Assigned
to NREW & APPROP & GOV FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
tax credit; gray water systems
Purpose
Establishes a tax credit for TYs 2024 through 2035 against the taxes imposed for expenses that a taxpayer incurs to purchase and install a residential gray water system for use in Arizona.
Background
The National Sanitary Foundation (NSF) and American National Standards Institute (ANSI) developed the NSF/ANSI Standard 350: On-site Residential and Commercial Water Reuse Treatment Systems (Standard 350) to provide comprehensive requirements for evaluating water reuse technologies. Standard 350 is referenced in the International Plumbing Code and the Uniform Plumbing Code, and is required in many U.S. states (NSF).
The Director of the Arizona Department of Environmental Quality may
establish by rule minimum requirements that are necessary to address public
health or safety concerns regarding residential gray water treatment systems
that are used indoors for toilet flushing. Until such rules are adopted,
residential gray water may be used indoors for toilet flushing with a gray
water treatment system if the system: 1) uses fewer than four hundred gallons
of gray water per day;
2) is certified to meet Standard 350; 3) reasonably precludes human contact
with gray water;
4) provides a dedicated piping system that supplies only treated gray water to
the toilet flushing facilities; and 5) provides gray water for toilet flushing
only if the system is properly functioning (A.R.S.
§ 49-204).
Gray water is wastewater that has been collected separately from a sewage flow and that originates from a clothes washer or a bathroom tub, shower or sink, not including wastewater from a kitchen sink, dishwasher or toilet (A.R.S. § 49-201).
S.B. 1241 allows the Arizona Department of Revenue (ADOR) to authorize tax credits totaling up to $25,000,000 in TYs 2024 through 2035.
Provisions
1. Allows, for TYs 2024 through 2035, a credit against the taxes imposed for expenses that a taxpayer incurred during the taxable year to purchase and install a residential gray water treatment system for use in Arizona.
2. States that the amount of the credit is 50 percent of the cost of the residential gray water treatment system, and may not exceed $5,000 per system.
3. Requires the taxpayer, to be eligible for the credit, to submit a form prescribed by ADOR for certification of the credit.
4. Requires ADOR to certify credits from January 2 through January 31 of the year following the calendar year for which the credit is being requested.
5. Prescribes the criteria of the form to include:
a) the name, address and social security or federal employer identification number of the applicant;
b) the number of residential gray water treatment systems for which the credit is claimed;
c) documentation that shows the date that each residential gray water treatment system was purchased and installed and that each residential gray water treatment system meets prescribed requirements; and
d) the total amount of the credit claimed.
6. Requires ADOR to review each form submitted and certify to the taxpayer the amount of the credit that is authorized.
7. Prohibits the amount of the credit for any calendar year from exceeding $5,000,000 per taxpayer.
8. Allows credits on a first-come, first-served basis.
9. Prohibits ADOR from authorizing tax credits that exceed in the aggregate a total of $25,000,000 for any calendar year.
10. Requires ADOR, after authorizing $25,000,000 in credits, to deny any subsequent forms that are received for that calendar year.
11. Prohibits ADOR from authorizing any additional credits that exceed the $25,000,000 limit even if the amounts that have been certified to any taxpayer were not claimed or a taxpayer otherwise fails to meet the requirements to claim the credit.
12. Allows, if the allowable credit exceeds the taxes otherwise due on the claimant's income or if there are no taxes due, the amount of the claim not used to offset the taxes due to be carried forward for up to two consecutive taxable years as a credit against subsequent years' income tax liability.
13. Allows co-owners of a
business, including partners in a partnership and shareholders of an
S corporation, to each claim only the pro rata share of the allowed credit
based on the ownership interest or financial interest in the system.
14. Caps the total amount of the credits allowed to all co-owners of a business at the amount that would have been allowed a sole owner.
15. Defines residential gray water treatment system to mean a residential gray water treatment system that is certified to meet Standard 350 for residential gray water recycling that is issued by an NSF and an ANSI and that complies with statute.
16. Declares that the legislation is intended to promote the use of residential gray water treatment systems in Arizona.
17. Becomes effective on the general effective date.
Prepared by Senate Research
February 13, 2024
RA/SDR/slp