Bill Text: AZ HB2323 | 2016 | Fifty-second Legislature 2nd Regular | Introduced

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Bill Title: Native American veterans; tax refund

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2016-01-28 - Referred to House APPROP Committee [HB2323 Detail]

Download: Arizona-2016-HB2323-Introduced.html

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REFERENCE TITLE: Native American veterans; tax refund

 

 

 

State of Arizona

House of Representatives

Fifty-second Legislature

Second Regular Session

2016

 

 

HB 2323

 

Introduced by

Representatives Borrelli, Andrade, Benally, Bolding, Cardenas, Hale, Larkin, Rios, Senators Begay, McGuire, Miranda, Pancrazi: Representatives Ackerley, Campbell, Cobb, Fann, Finchem, Lawrence, Livingston, Mitchell, Norgaard, Pratt, Shope, Senator Dial

 

 

AN ACT

 

Relating to native american veterans; appropriating monies.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 

Be it enacted by the Legislature of the State of Arizona:

Section 1.  Findings and intent

A.  Native American veterans of the armed forces of the United States who were domiciled within the boundaries of their tribal lands or of their spouse's tribal lands while on active military service may have been exempt from paying income tax to this state, but may have had state income taxes mistakenly withheld from their military pay.

B.  Native American veterans may be barred from claiming refunds of those erroneously withheld tax payments due to the passage of time or by the difficulty in meeting the strict legal standards of proof of entitlement to refunds.

C.  The intent of this act is to establish a process to enable these Native American veterans to recover the state income taxes that were erroneously withheld from their military pay.

Sec. 2.  Definitions

In this act, unless the context otherwise requires:

1.  "Claimant" means a person who files a claim for an income tax settlement refund under this act, either a Native American veteran or, if the veteran is deceased, the veteran's surviving spouse, personal representative, executor or other official representative of the estate, as designated pursuant to applicable state or tribal law or tradition.

2.  "Domicile" means a true, fixed and permanent established home in which an individual resides or to which an individual intends to return after a temporary definite or indefinite absence.

3.  "Fund" means the Native American veterans' income tax settlement fund established by this act.

4.  "Native American" means an individual Native American Indian who is duly registered on the tribal rolls of the tribe for whose benefit an Indian reservation was established.

5.  "Tribe" means any organized nation, tribe, band or community that is recognized as a Native American tribe by the United States department of the interior and includes any entity formed under tribal law.

6.  "Veteran" means a Native American citizen of the United States who was enlisted, drafted, inducted or commissioned and who was accepted for and assigned to active duty in the armed forces of the United States.

Sec. 3.  Native American veterans' income tax settlement fund; exemption from lapsing

A.  The Native American veterans' income tax settlement fund is established consisting of monies appropriated by the legislature and other monies donated or accruing to the fund.  Monies in the fund are continuously appropriated to the department of revenue for the purposes of this act and as provided by subsection C of this section.

B.  The department of revenue shall administer the fund.  On notice from the department, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, Arizona Revised Statutes, and monies earned from investment shall be credited to the fund.  Monies in the fund are exempt from the provisions of section 35-190, Arizona Revised Statutes, relating to lapsing of appropriations, except that unexpended and unencumbered monies remaining in the fund on June 30, 2021 revert to the state general fund.

C.  Five percent of the monies in the fund at the beginning of each fiscal year are appropriated separately to both the department of revenue and the department of veterans' services for administrative costs incurred under this act during the fiscal year.  Any unexpended and unencumbered balance of either appropriation remaining at the end of the fiscal year reverts to the fund.

Sec. 4.  Income tax settlement claims; requirements; procedure; approval or denial of claim

A.  A Native American veteran or, if the veteran is deceased, the veteran's surviving spouse, personal representative, executor or other official representative of the estate, as designated pursuant to applicable state or tribal law or tradition, may file a claim for a settlement payment for any period of active duty in the armed forces of the United States during which the veteran:

1.  Was an enrolled member of a Native American tribe.

2.  Maintained a domicile within the boundaries of the veteran's reservation or the reservation of the veteran's spouse or within the boundaries of lands held in trust by the United States for the benefit of the veteran, the veteran's spouse or the tribe of the veteran or spouse.

