Bill
Number: S.B. 1828
Fann
Floor Amendment
Reference
to: printed bill
Amendment
drafted by: Leg Council
FLOOR
AMENDMENT EXPLANATION
Individual Income Tax
1. Directs, by September
30, 2022, the Director of the Joint Legislative Budget Committee (JLBC) and the
Director of the Governor's Office of Strategic Planning and Budgeting (OSPB) to
notify the Arizona Department of Revenue (ADOR) whether the FY 2022 state
General Fund (GF) revenue was $12,782,800,000 or more (FY 2022 revenue notice).
2. Directs, by September
30, 2023, and by September 30 annually until a state GF threshold notice is
provided to ADOR, the Director of JLBC and the Director of OSPB to notify ADOR
whether the previous FYs state GF revenue was either:
a) between $12,782,800,000
and $12,976,300,000 (stage one revenue notice); or
b) $12,976,300,000 or more
(stage two revenue notice).
3. Replaces, for taxable
years (TYs) beginning January 1, 2022, through December 31 of the year the FY
2022 revenue notice or the stage one revenue notice is received, the modified
individual income tax bracket with the following:
|
Single or Married
Filing Separately
|
Married
Couple or Head of Household
|
|
Taxable
Income
|
Tax
|
Taxable
Income
|
Tax
|
|
$0
- $27,272
|
2.55%
of taxable income
|
$0
- $54,544
|
2.55%
of taxable income
|
|
$27,273
and over
|
$695,
plus 2.98% of the amount over $27,272
|
$54,545
and over
|
$1,391,
plus 2.98% of the amount over $54,544
|
4. Requires ADOR, on
receipt of the FY 2022 revenue notice or the stage one revenue notice, to use
the following tax rates beginning January 1 of the following TY, which applies
until ADOR receives the stage two revenue notice:
|
Single or Married
Filing Separately
|
Married Couple
or Head of Household
|
|
Taxable
Income
|
Tax
|
Taxable
Income
|
Tax
|
|
$0
- $27,272
|
2.53%
of taxable income
|
$0
- $54,544
|
2.53%
of taxable income
|
|
$27,273
and over
|
$690,
plus 2.75% of the amount over $27,272
|
$54,545
and over
|
$1,380,
plus 2.75% of the amount over $54,544
|
5. Requires ADOR, on
receipt of the stage two revenue notice, to use the 2.5 percent flat tax rate
beginning January 1 of the following TY.
6. Stipulates that the
stage one revenue notice is not required if the FY 2022 revenue notice was
provided by September 30, 2022.
7. Requires the Director
of JLBC and the Director of the OSPB to notify ADOR of the stage one revenue
notice and the stage two revenue notice only on the first occurrence of each
threshold being met.
8. Directs ADOR, for TYs
beginning January 1, 2022, to adjust the income dollar amount to the nearest
whole dollar for each rate bracket according to the average annual change in
the Metropolitan Phoenix Consumer Price Index.
9. Prohibits the income
dollar amounts for each rate bracket from being revised below the amounts
prescribed in the prior TY.
10. Removes the combined
individual income tax rate cap of 4.5 percent on an individual's taxable income.
11. Removes ADOR's
rulemaking authority and one-year exemption for the administration of the
combined tax rate cap.
Urban Revenue Sharing
Fund (URS Fund)
12. Increases, beginning in
FY 2024, the URS Fund annual distribution to 18 percent of the net proceeds of
state income taxes, from 15 percent, and removes the Revenue Sharing
Stabilization Fund.
13. Removes the FY 2024
supplemental allocation to the URS Fund.
Unemployment Insurance
(UI)
14. Delays, until July 1,
2022, the increase to the amount an individual may earn with no reduction to
their weekly benefit amount.
15. Delays, until July 1,
2022, the reduction of the maximum number of weeks an individual may receive UI
benefits when Arizona's unemployment rate is less than 5 percent in the prior
calendar quarter.
16. Removes the conditional
enactment for the provisions relating to UI benefits.
Tax Credits
17. Removes the Dependent
Tax Credit increase.
18. Removes the Affordable
Housing Premium Tax Credit and the individual and corporate Affordable Housing
Tax Credits.
