Bill Text: AZ HB2382 | 2024 | Fifty-sixth Legislature 2nd Regular | Introduced
Bill Title: TPT; sourcing; validation
Spectrum: Partisan Bill (Republican 7-0)
Status: (Passed) 2024-04-10 - Chapter 142 [HB2382 Detail]
Download: Arizona-2024-HB2382-Introduced.html
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REFERENCE TITLE: TPT; sourcing; validation |
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State of Arizona House of Representatives Fifty-sixth Legislature Second Regular Session 2024
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HB 2382 |
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Introduced by Representatives Carter: Carbone, Cook, Heap, Hendrix, Livingston, Smith
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An Act
amending sections 42-5005 and 42-5040, Arizona Revised Statutes; amending title 42, chapter 5, article 1, Arizona Revised Statutes, by adding section 42-5040.01; relating to transaction privilege tax.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 42-5005, Arizona Revised Statutes, is amended to read:
42-5005. Transaction privilege tax and municipal privilege tax licenses; fees; renewal; revocation; taxpayer assistance; violation; classification
A. Every person who receives gross proceeds of sales or gross income on which a transaction privilege tax is imposed by this article and who desires to engage or continue in business shall apply to the department for an annual transaction privilege tax license accompanied by a fee of $12. A person shall not engage or continue in business until the person has obtained a transaction privilege tax license.
B. A person desiring to engage or continue in business within a city or town that imposes a municipal privilege tax shall apply to the department of revenue for an annual municipal privilege tax license accompanied by a fee of up to $50, as established by ordinance of the city or town. The person shall submit the fee with each new license application. The person may not engage or continue in business until the person has obtained a municipal privilege tax license. The department must collect, hold, pay and manage the fees in trust for the city or town and may not use the monies for any other purposes. The fee imposed by this subsection does not apply to a marketplace facilitator or remote seller that is only required to obtain a transaction privilege tax license pursuant to section 42-5043.
C. A transaction privilege tax license is valid only for the calendar year in which it is issued, but it may be renewed for the following calendar year. There is no fee for the renewal of the transaction privilege tax license. The transaction privilege tax license must be renewed at the same time and in the manner as the municipal privilege tax license renewal.
D. A municipal privilege tax license is valid only for the calendar year in which it is issued, but it may be renewed for the following calendar year by the payment of paying a license renewal fee of up to $50. The renewal fee is due and payable on January 1 and is considered delinquent if not received on or before the last business day of January. The department must collect, hold, pay and manage the fees in trust for the city or town and may not use the monies for any other purposes. The renewal fee imposed by this subsection does not apply to a marketplace facilitator or remote seller that is only required to obtain a transaction privilege tax license pursuant to section 42-5043.
E. A licensee that remains in business after the municipal privilege tax license has expired is subject to the payment of the license renewal fee and the civil penalty prescribed in section 42-1125, subsection R.
F. If the applicant is not in arrears in payment of any tax imposed by this article, the department shall issue a license authorizing the applicant to engage and continue in business on the condition that the applicant complies with this article. The license number shall be continuous.
G. The transaction privilege tax license and the municipal privilege tax license are not transferable on a complete change of ownership or change of location of the business. For the purposes of this subsection:
1. "Location" means the business address appearing in the application for the license and on the transaction privilege tax or municipal privilege tax license.
2. "Ownership" means any right, title or interest in the business.
3. "Transferable" means the ability to convey or change the right or privilege to engage or continue in business by virtue of the issuance of the transaction privilege tax or municipal privilege tax license.
H. When the ownership or location of a business on which a transaction privilege tax or municipal privilege tax is imposed has been changed within the meaning of subsection G of this section, the licensee shall surrender the license to the department. The license shall be reissued to the new owners or for the new location on application by the taxpayer and payment of the $12 fee for a transaction privilege tax license and a fee of up to $50 per jurisdiction for a municipal privilege tax license. The department must collect, hold, pay and manage the fees in trust for the city or town and may not use the monies for any other purposes.
I. A person who is engaged in or conducting a business in two or more locations or under two or more business names shall procure a transaction privilege tax license for each location or business name regardless of whether all locations or business names are reported on a consolidated return under a single transaction privilege tax license number. This requirement shall not be construed as conflicting with section 42-5020.
