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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
tax laws; interpretation; application; hearing
Purpose
Requires the Arizona Department of Revenue (ADOR) to notify the Legislature of a proposed interpretation or application of tax law that will adversely affect taxpayers before the new interpretation or application is adopted and allows the Legislature to hold hearings on the proposed interpretation or application.
Background
ADOR administers and enforces statutes regarding taxation by: 1) formulating policies, plans and programs to effectuate the missions and purposes of ADOR; 2) providing information and advice within the scope of ADOR's duties; and 3) advising with and making recommendations to the Governor and Legislature on all matters concerning ADOR's objectives.
ADOR may not apply any newly enacted law retroactively or in a manner that will penalize a taxpayer for complying with prior law. If ADOR adopts a new interpretation or application of any provision of tax law or determines that any of those provisions apply to a new or additional category or type of taxpayer, and the change in interpretation or application is not due to a change in the law: 1) the change in interpretation or application applies prospectively unless it is favorable to taxpayers; 2) ADOR may not assess any tax, penalty or interest retroactively based on the change in interpretation or application; and 3) the change is an affirmative defense in any administrative or judicial action for retroactive assessment of tax, interest and penalties to taxable periods before the new interpretation or application was adopted. New interpretation or application includes policies and procedures adopted by administrative rule, tax ruling, tax procedure or instructions to a tax return (A.R.S. ยงยง 42-1004 and 42-2078).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires ADOR, and allows an affected taxpayer, to notify the Chairpersons of the Senate Finance Committee and the House of Representatives Ways and Means Committee, or their successor committees, if a proposed new interpretation or application of any provision of tax law will adversely affect taxpayers prospectively, before the new interpretation or application is adopted.
2. Allows the Chairpersons of the Senate Finance Committee and the House of Representatives Ways and Means Committee, or their successor committees, to hold a hearing on the proposed new interpretation's or application's impact on taxpayers and recommend that ADOR adopt or reject the proposed new interpretation or application.
3. Stipulates that, if the Legislature is notified of a proposal during the legislative session and a hearing is not held within 60 days, the new interpretation or application takes effect.
4. Stipulates that, if the Legislature is notified of a proposal during the interim and a hearing is not held within 60 days after the start of the next legislative session, the new interpretation or application takes effect.
5. Makes conforming changes.
6. Becomes effective on the general effective date.
Prepared by Senate Research
February 6, 2025
MG/KP/ci