19. Removes the extension
and modification of the Credit for Investment in Qualified Small Businesses.
Miscellaneous
20. Reduces the percentage
of assessed valuation of class 1 property over four years by lowering the
percentage by .5 percent annually to 16 percent.
21. Modifies the income tax
subtraction for contributions in aid of construction, retroactive to January 1,
2020, by allowing a public service corporation operating a water system or sewage
disposal facility to subtract the amount of monies or property received as a
contribution in aid of construction from their Arizona gross income.
22. Defines, retroactive to
January 1, 2021, qualifying foster care charitable organization and qualified
individual for the purposes of the Tax Credit for Contributions to
Qualifying Foster Care Charitable Organizations.
23. Defines terms.
24. Makes technical and
conforming changes.
Page 4,
strike lines 24 through 45
Strike pages
5 through 7
Page 8,
strike lines 1 through 11
Renumber to
conform
Page 14,
line 27, after "dollars" insert "$30 through June 30, 2022 and from and after June 30, 2022 that is in
excess of"
Page 15, strike
lines 29 through 44
Strike pages
16 through 21
Page 22,
strike lines 1 through 20
Renumber to
conform
Page 76,
line 44, after "2022" insert "through December 31, 2023"
After line
44, insert:
"14. Sixteen and one-half percent beginning from and
after December 31, 2023 through December 31, 2024.
15. Sixteen
percent beginning from and after December 31, 2024."
Strike page
77
Page 78,
strike lines 1 through 12, insert:
"Sec. 11. Section
43-206, Arizona Revised Statutes, is amended to read:
START_STATUTE43-206. Urban
revenue sharing fund; allocation; distribution; withholding
A. The
urban revenue sharing fund is established. Through fiscal
year 2022-2023, the fund shall consist consists of an amount equal to fifteen percent of the net
proceeds of the state income taxes for the fiscal year two years preceding the
current fiscal year. Beginning in fiscal year 2023-2024,
the fund consists of an amount equal to eighteen percent of the net proceeds of
the state income taxes for the fiscal year two years preceding the current
fiscal year. The fund shall be distributed to incorporated cities and
towns as provided in this section, except that a city or town shall receive at
least an amount equal to what a city or town with a population of fifteen
hundred or more persons would receive. The transfer of net proceeds
prescribed by section 49-282, subsection B does not affect the
calculation of net proceeds prescribed by this subsection.
B. Each
city or town shall share in the urban revenue sharing fund in the proportion
that the population of each bears to the population of all. Except as provided
by sections 42-5033 and 42-5033.01, the population of a city or
town as determined by the most recent United States decennial census plus any
revisions to the decennial census certified by the United States bureau of the
census shall be used as the basis for apportioning monies pursuant to this
subsection.
C. The
treasurer, on instruction from the department, shall transmit, no
not later than the tenth day of each month, to each city
or town an amount equal to one-twelfth of that city's or town's total
entitlement for the current fiscal year from the urban revenue sharing fund as
determined by the department.
D. A
newly incorporated city or town shall share in the urban revenue sharing fund
beginning the first month of the first full fiscal year following
incorporation.
E. On
receipt of a certificate of default from the greater Arizona development
authority pursuant to section 41-2257 or 41-2258, the state
treasurer, to the extent not otherwise expressly prohibited by law, shall
withhold from the next succeeding distribution of monies pursuant to this
section due to the city or town the amount specified in the certificate of
default and immediately deposit the amount withheld in the greater Arizona
development authority revolving fund. The state treasurer shall continue to
withhold and deposit the monies until the authority certifies to the state
treasurer that the default has been cured. In no event
shall The state treasurer may not withhold any
amount that is necessary, as certified by the defaulting political subdivision
to the state treasurer and the authority, to make any required deposits then
due for the payment of principal and interest on bonds of the political
subdivision that were issued prior to before
the date of the loan repayment agreement or bonds and that have been
secured by a pledge of distributions made pursuant to this section.