3.  Had Arizona state income tax withheld from his or her active duty military pay and the amount withheld:

(a)  Has not already been refunded to the veteran or the deceased veteran's estate.

(b)  Cannot be claimed as a refund by filing a state income tax return because the period for filing a claim for refund has lapsed under the applicable statute of limitations.

B.  The claim for a settlement payment must include evidence of the veteran's eligibility for and the amount of the claim as follows:

1.  The claimant must provide a copy of the veteran's certificate of release or discharge from active duty (DD Form 214) or other proof of service provided by the United States department of defense and approved by the department of veterans' services.  If a claimant does not have a copy of the veteran's DD Form 214 or other proof of service, the claimant may request that the department of veterans' services request the veteran's DD Form 214 or other proof of service from the United States department of defense.

2.  The claimant must provide a statement, signed by the claimant, that the veteran is or was duly registered on the tribal rolls of a Native American tribe during the period or periods of the veteran's active duty in the armed forces.

3.  The claimant must provide evidence of domicile within the boundaries of the veteran's reservation or the reservation of the veteran's spouse or within the boundaries of lands held in trust by the United States for the benefit of the veteran, the veteran's spouse or the tribe of the veteran or spouse during the taxable years the state income tax was withheld from active duty military pay.  If the veteran's address shown on the veteran's DD Form 214 or other proof of service:

(a)  Is on the veteran's tribal land, that evidence is sufficient for the purposes of this paragraph.

(b)  Is not on the veteran's tribal land or if the veteran has no DD Form 214 and the claimant cannot otherwise establish that the veteran's domicile was on the veteran's tribal land, the claimant must provide a signed statement, under penalty of perjury, that the veteran was domiciled on tribal land during the period or periods the state income tax was withheld.  The statement must include the veteran's address on the tribal land for each period, and an official designated by the tribe must attest that each address is on tribal land.

4.  The claimant must provide evidence of the amount of state income tax withheld from active duty military pay by providing copies of the United States internal revenue service Form W-2 covering active duty military pay for the year or years during which state personal income tax was withheld.  If the claimant does not have copies of the applicable Form W‑2 for one or more of those years, the claimant may request that the department of revenue obtain the veteran's Form W-2, or other withholding information in a form approved by the department of revenue, from the United States department of defense.

5.  The claimant must provide a signed statement attesting, under penalty of perjury, that the veteran has not received a refund of the state income tax withheld for the years for which the claimant is filing a claim for a settlement payment.

C.  A claim for settlement payment under this act must be filed by the eligible Native American veteran or, if the veteran is deceased, by the veteran's surviving spouse, successor or other personal representative.  The following apply if the claim is made for a deceased veteran:

1.  The claimant must include a copy of the veteran's death certificate or other proof of death.

2.  If the veteran's estate exceeds thirty thousand dollars, only the surviving spouse, personal representative, executor or other official representative of the estate, as designated pursuant to applicable state or tribal law or tradition, may file the claim.

3.  If the claimant is a successor who is not the surviving spouse, personal representative, executor or other official representative of the estate, the claimant must include a dated and notarized statement, signed under penalty of perjury, that:

(a)  The value of the entire probate estate of the deceased veteran, wherever located, minus liens and encumbrances, does not exceed thirty thousand dollars.

(b)  At least thirty days have elapsed since the veteran's death.

(c)  The successor is entitled to receive the settlement payment.

4.  If the claimant is a personal representative, executor or other official representative of the estate, the claimant must include:

(a)  A signed, dated and notarized statement that the claimant has been duly appointed as the personal representative, executor or other representative of the veteran's estate pursuant to applicable state or tribal law or tradition.

