tender" means a medium of exchange, including specie, that is authorized
by the United States Constitution or Congress for the payment of debts, public
charges, taxes and dues.
(b) "Specie"
means coins having precious metal content. END_STATUTE
Sec. 45. Section
43-1022, Arizona Revised Statutes, is amended to read:
START_STATUTE43-1022. Subtractions
from Arizona gross income
In computing
Arizona adjusted gross income, the following amounts shall be subtracted from
Arizona gross income:
1. The
amount of exemptions allowed by section 43‑1023.
2. Benefits,
annuities and pensions in an amount totaling not more than two thousand five
hundred dollars received from one or more of the following:
(a) The
United States government service retirement and disability fund, retired or retainer
pay of the uniformed services of the United States, the United States foreign
service retirement and disability system and any other retirement system or
plan established by federal law.
(b) The
Arizona state retirement system, the corrections officer retirement plan, the
public safety personnel retirement system, the elected officials' retirement
plan, an optional retirement program established by the Arizona board of
regents under section 15‑1628, an optional retirement program established
by a community college district board under section 15‑1451 or a
retirement plan established for employees of a county, city or town in this
state.
3. A
beneficiary's share of the fiduciary adjustment to the extent that the amount
determined by section 43‑1333 decreases the beneficiary's Arizona gross
income.
4. Interest
income received on obligations of the United States, less any interest on
indebtedness, or other related expenses, and deducted in arriving at Arizona
gross income, which were incurred or continued to purchase or carry such
obligations.
5. The
excess of a partner's share of income required to be included under section
702(a)(8) of the internal revenue code over the income required to be included
under chapter 14, article 2 of this title.
6. The
excess of a partner's share of partnership losses determined pursuant to
chapter 14, article 2 of this title over the losses allowable under section
702(a)(8) of the internal revenue code.
7. The
amount allowed by section 43‑1025 for contributions during the taxable
year of agricultural crops to charitable organizations.
8. The
portion of any wages or salaries paid or incurred by the taxpayer for the
taxable year that is equal to the amount of the federal work opportunity
credit, the empowerment zone employment credit, the credit for employer paid
social security taxes on employee cash tips and the Indian employment credit
that the taxpayer received under sections 45A, 45B, 51(a) and 1396 of the
internal revenue code.
9. The
amount of prizes or winnings less than five thousand dollars in a single
taxable year from any of the state lotteries established and operated pursuant
to title 5, chapter 5.1, article 1.
10. The
amount of exploration expenses that is determined pursuant to section 617 of
the internal revenue code, that has been deferred in a taxable year ending
before January 1, 1990 and for which a subtraction has not previously been
made. The subtraction shall be made on a ratable basis as the units of
produced ores or minerals discovered or explored as a result of this
exploration are sold.
11. The
amount included in federal adjusted gross income pursuant to section 86 of the
internal revenue code, relating to taxation of social security and railroad
retirement benefits.
12. To
the extent not already excluded from Arizona gross income under the internal
revenue code, compensation received for active service as a member of the
reserves, the national guard or the armed forces of the United States,
including compensation for service in a combat zone as determined under section
112 of the internal revenue code.
13. The
amount of unreimbursed medical and hospital costs, adoption counseling, legal
and agency fees and other nonrecurring costs of adoption not to exceed three
thousand dollars. In the case of a husband and wife who file separate returns,
the subtraction may be taken by either taxpayer or may be divided between them,
but the total subtractions allowed both husband and wife shall not exceed three
thousand dollars. The subtraction under this paragraph may be taken for the
costs that are described in this paragraph and that are incurred in prior
years, but the subtraction may be taken only in the year during which the final
adoption order is granted.
14. The
amount authorized by section 43‑1027 for the taxable year relating to
qualified wood stoves, wood fireplaces or gas fired fireplaces.
15. The
amount by which a net operating loss carryover or capital loss carryover
allowable pursuant to section 43‑1029, subsection F exceeds the net operating
loss carryover or capital loss carryover allowable pursuant to section
1341(b)(5) of the internal revenue code.
16. Any
amount of qualified educational expenses that is distributed from a qualified
state tuition program determined pursuant to section 529 of the internal
revenue code and that is included in income in computing federal adjusted gross
income.
