Bill Text: AZ SB1265 | 2024 | Fifty-sixth Legislature 2nd Regular | Introduced
Bill Title: Investments; rural areas; tax credits
Spectrum: Partisan Bill (Republican 1-0)
Status: (N/A) - [SB1265 Detail]
Download: Arizona-2024-SB1265-Introduced.html
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REFERENCE TITLE: investments; rural areas; tax credits |
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State of Arizona Senate Fifty-sixth Legislature Second Regular Session 2024
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SB 1265 |
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Introduced by Senator Shope
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An Act
amending section 20-224, Arizona Revised Statutes; amending title 20, chapter 2, article 1, Arizona Revised Statutes, by adding section 20-224.08; amending title 41, chapter 10, article 1, Arizona Revised Statutes, by adding section 41-1515; amending sections 42-2003 and 43-222, Arizona Revised Statutes; amending title 43, chapter 10, article 5, Arizona Revised Statutes, by adding section 43-1080; amending title 43, chapter 11, article 6, Arizona Revised Statutes, by adding section 43-1166; relating to tax credits.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 20-224, Arizona Revised Statutes, is amended to read:
20-224. Premium tax; reports
A. On or before March 1 of each year, each authorized domestic insurer, each other insurer and each formerly authorized insurer referred to in section 20-206, subsection B shall file with the director a report in a form prescribed by the director showing total direct premium income including policy membership and other fees and all other considerations for insurance from all classes of business whether designated as a premium or otherwise received by it during the preceding calendar year on account of policies and contracts covering property, subjects or risks located, resident or to be performed in this state, after deducting from such total direct premium income applicable cancellations, returned premiums, the amount of reduction in or refund of premiums allowed to industrial life policyholders for payment of premiums direct to an office of the insurer and all policy dividends, refunds, savings coupons and other similar returns paid or credited to policyholders within this state and not reapplied as premiums for new, additional or extended insurance. No A deduction shall not be made of the cash surrender values of policies or contracts. Considerations received on annuity contracts, as well as the unabsorbed portion of any premium deposit, shall not be included in total direct premium income, and neither shall be is subject to tax. The report shall separately indicate the total direct fire insurance premium income received from property located in the incorporated cities and towns certified by the office of the state fire marshal pursuant to section 9-951, subsection B, as procuring the services of a private fire company.
B. Coincident with the filing of the tax report, each insurer shall pay to the director for deposit, pursuant to sections 35-146 and 35-147, a tax on such net premiums at the following rates:
1. For fire insurance:
(a) On property located in a city or town certified by the office of the state fire marshal pursuant to section 9-951, subsection B, as procuring the services of a private fire company, .66 percent.
(b) On all other property, 2.2 percent.
2. For disability insurance, 2.0 percent.
3. For health care service plans, the rates prescribed under sections 20-837, 20-1010 and 20-1060.
4. For other insurance:
(a) For premiums received in calendar year 2016, 1.95 percent.
(b) For premiums received in calendar year 2017, 1.90 percent.
(c) For premiums received in calendar year 2018, 1.85 percent.
(d) For premiums received in calendar year 2019, 1.80 percent.
(e) For premiums received in calendar year 2020, 1.75 percent.
(f) For premiums received in calendar year 2021 and for each subsequent calendar year, 1.70 percent.
C. Any payments of tax pursuant to subsection F of this section shall be deducted from the tax payable pursuant to subsection B of this section. Each insurer shall reflect the cost savings attributable to the lower tax in fire insurance premiums charged on property located in an incorporated city or town certified by the office of the state fire marshal pursuant to section 9-951, subsection B, as procuring the services of a private fire company. No An insurer shall be is not liable to the this state or to any other person, or shall be and is not subject to regulatory action, relating to the calculation or submittal of CALCULATING or submitting fire insurance premium taxes based in good faith on the office of the state fire marshal's certification.
D. Eighty-five percent of the tax paid under this section by an insurer on account of premiums received for fire insurance shall be separately specified in the report and shall be apportioned in the manner provided by sections 9-951, 9-952 and 9-972, except that all of the tax so allocated to a fund of a municipality or fire district that has no volunteer firefighters or pension obligations to volunteer firefighters shall be appropriated to the account of the municipality or fire district in the public safety personnel retirement system and all of the tax so allocated to a fund of a municipality or fire district that has both full-time paid firefighters and volunteer firefighters or pension obligations to full-time paid firefighters or volunteer firefighters shall be appropriated to the account of the municipality or fire district in the public safety personnel retirement system where it shall be reallocated by actuarial procedures proportionately to the municipality or fire district for the account of the full-time paid firefighters and to the municipality or fire district for the account of the volunteer firefighters. A municipality or fire district shall provide to the public safety personnel retirement system all information that the system deems necessary to perform the reallocation prescribed by this section. A full accounting of the reallocation shall be forwarded to the municipality or fire district and its local boards.
