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ARIZONA HOUSE OF REPRESENTATIVESFifty-sixth Legislature First Regular Session |
Senate: APPROP DP 6-4-0-0 | 3rd Read DPA 24-6-0-0House: 3rd Read DP 46-13-0-1 |
SB 1734: taxation; 2023-2024 (Substituted for HB 2824)
Sponsor: Senator Kavanagh, LD 3
Transmitted to the Governor
Overview
Contains provisions relating to taxation needed to implement the FY 2024 budget.
History
Entity-Level Taxation for Partnerships
By default, partnerships are taxed at the individual business partner level. For Arizona income tax purposes, partnerships can elect to instead be taxed at the entity level. In this case the taxable income is the Arizona taxable income of the partnership (A.R.S. § 43-1014).
Income Tax Subtraction for Adoption
Under current statute, an income tax subtraction may be taken for the unreimbursed costs of adoption. These costs may include: 1) medical costs; 2) hospital costs; 3) adoption counseling fees; 4) legal fees; 5) agency fees; and 6) other nonrecurring costs of adoption. This income tax subtraction may not exceed $3,000 and may only be claimed in the tax year (TY) during which the final adoption order is granted (A.R.S. § 43-1022).
Department of Revenue Integrated Tax System Project Fund (ITSPF)
Laws 2022, Chapter 321 established the ITSPF to implement a multi-year integrated tax system modernization project under the aegis of the Arizona Department of Revenue (DOR). The fund consists of: 1) fees assessed from local governments; 2) a portion of the education sales tax; and 3) a portion of the marijuana excise tax. Monies in the fund are subject to legislative appropriation and will be used solely for the administrative, development and other operating costs incurred in implementing the integrated tax system modernization project. A legislative intent clause provides guidelines for the assessment and collection of the fees.
Provisions
Entity-Level Taxation for Partnerships
Income Tax Subtraction for Adoption
2. Increases the income tax subtraction for unreimbursed costs of adoption from $3,000 to $40,000 in TYs 2023-2025. (Sec. 2)
Integrated Tax System Project Fund (ITSPF)
3. Caps, by legislative intent, the total amount of fees charged for all counties, cities, towns, councils of government and regional transportation authorities to $6,597,200 in FY 2024 for the ITSPF. (Sec. 4)
4. Caps, by legislative intent, the total amount of transfers from the 0.6% educational sales tax to $800,000 in FY 2024 for the ITSPF. (Sec. 4)
5. Caps, by legislative intent, the total amount of transfers from the 16% recreational marijuana tax to $178,100 in FY 2024 for the ITSPF. (Sec. 4)
Arizona Families Tax Rebate (Families Rebate)
6. Creates the Families Rebate as a onetime individual income tax general welfare rebate for Arizona taxpayers. (Sec. 3)
7. Stipulates that, to qualify for the Families Rebate, a taxpayer must have:
a. Been an Arizona resident as of December 21, 2021;
b. Filed a full-year resident tax return;
c. Paid at least $1 in taxes in TYs 2021, 2020 or 2019; and
d. Claimed the dependent tax credit in TY 2021. (Sec. 3)
8. Entitles each qualifying taxpayer to $250 for each dependent under 17 years old at the end of TY 2021. (Sec. 3)
9. Entitles each qualifying taxpayer to $100 for each dependent 17 years old or older at the end of TY 2021. (Sec. 3)
10. Limits the amount a taxpayer may receive from the Families Rebate to no more than three dependents. (Sec. 3)
11. Requires the Families Rebate to be issued by DOR between October 15, 2023, and November 15, 2023. (Sec. 3)
12. Prescribes a statement that must be included on any notification from DOR that relates to the Families Rebate. (Sec. 3)
13. Prohibits any letter relating to the Families Rebate from being issued under the aegis of the Governor's Office. (Sec. 3)
14. Directs DOR, on or before August 15, 2024, to submit a report to specified legislative entities with pertinent information about the Families Rebate. (Sec. 3)
15. Defines relevant terms. (Sec. 3)
16. Contains an intent clause. (Sec. 3)
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SB 1734
Initials NM Page 0 Transmitted
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