Bill Text: AZ SB1102 | 2019 | Fifty-fourth Legislature 1st Regular | Introduced
Bill Title: Tax credit; public school projects
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2019-01-23 - Senate read second time [SB1102 Detail]
Download: Arizona-2019-SB1102-Introduced.html
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REFERENCE TITLE: tax credit; public school projects |
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State of Arizona Senate Fifty-fourth Legislature First Regular Session 2019
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SB 1102 |
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Introduced by Senators Carter: Brophy McGee
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AN ACT
amending title 15, chapter 10, Arizona Revised Statutes, by adding article 13; amending title 20, chapter 2, article 1, Arizona Revised Statutes, by adding section 20‑224.08; repealing section 20‑224.08, Arizona Revised Statutes; amending sections 43‑222 and 43‑1021, Arizona Revised Statutes; amending title 43, chapter 10, article 5, Arizona Revised Statutes, by adding section 43‑1077; repealing section 43‑1077, Arizona Revised Statutes; amending section 43‑1121, Arizona Revised Statutes; amending title 43, chapter 11, article 6, Arizona Revised Statutes, by adding section 43‑1177; repealing section 43‑1177, Arizona Revised Statutes; relating to tax credits.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 15, chapter 10, Arizona Revised Statutes, is amended by adding article 13, to read:
ARTICLE 13. PUBLIC SCHOOL INNOVATION PROJECT PROGRAM
15-1271. Public school innovation project program; selection committee; grants; annual report; committee termination
A. The public school innovation project program is established to fund innovative education projects in public schools.
B. The department of education shall establish an innovation project selection committee that awards project funding on a competitive grant basis. Grants may be awarded to school districts or charter schools for innovative education projects that have a proven track record of success, as prescribed by the innovation project selection committee, of Improving student achievement and Relating technology, instructional delivery and material.
C. The innovation project selection committee consists of seven members who are chosen by the department of education.
D. The innovation project selection committee, with the approval of the department of education, shall prescribe the innovation project evaluation criteria, the form of the innovation project application and the application procedures.
E. For each grant the innovation project selection committee awards, the selection committee shall notify the department of education of the recipient of the grant, the amount awarded and any other information the department requests to enable the department to pay the grant to the grantee.
F. For five years after receiving a project grant and longer if requested by the department of education, each grantee must submit a report to the selection committee and the department on the grantee's use of the grant monies and project status and results on or before June 30 of each year following receipt of the project grant.
G. The committee established by this section ends on July 1, 2024 pursuant to section 41‑3103.
15-1272. Public school innovation project fund; exemption; grants
A. The public school innovation project fund is established consisting of monies received by the department of education pursuant to sections 20‑224.08, 43‑1077 and 43‑1177. The department shall administer the fund and shall use monies in the fund to provide grants for public school innovation projects selected by the innovation project selection committee.
B. The department of education may use not more than ten percent of the monies in the fund for administrative purposes.
C. Notwithstanding any other law, the department of education shall deposit, pursuant to sections 35‑146 and 35‑147, monies it receives pursuant to this section in the public school innovation project fund. On notice from the department, the state treasurer shall invest and divest monies in the fund as provided by section 35‑313, and monies earned from investment shall be credited to the fund. The monies in the fund are exempt from section 35‑190 relating to the lapsing of appropriations.
D. The department of education shall pay to the grantee a project grant from the fund within thirty days after receiving notice from the selection committee under section 15‑1271, subsection E.
15-1273. Public school innovation projects; reports
A. The department of education shall provide the selection committee with a quarterly report of the fund, including the total amount of grant monies awarded and the fund balance.
B. The department of education shall provide an annual report on or before September 30 to the department of revenue, in a form prescribed by the department of revenue, separately compiled and identified for the purposes of sections 20‑224.08, 43‑1077 and 43‑1177, with the following information for the previous fiscal year:
1. The total dollar amount of contributions received.
2. The total number of contributions received.
3. The name of each taxpayer and the amount of the taxpayer's contribution.
4. The total number of grants awarded.
5. The total dollar amount of administrative expenses.
C. The department of education shall provide an annual report on or before October 31 to the president of the senate and the speaker of the house of representatives that includes all the information required under subsection B of this section and a description of each project that applied for a grant, the reasons the project was awarded or rejected for a grant and the projects awarded a grant during the previous calendar year. The department shall include in its report the project status and the project results for each grantee project for a period of five years after the grant was awarded and every two years thereafter.
