Bill Text: AZ HB2815 | 2012 | Fiftieth Legislature 2nd Regular | Introduced
Bill Title: Employment; incentives; regulatory tax credit
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2012-05-11 - Governor Signed [HB2815 Detail]
Download: Arizona-2012-HB2815-Introduced.html
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REFERENCE TITLE: employment; incentives; regulatory tax credit |
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State of Arizona House of Representatives Fiftieth Legislature Second Regular Session 2012
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HB 2815 |
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Introduced by Representative Mesnard
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AN ACT
amending title 41, chapter 10, article 4, Arizona Revised Statutes, by adding section 41-1541.01; amending sections 42-5029, 43-222, 43-1022, 43-1122 and 43-1123, Arizona Revised Statutes; amending title 43, Arizona Revised Statutes, by adding chapter 17; providing for the delayed repeal of section 41-1541.01, Arizona Revised Statutes, as added by this act; relating to business incentives.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 41, chapter 10, article 4, Arizona Revised Statutes, is amended by adding section 41-1541.01, to read:
41-1541.01. Community college job training; procedures; funding; definitions
A. In addition to the authorization provided by section 41-1541, subsection B, the chief executive officer may spend monies in the Arizona job training fund established by section 41-1544 pursuant to this section. General fund monies shall not be used for the reimbursement of job training costs pursuant to this section.
B. A qualified employer may certify to the authority the skill requirements of new employment. The authority shall determine whether the new employment is qualified new employment and eligible for job training funding pursuant to this article. If the authority identifies a potential qualified employer, the chief executive officer shall contact the community college district that serves the geographic location of the qualified new employment.
C. If qualified by the authority, the qualified employer shall provide the community college with information regarding the specific skills sought through the proposed job training. A community college district shall identify any existing or proposed training programs or courses that meet the qualified employer's needs within thirty days of contact by the authority and receipt of the job training requirements from the qualified employer. The authority may extend the deadline for response beyond the thirty-day period.
D. On receipt and review of the programs and courses identified by the community college, the qualified employer shall certify to the authority that identified programs or courses meet job and skill requirements of the qualified new employment. On approval by the authority, the qualified employer shall identify and qualify student applicants for admission to the training program or courses. On approval by the authority, the community college shall provide the training either directly or in conjunction with another community college pursuant to an intergovernmental agreement.
E. The authority shall reimburse the community college from the Arizona job training fund in an amount equal to any student tuition and course fees and an amount equal to the appropriate associated administrative expenses. An employee in a training program or courses shall be included in the full‑time student equivalency calculations for state aid pursuant to title 15, chapter 12, article 4.
F. If a qualified employer terminates the qualified new employment positions within twenty‑four months after the training completion date, the qualified employer shall reimburse the authority for all amounts that were paid from the Arizona job training fund to the community college.
G. Job training funded pursuant to this section shall not require an employer match requirement as prescribed in section 41-1541, subsection D and is not subject to the rules and procedures established by the governor's council on workforce policy pursuant to section 41-1542.
H. For the purposes of this section:
1. "Qualified employer" means a business in this state that intends to offer qualified new employment.
2. "Qualified new employment" means new or additional jobs that meet all of the following:
(a) Are permanent new or additional positions that result from the opening of a new business, the expansion of an existing business or the relocation of an existing business or business operation from another state.
(b) Require specific job skills beyond those normally required for high school graduation.
(c) Each new or additional job has compensation that is equal to or greater than one hundred twenty‑five per cent of the median wage of the county where the qualified new employment is located.
Sec. 2. Section 42-5029, Arizona Revised Statutes, is amended to read:
42-5029. Remission and distribution of monies; definition
A. The department shall deposit, pursuant to sections 35‑146 and 35‑147, all revenues collected under this article and articles 4, 5 and 8 of this chapter pursuant to section 42‑1116, separately accounting for:
1. Payments of estimated tax under section 42‑5014, subsection D.
2. Revenues collected pursuant to section 42‑5070.
3. Revenues collected under this article and article 5 of this chapter from and after June 30, 2000 from sources located on Indian reservations in this state.
4. Revenues collected pursuant to section 42‑5010, subsection G and section 42‑5155, subsection D.
B. The department shall credit payments of estimated tax to an estimated tax clearing account and each month shall transfer all monies in the estimated tax clearing account to a fund designated as the transaction privilege and severance tax clearing account. The department shall credit all other payments to the transaction privilege and severance tax clearing account, separately accounting for the monies designated as distribution base under sections 42‑5010, 42‑5164, 42‑5205 and 42‑5353. Each month the department shall report to the state treasurer the amount of monies collected pursuant to this article and articles 4, 5 and 8 of this chapter.
C. On notification by the department, the state treasurer shall distribute the monies deposited in the transaction privilege and severance tax clearing account in the manner prescribed by this section and by sections 42‑5164, 42‑5205 and 42‑5353, after deducting warrants drawn against the account pursuant to sections 42‑1118 and 42‑1254.
D. Of the monies designated as distribution base the department shall:
1. Pay twenty‑five per cent to the various incorporated municipalities in this state in proportion to their population to be used by the municipalities for any municipal purpose.
2. Pay 38.08 per cent to the counties in this state by averaging the following proportions:
(a) The proportion that the population of each county bears to the total state population.
(b) The proportion that the distribution base monies collected during the calendar month in each county under this article, section 42‑5164, subsection B, section 42‑5205, subsection B and section 42‑5353 bear to the total distribution base monies collected under this article, section 42‑5164, subsection B, section 42‑5205, subsection B and section 42‑5353 throughout the state for the calendar month.
