ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
TPT; exemption; agricultural equipment
Purpose
Requires the gross proceeds of sales or gross income derived from sales of agricultural machinery and equipment, rather than only new agricultural machinery and equipment, including off-highway vehicles, to be deducted from the tax base for the retail classification of transaction privilege tax (TPT).
Background
The gross
proceeds of sales or gross income derived from sales of certain tangible
personal property must be deducted from the tax base for the retail
classification of TPT, including new machinery and equipment consisting of
agricultural aircraft, tractors, tractor-drawn and
self-powered implements and machinery and equipment necessary for extracting
milk and for cooling milk and livestock. New agricultural machinery and
equipment is exempt from use tax. New machinery and equipment is
machinery and equipment that have never been sold at retail except pursuant to
leases or rentals that do not total two years or more (A.R.S. §§ 42-5061
and
42-5071).
The Joint Legislative Budget Committee fiscal note estimates that H.B. 2400 would reduce the state General Fund portion of TPT revenue distributions by $583,000 annually (JLBC fiscal note).
Provisions
1. Requires the gross proceeds of sales or gross income derived from sales of agricultural machinery and equipment, rather than only new agricultural machinery and equipment, to be deducted from the tax base for the retail classification of TPT.
2. Exempts, from use tax, the gross proceeds of sales or gross income derived from sales of agricultural machinery and equipment, rather than only new agricultural machinery and equipment.
3. Includes off-highway vehicles in agricultural machinery and equipment for the purposes of the TPT deduction and use tax exemption.
4. Defines off-highway vehicles as off-highway vehicles that meet the definition used for the purposes of traffic and vehicle regulation and that are not equipped with a modified exhaust system to increase horsepower or speed or an engine that is more than 1,000 cubic centimeters or that have a maximum speed of 50 miles per hour or less.
5. Removes the definition of new machinery and equipment.
6. Applies the modified exemption and deduction to taxable periods beginning on or after the first day of the month following the general effective date.
7. Contains a technical conditional enactment.
8. Makes technical changes.
9. Becomes effective on the general effective date or later, subject to the provisions of the conditional enactment.
House Action
WM 2/2/22 DP 6-4-0-0
3rd Read 2/23/22 38-21-1
Prepared by Senate Research
March 14, 2022
MG/AN/slp