Bill Text: AZ HB2151 | 2012 | Fiftieth Legislature 2nd Regular | Engrossed
Bill Title: Voluntary classification settlement program
Spectrum: Partisan Bill (Republican 4-0)
Status: (Engrossed - Dead) 2012-03-19 - Senate majority caucus: Hold [HB2151 Detail]
Download: Arizona-2012-HB2151-Engrossed.html
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House Engrossed |
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State of Arizona House of Representatives Fiftieth Legislature Second Regular Session 2012
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HOUSE BILL 2151 |
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AN ACT
Amending Title 43, chapter 4, Arizona Revised Statutes, by adding article 4; relating to the VOLUNTARY CLASSIFICATION SETTLEMENT PROGRAM.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 43, chapter 4, Arizona Revised Statutes, is amended by adding article 4, to read:
ARTICLE 4. VOLUNTARY CLASSIFICATION SETTLEMENT PROGRAM
43-441. Definitions
In this article, unless the context otherwise requires:
1. "Employment tax" includes both employee income taxes and unemployment taxes.
2. "Program" means the voluntary classification settlement program that is established by this article.
3. "Taxpayer" means an employer, as defined in section 43-402, that is required to withhold taxes from employees pursuant to section 43-401.
4. "Worker" means an individual who provides services for an employer and who the employer has treated for tax purposes as a nonemployee.
43-442. Voluntary classification settlement program; program termination
A. The department shall establish the voluntary classification settlement program. Under the program, the department shall allow a taxpayer to voluntarily reclassify workers as employees for state employment tax purposes, obtain relief from potential tax penalties and pay limited state employment tax for the past treatment of workers as nonemployees.
B. The department shall adopt rules necessary to administer the program.
C. To participate in the voluntary classification settlement program, the taxpayer must:
1. Meet the program requirements under section 43-443 and any other requirements that are established by department rule.
2. Submit an application in a form established by the department.
3. Enter into a program closing agreement with the department.
D. The program established by this section ends on July 1, 2022 pursuant to section 41-3102.
43-443. Program eligibility; requirements
All of the following must apply for a taxpayer to be eligible for the program:
1. The taxpayer consistently treated similarly situated workers as nonemployees.
2. The taxpayer filed all required 1099 forms with the internal revenue service for the workers for the three tax years preceding the calendar year in which the taxpayer applies to the program.
3. The taxpayer currently is not under an audit by the department or by the federal internal revenue service.
4. The taxpayer currently is not under an audit by any state or federal agency regarding the classification of workers.
5. The taxpayer agrees to voluntarily reclassify workers as employees for purposes of state employment taxes.
6. The taxpayer agrees to extend the period of limitations on assessment of employment taxes for three years for the first, second and third calendar years after the date the taxpayer elects to begin treating workers as employees under the program.
43-444. Program application
A. To participate in the program, the taxpayer shall apply on a form prescribed by the department. The department shall make the application form available within thirty days after the effective date of this section.
B. The taxpayer shall sign the application under penalty of perjury. The taxpayer's representative shall not sign the application on behalf of the taxpayer. By signing the application, the taxpayer is affirming that the taxpayer is eligible for the program and that all the information in the application is true and correct to the best of the taxpayer's knowledge. If the taxpayer is:
1. A sole proprietorship, the application shall be signed and dated by the individual who owns the business.
2. A corporation or a limited liability company that is treated as a corporation, the application shall be signed and dated by the president, vice-president, treasurer, assistant treasurer, chief accounting officer or any other corporate officer who is authorized to sign tax documents.
3. A partnership, the application shall be signed and dated by a general partner.
4. A limited liability company that is classified as a partnership, the application shall be signed by a member or manager who is authorized to sign the limited liability company's tax forms.
C. The taxpayer may reclassify all or any portion of its workers, but the taxpayer must reclassify all workers in the same class who perform the same duties.
D. After the taxpayer submits the application, the department shall review the application and determine the taxpayer's eligibility.
E. The department shall establish rules that:
1. Provide the taxpayer an opportunity to submit supplemental information to the department if the initial application is incomplete.
2. Allow the taxpayer to appeal a determination by the department if the department rejects the application.
43-445. Program closing agreement; benefits
A. If the department determines that the taxpayer is eligible for the program, the taxpayer shall:
1. Sign and return a program closing agreement to the department.
2. Include with the program closing agreement a payment in the amount of ten per cent of the amount of employment tax liability that would have been due on the compensation paid to the workers for the most recently closed tax year.
B. A taxpayer that participates in the program and complies with all program requirements is not subject to:
1. Liability for any interest or penalties.
2. An employment tax audit with respect to the classification of workers for the years prior to participating in the program.
43-446. Sharing of program information
The department of revenue shall coordinate and share information with the department of economic security as necessary in order to administer the program. The department of revenue shall not share information about taxpayers that apply for the program with any agency of the federal government unless otherwise required by law or court order.