3. Pay an additional 2.43 per cent to the counties in this state as follows:
(a) Average the following proportions:
(i) The proportion that the assessed valuation used to determine secondary property taxes of each county, after deducting that part of the assessed valuation that is exempt from taxation at the beginning of the month for which the amount is to be paid, bears to the total assessed valuations used to determine secondary property taxes of all the counties after deducting that portion of the assessed valuations that is exempt from taxation at the beginning of the month for which the amount is to be paid. Property of a city or town that is not within or contiguous to the municipal corporate boundaries and from which water is or may be withdrawn or diverted and transported for use on other property is considered to be taxable property in the county for purposes of determining assessed valuation in the county under this item.
(ii) The proportion that the distribution base monies collected during the calendar month in each county under this article, section 42‑5164, subsection B, section 42‑5205, subsection B and section 42‑5353 bear to the total distribution base monies collected under this article, section 42‑5164, subsection B, section 42‑5205, subsection B and section 42‑5353 throughout the state for the calendar month.
(b) If the proportion computed under subdivision (a) of this paragraph for any county is greater than the proportion computed under paragraph 2 of this subsection, the department shall compute the difference between the amount distributed to that county under paragraph 2 of this subsection and the amount that would have been distributed under paragraph 2 of this subsection using the proportion computed under subdivision (a) of this paragraph and shall pay that difference to the county from the amount available for distribution under this paragraph. Any monies remaining after all payments under this subdivision shall be distributed among the counties according to the proportions computed under paragraph 2 of this subsection.
4. After any distributions required by sections 42‑5030, 42‑5030.01, 42‑5031, 42‑5032 and 42‑5032.01, and after making any transfer to the water quality assurance revolving fund as required by section 49‑282, subsection B, credit the remainder of the monies designated as distribution base to the state general fund. From this amount:
(a) The legislature shall annually appropriate to:
(i) The department of revenue sufficient monies to administer and enforce this article and articles 5 and 8 of this chapter.
(ii) The department of economic security monies to be used for the purposes stated in title 46, chapter 1.
(iii) The firearms safety and ranges fund established by section 17‑273, fifty thousand dollars derived from the taxes collected from the retail classification pursuant to section 42‑5061 for the current fiscal year.
(b) Subject to separate initial legislative authorization, each year the state treasurer shall transfer to the tourism fund an amount equal to the sum of the following:
(i) Three and one‑half per cent of the gross revenues derived from the transient lodging classification pursuant to section 42‑5070 during the preceding fiscal year.
(ii) Three per cent of the gross revenues derived from the amusement classification pursuant to section 42‑5073 during the preceding fiscal year.
(iii) Two per cent of the gross revenues derived from the restaurant classification pursuant to section 42‑5074 during the preceding fiscal year.
E. If approved by the qualified electors voting at a statewide general election, all monies collected pursuant to section 42‑5010, subsection G and section 42‑5155, subsection D shall be distributed each fiscal year pursuant to this subsection. The monies distributed pursuant to this subsection are in addition to any other appropriation, transfer or other allocation of public or private monies from any other source and shall not supplant, replace or cause a reduction in other school district, charter school, university or community college funding sources. The monies shall be distributed as follows:
1. If there are outstanding state school facilities revenue bonds pursuant to title 15, chapter 16, article 7, each month one‑twelfth of the amount that is necessary to pay the fiscal year's debt service on outstanding state school improvement revenue bonds for the current fiscal year shall be transferred each month to the school improvement revenue bond debt service fund established by section 15‑2084. The total amount of bonds for which these monies may be allocated for the payment of debt service shall not exceed a principal amount of eight hundred million dollars exclusive of refunding bonds and other refinancing obligations.
2. After any transfer of monies pursuant to paragraph 1 of this subsection, twelve per cent of the remaining monies collected during the preceding month shall be transferred to the technology and research initiative fund established by section 15‑1648 to be distributed among the universities for the purpose of investment in technology and research‑based initiatives.
3. After the transfer of monies pursuant to paragraph 1 of this subsection, three per cent of the remaining monies collected during the preceding month shall be transferred to the workforce development account established in each community college district pursuant to section 15‑1472 for the purpose of investment in workforce development programs.
4. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one‑twelfth of the amount a community college that is owned, operated or chartered by a qualifying Indian tribe on its own Indian reservation would receive pursuant to section 15‑1472, subsection D, paragraph 2 if it were a community college district shall be distributed each month to the treasurer or other designated depository of a qualifying Indian tribe. Monies distributed pursuant to this paragraph are for the exclusive purpose of providing support to one or more community colleges owned, operated or chartered by a qualifying Indian tribe and shall be used in a manner consistent with section 15‑1472, subsection B. For the purposes of this paragraph, "qualifying Indian tribe" has the same meaning as defined in section 42‑5031.01, subsection D.
5. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one‑twelfth of the following amounts shall be transferred each month to the department of education for the increased cost of basic state aid under section 15‑971 due to added school days and associated teacher salary increases enacted in 2000:
(a) In fiscal year 2001‑2002, $15,305,900.
(b) In fiscal year 2002‑2003, $31,530,100.
(c) In fiscal year 2003‑2004, $48,727,700.
(d) In fiscal year 2004‑2005, $66,957,200.
(e) In fiscal year 2005‑2006 and each fiscal year thereafter, $86,280,500.
6. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, seven million eight hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments, to the department of education to be used for school safety as provided in section 15‑154 and two hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments to the department of education to be used for the character education matching grant program as provided in section 15‑154.01.
7. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, no more than seven million dollars may be appropriated by the legislature each fiscal year to the department of education to be used for accountability purposes as described in section 15‑241 and title 15, chapter 9, article 8.
8. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one million five hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments, to the failing schools tutoring fund established by section 15‑241.
9. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, twenty‑five million dollars shall be transferred each fiscal year to the state general fund to reimburse the general fund for the cost of the income tax credit allowed by section 43‑1072.01.