F. Except
as otherwise provided by this subsection, on notice from the attorney general
pursuant to section 41-194.01, subsection B, paragraph 1 that an ordinance,
regulation, order or other official action adopted or taken by the governing
body of a city or town violates state law or the Constitution of Arizona, the
state treasurer shall withhold the distribution of monies pursuant to this
section to the affected city or town and shall continue to withhold monies
pursuant to this subsection until the attorney general certifies to the state
treasurer that the violation has been resolved. The state treasurer
shall redistribute the monies withheld pursuant to this subsection among all
other cities and towns in proportion to their population as provided by subsection
B of this section. The state treasurer shall not withhold any amount that the
city or town certifies to the attorney general and the state treasurer as being
necessary to make any required deposits or payments for debt service on bonds
or other long-term obligations of the city or town that were issued or
incurred before committing the violation." END_STATUTE
Page 78,
strike lines 28 through 45
Page 79,
strike lines 1 through 22, insert:
"Sec.
13. Title 43, chapter 2, article 3, Arizona Revised Statutes, is
amended by adding section 43-243, to read:
START_STATUTE43-243. State
general fund revenue notification; tax rate adjustment
A. On
or before September 30, 2022, the director of the joint legislative budget
committee and the director of the governor's office of strategic planning and
budgeting shall jointly notify the department whether the fiscal year 2021-2022
state general fund revenue, excluding the beginning balance, was
$12,782,800,000 or more.
B. On
or before September 30, 2023 and on or before September 30 of each year until
the notice is provided as prescribed in subsection A of this section or
paragraph 1 of this subsection, and paragraph 2 of this subsection, the
director of the joint legislative budget committee and the director of the
governor's office of strategic planning and budgeting shall jointly notify the
department whether the previous fiscal year state general fund revenue,
excluding the beginning balance, was either of the following amounts:
1. More
than $12,782,800,000 but less than $12,976,300,000. THe notice required
pursuant to this paragraph is not required if the notice required pursuant to
subsection A of this section was provided on or before September 30, 2022.
2. $12,976,300,000
or more.
C. On
receipt of the notice required pursuant to subsection A or subsection B,
paragraph 1 of this section, the department shall use the tax rates provided in
section 43-1011, subsection A, paragraph 8 for taxable years beginning
from and after December 31 of the year in which the notice required pursuant to
subsection A or subsection B, paragraph 1 of this section is received. The tax
rate prescribed in section 43-1011, subsection A, paragraph 8 applies
until the department receives the notice required pursuant to subsection B,
paragraph 2 of this section.
D. On
receipt of the notice required pursuant to subsection B, paragraph 2 of this
section, the department shall use the tax rates provided in section 43-1011,
subsection A, paragraph 9 for taxable years beginning from and after December
31 of the year in which the notice required pursuant to subsection B, paragraph
2 of this section is received.
E. The
director of the joint legislative budget committee and the director of the
governor's office of strategic planning and budgeting shall notify the
department as required pursuant to subsection B, paragraphs 1 and 2 of this
section only on the first occurrence that each state general fund revenue
threshold is met." END_STATUTE
Renumber to
conform
Page 84,
strike lines 11 through 27, insert:
"7. Subject to subsections E and F of this section, For
taxable years beginning from and after December 31, 2021 through December 31 of
the year in which notice is provided to the department pursuant to section 43-243,
subsection A or subsection B, paragraph 1:
(a) In
the case of a single person or a married person filing separately:
If
taxable income is: The tax is:
$0
— $27,272 2.55% of taxable income
$27,273
and over $695, plus 2.98% of the amount
over
$27,272
(b) In
the case of a married couple filing a joint return or a single person who is a
head of a household:
If
taxable income is: The tax is:
$0
— $54,544 2.55% of taxable income
$54,545 and over $1,391,
plus 2.98% of the amount over $54,544
8. Subject
to subsections E and F of this section, for taxable years beginning from and
after December 31 of the year in which notice is provided to the department
pursuant to section 43-243, subsection A or subsection B, paragraph 1
through December 31 of the year in which notice is provided to the department
pursuant to section 43-243, subsection B, paragraph 2:
(a) In
the case of a single person or a married person filing separately:
If
taxable income is: The tax is:
$0
— $27,272 2.53% of taxable income
$27,273
and over $690, plus 2.75% of the amount
over
$27,272
(b) In
the case of a married couple filing a joint return or a single person who is a
head of a household:
If
taxable income is: The tax is:
$0
— $54,544 2.53% of taxable income
$54,545 and over $1,380,
plus 2.75% of the amount over $54,544
9. Subject
to subsection F of this section, for taxable years beginning from and after
December 31 of the year in which notice is provided to the department pursuant
to section 43-243, subsection B, paragraph 2, the tax is 2.5% of taxable
income."