17. Any
item of income resulting from an installment sale that has been properly
subjected to income tax in another state in a previous taxable year and that is
included in Arizona gross income in the current taxable year.
18. The
amount authorized by section 43‑1030 relating to holocaust survivors.
19. For
property placed in service:
(a) In
taxable years beginning before December 31, 2012, an amount equal to the
depreciation allowable pursuant to section 167(a) of the internal revenue code
for the taxable year computed as if the election described in section
168(k)(2)(D)(iii) of the internal revenue code had been made for each
applicable class of property in the year the property was placed in service.
(b) In
taxable years beginning from and after December 31, 2012 through December 31,
2013, an amount determined in the year the asset was placed in service based on
the calculation in subdivision (a) of this paragraph. In the first
taxable year beginning from and after December 31, 2013, the taxpayer may elect
to subtract the amount necessary to make the depreciation claimed to date for
the purposes of this title the same as it would have been if subdivision (c) of
this paragraph had applied for the entire time the asset was in
service. Subdivision (c) of this paragraph applies for the remainder
of the asset's life. If the taxpayer does not make the election under this
subdivision, subdivision (a) of this paragraph applies for the remainder of the
asset's life.
(c) In
taxable years beginning from and after December 31, 2013 through December 31,
2015, an amount equal to the depreciation allowable pursuant to section 167(a)
of the internal revenue code for the taxable year as computed as if the
additional allowance for depreciation had been ten percent of the amount
allowed pursuant to section 168(k) of the internal revenue code.
(d) In
taxable years beginning from and after December 31, 2015 through December 31,
2016, an amount equal to the depreciation allowable pursuant to section 167(a)
of the internal revenue code for the taxable year as computed as if the
additional allowance for depreciation had been fifty‑five percent of the
amount allowed pursuant to section 168(k) of the internal revenue code.
(e) In
taxable years beginning from and after December 31, 2016, an amount equal to
the depreciation allowable pursuant to section 167(a) of the internal revenue
code for the taxable year as computed as if the additional allowance for
depreciation had been the full amount allowed pursuant to section 168(k) of the
internal revenue code.
20. With
respect to property that is sold or otherwise disposed of during the taxable
year by a taxpayer that complied with section 43‑1021, paragraph 14 with
respect to that property, the amount of depreciation that has been allowed
pursuant to section 167(a) of the internal revenue code to the extent that the
amount has not already reduced Arizona taxable income in the current or prior
taxable years.
21. With
respect to property for which an adjustment was made under section 43‑1021,
paragraph 15, an amount equal to one‑fifth of the amount of the
adjustment pursuant to section 43‑1021, paragraph 15 in the year in which
the amount was adjusted under section 43‑1021, paragraph 15 and in each
of the following four years.
22. 21. The
amount contributed during the taxable year to college savings plans established
pursuant to section 529 of the internal revenue code to the extent that the
contributions were not deducted in computing federal adjusted gross income.
The amount subtracted shall not exceed:
(a) Two
thousand dollars for a single individual or a head of household.
(b) Four
thousand dollars for a married couple filing a joint return. In the
case of a husband and wife who file separate returns, the subtraction may be
taken by either taxpayer or may be divided between them, but the total
subtractions allowed both husband and wife shall not exceed four thousand
dollars.
23. 22. The
amount of any original issue discount that was deferred and not allowed to be
deducted in computing federal adjusted gross income in the current taxable year
pursuant to section 108(i) of the internal revenue code as added by section
1231 of the American recovery and reinvestment act of 2009 (P.L. 111‑5).
24. 23. The
amount of previously deferred discharge of indebtedness income that is included
in the computation of federal adjusted gross income in the current taxable year
pursuant to section 108(i) of the internal revenue code as added by section
1231 of the American recovery and reinvestment act of 2009 (P.L. 111‑5),
to the extent that the amount was previously added to Arizona gross income
pursuant to section 43‑1021, paragraph 17 16.
25. 24. The
portion of the net operating loss carryforward that would have been allowed as
a deduction in the current year pursuant to section 172 of the internal revenue
code if the election described in section 172(b)(1)(H) of the internal revenue
code had not been made in the year of the loss that exceeds the actual net
operating loss carryforward that was deducted in arriving at federal adjusted
gross income. This subtraction only applies to taxpayers who made an election
under section 172(b)(1)(H) of the internal revenue code as amended by section
1211 of the American recovery and reinvestment act of 2009 (P.L. 111‑5)
or as amended by section 13 of the worker, homeownership, and business
assistance act of 2009 (P.L. 111‑92).
