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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
AMENDED
tax corrections act of 2020
Purpose
Corrects errors and obsolete language, addresses blending problems and provides clarifying changes to tax statutes.
Background
The Arizona Department of Revenue (ADOR) and Legislative Council review the tax statutes for errors, obsolete language and blending problems. These recommendations are then compiled into an annual bill.
Current statute requires ADOR to include the repeal of an individual or corporate income tax credit that has not been used for four years in the Tax Corrections Act (A.R.S. § 43-224).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Repeals, retroactive to tax years beginning January 1, 2020, the following tax credits:
a) the individual Credit for Construction Costs of Qualified Environmental Technology Facility;
b) the corporate Credit for Employment by a Healthy Forest Enterprise;
c) the corporate Credit of Donation of School Site; and
d) the corporate Credit for Agricultural Pollution Control Equipment.
2. Requires, retroactive to tax years beginning January 1, 2020, a full-year or part-year resident individual to file a tax return with ADOR if their gross income was greater than the standard deduction adjusted for inflation, rather than if the individual had:
a) an Arizona adjusted gross income was great than $5,500, if single or married filing a separate return;
b) an Arizona adjusted gross income was greater than $11,000, if filing a joint return; or
c) a gross income of $15,000 or more, regardless of the amount of taxable income.
3. Requires, retroactive to tax years beginning January 1, 2020, a nonresident individual to file a tax return with ADOR if their gross income was greater than the standard deduction adjusted for inflation and multiplied by the quotient of the individual's gross income and their federal adjusted gross income.
4. Removes, from the computation of Arizona adjusted gross income and Arizona taxable income for a corporation, expired additions and subtractions relating to the American Recovery and Reinvestment Act of 2009.
5. Extends the applicability of the amount of dividend income from foreign corporations that can be subtracted from Arizona income tax to tax year 2017.
6. Specifies that a claimed tax exemption for the caretaking of a person aged 65 years or older or for a stillbirth is in lieu of the dependent tax credit.
7. Removes, from the computation of Arizona taxable income for a corporation, the addition of amounts related to the Credit for Agricultural Pollution Control Equipment and the Credit of Donation of School Site.
8. Removes, from the computation of Arizona adjusted gross income, the addition of amounts related to the Credit for Construction Costs of Qualified Environmental Technology Facility.
9. Includes property that has been subdivided from January 1 through September 30 of the valuation year in the circumstances where limited property value must be established as a level or percentage of full cash value that is comparable to other properties of similar use or classification.
10. Specifies that the exclusion from the personal property rental classification applies to a parent business entity and its subsidiary, rather than a parent corporation and its subsidiary, who lease or rent tangible personal property to one another or another subsidiary if taxes were already paid.
11. Removes, from the list of commercial lease classification exclusions, leasing or renting real property for agricultural purposes, if:
a) the lease or rental is between family members, trusts, estates, corporations, partnerships, joint venturers or similar entities, if the individuals or at least 80 percent of the beneficiaries, shareholders, partners or joint venturers share a family relationship; or
b) the lessor leases or rents under no more than three agreements.
12. Requires estimated tax payments, for taxpayers with an annual tax liability above a statutory threshold, to be made by the last business day in June if the taxpayer is required to make the payment by electronic means.
13. Specifies that estimated tax payments made in June of each year, for taxpayers with an annual tax liability above a statutory threshold, must be made in the same manner as a taxpayer's regular payments.
14. Applies, to any contribution for which a credit is allowed even if the contribution is treated as a payment of state income tax, the prohibition on a taxpayer from claiming itemized deductions and a credit against the same charitable contributions
15. States that the repeal of the tax credits does not affect the continuing validity of any amount of the credit carried forward from previous taxable years for application against subsequent tax liabilities as allowed by prior law.
16. Makes technical and conforming changes.
17. Becomes effective on the general effective date, with retroactive provisions as noted.
Amendments Adopted by Committee
1. Requires a part-year resident individual to file a tax return with ADOR if their gross income was greater than the standard deduction adjusted for inflation, rather than if their gross income was greater than the standard deduction adjusted for inflation and multiplied by the quotient of the individual's gross income and their federal adjusted gross income.
2. Applies, to any contribution for which a credit is allowed even if the contribution is treated as a payment of state income tax, the prohibition on a taxpayer from claiming itemized deductions and a credit against the same charitable contributions
3. Inserts a saving clause.
4. Makes conforming changes.
Senate Action
FIN 2/19/20 DPA 6-0-4
Prepared by Senate Research
February 20, 2020
MG/gs