E. This section does not apply to title insurance. Title insurers shall be taxed as provided in section 20-1566.
F. Any insurer that paid or is required to pay a tax of $50,000 or more on net premiums received during the preceding calendar year, pursuant to subsection B of this section and sections 20-224.01, 20-837, 20-1010, 20-1060 and 20-1097.07, shall file on or before the fifteenth day of each month from March through August a report for that month, on a form prescribed by the director, accompanied by a payment in an amount equal to fifteen percent of the amount paid or required to be paid during the preceding calendar year pursuant to subsection B of this section and sections 20-224.01, 20-837, 20-1010, 20-1060 and 20-1097.07. The payments are due and payable on or before the fifteenth day of each month and shall be made to the director for deposit, pursuant to sections 35-146 and 35-147.
G. Except for the tax paid on fire insurance premiums pursuant to subsections B and D of this section, an insurer may claim a premium tax credit if the insurer qualifies for a credit pursuant to section 20-224.03, 20-224.04, 20-224.06, or 20-224.07 or 20-224.08.
H. On receipt of a properly documented claim, a refund shall be provided to an insurer from available funds monies for the excess amount of any fire insurance premium improperly paid by the insurer. The insurer shall reflect the refund in the fire insurance premiums charged on the property that was charged the excessive amount.
I. On or before September 30 of each year, the director of the department of insurance and financial institutions shall report to the directors of the joint legislative budget committee and the governor's office of strategic planning and budgeting on the amount of insurance premium tax credits established by sections 20-224.03, 20-224.04, 20-224.05, 20-224.06, and 20-224.07 and 20-224.08 that were used during the previous fiscal year.
J. For the purposes of:
1. Subsection B of this section, fire insurance is one hundred percent of fire lines, forty percent of commercial multiple peril nonliability lines, thirty-five percent of homeowners' multiple peril lines, twenty-five percent of farm owners' multiple peril lines and twenty percent of allied lines.
2. Section 20-416, fire insurance is eighty-five percent of fire and allied lines.
K. From and after December 31, 2017, the director may require that reports and payments under this section be submitted electronically. If the director requires electronic submission, the director shall include on the department's official website a list of one or more acceptable third-party services through which an insurer must submit reports and payments.
Sec. 2. Title 20, chapter 2, article 1, Arizona Revised Statutes, is amended by adding section 20-224.08, to read:
20-224.08. Premium tax credit for rural fund capital investments; rules; definitions
A. For taxable years beginning from and after December 31, 2024, a credit is allowed against the premium tax liability imposed pursuant to section 20-224, 20-837, 20-1010, 20-1060 or 20-1097.07 for credit-eligible capital investments to a rural fund as certified by the Arizona commerce authority pursuant to section 41-1515.
B. The amount of the credit for the taxable year is an amount equal to the applicable percentage for the credit allowance date multiplied by the purchase price paid to the rural fund for the capital investment. To claim the credit, the insurer must submit a copy of the Arizona commerce authority certification provided pursuant to section 41-1515 with each year's tax return.
C. If the amount of the allowable credit for a taxable year exceeds the insurer's state premium tax liability, the amount of the claim not used to offset the premium tax liability may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' premium tax liability.
D. If the Arizona commerce authority Recaptures the credit certificate and related capital investment authority pursuant to section 41-1515, subsection K, the department of insurance and financial institutions shall disallow any further credits claimed by the insurer.
E. Co-owners of a business, including corporate partners in a partnership, may each claim the pro rata share of the tax credit allowed under this section based on ownership interests. The total of the tax credits allowed all such owners may not exceed the amount that is allowed to a sole owner.
F. The department of insurance and financial institutions, with the cooperation of the department of revenue and the Arizona commerce authority, shall adopt rules and prescribe forms to administer this section.
G. For the purposes of this section, "applicable percentage", "capital investment", "credit allowance date" and "purchase price" have the same meanings prescribed in section 41-1515.
Sec. 3. Title 41, chapter 10, article 1, Arizona Revised Statutes, is amended by adding section 41-1515, to read:
41-1515. Rural capital investments; rural fund; application; fee; certification; tax incentives; reports; exit application; definitions
A. Beginning from and after the ninetieth day after the effective date of this section, the authority shall establish and administer a procedure for accepting and evaluating applications for approval of capital investments that are eligible for a tax credit pursuant to section 20-224.08, 43-1080 or 43-1166.
B. A qualified investor may apply to the authority for approval as a rural fund for the purposes of this section. The Application must be accompanied by a nonrefundable application fee in an amount prescribed by the authority. The application must be in a form prescribed by the authority and include all of the following:
1. The name, address and federal income tax identification number of the applicant.
2. The amount of the capital investment requested.
3. A copy of the applicant's or an affiliate of the applicant's license as either:
(a) A rural business investment company as defined in 7 United States code section 2009cc.
(b) A small business investment company prescribed under 15 United States code section 681.
4. a certificate executed by an executive officer of the applicant attesting that the license required in paragraph 3 of this subsection is in effect and has not been revoked.
5. Evidence that, as of the application date, the applicant or affiliates of the applicant have invested at least $100,000,000 in nonpublic companies that are located in counties within the United States with a population of less than seventy-five thousand persons.
6. A business plan that includes:
(a) A revenue-impact assessment projecting state and local tax revenue to be generated by the applicant's proposed qualified investments, prepared by a nationally recognized, third-party, independent economic forecasting firm using a dynamic economic forecasting model that analyzes the applicant's business plan over the ten years following the application date.