15-1274. Program termination
The program established by this article ends on July 1, 2024 pursuant to section 41‑3102.
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 public school innovation project
A. A credit is allowed against the premium tax liability incurred by an insurer pursuant to section 20‑224, 20‑837, 20‑1010, 20‑1060 or 20‑1097.07 for the amount of voluntary cash contributions made by the insurer during the tax year to the public school innovation project fund established by section 15‑1272.
B. The amount of the credit is the total amount of the insurer's contributions for the tax year under subsection A of this section that is preapproved by the department of revenue pursuant to section 43‑1177, subsection D.
C. If the allowable amount of a credit under this section 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 as a credit against the insurer's subsequent years' premium tax liability for a period not to exceed five taxable years.
D. An insurer that claims a tax credit against state premium tax liability is not required to pay any additional retaliatory tax imposed pursuant to section 20‑230 as a result of claiming that tax credit.
E. The department of insurance, with the cooperation of the department of revenue, shall adopt rules necessary to administer this section.
Sec. 3. Delayed repeal
Section 20‑224.08, Arizona Revised Statutes, as added by this act, is repealed from and after June 30, 2024.
Sec. 4. 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, 43‑1087, 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, 43‑1083, 43‑1083.02, 43‑1164.03 and 43‑1183.
3. For years ending in 2 and 7, sections 43‑1073, 43‑1080, 43‑1085, 43‑1086, 43‑1089, 43‑1089.01, 43‑1089.02, 43-1089.03, 43‑1164, 43‑1169 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, 43‑1077, 43‑1081.01, 43‑1083.04, 43‑1084, 43‑1162, 43‑1164.05, 43‑1170.01, 43‑1177 and 43-1184 and, beginning in 2019, sections 43‑1083.03 and 43‑1164.04.
Sec. 5. Section 43-1021, Arizona Revised Statutes, is amended to read:
43-1021. Addition to Arizona gross income
In computing Arizona adjusted gross income, the following amounts shall be added to Arizona gross income:
1. A beneficiary's share of the fiduciary adjustment to the extent that the amount determined by section 43‑1333 increases the beneficiary's Arizona gross income.
2. An amount equal to the ordinary income portion of a lump sum distribution that was excluded from federal adjusted gross income pursuant to the special rule for individuals who attained fifty years of age before January 1, 1986 under Public Law 99‑514, section 1122(h)(3).
3. The amount of interest income received on obligations of any state, territory or possession of the United States, or any political subdivision thereof, located outside the state of Arizona, reduced, for taxable years beginning from and after December 31, 1996, by the amount of any interest on indebtedness and other related expenses that were incurred or continued to purchase or carry those obligations and that are not otherwise deducted or subtracted in arriving at Arizona gross income.
4. The excess of a partner's share of partnership taxable income required to be included under chapter 14, article 2 of this title over the income required to be reported under section 702(a)(8) of the internal revenue code.
5. The excess of a partner's share of partnership losses determined pursuant to section 702(a)(8) of the internal revenue code over the losses allowable under chapter 14, article 2 of this title.
6. Any amount of agricultural water conservation expenses that were deducted pursuant to the internal revenue code for which a credit is claimed under section 43‑1084.
7. The amount by which the depreciation or amortization computed under the internal revenue code with respect to property for which a credit was taken under section 43‑1080 exceeds the amount of depreciation or amortization computed pursuant to the internal revenue code on the Arizona adjusted basis of the property.
8. The amount by which the adjusted basis computed under the internal revenue code with respect to property for which a credit was claimed under section 43‑1080 and that is sold or otherwise disposed of during the taxable year exceeds the adjusted basis of the property computed under section 43‑1080.
9. The amount by which the depreciation or amortization computed under the internal revenue code with respect to property for which a credit was taken under either section 43‑1081 or 43‑1081.01 exceeds the amount of depreciation or amortization computed pursuant to the internal revenue code on the Arizona adjusted basis of the property.