10. After the payment of monies pursuant to paragraphs 1 through 9 of this subsection, the remaining monies collected during the preceding month shall be transferred to the classroom site fund established by section 15‑977. The monies shall be allocated as follows in the manner prescribed by section 15‑977:
(a) Forty per cent shall be allocated for teacher compensation based on performance.
(b) Twenty per cent shall be allocated for increases in teacher base compensation and employee related expenses.
(c) Forty per cent shall be allocated for maintenance and operation purposes.
F. The department shall credit the remainder of the monies in the transaction privilege and severance tax clearing account to the state general fund, subject to any distribution required by section 42‑5030.01.
G. Notwithstanding subsection D of this section, if a court of competent jurisdiction finally determines that tax monies distributed under this section were illegally collected under this article or articles 5 and 8 of this chapter and orders the monies to be refunded to the taxpayer, the department shall compute the amount of such monies that was distributed to each city, town and county under this section. The department shall notify the state treasurer of that amount plus the proportionate share of additional allocated costs required to be paid to the taxpayer. Each city's, town's and county's proportionate share of the costs shall be based on the amount of the original tax payment each municipality and county received. Each month the state treasurer shall reduce the amount otherwise distributable to the city, town and county under this section by one thirty‑sixth of the total amount to be recovered from the city, town or county until the total amount has been recovered, but the monthly reduction for any city, town or county shall not exceed ten per cent of the full monthly distribution to that entity. The reduction shall begin for the first calendar month after the final disposition of the case and shall continue until the total amount, including interest and costs, has been recovered.
H. On receiving a certificate of default from the greater Arizona development authority pursuant to section 41‑2257 or 41‑2258 and to the extent not otherwise expressly prohibited by law, the state treasurer shall withhold from the next succeeding distribution of monies pursuant to this section due to the defaulting political subdivision the amount specified in the certificate of default and immediately deposit the amount withheld in the greater Arizona development authority revolving fund. The state treasurer shall continue to withhold and deposit the monies until the greater Arizona development authority certifies to the state treasurer that the default has been cured. In no event may the state treasurer withhold any amount that the defaulting political subdivision certifies to the state treasurer and the authority as being necessary to make any required deposits then due for the payment of principal and interest on bonds of the political subdivision that were issued before the date of the loan repayment agreement or bonds and that have been secured by a pledge of distributions made pursuant to this section.
I. Except as provided by sections 42‑5033 and 42‑5033.01, the population of a county, city or town as determined by the most recent United States decennial census plus any revisions to the decennial census certified by the United States bureau of the census shall be used as the basis for apportioning monies pursuant to subsection D of this section.
J. Except as otherwise provided by this subsection, on notice from the department of revenue pursuant to section 42-6010, subsection B, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city or town the amount of the penalty for business location municipal tax incentives provided by the city or town to a business entity that locates a retail business facility in the city or town. The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount of the penalty has been withheld. The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section. The state treasurer shall not withhold any amount that the city or town certifies to the department of revenue and the state treasurer as being necessary to make any required deposits or payments for debt service on bonds or other long‑term obligations of the city or town that were issued or incurred before the location incentives provided by the city or town.
K. On notice from the auditor general pursuant to section 9‑626, subsection D, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city the amount computed pursuant to section 9‑626, subsection D. The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount specified in the notice has been withheld. The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section.
L. On notice from the department of revenue pursuant to section 43‑1703, subsection G, paragraph 3, the state treasurer shall:
1. Withhold from the distribution of monies pursuant to this section to the affected county, city or town the current aggregate amount of regulatory tax credits approved with respect to excessive regulations enacted, adopted or enforced by the county, city or town.
2. Continue to withhold monies pursuant to this subsection as long as approved amounts remain outstanding against the respective county, city or town.
3. Credit monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section.
L. M. For the purposes of this section, "community college district" means a community college district that is established pursuant to sections 15‑1402 and 15‑1403 and that is a political subdivision of this state and, subject to the distribution procedures specified in section 15‑1472, subsection D, paragraph 2, subdivision (b), includes a community college district established pursuant to section 15‑1402.01 and, subject to the distribution procedures specified in section 15‑1472, subsection D, paragraph 2, subdivision (b), includes a provisional community college district established pursuant to section 15-1409.
Sec. 3. Section 43-222, Arizona Revised Statutes, is amended to read:
43-222. Income tax credit review schedule
The joint legislative income tax credit review committee shall review the following income tax credits:
1. For years ending in 0 and 5, sections 43‑1075, 43‑1075.01, 43‑1079.01, 43‑1087, 43‑1088, 43‑1090.01, 43‑1163, 43‑1163.01, 43‑1167.01, 43‑1175 and 43‑1182.
2. For years ending in 1 and 6, sections 43‑1074.02, 43‑1083, 43‑1083.02, 43‑1085.01, 43‑1164.02, 43-1164.03 and 43‑1183.
3. For years ending in 2 and 7, sections 43‑1073, 43‑1079, 43‑1080, 43‑1085, 43‑1086, 43‑1089, 43‑1089.01, 43‑1089.02, 43‑1090, 43-1164, 43‑1167, 43‑1169, 43‑1176 and 43‑1181.
4. For years ending in 3 and 8, sections 43‑1074.01, 43‑1081, 43‑1168, 43‑1170 and 43‑1178.
5. For years ending in 4 and 9, sections 43‑1076, 43‑1081.01, 43‑1083.01, 43‑1084, 43‑1162, 43‑1164.01, 43‑1170.01 and 43-1184 and, beginning in 2019, chapter 17 of this title.
Sec. 4. Section 43-1022, Arizona Revised Statutes, is amended to read:
43-1022. Subtractions from Arizona gross income
In computing Arizona adjusted gross income, the following amounts shall be subtracted from Arizona gross income:
1. The amount of exemptions allowed by section 43‑1023.
2. Benefits, annuities and pensions in an amount totaling not more than two thousand five hundred dollars received from one or more of the following:
(a) The United States government service retirement and disability fund, retired or retainer pay of the uniformed services of the United States, the United States foreign service retirement and disability system and any other retirement system or plan established by federal law.