J. A person who is engaged in or conducting a business in two or more locations or under two or more business names shall procure a municipal privilege tax license for each location or business name regardless of whether all locations or business names are reported on a consolidated return.
K. A person who is engaged in or conducting business at two or more locations or under two or more business names and who files a consolidated return under a single transaction privilege tax license number as provided by section 42-5020 is required to pay only a single municipal privilege tax license renewal fee for each local jurisdiction pursuant to subsection D of this section. A person who is engaged in or conducting business at two or more locations or under two or more business names and who does not file a consolidated return under a single license number is required to pay a license renewal fee for each location or license in a local jurisdiction.
L. For the purposes of this chapter and chapter 6 of this title:
1. Through December 31, 2018, an online lodging marketplace, as defined in section 42-5076, may register with the department for a license for the payment of taxes levied by this state and one or more counties, cities, towns or special taxing districts, at the election of the online lodging marketplace, for taxes due from an online lodging operator on any online lodging transaction facilitated by the online lodging marketplace, subject to sections 42-5076 and 42-6009.
2. Beginning from and after December 31, 2018, an online lodging marketplace, as defined in section 42-5076, shall register with the department for a license for the payment of taxes levied by this state and one or more counties, cities, towns or special taxing districts for taxes due from an online lodging operator on any online lodging transaction facilitated by the online lodging marketplace, subject to sections 42-5076 and 42-6009.
M. For the purposes of this chapter and chapter 6 of this title, a person who is licensed pursuant to title 32, chapter 20 and who files an electronic consolidated tax return for individual real properties under management on behalf of the property owners may be licensed with the department for the payment of taxes levied by this state and by any county, city or town with respect to those properties. There is no fee for a license issued pursuant to this subsection.
N. For the purposes of this chapter, a peer-to-peer car sharing program shall register with the department for a license for the payment of taxes levied by this state and one or more counties, cities, towns or special districts for taxes due from a shared vehicle owner on any shared vehicle transaction facilitated by the peer-to-peer car sharing program, subject to the limitations in section 28-9616. A peer-to-peer car sharing program shall remit the surcharges established pursuant to sections 5-839 and 48-4234 only if the peer-to-peer car sharing program allows shared vehicle transactions that involve a vehicle for which the shared vehicle owner has not certified to the department pursuant to section 28-9616, subsection C that it is an individual-owned shared vehicle. For the purposes of this subsection, "individual-owned shared vehicle", "peer-to-peer car sharing program", "shared vehicle owner" and "shared vehicle transaction" have the same meanings prescribed in section 28-9601.
O. If a person violates this article or any rule adopted under this article, the department upon hearing may revoke any transaction privilege tax or municipal privilege tax license issued to the person. The department shall provide ten days' written notice of the hearing, stating the time and place and requiring the person to appear and show cause why the license or licenses should not be revoked. The department shall provide written notice to the person of the revocation of the license. The notices may be served personally or by mail pursuant to section 42-5037. After revocation, the department shall not issue a new license to the person unless the person presents evidence satisfactory to the department that the person will comply with this article and with the rules adopted under this article. The department may prescribe the terms under which a revoked license may be reissued.
P. The department may revoke any transaction privilege tax or municipal privilege tax license issued to any person who fails for thirteen consecutive months to make and file a return required by this article on or before the due date or the due date as extended by the department unless the failure is due to a reasonable cause and not due to wilful neglect.
Q. The department shall establish and maintain a taxpayer assistance team to ensure taxpayers are levying the correct transaction privilege tax rate and sourcing the transaction to the correct jurisdictions. The team shall select at random a sample of transaction privilege tax licenses and municipal privilege tax licenses to verify that the business location identified on the license corresponds to the transaction privilege tax rate and source of the transaction used by the taxpayer. If the team identifies a taxpayer that is not levying the correct transaction privilege tax rate or is not sourcing the transaction to the correct jurisdiction, the team shall notify the taxpayer and provide resources to assist the taxpayer in determining the correct rate and sourcing information for that taxpayer.
Q. R. A person who violates any provision of this section is guilty of a class 3 misdemeanor.
Sec. 2. Section 42-5040, Arizona Revised Statutes, is amended to read:
42-5040. Sourcing of certain transactions involving tangible personal property; definitions
A. Except as provided in section 42-5075, retail sales of tangible personal property shall be sourced as follows:
1. To the seller's business location if the seller receives the order at a business location in this state and the seller regularly conducts retail sales at that business location.