10. The amount by which the adjusted basis computed under the internal revenue code with respect to property for which a credit was claimed under section 43‑1074.02, 43‑1081 or 43‑1081.01 and that is sold or otherwise disposed of during the taxable year exceeds the adjusted basis of the property computed under section 43‑1074.02, 43‑1081 or 43‑1081.01, as applicable.
11. The deduction referred to in section 1341(a)(4) of the internal revenue code for restoration of a substantial amount held under a claim of right.
12. The amount by which a net operating loss carryover or capital loss carryover allowable pursuant to section 1341(b)(5) of the internal revenue code exceeds the net operating loss carryover or capital loss carryover allowable pursuant to section 43‑1029, subsection F.
13. Any wage expenses deducted pursuant to the internal revenue code for which a credit is claimed under section 43‑1087 and representing net increases in qualified employment positions for employment of temporary assistance for needy families recipients.
14. The amount of any depreciation allowance allowed pursuant to section 167(a) of the internal revenue code to the extent not previously added.
15. The amount of a nonqualified withdrawal, as defined in section 15‑1871, from a college savings plan established pursuant to section 529 of the internal revenue code that is made to a distributee to the extent the amount is not included in computing federal adjusted gross income, except that the amount added under this paragraph shall not exceed the difference between the amount subtracted under section 43‑1022 in prior taxable years and the amount added under this section in any prior taxable years.
16. The amount of discharge of indebtedness income that is deferred and excluded from the computation of federal adjusted gross 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).
17. The amount of any previously deferred original issue discount that was deducted in computing federal adjusted gross income in the current 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 subtracted from Arizona gross income pursuant to section 43‑1022, paragraph 22.
18. If a subtraction is or has been taken by the taxpayer under section 43‑1024, in the current or a prior taxable year for the full amount of eligible access expenditures paid or incurred to comply with the requirements of the Americans with disabilities act of 1990 (P.L. 101‑336) or title 41, chapter 9, article 8, any amount of eligible access expenditures that is recognized under the internal revenue code, including any amount that is amortized according to federal amortization schedules, and that is included in computing taxable income for the current taxable year.
19. For taxable years beginning from and after December 31, 2017, the amount of any net capital loss included in Arizona gross income for the taxable year that is derived from the exchange of one kind of legal tender for another kind of legal tender. For the purposes of this paragraph:
(a) "Legal tender" means a medium of exchange, including specie, that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues.
(b) "Specie" means coins having precious metal content.
20. Any amount deducted pursuant to section 170 of the internal revenue code representing contributions to a public school for which a credit is claimed under section 43‑1177.
Sec. 6. Title 43, chapter 10, article 5, Arizona Revised Statutes, is amended by adding section 43-1077, to read:
43-1077. Credit for public school innovation project
A. A credit is allowed against the taxes imposed by this title for the amount of voluntary cash contributions by the taxpayer or on the taxpayer's behalf during the taxable year to the public school innovation project fund established by section 15‑1272. Except as provided by subsection C of this section, the amount of the credit may not exceed:
1. $500 in any taxable year for a single individual or a head of household.
2. $1,000 in any taxable year for a married couple filing a joint return.
B. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one‑half of the tax credit that would have been allowed for a joint return.
C. For each taxable year beginning on or after January 1, the department shall adjust the dollar amounts prescribed by subsection A, paragraphs 1 and 2 of this section according to the average annual change in the metropolitan Phoenix consumer price index published by the United States bureau of labor statistics, except that the dollar amounts may not be revised downward below the amounts allowed in the prior taxable year. The revised dollar amounts shall be raised to the nearest whole dollar.
D. If the allowable tax credit exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the taxpayer may carry the amount of the claim not used to offset the taxes under this title forward for not more than five consecutive taxable years' income tax liability.
E. The credit allowed by this section is in lieu of any deduction pursuant to section 170 of the internal revenue code and taken for state tax purposes.
Sec. 7. Delayed repeal
Section 43‑1077, Arizona Revised Statutes, as added by this act, is repealed from and after June 30, 2024.
