ARIZONA STATE SENATE

MOLLY GRAVER

LEGISLATIVE RESEARCH ANALYST

FINANCE COMMITTEE

Telephone: (602) 926-3171

RESEARCH STAFF

TO:                  MEMBERS OF THE SENATE

FINANCE COMMITTEE

DATE:            February 9, 2023

SUBJECT:      Strike everything amendment to S.B. 1190, relating to department of revenue; administration

Purpose

            Makes various administrative changes relating to the Arizona Department of Revenue (ADOR).

Background

If a taxpayer fails to file a required tax return or if ADOR is not satisfied with the return or tax payment, ADOR may examine the return to determine the correct amount of tax. The examination must occur within the applicable time period and may be accomplished through a detailed review of transactions or records or by a statistically valid sampling method (A.R.S.
§ 42-1108).

The county assessor must notify each owner of locally assessed property of the property's full cash value and limited property value, if applicable, for property tax purposes. The Director of ADOR may extend the final date for mailing notices beyond March 1 for a period of up to 30 days for delays caused by an act of God, flood or fire (A.R.S. § 42-15101).

ADOR is responsible for licensing tobacco distributors and conducting tobacco enforcement activities. ADOR issues tobacco distributor licenses that authorize applicants to acquire or possess tobacco products in Arizona on the condition that the applicant complies with statutory requirements and ADOR rule. ADOR may deny or revoke a tobacco distributor license if the applicant or licensee violates statutory requirements more than two times within a three-year period or fails to otherwise maintain the conditions of licensure (A.R.S. § 42-3401).

Any municipality or county requiring the issuance of a building permit must transmit copies to the county assessor and the Director of ADOR. On the completion of cancellation of the permit, the county assessor and ADOR must be notified of the permit and parcel number and the issuance and completion date (A.R.S. §§ 9-467 and 11-321).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Allows ADOR to audit, rather than examine, any tax return to determine the correct amount of tax.

2. Defines audit as a review or examination of a taxpayer's accounts, financial information, books and records and any other document to ensure information is reported correctly on a tax return and to verify the reported amount of tax is correct.

3. Adds, to the reasons the Director of ADOR may extend the final date for mailing an annual notice of property value, delays caused by a declared state of emergency.

4. Defines violation for the purposes of tobacco distributor licensees as:

a) failure to submit a timely required luxury privilege tax return;

b) failure to submit a timely payment with the luxury privilege tax return; or

c) failure to amend any error on a required return within 30 days after receiving written notice from ADOR.

5. Removes the requirement for a county or municipality requiring an issuance of a building permit to transmit a copy of the building permit to ADOR.

6. Makes technical and conforming changes.

7. Becomes effective on the general effective date.