(b) An estimate of the number of employment positions created and retained in this state as a result of the applicant's qualified investments.
C. Within thirty days after receiving a complete application, the authority shall grant or deny the application in full or in part. The authority shall deny the application if any of the following occurs:
1. The applicant does not satisfy all the criteria provided under subsection B of this section.
2. The revenue-impact assessment submitted with the business plan does not demonstrate that the applicant's business plan will result in a positive fiscal impact on this state over a ten-year period that exceeds the cumulative amount of tax credits that would be issued to the applicant if the application was approved.
3. The authority has already approved the maximum amount of capital investment authority allowed under subsection F of this section.
D. If the authority denies any part of the application, the authority shall notify the applicant of the grounds for the denial. The applicant may provide any additional information required by the authority or otherwise complete the application within fifteen days after the notice of denial, and the application shall be considered complete as of the original submission date. If the applicant fails to provide the information or fails to complete the application within the fifteen-day period, the application shall remain denied and must be resubmitted with a new submission date and a new application fee.
E. If the authority approves an application, the authority shall certify the proposed equity investment as a capital investment eligible for tax credits pursuant to sections 20-224.08, 43-1080 and 43-1166, subject to the maximum amount of capital investment authority allowed under subsection F of this section. The authority shall provide written notice of the certification to the applicant and include the amount of the applicant's capital investment authority. The authority shall certify capital investments in the order that applications are received. Applications received on the same day are deemed to have been received simultaneously. For applications that are complete and received on the same day, the authority shall certify applications in proportionate percentages based on the ratio of the amount of capital investment authority requested in all applications.
F. The authority may not certify tax credits and capital investment authority under this section in amounts that exceed an aggregate of $15,000,000 in any calendar year, excluding any credit amounts carried forward as provided under sections 20-224.08, 43-1080 and 43-1166.
G. Within ninety days after receiving the notice of certification, a rural fund shall issue the capital investment to and receive cash in the amount of the certified amount from a rural investor. At least ten percent of the rural investor's capital investment shall be composed of capital raised by the rural investor directly or indirectly from sources, including directors, members, employees, officers and affiliates of the rural investor. The rural fund shall provide the authority with evidence of the receipt of the cash investment within ninety-five days after receiving the notice of certification.
H. If a rural fund does not receive the cash investment and issue the capital investment within ninety days after receiving the notice of certification, the certification lapses and the rural fund may not issue the capital investment without reapplying to the authority for certification. Lapsed certifications revert to the authority and shall be reissued proportionately to applicants whose capital investment allocations were reduced pursuant to subsection E of this section.
I. Before making a qualified investment, a rural fund may request from the authority a written opinion as to whether the business in which the rural fund proposes to invest in is an eligible business. The authority, not later than fifteen business days after the date of receipt of the request, shall notify the rural fund of the authority's determination. If the authority fails to notify the rural fund of the determination by the twentieth business day, the business in which the rural fund proposes to invest shall be deemed an eligible business.
J. On making a capital investment in a rural fund, a rural investor may claim a tax credit under section 20-224.08, 43-1080 or 43-1166 on each credit allowance date of the capital investment in an amount equal to the applicable percentage for the credit allowance date multiplied by the purchase price paid to the rural fund for the capital investment.
K. The authority may recapture credits from a taxpayer that claimed a credit authorized under this section if:
1. A rural fund does not invest sixty percent of the rural fund's capital investment authority in qualified investments in this state within two years after the credit allowance date and one hundred percent of the rural fund's capital investment authority in qualified investments in this state within three years after the credit allowance date. At least seventy percent of these initial qualified investments must be made in eligible businesses located in rural areas.
2. A rural fund fails to maintain qualified investments equal to ninety percent of the rural fund's capital investment authority from the third anniversary until the sixth anniversary of the credit allowance date, with seventy percent of the capital investments maintained in eligible businesses located in rural areas. For each year the rural fund fails to maintain such capital investments, the authority may recapture an amount of that year's allowed credits equal to the percentage difference between ninety percent of the rural fund's capital investment authority and the actual amount of qualified investments maintained for that year. For the purposes of this subsection, a qualified investment is considered even if the qualified investment was sold or repaid if the rural fund reinvests an amount equal to the capital returned, recovered or repaid by the rural fund from the original investment, exclusive of any profits realized, in other qualified investments in this state within twelve months of receipt of the capital. Amounts received periodically by a rural fund shall be treated as continually invested in qualified investments if the amounts are reinvested in one or more qualified investments by the end of the following calendar year. A rural fund may not be required to reinvest capital returned from qualified investments after the fifth anniversary of the credit allowance date, and such qualified investments are considered to be held continuously by the rural fund through the sixth anniversary of the credit allowance date.
3. Before the earlier of either exiting the program pursuant to subsection R of this section or thirty days after the sixth anniversary of the credit allowance date, the rural fund makes a distribution or payment that results in the rural fund having less than one hundred percent of its capital investment authority invested in qualified investments in this state or held in cash or other marketable securities.
4. The rural fund violates subsection O of this section in which case the authority may recapture an amount equal to the amount of the rural fund's capital investment authority found to be in violation of subsection O of this section.