(b) The Arizona state retirement system, the corrections officer retirement plan, the public safety personnel retirement system, the elected officials' retirement plan, an optional retirement program established by the Arizona board of regents under section 15‑1628, an optional retirement program established by a community college district board under section 15‑1451 or a retirement plan established for employees of a county, city or town in this state.
3. A beneficiary's share of the fiduciary adjustment to the extent that the amount determined by section 43‑1333 decreases the beneficiary's Arizona gross income.
4. The amount of any distributions from an individual retirement account as provided for in section 408 of the internal revenue code or from a qualified retirement plan of a self‑employed individual as provided for in section 401 of the internal revenue code to the extent that total adjustments made pursuant to this paragraph in all tax years do not exceed the total of all contributions made by the taxpayer to such plans prior to before December 31, 1975, which were included in computing Arizona taxable income.
5. The amount of income on an installment receivable which that is recognized pursuant to the internal revenue code and which that has already been recognized on the death of the taxpayer for purposes of this title for tax years ending before January 1, 1990.
6. Interest income received on obligations of the United States, less any interest on indebtedness, or other related expenses, and deducted in arriving at Arizona gross income, which were incurred or continued to purchase or carry such obligations.
7. The amount of any income tax refunds which that were received from states other than Arizona and which that were included as income in computing federal adjusted gross income.
8. Annuity income included in federal adjusted gross income pursuant to section 72 of the internal revenue code if the first payment with respect to such annuity was received prior to before December 31, 1978.
9. The excess of a partner's share of income required to be included under section 702(a)(8) of the internal revenue code over the income required to be included under chapter 14, article 2 of this title.
10. The excess of a partner's share of partnership losses determined pursuant to chapter 14, article 2 of this title over the losses allowable under section 702(a)(8) of the internal revenue code.
11. The amount by which the adjusted basis of property described in this paragraph and computed pursuant to this title and the income tax act of 1954, as amended, exceeds the adjusted basis of such property computed pursuant to the internal revenue code. This paragraph shall apply to all property which that is held for the production of income and which that is sold or otherwise disposed of during the taxable year other than depreciable property used in a trade or business.
12. The amount allowed by section 43‑1024 for amortization, by a qualified defense contractor certified by the Arizona commerce authority under section 41‑1508, of a capital investment for private commercial activities.
13. The amount of gain included in federal adjusted gross income on the sale or other disposition of a capital investment that a qualified defense contractor has elected to amortize pursuant to section 43‑1024.
14. The amount allowed by section 43‑1025 for contributions during the taxable year of agricultural crops to charitable organizations.
15. The portion of any wages or salaries paid or incurred by the taxpayer for the taxable year that is equal to the amount of the federal work opportunity credit, the empowerment zone employment credit, the credit for employer paid social security taxes on employee cash tips and the Indian employment credit that the taxpayer received under sections 45A, 45B, 51(a) and 1396 of the internal revenue code.
16. The amount of prizes or winnings less than five thousand dollars in a single taxable year from any of the state lotteries established and operated pursuant to title 5, chapter 5, article 1, except that all such winnings before March 22, 1983, including periodic distributions from such winnings made after March 22, 1983, may be subtracted.
17. The amount of exploration expenses that is determined pursuant to section 617 of the internal revenue code, that has been deferred in a taxable year ending before January 1, 1990 and for which a subtraction has not previously been made. The subtraction shall be made on a ratable basis as the units of produced ores or minerals discovered or explored as a result of this exploration are sold.
18. The amount included in federal adjusted gross income pursuant to section 86 of the internal revenue code, relating to taxation of social security and railroad retirement benefits.
19. To the extent not already excluded from Arizona gross income under the internal revenue code, compensation received for active service as a member of the reserves, the national guard or the armed forces of the United States, including compensation for service in a combat zone as determined under section 112 of the internal revenue code.
20. The amount of unreimbursed medical and hospital costs, adoption counseling, legal and agency fees and other nonrecurring costs of adoption not to exceed three thousand dollars. In the case of a husband and wife who file separate returns, the subtraction may be taken by either taxpayer or may be divided between them, but the total subtractions allowed both husband and wife shall not exceed three thousand dollars. The subtraction under this paragraph may be taken for the costs that are described in this paragraph and that are incurred in prior years, but the subtraction may be taken only in the year during which the final adoption order is granted.
21. The amount authorized by section 43‑1027 for the taxable year relating to qualified wood stoves, wood fireplaces or gas fired fireplaces.
22. With respect to a medical savings account established pursuant to section 43‑1028:
(a) An eligible individual may subtract:
(i) The amount of contributions made by the individual's employer during the taxable year to the individual's medical savings account pursuant to section 43‑1028 to the extent that the employer contributions are included in the individual's federal adjusted gross income.
(ii) The amount deposited by the individual in the account during the taxable year to the extent that the individual's contributions are included in the individual's federal adjusted gross income.
(b) The individual's employer may subtract the amount of contributions made by the employer to a medical savings account established on the individual's behalf to the extent that the contributions are not deductible under the internal revenue code.
23. The amount by which a net operating loss carryover or capital loss carryover allowable pursuant to section 43‑1029, subsection F exceeds the net operating loss carryover or capital loss carryover allowable pursuant to section 1341(b)(5) of the internal revenue code.
24. Any amount of qualified educational expenses that is distributed from a qualified state tuition program determined pursuant to section 529 of the internal revenue code and that is included in income in computing federal adjusted gross income.
25. Any item of income resulting from an installment sale that has been properly subjected to income tax in another state in a previous taxable year and that is included in Arizona gross income in the current taxable year.