Page 85,
strike lines 10 through 19, insert:
"E. For each taxable year beginning from and after December
31, 2021, the department shall adjust the income dollar amount for each rate
bracket prescribed by subsection A, paragraphs 7 and 8 of this section, as
applicable, according to the average annual change in the metropolitan Phoenix
consumer price index published by the United States department of labor, bureau
of labor statistics. The revised dollar amounts shall be raised to
the nearest whole dollar. The income dollar amounts for each rate
bracket may not be revised below the amounts prescribed in the prior taxable
year."
Page 91,
strike lines 10 through 45
Strike pages
92 and 93
Page 94,
strike lines 1 through 7
Renumber to
conform
Page 98,
strike lines 31 through 43
Strike pages
99 and 100, insert:
"Sec. 20. Section
43-1122, Arizona Revised Statutes, is amended to read:
START_STATUTE43-1122. Subtractions
from Arizona gross income; corporations
In computing
Arizona taxable income for a corporation, the following amounts shall be
subtracted from Arizona gross income:
1. 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.
2. 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.
3. The
amount allowed by section 43-1025 for contributions during the taxable
year of agricultural crops to charitable organizations.
4. 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.
5. With
respect to property that is sold or otherwise disposed of during the taxable
year by a taxpayer that complied with section 43-1121, paragraph 4 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 taxable
year or prior taxable years.
6. With
respect to a financial institution as defined in section 6-101, expenses
and interest relating to tax-exempt income disallowed pursuant to section
265 of the internal revenue code.
7. Dividends
received from another corporation owned or controlled directly or indirectly by
a recipient corporation. For the purposes of this paragraph,
"control" means direct or indirect ownership or control of fifty
percent or more of the voting stock of the payor corporation by the recipient
corporation. Dividends shall have the meaning provided in section 316 of the
internal revenue code. This subtraction shall apply without regard
to section 43-961, paragraph 2 and article 4 of this chapter.
8. Interest
income received on obligations of the United States.
9. The
amount of dividend income from foreign corporations. For the purposes of this
paragraph, gross up income as described in section 78 of the internal revenue
code, global intangible low-taxed income as defined in section 951A of the
internal revenue code and subpart F income as defined in section 952 of the
internal revenue code shall be considered foreign dividends.
10. The
amount of net operating loss allowed by section 43-1123.
11. The
amount of any state income tax refunds received that were included as income in
computing federal taxable income.
12. The
amount of expense recapture included in income pursuant to section 617 of the
internal revenue code for mine exploration expenses.
13. The
amount of deferred exploration expenses allowed by section 43-1127.
14. The
amount of exploration expenses related to the exploration of oil, gas or geothermal
resources, computed in the same manner and on the same basis as a deduction for
mine exploration pursuant to section 617 of the internal revenue
code. This computation is subject to the adjustments contained in
section 43-1121, paragraph 10 and paragraphs 12 and 13 of this
section relating to exploration expenses.
15. The
amortization of pollution control devices allowed by section 43-1129.
16. The
amount of amortization of the cost of child care facilities pursuant to section
43-1130.
17. The
amount of income from a domestic international sales corporation required to be
included in the income of its shareholders pursuant to section 995 of the
internal revenue code.
18. The
income of an insurance company that is exempt under section 43-1201 to
the extent that it is included in computing Arizona gross income on a
consolidated return pursuant to section 43-947.
19. The
amount by which a capital loss carryover allowable pursuant to section 43-1130.01,
subsection F exceeds the capital loss carryover allowable pursuant to section
1341(b)(5) of the internal revenue code.
20. 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)(7) of the internal revenue code had been made for
each applicable class of property in the year the property was placed in
service.
21. 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
43-1124.
22. 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 to pay debts, public charges,
taxes and dues.