L. For the purposes of meeting and maintaining the objectives established for investment in subsection K, paragraphs 1 and 2 of this section, a rural fund's qualified investments shall be multiplied by a factor of one and one-quarter in counties with a population of less than thirty thousand persons and more than thirteen thousand persons and shall be multiplied by a factor of one and one-half in counties with a population of thirteen thousand persons or less.
M. Recaptured credits and related capital investment authority revert to the authority and the authority shall reissue the credits and related capital investment authority pro rata to applicants whose capital investment allocations were reduced in accordance with the application process provided under subsection E of this section.
N. Recapture may not occur until the rural fund has been given notice of noncompliance and the rural fund has not cured the noncompliance within six months after the date of the notice.
O. An eligible business that receives a qualified investment under this section, or any affiliates of the eligible business, may not directly or indirectly:
1. Own or have the right to acquire an ownership interest in a rural fund or be a member or an affiliate of a rural fund, including a holder of a capital investment issued by a rural fund.
2. Loan to or invest in a rural fund or any member or affiliate of a rural fund, including a holder of capital investment issued by a rural fund, where the proceeds of the loan or investment are directly or indirectly used to fund or refinance the purchase of capital investments under this section.
P. A Rural fund shall submit a report to the authority within fifteen business days after the second and third anniversary of the initial credit allowance date. The report following the second anniversary shall provide documentation of investing sixty percent of the purchase price of the capital investment in qualified investments. The report following the third anniversary shall provide documentation of investing one hundred percent of the purchase price of the capital investment in qualified investments. Unless previously reported pursuant to this subsection, the reports shall include:
1. The name and location of each eligible business receiving a qualified investment.
2. Bank statements of the rural fund evidencing each qualified investment.
3. A copy of the written opinion of the authority, if requested pursuant to subsection I of this section, or evidence that a business was an eligible business at the time of the qualified investment, as applicable.
4. The number of employment positions created and retained as a result of each qualified investment.
5. The average salary of the employment positions described in paragraph 4 of this subsection.
6. Any other information required by the authority.
Q. For all subsequent years after the third anniversary, a rural fund shall submit an annual report to the authority within ninety days after the beginning of the calendar year during the compliance period. The report shall include the following:
1. The number of employment positions created and as a result of qualified investments.
2. The average annual salary of the employment positions described in paragraph 1 of this subsection.
3. Any other information required by the authority.
R. On or after the sixth anniversary of the credit allowance date, a rural fund may apply to the authority to exit the program and no longer be subject to the requirements of this section. The authority shall respond to the exit application within fifteen days of receipt of the exit application. In evaluating the exit application, the fact that no credits have been recaptured and that the rural fund has not received a notice of recapture that has not been cured is sufficient evidence to prove that the rural fund is eligible for exit. The authority may not unreasonably deny an exit application submitted under this section. If an exit application is denied, the notice shall include the reasons for the denial.
S. The authority may not accept new applications or approval of capital investments eligible for a tax credit pursuant to sections 20-224.08, 43-1080 and 43-1166 from and after December 1, 2034.
T. For the purposes of this section:
1. "Affiliate" means an entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under the common control with another entity.
2. "Applicable percentage" means zero percent for the first two credit allowance dates and fifteen percent for the next four credit allowance dates.
3. "Capital investment" means any equity investment in a rural fund by a rural investor that meets all of the following requirements:
(a) Is acquired after the effective date of this section at its original issuance solely in exchange for cash.
(b) Has one hundred percent of its cash purchase price used by the rural fund to make qualified investments in eligible businesses located in this state by the third anniversary of the initial credit allowance date.
(c) Is designated by the rural fund as a capital investment under this section and is certified by the authority pursuant to this section, including any capital investment that was not provided in the application pursuant to subsection B, paragraph 2 of this section if the investment was a capital investment of a prior holder.
4. "Control" means directly or indirectly holding the majority of voting or ownership interest or control over the day-to-day operations either by contract or by law.
5. "Credit allowance date" means the date on which the authority certifies a rural fund's capital investment and each of the five anniversary dates of that date thereafter.
6. "Eligible business" means a business that, at the time of the initial qualified investment in the business, has both:
(a) Fewer than two hundred fifty employees.
(b) The business's principal business operations in this state.
7. "Principal business operations":
(a) Means the location where at least sixty percent of a business's employees work or where employees who are paid at least sixty percent of the business's payroll work.
(b) Includes the new location of a business that has agreed to relocate employees using the proceeds of a qualified investment to establish its principal business operations in a new location if it satisfies the requirements of this paragraph not later than one hundred eighty days after receiving a qualified investment.
8. "Purchase price" means the amount paid to the rural fund that issues a capital investment not to exceed the amount of capital investment authority certified under this section.
9. "Qualified investment" means any investment in an eligible business or any loan to an eligible business with a stated maturity date of at least one year after the date of issuance, excluding revolving lines of credit and senior-secured debt, unless the chief executive or similar officer of the eligible business certifies that the eligible business sought and was denied similar financing from a depository institution, by a rural fund, except that with respect to any one eligible business, the maximum amount of investments made in such business by one or more rural funds, on a collective basis with all of the businesses' affiliates, with the proceeds of the capital investments, is the greater of twenty percent of the rural fund's capital investment authority or $6,500,000, exclusive of investments made with repaid or redeemed investments or interest or profits realized on the investment.