26. The amount authorized by section 43‑1030 relating to holocaust survivors.
27. The amount authorized by section 43‑1031 for constructing an energy efficient residence.
28. An amount equal to the depreciation allowable pursuant to section 167(a) of the internal revenue code for the taxable year computed as if the election described in section 168(k)(2)(D)(iii) of the internal revenue code had been made for each applicable class of property in the year the property was placed in service.
29. With respect to property that is sold or otherwise disposed of during the taxable year by a taxpayer that complied with section 43‑1021, paragraph 26 with respect to that property, the amount of depreciation that has been allowed pursuant to section 167(a) of the internal revenue code to the extent that the amount has not already reduced Arizona taxable income in the current or prior taxable years.
30. With respect to property for which an adjustment was made under section 43‑1021, paragraph 27, an amount equal to one‑fifth of the amount of the adjustment pursuant to section 43‑1021, paragraph 27 in the year in which the amount was adjusted under section 43‑1021, paragraph 27 and in each of the following four years.
31. For taxable years beginning from and after December 31, 2007 through December 31, 2012, the amount contributed during the taxable year to college savings plans established pursuant to section 529 of the internal revenue code to the extent that the contributions were not deducted in computing federal adjusted gross income. The amount subtracted shall not exceed:
(a) Seven hundred fifty dollars for a single individual or a head of household.
(b) One thousand five hundred dollars for a married couple filing a joint return. In the case of a husband and wife who file separate returns, the subtraction may be taken by either taxpayer or may be divided between them, but the total subtractions allowed both husband and wife shall not exceed one thousand five hundred dollars.
32. To the extent not already excluded from Arizona gross income under the internal revenue code, the amount authorized by section 43‑1032 for displaced pupils choice grants.
33. The amount of any original issue discount that was deferred and not allowed to be deducted in computing federal adjusted gross income or federal taxable income in the current taxable year pursuant to section 108(i) of the internal revenue code as added by section 1231 of the American recovery and reinvestment act of 2009 (P.L. 111‑5).
34. The amount of previously deferred discharge of indebtedness income that is included in the computation of federal adjusted gross income or federal taxable income in the current taxable year pursuant to section 108(i) of the internal revenue code as added by section 1231 of the American recovery and reinvestment act of 2009 (P.L. 111-5), to the extent that the amount was previously added to Arizona gross income pursuant to section 43‑1021, paragraph 33.
35. The portion of the net operating loss carryforward that would have been allowed as a deduction in the current year pursuant to section 172 of the internal revenue code if the election described in section 172(b)(1)(H) of the internal revenue code had not been made in the year of the loss that exceeds the actual net operating loss carryforward that was deducted in arriving at federal adjusted gross income. This subtraction only applies to taxpayers who made an election under section 172(b)(1)(H) of the internal revenue code as amended by section 1211 of the American recovery and reinvestment act of 2009 (P.L. 111-5) or as amended by section 13 of the worker, homeownership, and business assistance act of 2009 (P.L. 111‑92).
36. For taxable years beginning from and after December 31, 2013, the amount of any net capital gain included in federal adjusted gross income for the taxable year derived from investment in a qualified small business as determined by the Arizona commerce authority pursuant to section 41‑1518.
37. an amount of any net capital gain included in federal adjusted gross income for the taxable year that is derived from an investment in a capital asset ACQUIRED after December 31, 2011, as follows:
(a) For taxable years beginning from and after December 31, 2012 through December 31, 2013, twenty-five per cent of the net capital gain included in federal adjusted gross income.
(b) For taxable years beginning from and after December 31, 2013 through December 31, 2014, fifty per cent of the net capital gain included in federal adjusted gross income.
(c) For taxable years beginning from and after December 31, 2014 through December 31, 2015, seventy-five per cent of the net capital gain included in federal adjusted gross income.
(d) For taxable years beginning from and after December 31, 2015, one hundred per cent of the net capital gain included in federal adjusted gross income.
Sec. 5. Section 43-1122, Arizona Revised Statutes, is amended to read:
43-1122. Subtractions from Arizona gross income; corporations
In computing Arizona taxable income for a corporation, the following amounts shall be subtracted from Arizona gross income:
1. The amounts computed pursuant to section 43‑1022, paragraphs 8 through 15, 28, 29, 30, 33, and 34 and 37. For the purposes of this paragraph, "federal adjusted gross income" as used in section 43‑1022 means "federal taxable income".
2. The amount of Arizona capital loss carryover as defined in section 43‑1124 in an amount not to exceed one thousand dollars.
3. With respect to a financial institution as defined in section 6‑101, expenses and interest relating to tax‑exempt income disallowed pursuant to section 265 of the internal revenue code.
4. Dividends received from another corporation owned or controlled directly or indirectly by a recipient corporation. For the purposes of this paragraph, "control" means direct or indirect ownership or control of fifty per cent or more of the voting stock of the payor corporation by the recipient corporation. Dividends shall have the meaning provided in section 316 of the internal revenue code. This subtraction shall apply without regard to the provisions of section 43‑961, paragraph 2 and article 4 of this chapter. A corporation that has its commercial domicile, as defined in section 43‑1131, in this state may subtract the full amount of the dividends. A corporation that does not have its commercial domicile in this state may subtract:
(a) For its taxable year beginning in 1990, an amount equal to one‑half of the dividends.
(b) For taxable years beginning in 1991 and thereafter, the full amount of the dividends.
5. Interest income received on obligations of the United States.
6. The amount of dividend income from foreign corporations.
7. The amount of net operating loss allowed by section 43‑1123.
8. The amount of any state income tax refunds received which were included as income in computing federal taxable income.
9. The amount of expense recapture included in income pursuant to section 617 of the internal revenue code for mine exploration expenses.