2. Except as provided in section 42-5008.01, to the purchaser's location in this state if the seller receives the order at a business location outside this state or, if there is no delivery address, to the purchaser's billing address.
B. A shared vehicle transaction shall be sourced as follows:
1. To the permanent street address of the registered shared vehicle owner if the shared vehicle is registered in this state.
2. To the street address in this state where the shared vehicle owner resides while in this state if the shared vehicle is registered in another state or country.
3. To the location of the shared vehicle at the car sharing start time if the shared vehicle owner does not reside in this state and the shared vehicle is registered in another state or country.
C. For the purposes of subsection A of this section, an order is received when all of the information necessary to accept the order has been received by or on behalf of the seller, regardless of where the order is accepted or approved. The place of business or residence of the purchaser does not determine where the order is received.
D. The gross receipts from leasing or renting tangible personal property shall be sourced as follows:
1. To the lessor's business location if the lessor has a business location in this state.
2. To the lessee's address if the lessor does not have a business location in this state or, if there is no lessee's address, to the lessee's billing address. The gross receipts are taxable when the property is shipped, delivered or otherwise brought into this state for use in this state.
E. For the purposes of this section:
1. "Car sharing start time" has the same meaning prescribed in section 28-9601.
2. "Lessee's address" means the residential address of an individual lessee and the primary business address of any other lessee.
3. "Lessor's business location" means the business address that appears on the lessor's transaction privilege tax license.
4. "Shared vehicle" has the same meaning prescribed in section 28-9601.
5. "Shared vehicle owner" has the same meaning prescribed in section 28-9601.
6. "Shared vehicle transaction" has the same meaning prescribed in section 28-9601.
Sec. 3. Title 42, chapter 5, article 1, Arizona Revised Statutes, is amended by adding section 42-5040.01, to read:
42-5040.01. Sourcing of tangible personal property; third-party service providers; certification
A. Beginning on or before January 1, 2026, the department shall establish a process by which a third-party provider that offers sourcing services to taxpayers for transactions involving tangible personal property may become certified in this state. A certified third-party service provider shall meet all of the requirements established by the department.
B. The director shall:
1. Supervise and regulate all persons required by this section to obtain certification.
2. Establish minimum standards for certification and a quality assurance program for authorized third parties to ensure that a certified third-party service provider is complying with the minimum standards.
3. Post a list of certified third-party service providers on the department's website.
4. Adopt rules to administer and enforce this section.
C. The director may:
1. Investigate and audit third-party service providers as necessary to ensure compliance with this section.
2. Require that a certified third-party service provider or any employees or agents of the certified third-party service provider be certified by the department to perform certain functions.
D. A person may apply to the department to be a certified third-party service provider on a form prescribed and furnished by the director. The person shall include with the application all documents and fees prescribed by the director. The application shall contain, at a minimum:
1. The name, telephone number and address of the applicant and primary contact person.
2. Verification that the applicant meets the requirements prescribed by the director.
3. Other information the director requires.
E. A taxpayer may use a certified third-party service provider to assist the taxpayer in sourcing transactions involving tangible personal property. A taxpayer that uses a certified third-party provider for sourcing transactions involving tangible personal property is not liable for failing to pay the correct amount of tax due to an error in sourcing the transaction. The taxpayer is liable for failing to pay the correct amount of tax if the failure to pay the correct amount of tax was due to an error other than an error in sourcing the transaction.
Sec. 4. Department of revenue; taxpayer education campaign; report
A. On or before December 31, 2024, the department of revenue shall conduct a taxpayer education campaign to educate and obtain feedback from remote sellers and marketplace facilitators as defined in section 42-5001, Arizona Revised Statutes, and other transaction privilege tax license holders located in unincorporated areas of a county on issues related to the correct use of transaction privilege tax rates and transaction sourcing methods.
B. On or before March 31, 2025, the department of revenue shall submit a report on the taxpayer education campaign and the feedback the department received during the campaign to the governor, president of the senate and the speaker of the house of representatives and shall provide a copy of this report to the secretary of state.