10. "Rural area" means any county in this state that has a population of less than seventy-five thousand persons or any city or town in this state that has a population of seven thousand persons or less.
11. "Rural fund" means an entity certified by the authority for the purposes of this section.
12. "Rural investor" means an entity that makes a capital investment in a rural fund.
13. "Senior-secured debt" means any loan that is secured by a first mortgage on real estate with a loan-to-value ratio of less than eighty percent.
Sec. 4. Section 42-2003, Arizona Revised Statutes, is amended to read:
42-2003. Authorized disclosure of confidential information
A. Confidential information relating to:
1. A taxpayer may be disclosed to the taxpayer, its successor in interest or a designee of the taxpayer who is authorized in writing by the taxpayer. A principal corporate officer of a parent corporation may execute a written authorization for a controlled subsidiary. If a taxpayer elects to file an Arizona small business income tax return under section 43-302, a written authorization by the taxpayer to allow the department to disclose personal income tax information to a designee includes the corresponding Arizona small business income tax return.
2. A corporate taxpayer may be disclosed to any principal officer, any person designated by a principal officer or any person designated in a resolution by the corporate board of directors or other similar governing body. If a corporate officer signs a statement under penalty of perjury representing that the officer is a principal officer, the department may rely on the statement until the statement is shown to be false. For the purposes of this paragraph, "principal officer" includes a chief executive officer, president, secretary, treasurer, vice president of tax, chief financial officer, chief operating officer or chief tax officer or any other corporate officer who has the authority to bind the taxpayer on matters related to state taxes.
3. A partnership may be disclosed to any partner of the partnership. This exception does not include disclosure of confidential information of a particular partner unless otherwise authorized.
4. A limited liability company may be disclosed to any member of the company or, if the company is manager-managed, to any manager.
5. An estate may be disclosed to the personal representative of the estate and to any heir, next of kin or beneficiary under the will of the decedent if the department finds that the heir, next of kin or beneficiary has a material interest that will be affected by the confidential information.
6. A trust may be disclosed to the trustee or trustees, jointly or separately, and to the grantor or any beneficiary of the trust if the department finds that the grantor or beneficiary has a material interest that will be affected by the confidential information.
7. A government entity may be disclosed to the head of the entity or a member of the governing board of the entity, or any employee of the entity who has been delegated the authorization in writing by the head of the entity or the governing board of the entity.
8. Any taxpayer may be disclosed if the taxpayer has waived any rights to confidentiality either in writing or on the record in any administrative or judicial proceeding.
9. The name and taxpayer identification numbers of persons issued direct payment permits may be publicly disclosed.
10. Any taxpayer may be disclosed during a meeting or telephone call if the taxpayer is present during the meeting or telephone call and authorizes the disclosure of confidential information.
B. Confidential information may be disclosed to:
1. Any employee of the department whose official duties involve tax administration.
2. The office of the attorney general solely for its use in preparation for, or in an investigation that may result in, any proceeding involving tax administration before the department or any other agency or board of this state, or before any grand jury or any state or federal court.
3. The department of liquor licenses and control for its use in determining whether a spirituous liquor licensee has paid all transaction privilege taxes and affiliated excise taxes incurred as a result of the sale of spirituous liquor, as defined in section 4-101, at the licensed establishment and imposed on the licensed establishments by this state and its political subdivisions.
4. Other state tax officials whose official duties require the disclosure for proper tax administration purposes if the information is sought in connection with an investigation or any other proceeding conducted by the official. Any disclosure is limited to information of a taxpayer who is being investigated or who is a party to a proceeding conducted by the official.
5. The following agencies, officials and organizations, if they grant substantially similar privileges to the department for the type of information being sought, pursuant to statute and a written agreement between the department and the foreign country, agency, state, Indian tribe or organization:
(a) The United States internal revenue service, alcohol and tobacco tax and trade bureau of the United States treasury, United States bureau of alcohol, tobacco, firearms and explosives of the United States department of justice, United States drug enforcement agency and federal bureau of investigation.
(b) A state tax official of another state.
(c) An organization of states, federation of tax administrators or multistate tax commission that operates an information exchange for tax administration purposes.
(d) An agency, official or organization of a foreign country with responsibilities that are comparable to those listed in subdivision (a), (b) or (c) of this paragraph.
(e) An agency, official or organization of an Indian tribal government with responsibilities comparable to the responsibilities of the agencies, officials or organizations identified in subdivision (a), (b) or (c) of this paragraph.
6. The auditor general, in connection with any audit of the department subject to the restrictions in section 42-2002, subsection D.
7. Any person to the extent necessary for effective tax administration in connection with:
(a) The processing, storage, transmission, destruction and reproduction of the information.
(b) The programming, maintenance, repair, testing and procurement of equipment for purposes of tax administration.
(c) The collection of the taxpayer's civil liability.
8. The office of administrative hearings relating to taxes administered by the department pursuant to section 42-1101, but the department shall not disclose any confidential information without the taxpayer's written consent:
(a) Regarding income tax or withholding tax.
(b) On any tax issue relating to information associated with the reporting of income tax or withholding tax.