10. The amount of deferred exploration expenses allowed by section 43‑1127.
11. The amount of exploration expenses related to the exploration of oil, gas or geothermal resources, computed in the same manner and on the same basis as a deduction for mine exploration pursuant to section 617 of the internal revenue code. This computation is subject to the adjustments contained in section 43‑1121, paragraph 8 and paragraphs 9 and 10 of this section relating to exploration expenses.
12. The amortization of pollution control devices allowed by section 43‑1129.
13. The amount of amortization of the cost of child care facilities pursuant to section 43‑1130.
14. The amount of income from a domestic international sales corporation required to be included in the income of its shareholders pursuant to section 995 of the internal revenue code.
15. The income of an insurance company that is exempt under section 43‑1201 to the extent that it is included in computing Arizona gross income on a consolidated return pursuant to section 43‑947.
16. The amount of contributions by the taxpayer during the taxable year to medical savings accounts established on behalf of the taxpayer's employees as provided by section 43‑1028, to the extent that the contributions are not deductible under the internal revenue code.
17. The amount by which a capital loss carryover allowable pursuant to section 43‑1130.01, subsection F exceeds the capital loss carryover allowable pursuant to section 1341(b)(5) of the internal revenue code.
Sec. 6. Section 43-1123, Arizona Revised Statutes, is amended to read:
43-1123. Net operating loss; definition
A. As used in For the purposes of this section, "net operating loss" means:
1. In the case of a taxpayer who has a net operating loss for the taxable year within the meaning of section 172(c) of the internal revenue code, the amount of the net operating loss increased by the subtractions specified in section 43‑1122, except the deduction subtraction allowed in section 43‑1122, paragraph 7, and reduced by the additions specified in section 43‑1121.
2. In the case of a taxpayer not described in paragraph 1 of this subsection, any excess of the subtractions specified in section 43‑1122, except the deduction subtraction allowed in section 43‑1122, paragraph 7, over the sum of the Arizona gross income plus the additions specified in section 43‑1121.
B. If for any taxable year the taxpayer has a net operating loss: ,
1. Such net operating loss shall be a net operating loss carryover for:
(a) Each of the five succeeding taxable years, except that for net operating losses arising in taxable periods through December 31, 2012.
(b) Each of the twenty succeeding taxable years for net operating losses arising in taxable periods beginning from and after December 31, 2012.
2. The carryover in the case of each such succeeding taxable year, other than the first succeeding taxable year, shall be the excess, if any, of the amount of such net operating loss over the sum of the taxable income for each of the intervening years computed by determining the net operating loss deduction subtraction for each intervening taxable year, without regard to such net operating loss or to the net operating loss for any succeeding taxable year.
C. The amount of the net operating loss deduction subtraction shall be the aggregate of the net operating loss carryovers to the taxable year.
Sec. 7. Title 43, Arizona Revised Statutes, is amended by adding chapter 17, to read:
CHAPTER 17
UNIVERSAL REGULATORY TAX CREDIT
ARTICLE 1. GENERAL PROVISIONS
43-1701. Definitions
In this chapter, unless the context otherwise requires:
1. "Creditable cost" means the loss of the fair market value of property incurred as a direct result of an excessive regulation.
2. "Creditable expense" means any actual expense that is incurred as a direct result of an excessive regulation, including the fair market value of time spent fulfilling regulatory requirements. Creditable expense does not include the normal cost of tax compliance, including accounting, preparation and filing tax returns.
3. "Excessive regulation" means any of the following:
(a) Any regulation that does not protect individuals from CIVIL OR CRIMINAL FRAUD OR VERIFIABLE AND SUBSTANTIAL DAMAGE TO THEIR HEALTH AND SAFETY.
(b) Any regulation that primarily serves esthetic or cultural purposes.
(c) Any regulation that restricts or prohibits ordinarily harmless property conditions.
(d) Any regulation that restricts or prohibits ordinarily harmless action by individuals or organizations.
(e) Any regulation that restricts or prohibits the ordinarily harmless exercise or enjoyment of an individual's or organization's legal rights.
(f) Any regulation mandatING THAT individuals or organizations take action that is both:
(i) Remotely connected to public health or safety.
(ii) Likely to cause substantially more economic costs than benefits.
4. "Regulation" means any legislation, administrative rule or executive action by this state or its agencies or political subdivisions that is governmental in nature and not proprietary, that has the force of law and that either:
(a) Requires individuals or private organizations to act in one or more ways.
(b) Restricts or prohibits individuals or private organizations from acting in one or more ways.
(c) Restricts or prohibits one or more property conditions.
5. "Taxable year" means the taxpayer's taxable year for paying individual or corporate income tax, as applicable, under THIS title.
6. "Taxpayer" means either:
(a) aN individual OR CORPORATION on which any tax authorized by title 9, 11, 15, 20, 28, 42 or 48 OR THIS TITLE is imposed, levied or assessed.
(b) The owner of property against which tax is assessed pursuant to title 9, 11, 15, 42 or 48.
43-1702. Allowance of credit
A. For taxable years beginning from and after December 31, 2013, a credit is allowed against tax liability assessed pursuant to chapter 10 or 11 of this title, as applicable, for the creditable costs and creditable expenses of excessive regulation incurred by a taxpayer after December 31, 2013. No credit is allowed for creditable costs and creditable expenses that do not total more than twenty dollars for an individual, or fifty dollars for a corporation, in a taxable year. A credit is allowed for creditable costs and creditable expenses with respect to only one excessive regulation of only one taxing entity in a taxable year.
B. Subject to subsection D of this section, the amount of credit under this section is the lesser of:
1. The total amount of creditable costs and creditable expenses incurred by a taxpayer in the taxable year for which the tax liability is computed and assessed.
2. For individual taxpayers, regardless of filing status, one thousand dollars for taxable years beginning from and after December 31, 2013 through December 31, 2015 and two thousand dollars for taxable years beginning from and after December 31, 2015.