Sec. 8. Section 43-1121, Arizona Revised Statutes, is amended to read:
43-1121. Additions to Arizona gross income; corporations
In computing Arizona taxable income for a corporation, the following amounts shall be added to Arizona gross income:
1. The amount of interest income received on obligations of any state, territory or possession of the United States, or any political subdivision thereof, located outside this state, reduced, for taxable years beginning from and after December 31, 1996, by the amount of any interest on indebtedness and other related expenses that were incurred or continued to purchase or carry those obligations and that are not otherwise deducted or subtracted in arriving at Arizona gross income.
2. The excess of a partner's share of partnership taxable income required to be included under chapter 14, article 2 of this title over the income required to be reported under section 702(a)(8) of the internal revenue code.
3. The excess of a partner's share of partnership losses determined pursuant to section 702(a)(8) of the internal revenue code over the losses allowable under chapter 14, article 2 of this title.
4. The amount of any depreciation allowance allowed pursuant to section 167(a) of the internal revenue code to the extent not previously added.
5. The amount of discharge of indebtedness income that is deferred and excluded from the computation of 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).
6. The amount of any previously deferred original issue discount that was deducted in computing federal taxable income in the current 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 subtracted from Arizona gross income pursuant to section 43‑1122, paragraph 6.
7. The amount of dividend income received from corporations and allowed as a deduction pursuant to sections 243 and 245 of the internal revenue code.
8. Taxes that are based on income paid to states, local governments or foreign governments and that were deducted in computing federal taxable income.
9. Expenses and interest relating to tax‑exempt income on indebtedness incurred or continued to purchase or carry obligations the interest on which is wholly exempt from the tax imposed by this title. Financial institutions, as defined in section 6‑101, shall be governed by section 43‑961, paragraph 2.
10. Commissions, rentals and other amounts paid or accrued to a domestic international sales corporation controlled by the payor corporation if the domestic international sales corporation is not required to report its taxable income to this state because its income is not derived from or attributable to sources within this state. If the domestic international sales corporation is subject to article 4 of this chapter, the department shall prescribe by rule the method of determining the portion of the commissions, rentals and other amounts that are paid or accrued to the controlled domestic international sales corporation and that shall be deducted by the payor. For the purposes of this paragraph, "control" means direct or indirect ownership or control of fifty percent or more of the voting stock of the domestic international sales corporation by the payor corporation.
11. The amount of net operating loss taken pursuant to section 172 of the internal revenue code.
12. The amount of exploration expenses determined pursuant to section 617 of the internal revenue code to the extent that they exceed seventy‑five thousand dollars $75,000 and to the extent that the election is made to defer those expenses not in excess of seventy‑five thousand dollars $75,000.
13. Amortization of costs incurred to install pollution control devices and deducted pursuant to the internal revenue code or the amount of deduction for depreciation taken pursuant to the internal revenue code on pollution control devices for which an election is made pursuant to section 43‑1129.
14. The amount of depreciation or amortization of costs of child care facilities deducted pursuant to section 167 or 188 of the internal revenue code for which an election is made to amortize pursuant to section 43‑1130.
15. The loss 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 by which the depreciation or amortization computed under the internal revenue code with respect to property for which a credit was taken under section 43‑1169 exceeds the amount of depreciation or amortization computed pursuant to the internal revenue code on the Arizona adjusted basis of the property.
17. The amount by which the adjusted basis computed under the internal revenue code with respect to property for which a credit was claimed under section 43‑1169 and that is sold or otherwise disposed of during the taxable year exceeds the adjusted basis of the property computed under section 43‑1169.
18. The amount by which the depreciation or amortization computed under the internal revenue code with respect to property for which a credit was taken under either section 43‑1170 or 43‑1170.01 exceeds the amount of depreciation or amortization computed pursuant to the internal revenue code on the Arizona adjusted basis of the property.
19. The amount by which the adjusted basis computed under the internal revenue code with respect to property for which a credit was claimed under either section 43‑1170 or 43‑1170.01 and that is sold or otherwise disposed of during the taxable year exceeds the adjusted basis of the property computed under section 43‑1170 or 43‑1170.01, as applicable.
20. The deduction referred to in section 1341(a)(4) of the internal revenue code for restoration of a substantial amount held under a claim of right.
21. The amount by which a capital loss carryover allowable pursuant to section 1341(b)(5) of the internal revenue code exceeds the capital loss carryover allowable pursuant to section 43‑1130.01, subsection F.