9. The United States treasury inspector general for tax administration for the purpose of reporting a violation of internal revenue code section 7213A (26 United States Code section 7213A), unauthorized inspection of returns or return information.
10. The financial management service of the United States treasury department for use in the treasury offset program.
11. The United States treasury department or its authorized agent for use in the state income tax levy program and in the electronic federal tax payment system.
12. The Arizona commerce authority for its use in:
(a) Qualifying renewable energy operations for the tax incentives under section 42-12006.
(b) Qualifying businesses with a qualified facility for income tax credits under sections 43-1083.03 and 43-1164.04.
(c) Fulfilling its annual reporting responsibility pursuant to section 41-1512, subsections U and V and section 41-1517, subsection L.
(d) Certifying computer data centers for tax relief under section 41-1519.
(e) Certifying applicants for the tax credit for motion picture production costs under sections 43-1082 and 43-1165.
(f) Certifying rural funds for the tax credit for rural capital investment under sections 20-224.08, 43-1080 and 43-1166.
13. A prosecutor for purposes of section 32-1164, subsection C.
14. The office of the state fire marshal for use in determining compliance with and enforcing title 37, chapter 9, article 5.
15. The department of transportation for its use in administering taxes, surcharges and penalties prescribed by title 28.
16. The Arizona health care cost containment system administration for its use in administering nursing facility provider assessments.
17. The department of administration risk management division and the office of the attorney general if the information relates to a claim against this state pursuant to section 12-821.01 involving the department of revenue.
18. Another state agency if the taxpayer authorizes the disclosure of confidential information in writing, including an authorization that is part of an application form or other document submitted to the agency.
19. The department of economic security for its use in determining whether an employer has paid all amounts due under the unemployment insurance program pursuant to title 23, chapter 4.
20. The department of health services for its use in determining the following:
(a) Whether a medical marijuana dispensary is in compliance with the tax requirements of chapter 5 of this title for the purposes of section 36-2806, subsection A.
(b) Whether a marijuana establishment, marijuana testing facility or dual licensee licensed under title 36, chapter 28.2 is in compliance with the tax obligations under this title or title 43.
21. The Arizona department of agriculture for the purpose of ascertaining compliance with the licensing provisions in title 3.
22. The office of economic opportunity for the purpose of performing the duties and obligations to or on behalf of this state prescribed by title 41, chapter 53.
C. Confidential information may be disclosed in any state or federal judicial or administrative proceeding pertaining to tax administration pursuant to the following conditions:
1. One or more of the following circumstances must apply:
(a) The taxpayer is a party to the proceeding.
(b) The proceeding arose out of, or in connection with, determining the taxpayer's civil or criminal liability, or the collection of the taxpayer's civil liability, with respect to any tax imposed under this title or title 43.
(c) The treatment of an item reflected on the taxpayer's return is directly related to the resolution of an issue in the proceeding.
(d) Return information directly relates to a transactional relationship between a person who is a party to the proceeding and the taxpayer and directly affects the resolution of an issue in the proceeding.
2. Confidential information may not be disclosed under this subsection if the disclosure is prohibited by section 42-2002, subsection C or D.
D. Identity information may be disclosed for purposes of notifying persons entitled to tax refunds if the department is unable to locate the persons after reasonable effort.
E. The department, on the request of any person, shall provide the names and addresses of bingo licensees as defined in section 5-401, verify whether or not a person has a privilege license and number, a tobacco product distributor's license and number or a withholding license and number or disclose the information to be posted on the department's website or otherwise publicly accessible pursuant to section 42-1124, subsection F and section 42-3401.
F. A department employee, in connection with the official duties relating to any audit, collection activity or civil or criminal investigation, may disclose return information to the extent that disclosure is necessary to obtain information that is not otherwise reasonably available. These official duties include the correct determination of and liability for tax, the amount to be collected or the enforcement of other state tax revenue laws.
G. Confidential information relating to transaction privilege tax, use tax, severance tax, jet fuel excise and use tax and any other tax collected by the department on behalf of any jurisdiction may be disclosed to any county, city or town tax official if the information relates to a taxpayer who is or may be taxable by a county, city or town or who may be subject to audit by the department pursuant to section 42-6002. Any taxpayer information that is released by the department to the county, city or town:
1. May be used only for internal purposes, including audits. If there is a legitimate business need relating to enforcing laws, regulations and ordinances pursuant to section 9-500.39 or 11-269.17, a county, city or town tax official may redisclose transaction privilege tax information relating to a vacation rental or short-term rental property owner or online lodging operator from the new license report and license update report, subject to the following:
(a) The information redisclosed is limited to the following:
(i) The transaction privilege tax license number.
(ii) The type of organization or ownership of the business.
(iii) The legal business name and doing business as name, if different from the legal name.
(iv) The business mailing address, tax record physical location address, telephone number, email address and fax number.
(v) The date the business started in this state, the business description and the North American industry classification system code.
(vi) The name, address and telephone number for each owner, partner, corporate officer, member, managing member or official of the employing unit.
(b) Redisclosure is limited to nonelected officials in other units within the county, city or town. The information may not be redisclosed to an elected official or the elected official's staff.