3. For corporate taxpayers, four thousand dollars for taxable years beginning from and after December 31, 2013 through December 31, 2015 and eight thousand dollars for taxable year beginning from and after December 31, 2015.
C. If the amount of the credit exceeds the amount that may be applied for the taxable year, the amount of the credit not used as an offset against the tax liability for that taxable year may be carried forward as a credit against up to ten consecutive subsequent taxable years, but not exceeding the taxpayer's income tax liability in each subsequent taxable year.
D. The department of revenue shall not allow tax credits that are approved under this article that exceed in the annual aggregate:
1. For individual taxpayers, awarded on a first come, first served basis:
(a) In calendar years 2014 and 2015:
(i) $31,250 in claims against agencies of this state.
(ii) $31,250 in claims against counties.
(iii) $31,250 in claims against cities and towns.
(iv) $31,250 in claims against special taxing districts.
(b) Beginning with calendar year 2016:
(i) $62,500 in claims against agencies of this state.
(ii) $62,500 in claims against counties.
(iii) $62,500 in claims against cities and towns.
(iv) $62,500 in claims against special taxing districts.
2. For corporate taxpayers, awarded on a first come, first served basis:
(a) In calendar years 2014 and 2015:
(i) $50,000 in claims against agencies of this state.
(ii) $50,000 in claims against counties.
(iii) $50,000 in claims against cities and towns.
(iv) $50,000 in claims against special taxing districts.
(b) Beginning with calendar year 2016:
(i) $100,000 in claims against agencies of this state.
(ii) $100,000 in claims against counties.
(iii) $100,000 in claims against cities and towns.
(iv) $100,000 in claims against special taxing districts.
E. For the purposes of computing the maximum aggregate dollar value of claims allowed under subsection D of this section, an approved claim, regardless of the approved amount, shall be deemed to be the maximum value allowed by subsection B, paragraph 2 or 3 of this section, as applicable, and no further claim by that taxpayer may be approved for that calendar year against any taxing entity.
43-1703. Claiming the credit; approval or denial of claim; appeal of denial
A. A taxpayer must claim a credit under this CHAPTER on a single universal claim form that is prescribed by the department of revenue and submitted to the department at the time of filing the taxpayer's individual or corporate income tax return under THIS title. The claim form shall include a duplicate copy for the taxpayer to submit, by certified mail, return receipt requested, to the taxing entity directly responsible for enacting, adopting or enforcing the excessive regulation. The claim form must include the following information:
1. An identification of each excessive regulation causing any portion of the claim and the corresponding amount of creditable costs and creditable expenses attributable to each excessive regulation.
2. The name of the taxing entity directly responsible for enacting, adopting or enforcing the excessive regulation.
3. The amount of the credit that will be applied to the current tax liability and any amount that will be carried over to subsequent taxable years.
4. An acknowledgement that the taxpayer has notified and submitted a copy of the claim form to the responsible taxing entity and the date of submission.
5. A declaration or verification that the claim is true, complete and accurate to the taxpayer's best knowledge and belief and made under penalty of perjury.
B. If the taxpayer fails to submit a complete, correct and timely claim form, the department shall deny the credit until the taxpayer is in full compliance.
C. In addition to the taxpayer's claim, the department may accept a written response with documentation submitted to the department by the responsible taxing entity.
D. Within sixty days after the taxpayer's submission of the claim, the department shall make an initial evaluation and determination to approve or deny the entire claim as submitted and notify both the taxpayer and the responsible taxing entity of the decision by certified mail, return receipt requested. If the department approves the claim, it shall process the claim as provided by subsections G and H of this section. If the department denies the claim, the claim is automatically transferred to the state treasurer to review the merits of the claim.
E. If the claim is transferred to the state treasurer, the treasurer may make a determination and ruling solely on the written materials submitted by the taxpayer and taxing entity, as transmitted to the treasurer by the department, or the treasurer may hold a hearing to receive additional oral, physical or written information. Within forty-five days after receiving the claim from the department, the treasurer shall make an evaluation and determination whether to approve or deny all or part of the claim and notify the taxpayer, the responsible taxing entity and the department of the decision by certified mail, return receipt requested. If the treasurer approves all or part of the claim, the department shall process the approved claim as provided by subsections G and H of this section. If the treasurer denies all or part of the claim:
1. The department shall recompute the taxpayer's income tax liability without the denied portion of the credit. No penalty or interest accrues to the increased liability if the taxpayer pays the additional amount within sixty days after notification by the department. A payment under this paragraph precludes further appeal under paragraph 2 of this subsection.
2. The taxpayer may pay the additional tax under protest as provided by section 42-1115 and appeal the denied portion of the claim to superior court. An appeal to court is considered to be a claim for refund under section 42-1118, subsection I and section 43-611.
3. The department and treasurer shall deny subsequent claims with respect to the same regulation based on substantially similar circumstances.
F. If at any time during any proceeding described by subsection D or E of this section the department determines that the maximum annual amount of credits prescribed by section 43‑1702, subsection D has been awarded, the department shall notify all parties and the state treasurer and affected courts that further proceedings are terminated and no further credits may be awarded with respect to the calendar year.
G. Any amount of the claim finally approved by the department or state treasurer constitutes:
1. A credit against the taxpayer's income tax liability as provided by section 43-1702.
2. A debit against the general fund appropriation to any state agency directly responsible for enacting, adopting or enforcing the excessive regulation. Notwithstanding any other law, the department shall notify the department of administration to deduct and withhold the amount of the approved claim from monies otherwise appropriated to the agency in the current fiscal year. Monies affected by this paragraph revert to the state general fund.