22. Any wage expenses deducted pursuant to the internal revenue code for which a credit is claimed under section 43‑1175 and representing net increases in qualified employment positions for employment of temporary assistance for needy families recipients.
23. Any amount of expenses that were deducted pursuant to the internal revenue code and for which a credit is claimed under section 43‑1178.
24. The amount of any deduction that is claimed in computing Arizona gross income and that represents a donation of a school site for which a credit is claimed under section 43‑1181.
25. Any amount deducted pursuant to section 170 of the internal revenue code representing contributions to a school tuition organization or a public school for which a credit is claimed under section 43‑1177, 43‑1183 or 43‑1184.
26. If a subtraction is or has been taken by the taxpayer under section 43‑1124, in the current or a prior taxable year for the full amount of eligible access expenditures paid or incurred to comply with the requirements of the Americans with disabilities act of 1990 (P.L. 101‑336) or title 41, chapter 9, article 8, any amount of eligible access expenditures that is recognized under the internal revenue code, including any amount that is amortized according to federal amortization schedules, and that is included in computing Arizona taxable income for the current taxable year.
27. For taxable years beginning from and after December 31, 2017, the amount of any net capital loss included in Arizona gross income for the taxable year that is derived from the exchange of one kind of legal tender for another kind of legal tender. For the purposes of this paragraph:
(a) "Legal tender" means a medium of exchange, including specie, that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues.
(b) "Specie" means coins having precious metal content.
Sec. 9. Title 43, chapter 11, article 6, Arizona Revised Statutes, is amended by adding section 43-1177, to read:
43-1177. Credit for public school innovation project
A. A credit is allowed against the taxes imposed by this title for the amount of voluntary cash contributions made by the taxpayer during the taxable year to the public school innovation project fund established by section 15‑1272.
B. The amount of the credit is the total amount of the taxpayer's contributions for the taxable year under subsection A of this section that is preapproved by the department of revenue pursuant to subsection d of this section.
C. The department of revenue:
1. May not allow tax credits under this section and section 20‑224.08 that exceed in the aggregate a combined total of $5,000,000 in any fiscal year.
2. Shall preapprove tax credits under this section and section 20‑224.08 subject to subsection D of this section.
3. Shall allow the tax credits under this section and section 20‑224.08 on a first‑come, first‑served basis.
D. For the purposes of subsection C, paragraph 2 of this section, before making a contribution to the public school innovation project fund, the taxpayer under this title or title 20 must notify the department of education of the total amount of the contribution that the taxpayer intends to make to the fund. Before accepting the contribution, the department of education shall request preapproval from the department of revenue for the taxpayer's intended contribution amount. The department of revenue shall preapprove or deny the requested amount within twenty days after receiving the request from the department of education. If the department of revenue preapproves the request, the department of education shall immediately notify the taxpayer that the requested amount was preapproved by the department of revenue. In order to receive a tax credit under this subsection, the taxpayer shall make the contribution to the public school innovation project fund within twenty days after receiving notice from the department of education that the requested amount was preapproved. If the department of education does not receive the preapproved contribution from the taxpayer within the required twenty days, the department of education shall immediately notify the department of revenue, which may no longer include this preapproved contribution amount when calculating the limit prescribed in subsection C, paragraph 1 of this section.
E. If the allowable tax credit exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the taxpayer may carry the amount of the claim not used to offset the taxes under this title forward for not more than five consecutive taxable years' income tax liability.
F. Co-owners of a business, including corporate partners in a partnership, may each claim only the pro rata share of the credit allowed under this section based on the ownership interest. The total of the credits allowed all such owners may not exceed the amount that would have been allowed a sole owner.
G. The credit allowed by this section is in lieu of any deduction pursuant to section 170 of the internal revenue code and taken for state tax purposes.
h. The department of revenue shall adopt rules necessary to administer this section.
Sec. 10. Delayed repeal
Section 43-1177, Arizona Revised Statutes, as added by this act, is repealed from and after June 30, 2024.
Sec. 11. Purpose
Pursuant to section 43-223, Arizona Revised Statutes, the purpose of sections 43-1077 and 43-1177, Arizona Revised Statutes, as added by this act, is to encourage the implementation of innovative education projects in the public schools in this state.