26. 25.
For taxable years beginning from and after December 31, 2013, the amount of any
net capital gain included in federal adjusted gross income for the taxable year
derived from investment in a qualified small business as determined by the
Arizona commerce authority pursuant to section 41‑1518.
27. 26. An
amount of any net long-term capital gain included in federal adjusted gross
income for the taxable year that is derived from an investment in an asset
acquired after December 31, 2011, as follows:
(a) For
taxable years beginning from and after December 31, 2012 through December 31,
2013, ten percent of the net long-term capital gain included in federal
adjusted gross income.
(b) For
taxable years beginning from and after December 31, 2013 through December 31,
2014, twenty percent of the net long-term capital gain included in federal
adjusted gross income.
(c) For
taxable years beginning from and after December 31, 2014, twenty‑five
percent of the net long-term capital gain included in federal adjusted gross
income. For the purposes of this paragraph, a transferee that receives an
asset by gift or at the death of a transferor is considered to have acquired
the asset when the asset was acquired by the transferor. If the date
an asset is acquired cannot be verified, a subtraction under this paragraph is
not allowed.
28. 27. If
an individual is not claiming itemized deductions pursuant to section 43‑1042,
the amount of premium costs for long-term care insurance, as defined in section
20‑1691.
29. With
respect to a long-term health care savings account established pursuant to
section 43‑1032, the amount deposited by the taxpayer in the account
during the taxable year to the extent that the taxpayer's contributions are
included in the taxpayer's federal adjusted gross income.
30. 28. The
amount of eligible access expenditures paid or incurred during the taxable year
to comply with the requirements of the Americans with disabilities act of 1990
(P.L. 101‑336) or title 41, chapter 9, article 8 as provided by section
43‑1024.
31. 29. For
taxable years beginning from and after December 31, 2017, the amount of any net
capital gain included in Arizona gross income for the taxable year that is
derived from the exchange of one kind of legal tender for another kind of legal
tender. For the purposes of this paragraph:
(a) "Legal
tender" means a medium of exchange, including specie, that is authorized
by the United States Constitution or Congress for the payment of debts, public
charges, taxes and dues.
(b) "Specie"
means coins having precious metal content.
Sec. 46. Repeal
Section 43-1032, Arizona Revised Statutes, is repealed.
Sec. 47. Section
43-1042, Arizona Revised Statutes, is amended to read:
START_STATUTE43-1042. Itemized
deductions
A. Except
as provided by subsections B and D c of
this section, at the election of the taxpayer, and in lieu of the standard
deduction allowed by section 43‑1041, in computing taxable income the
taxpayer may take the amount of itemized deductions allowable for the taxable
year pursuant to subtitle A, chapter 1, subchapter B, parts VI and VII, but
subject to the limitations prescribed by sections 67, 68 and 274,
of the internal revenue code.
B. In
lieu of the amount of the federal itemized deduction for expenses paid for
medical care allowed under section 213 of the internal revenue code, the
taxpayer may deduct the full amount of such expenses.
C. Notwithstanding
subsection B of this section, expenses for long‑term health care that are
paid or reimbursed from the taxpayer's long‑term health care savings
account pursuant to section 43‑1032 shall not be deducted pursuant to
this section.
D. c. A
taxpayer shall not claim both a deduction provided by this section and a credit
allowed by this title with respect to the same charitable contributions.
E. d. The
taxpayer may add any interest expense paid by the taxpayer for the taxable year
that is equal to the amount of federal credit for interest on certain home
mortgages allowed by section 25 of the internal revenue code."
Renumber to
conform
Page 61,
line 11, strike "attributable to"; strike "its income"
Line 12,
strike "and"
Line 21,
after "beginning" insert "and end"
Page 64,
after line 26, insert:
"Sec. 60. Legislative intent
It is the intent
of the legislature in enacting this act that from and after the effective date
of this act:
1. The
department of revenue provides the taxpayer the option of receiving notices
from the department by electronic or physical means.
2. The
department of revenue provides notices by the means requested by the
taxpayer."
END_STATUTE
END_STATUTEAmend title to conform
Bill
Number: S.B. 1293