3. A debit against state shared revenues distributed to any county, city or town directly responsible for enacting, adopting or enforcing the excessive regulation. The department of revenue shall notify the state treasurer to withhold the amount of the approved claim from monies otherwise payable to the county, city or town as provided by section 42-5029, subsection L.
4. a DEBIT AGAINST ANY OF THE TAXING ENTITY'S MONIES IN THE CUSTODY OF THE STATE TREASURER, IF THE APPROVED CLAIM RESULTS FROM AN EXCESSIVE REGULATION ADOPTED BY A TAXING ENTITY OTHER THAN THIS STATE, OR A COUNTY, CITY OR TOWN AND PAID UNDER PARAGRAPH 2 OF THIS SUBSECTION. tHE DEPARTMENT SHALL IDENTIFY ANY MONIES OF THE TAXING ENTITY THAT ARE IN THE CUSTODY OF THE STATE TREASURER, INCLUDING ANY INVESTMENT POOL ADMINISTERED BY THE STATE TREASURER, AND ORDER THE treasurer to transfer THE AMOUNT OF THE APPROVED CLAIM FROM THE TAXING ENTITY'S ACCOUNT TO THE STATE GENERAL FUND. If there are no monies of the taxing entity in the state treasury, the department of revenue and department of administration shall jointly identify suitable property and shall file and record a lien against the entity's real property in the amount of the debit until the amount of the approved claim is paid to this state. The department of revenue shall notify the taxing entity of the lien by certified mail, return receipt requested.
H. The department shall maintain a public electronic register of claims filed under this section, whether ultimately approved or denied, the location of the claim, the dollar amount of the claim and any approved amount, the excessive regulation and creditable costs and creditable expenses associated with each excessive regulation by taxing entity and cited, classified and coded in uniform common nomenclature to expedite public access and application in individual circumstances. If an excessive regulation is repealed or modified in any way to affect the associated creditable costs and creditable expenses, the department shall annotate the register accordingly.
43-1704. Transferability
A. All or part of any unclaimed amount of credit under section 43-1702 may be sold or otherwise transferred under the following conditions:
1. A single sale or transfer of a credit may involve one transferee or divided among more than one transferee, but an original transferee may not thereafter sell or transfer the credit.
2. Both the transferor and transferee must submit a single written notice of the transfer to the department within thirty days after the sale or transfer. The notice shall include:
(a) A processing fee of two hundred dollars.
(b) The names of the transferor and transferee.
(c) The date of the transfer.
(d) The dollar amount of the credit transferred.
(e) The transferor's tax credit balance before the transfer and the remaining balance after the transfer.
(f) All tax identification numbers for both the transferor and transferee.
B. A transferee shall apply, and the department shall allow, the transferred credit against the transferee's individual or corporate income tax liability, as applicable. The TRANSFEREE must submit to the taxing agency a copy of the notice under subsection A, paragraph 2 of this section.
C. If the transferor or transferee fails to comply with any provision of this section, the department shall disallow the credit until both the transferor and transferee are in full compliance.
43-1705. Administration; rules, forms and procedures; public information
The department of revenue shall:
1. Administer this CHAPTER, adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purposes of this CHAPTER to encourage the repeal, RESCISSION or moderation of excessive regulation.
2. Maintain and, on request, provide to the public annual data on the total amount of monies credited pursuant to this CHAPTER, in electronic format, both aggregated and disaggregated and categorized according to excessive regulation, taxing authority and responsible state agency or political subdivision, without personal identifying information of any taxpayer.
43-1706. Recoupment of revenue loss in case of shared responsibility for excess regulation
A. The department shall adopt rules and publish and prescribe forms and procedures as necessary to allow taxing entities under title 9, 11, 15, 20, 28, 42 or 48 OR THIS TITLE to recoup revenues attributable to any approved claim for credit under this CHAPTER from any other state agency or political subdivision that is directly or jointly responsible for enacting or enforcing the excessive regulation giving rise to any part of the credit.
B. The taxing entity must promptly make demand for recoupment from each other responsible taxing entity or state agency on a form that provides all relevant information supplied by the taxpayer.
C. The department may establish a secure electronic clearinghouse to allow the demands for recoupment to be claimed and paid through electronic debits and credits to the accounts of the respective taxing entities and state agencies.
D. Each responsible taxing entity or state agency receiving a demand for recoupment is liable for the prompt payment of the amount demanded ratably.
E. If the responsible taxing entity or state agency receiving a demand for recoupment does not have sufficient monies to pay the amount of the demand, and will not have sufficient monies to pay the amount of the demand without new debt financing or imposing new or increased taxes or fees, each underlying excessive regulation identified by the taxpayer and all related enforcement proceedings or penalties shall immediately be considered to be void and not replaced with any substantially equivalent regulation for each taxable year in which the credit has been or could have been claimed. Thereafter, the demand is considered to be paid in full.
43-1707. Debt financing and increased tax or fee revenue prohibited
A. A taxing entity that is responsible for excessive regulation shall not engage in debt financing or impose new or increased taxes or fees to offset the fiscal impact of any credit allowed under this CHAPTER.
B. If the fiscal impact of any credit allowed under this CHAPTER poses a threat to public health and safety by requiring the discontinuation of essential government services, the underlying excessive regulation and all related enforcement proceedings or penalties are immediately considered to be void and shall not be replaced with any substantially equivalent regulation for each taxable year in which the credit has been or could have been claimed. Thereafter, the tax credit shall be disallowed on corresponding notice to the taxpayer.
Sec. 8. Purpose
Pursuant to section 43-223, Arizona Revised Statutes, the legislature enacts title 43, chapter 17, Arizona Revised Statutes, as added by this act, to encourage the repeal, rescission or moderation of excessive government regulation of private lives and businesses.
Sec. 9. Delayed repeal
Section 41‑1541.01, Arizona Revised Statutes, as added by this act, is repealed from and after December 31, 2016.