(b) "Specie"
means coins having precious metal content.
23.
WITH RESPECT TO A PUBLIC SERVICE CORPORATION OPERATING A WATER system OR SEWAGE
disposal facility, THE AMOUNT OF MONIES OR PROPERTY RECEIVED AS A CONTRIBUTION
IN AID OF CONSTRUCTION. FOR THE PURPOSES OF THIS PARAGRAPH:
(a) "CONTRIBUTION
IN AID OF CONSTRUCTION" MEANS ANY AMOUNT OF MONIES OR OTHER PROPERTY
CONTRIBUTED TO A PUBLIC SERVICE CORPORATION THAT PROVIDES WATER OR SEWAGE
DISPOSAL SERVICES TO THE EXTENT THAT THE PURPOSE OF THE CONTRIBUTION IS TO
PROVIDE FOR EXPANDING, IMPROVING OR REPLACING THE PUBLIC SERVICE CORPORATION'S
WATER SYSTEM OR SEWAGE DISPOSAL FACILITIES, INCLUDING ANY AMOUNT OF MONIES OR
OTHER PROPERTY CONTRIBUTED TO A PUBLIC SERVICE CORPORATION FOR A WATER SYSTEM
OR SEWAGE DISPOSAL FACILITY SUBJECT TO A CONTINGENT OBLIGATION TO REPAY THE
AMOUNT, IN WHOLE OR IN PART, TO THE CONTRIBUTOR.
(b) "PUBLIC
SERVICE CORPORATION" MEANS A PUBLIC SERVICE CORPORATION AS DEFINED IN
ARTICLE XV, SECTION 2, CONSTITUTION OF ARIZONA, THAT IS REGULATED BY THE
CORPORATION COMMISSION." END_STATUTE
Renumber to
conform
Page 101,
line 2, strike "sections" insert "section"; strike
"and 43-1163"
Page 103,
strike lines 13 through 44
Page 104,
strike lines 1 through 7
Renumber to
conform
Page 114,
strike lines 10 through 15
Renumber to
conform
Strike lines
40 through 45
Page 115,
strike lines 1 through 11
Renumber to conform
Line 16, after
"43-1083.02" insert "or 43-1164.03"
Between
lines 20 and 21, insert:
"Sec. 29. Contributions to qualifying foster care charitable organizations;
taxable year 2021; definitions; retroactivity; delayed repeal
A. Notwithstanding
any other law, for the purposes of the tax credit for contributions to
qualifying foster care charitable organizations under section 43-1088,
subsection B, Arizona Revised Statutes, for taxable year 2021, the following
definitions apply:
1. "Qualifying
foster care charitable organization" means a qualifying charitable
organization as defined in section 43-1088, Arizona Revised Statutes,
that each operating year provides services to at least two hundred qualified
individuals in this state and spends at least fifty percent of its budget on
services to qualified individuals in this state.
2. "Qualified
individual" means any of the following:
(a) A
foster child as defined in section 8-501, Arizona Revised Statutes.
(b) A
person who is participating in an independent living program as prescribed by
section 8-521, Arizona Revised Statutes.
(c) A
person who is participating in a transitional independent living program as
prescribed by section 8-521.01, Arizona Revised Statutes.
(d) A
person who is participating in an extended foster care program as prescribed by
section 8-521.02, Arizona Revised Statutes.
(e) A
person who is under twenty-seven years of age and whose reason for
leaving foster care is any of the following:
(i) Reaching
eighteen years of age.
(ii) Adoption
or legal guardianship after reaching sixteen years of age.
(iii) Reunification
at fourteen years of age or fifteen years of age.
B. This
section applies retroactively to taxable years from and after December 31,
2020.
C. This
section is repealed from and after December 31, 2021."
Renumber to
conform
Page 115,
line 23, strike "the following:"
Line 24,
strike "1."
Strikes
lines 30 through 32
Line 40,
strike "2017" insert "2020"
Page 116,
strike lines 3 through 16, insert:
"Sec. 32. Effective date
Section 23-780,
Arizona Revised Statutes, as amended by this act, is effective from and after
June 30, 2022."
Strike lines
24 through 38
Amend title to conform