(c) All redisclosures of confidential information made pursuant to this paragraph are subject to paragraph 2 of this subsection.
2. May not be disclosed to the public in any manner that does not comply with confidentiality standards established by the department. The county, city or town shall agree in writing with the department that any release of confidential information that violates the confidentiality standards adopted by the department will result in the immediate suspension of any rights of the county, city or town to receive taxpayer information under this subsection.
H. The department may disclose statistical information gathered from confidential information if it does not disclose confidential information attributable to any one taxpayer. The department may disclose statistical information gathered from confidential information, even if it discloses confidential information attributable to a taxpayer, to:
1. The state treasurer in order to comply with the requirements of section 42-5029, subsection A, paragraph 3.
2. The joint legislative income tax credit review committee, the joint legislative budget committee staff and the legislative staff in order to comply with the requirements of section 43-221.
I. The department may disclose the aggregate amounts of any tax credit, tax deduction or tax exemption enacted after January 1, 1994. Information subject to disclosure under this subsection shall not be disclosed if a taxpayer demonstrates to the department that such information would give an unfair advantage to competitors.
J. Except as provided in section 42-2002, subsection C, confidential information, described in section 42-2001, paragraph 1, subdivision (a), item (ii), may be disclosed to law enforcement agencies for law enforcement purposes.
K. The department may provide transaction privilege tax license information to property tax officials in a county for the purpose of identification and verification of the tax status of commercial property.
L. The department may provide transaction privilege tax, luxury tax, use tax, property tax and severance tax information to the ombudsman-citizens aide pursuant to title 41, chapter 8, article 5.
M. Except as provided in section 42-2002, subsection D, a court may order the department to disclose confidential information pertaining to a party to an action. An order shall be made only on a showing of good cause and that the party seeking the information has made demand on the taxpayer for the information.
N. This section does not prohibit the disclosure by the department of any information or documents submitted to the department by a bingo licensee. Before disclosing the information, the department shall obtain the name and address of the person requesting the information.
O. If the department is required or allowed to disclose confidential information, it may charge the person or agency requesting the information for the reasonable cost of its services.
P. Except as provided in section 42-2002, subsection D, the department of revenue shall release confidential information as requested by the department of economic security pursuant to section 42-1122 or 46-291. Information disclosed under this subsection is limited to the same type of information that the United States internal revenue service is authorized to disclose under section 6103(l)(6) of the internal revenue code.
Q. Except as provided in section 42-2002, subsection D, the department shall release confidential information as requested by the courts and clerks of the court pursuant to section 42-1122.
R. To comply with the requirements of section 42-5031, the department may disclose to the state treasurer, to the county stadium district board of directors and to any city or town tax official that is part of the county stadium district confidential information attributable to a taxpayer's business activity conducted in the county stadium district.
S. The department shall release to the attorney general confidential information as requested by the attorney general for purposes of determining compliance with or enforcing any of the following:
1. Any public health control law relating to tobacco sales as provided under title 36, chapter 6, article 14.
2. Any law relating to reduced cigarette ignition propensity standards as provided under title 37, chapter 9, article 5.
3. Sections 44-7101 and 44-7111, the master settlement agreement referred to in those sections and all agreements regarding disputes under the master settlement agreement.
T. For proceedings before the department, the office of administrative hearings, the state board of tax appeals or any state or federal court involving penalties that were assessed against a return preparer, an electronic return preparer or a payroll service company pursuant to section 42-1103.02, 42-1125.01 or 43-419, confidential information may be disclosed only before the judge or administrative law judge adjudicating the proceeding, the parties to the proceeding and the parties' representatives in the proceeding prior to its introduction into evidence in the proceeding. The confidential information may be introduced as evidence in the proceeding only if the taxpayer's name, the names of any dependents listed on the return, all social security numbers, the taxpayer's address, the taxpayer's signature and any attachments containing any of the foregoing information are redacted and if either:
1. The treatment of an item reflected on such a return is or may be related to the resolution of an issue in the proceeding.
2. Such a return or the return information relates or may relate to a transactional relationship between a person who is a party to the proceeding and the taxpayer that directly affects the resolution of an issue in the proceeding.
3. The method of payment of the taxpayer's withholding tax liability or the method of filing the taxpayer's withholding tax return is an issue for the period.
U. The department and attorney general may share the information specified in subsection S of this section with any of the following:
1. Federal, state or local agencies located in this state for the purposes of enforcement of the statutes or agreements specified in subsection S of this section or for the purposes of enforcement of corresponding laws of other states.
2. Indian tribes located in this state for the purposes of enforcement of the statutes or agreements specified in subsection S of this section.
3. A court, arbitrator, data clearinghouse or similar entity for the purpose of assessing compliance with or making calculations required by the master settlement agreement or agreements regarding disputes under the master settlement agreement, and with counsel for the parties or expert witnesses in any such proceeding, if the information otherwise remains confidential.
V. The department may provide the name and address of qualifying hospitals and qualifying health care organizations, as defined in section 42-5001, to a business that is classified and reporting transaction privilege tax under the utilities classification.
