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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
model city tax code; notice
Purpose
Requires a municipality that proposes an ordinance to adopt or repeal a model or local option in the Model City Tax Code (MCTC) to notify all affected taxpayers before the proposed ordinance is approved or rejected, with exceptions.
Background
The MCTC is a uniform sales tax and use tax act adopted by most cities and towns in Arizona. The Arizona Department of Revenue (ADOR) maintains the official copy of the MCTC. A city or town may not adopt an amendment to the MCTC unless the Municipal Tax Code Commission (MTCC) has adopted the amendment. Amendments to the MCTC may be proposed by a city or town, a taxpayer or ADOR and must be approved by the MTCC following a public hearing. Once the MTCC adopts an amendment, all cities and towns that have adopted the MCTC must also adopt the amendment after holding a public hearing to receive comments before the amendment becomes effective. This requirement does not prohibit the MTCC from recommending a model or local option or changes to a model or local option to be adopted only by cities and towns that choose the option or from approving a change submitted by a city or town that does not apply to any other city or town. Beginning October 31, 2023, a two-thirds vote of the MTCC is required to adopt a proposed amendment to the MCTC that either repeals a model or local option that provides a tax exemption or which expands the types of business activities that are considered taxable (A.R.S. §§ 42-6052 and 42-6054).
A municipality may not levy or assess a new tax or fee or increase an existing tax or fee on a business unless the municipality: 1) prepares a schedule of the proposed new or increased tax or fee; 2) provides written notice of the proposed charge or increase, the schedule of the proposed new charge or increase and supporting data at least 60 days prior to approval on the municipality's website; and 3) prepares a notice of intent to establish or increase taxes, assessments or fees, published on the municipality's website (A.R.S. § 9-499.15).
At the time an applicant for licensure obtains a license application, the municipality that issues the license must provide the applicant outlined information, including licensing timeframes and the steps to obtain licensure (A.R.S. § 9-836).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires a municipality that proposes an ordinance to adopt or repeal a model or local option in the MCTC to notify all taxpayers in the affected tax classification by mail at least 60 days before the date the proposed ordinance is approved or rejected by the governing body.
2. Requires a municipality that proposes an ordinance to adopt or repeal a model or local option in the MCTC to request a list of all taxpayers in the affected tax classification from ADOR at least 75 days before the municipality proposes the ordinance.
3. Adds, to the purposes for which a county or municipality may use confidential taxpayer information released by ADOR, communicating with taxpayers for the purpose of notifying affected taxpayers before a proposed ordinance is approved or rejected.
4. Specifies that the outlined notification requirement does not apply to ordinances that impose:
a) a use tax or model or local option to exempt a city or town from use tax; or
b) a two-tiered tax rate structure for retail sales.
5. Requires a municipality that issues a business license to provide notice of any model or local option in the MCTC that will apply to an applicant at the time the applicant obtains a business license application.
6. Makes technical and conforming changes.
7. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Requires a municipality that proposes an ordinance to adopt or repeal a model or local option in the MCTC, at least 75 days before the municipality proposes the ordinance, to request a list of all taxpayers in the affected tax classification from ADOR.
2. Requires a municipality to notify all taxpayers, rather than businesses, in the affected tax classification by mail at least 60 days before the date the proposed ordinance is approved or rejected.
3. Specifies that a municipality that issues a business license, rather than any license, must provide notice of any model or local option in the MCTC that will apply to an applicant at the time the applicant obtains a business license application.
4. Adds, to the purposes for which a county or municipality may use confidential taxpayer information released by ADOR, communicating with taxpayers for the purpose of the notice of a proposed ordinance to adopt or repeal a model or local option in the MCTC.
House Action Senate Action
WM 2/5/25 DP 6-2-0-1
FIN 3/17/25 DPA 6-1-0
3rd Read 3/3/25 34-24-2
Prepared by Senate Research
March 18, 2025
MG/AL/ci