(b)  A copy of the claimant's appointment.

D.  A claim for a settlement payment shall be denied for any amount of withholding tax that can be claimed as a refund by filing a state income tax return pursuant to title 43, Arizona Revised Statutes.  A state income tax return may be filed by a veteran to claim the refund by the later of December 31 of the year three years after:

1.  The veteran separated from military service.

2.  The year in which Arizona withholding tax was withheld from the veteran's active duty pay.

E.  A claim for a settlement payment must be made on a claim form prescribed by the department of revenue and filed with the department of veterans' services.

F.  The department of veterans' services shall not accept claims submitted from and after December 31, 2019.

G.  Within two hundred ten days after receiving a complete and correct claim form, the department of veterans' services shall determine whether the claim meets the requirements of subsection B, paragraphs 1, 2 and 3 of this section, transmit qualifying claim forms to the department of revenue and notify the claimant of the department's approval or denial.  The failure of the department of veterans' services to respond within two hundred ten days after receiving a complete and correct claim form is considered to be a denial.

H.  Within two hundred ten days after receiving the claim form from the department of veterans' services, the department of revenue shall determine whether the claim meets the requirements of subsection B, paragraphs 4 and 5 of this section and notify the claimant and the department of veterans' services of its approval or denial.  The failure of the department of revenue to respond within two hundred ten days after receiving the claim form is considered to be a denial.

Sec. 5.  Payment of claims; computation of interest

A.  The department of revenue shall:

1.  Pay approved claims under this act from the Native American veterans' income tax settlement fund on a first-come, first-served basis until the fund is exhausted or until there are no further approved claims to pay.

2.  Pay approved claims in the same manner as refunds granted under section 42-1118, Arizona Revised Statutes.  Payments made pursuant to this act are subject to setoff as provided by section 42‑1122, Arizona Revised Statutes.

B.  Settlement payments under this act shall include interest computed on a daily basis from the date of withholding through the date the payment warrant is issued at the rate determined under section 6621 of the internal revenue code, as defined by section 42-1201, Arizona Revised Statutes, on the date of withholding.  The date of withholding is determined as follows:

1.  For withholding that occurred over an entire calendar year, one‑twelfth of the amount withheld during the year is considered to have been paid on the last day of each calendar month of the year.

2.  For withholding that occurred over a period of less than an entire calendar year, the amount withheld during the period shall be divided by the number of full and partial months in the period.  The resulting amount is considered to have been paid on the last day of each calendar month during the period.

Sec. 6.  Appeals of agency decisions

Notwithstanding any other administrative proceedings established by law or by rule, all appealable agency actions, as defined by section 41‑1092, Arizona Revised Statutes, and contested cases, as defined by section 41‑1001, Arizona Revised Statutes, shall be governed by title 41, chapter 6, article 10, Arizona Revised Statutes.

Sec. 7.  Administrative rules

The director of the department of revenue and the director of the department of veterans' services shall collaborate in adopting any additional administrative rules that are considered to be necessary to administer this act.

Sec. 8.  Annual reports

The director of the department of revenue shall report the following information to the senate appropriations and finance committees and to the house of representatives appropriations and ways and means committees on or before October 1 in each of years 2017 through 2021:

1.  Estimates of the amount of state income tax withholdings subject to payments under this act.

2.  The number of Native American veterans affected by withholdings subject to payments under this act.

3.  Expenditures from the Native American veterans' income tax settlement fund during the previous fiscal year.

4.  Anticipated expenditures from the Native American veterans' income tax settlement fund during the current fiscal year.

5.  Anticipated appropriations to the fund necessary to meet expected payments in the next fiscal year.

Sec. 9.  Appropriation

The sum of $1,000,000 is appropriated from the state general fund in fiscal year 2016-2017 to the Native American veterans' income tax settlement fund for the purposes described in section 3 of this act.

Sec. 10.  Repeal

This act is repealed from and after December 31, 2021.