W. The department may disclose to an official of any city, town or county in a current agreement or considering a prospective agreement with the department as described in section 42-5032.02, subsection G any information relating to amounts that are subject to distribution and that are required by section 42-5032.02. Information disclosed by the department under this subsection:
1. May be used only by the city, town or county for internal purposes.
2. May not be disclosed to the public in any manner that does not comply with confidentiality standards established by the department. The city, town or county must agree with the department in writing that any release of confidential information that violates the confidentiality standards will result in the immediate suspension of any rights of the city, town or county to receive information under this subsection.
X. Notwithstanding any other provision of this section, the department may not disclose information provided by an online lodging marketplace, as defined in section 42-5076, without the written consent of the online lodging marketplace, and the information may be disclosed only pursuant to subsection A, paragraphs 1 through 6, 8 and 10, subsection B, paragraphs 1, 2, 7 and 8 and subsections C, D and G of this section. Such information:
1. Is not subject to disclosure pursuant to title 39, relating to public records.
2. May not be disclosed to any agency of this state or of any county, city, town or other political subdivision of this state.
Sec. 5. 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 43-1079.01, 43-1088, 43-1089.04, 43-1167.01 and 43-1175.
2. For years ending in 1 and 6, sections 43-1072.02, 43-1074.02, 43-1075, 43-1076.01, 43-1077, 43-1078, 43-1083, 43-1083.02, 43-1162, 43-1164.03 and 43-1183.
3. For years ending in 2 and 7, sections 43-1073, 43-1082, 43-1085, 43-1086, 43-1089, 43-1089.01, 43-1089.02, 43-1089.03, 43-1164, 43-1165, and 43-1181.
4. For years ending in 3 and 8, sections 43-1074.01, 43-1168, 43-1170 and 43-1178.
5. For years ending in 4 and 9, sections 43-1073.01, 43-1080, 43-1081.01, 43-1083.03, 43-1084, 43-1164.04, 43-1164.05, 43-1166 and 43-1184.
Sec. 6. Title 43, chapter 10, article 5, Arizona Revised Statutes, is amended by adding section 43-1080, to read:
43-1080. Credit for rural fund capital investments; rules; definitions
A. For taxable years beginning from and after December 31, 2024, a credit is allowed against the tax liability imposed pursuant to this chapter for credit-eligible capital investments to a rural fund as certified by the Arizona commerce authority pursuant to section 41-1515.
B. The amount of the credit for the taxable year is an amount equal to the applicable percentage for the credit allowance date multiplied by the purchase price paid to the rural fund for the capital investment. To claim the credit, the taxpayer must submit a copy of the Arizona commerce authority certification provided pursuant to section 41-1515 with each year's tax return.
C. If the amount of the allowable credit for a taxable year exceeds the amount of tax due, the amount of the claim not used to offset the tax may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' tax liability.
D. If the Arizona commerce authority Recaptures the credit certificate and related capital investment authority pursuant to section 41-1515, subsection K, the department shall disallow any further credits claimed by the taxpayer.
E. Co-owners of a business, including partners in a partnership, members of a limited liability company and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, may each claim the pro rata share of the tax credit allowed under this section based on ownership interests. The total amount of the tax credits allowed all such owners may not exceed the amount that would have been allowed a sole owner.
F. The department, with the cooperation of the Arizona commerce authority, shall adopt rules and prescribe forms to administer this section.
G. For the purposes of this section, "applicable percentage", "capital investment", "credit allowance date" and "purchase price" have the same meanings prescribed in section 41-1515.
Sec. 7. Title 43, chapter 11, article 6, Arizona Revised Statutes, is amended by adding section 43-1166, to read:
43-1166. Credit for rural fund capital investments; definitions
A. For taxable years beginning from and after December 31, 2024, a credit is allowed against the tax liability imposed pursuant to this chapter for credit-eligible capital investments to a rural fund as certified by the Arizona commerce authority pursuant to section 41-1515.
B. The amount of the credit for the taxable year is an amount equal to the applicable percentage for the credit allowance date multiplied by the purchase price paid to the rural fund for the capital investment. To claim the credit, the taxpayer must submit a copy of the Arizona commerce authority certification provided pursuant to section 41-1515 with each year's tax return.
C. If the amount of the allowable credit for a taxable year exceeds the amount of tax due, the amount of the claim not used to offset the tax may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' tax liability.
D. If the Arizona commerce authority Recaptures the credit certificate and related capital investment authority pursuant to section 41-1515, subsection K, the department shall disallow any further credits claimed by the taxpayer.
E. Co-owners of a business, including corporate partners in a partnership, may each claim the pro rata share of the tax credit allowed under this section based on ownership interests. The total amount of the tax credits allowed all such owners may not exceed the amount that would have been allowed a sole owner.
F. The department, with the cooperation of the Arizona commerce authority, shall adopt rules and prescribe forms to administer this section.
G. For the purposes of this section, "applicable percentage", "capital investment", "credit allowance date" and "purchase price" have the same meanings prescribed in section 41-1515.
Sec. 8. Purpose
Pursuant to section 43-223, Arizona Revised Statutes, the legislature enacts sections 43-1080 and 43-1166, Arizona Revised Statutes, as added by this act, to encourage capital investments to grow the economy in rural areas in this state by attracting new business, stimulating the growth of existing business and creating jobs in rural areas.
