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REFERENCE TITLE: department of revenue; revenue changes |
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State of Arizona Senate Forty-ninth Legislature Second Regular Session 2010
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SB 1221 |
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Introduced by Senator Garcia
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AN ACT
Amending title 6, Arizona Revised Statutes, by adding chapter 16; amending sections 42‑1004, 42‑1114, 42‑1129 and 42‑1201, Arizona Revised Statutes; amending title 42, chapter 1, article 5, Arizona Revised Statutes, by adding section 42‑1207; amending sections 42‑2066, 42‑5005 and 42‑5017, Arizona Revised Statutes; amending title 43, chapter 4, article 3, Arizona Revised Statutes, by adding section 43‑436; making appropriations; relating to the department of revenue.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 6, Arizona Revised Statutes, is amended by adding chapter 16, to read:
CHAPTER 16
FINANCIAL INSTITUTIONS DATA MATCH AND DATA EXCHANGE
ARTICLE 1. GENERAL PROVISIONS
6-1601. Financial institutions data match and data exchange; surrender of assets of delinquent taxpayer; nonliability
A. Financial institutions may enter into agreements with the department of revenue for data match and data exchange as prescribed by section 42-1207.
B. On receipt of a notice of levy, a financial institution shall encumber or surrender, as appropriate, assets held by the financial institution on behalf of a delinquent taxpayer. If the financial institution receives two notices of levy on the same day for the same person, a levy issued to collect child support pursuant to section 25-521 has priority over a levy issued pursuant to this section.
C. Notwithstanding any other law, a financial institution is not subject to civil liability for either:
1. Disclosing to the department of revenue or its agent a person's financial record pursuant to section 42-1207 or any acts of omission that are inadvertent and made in good faith.
2. Encumbering or surrendering any assets held by the financial institution in response to a notice of levy that is issued by the department of revenue or for any action taken in good faith to comply with this section.
D. The remedy under subsection B of this section is limited to collection of delinquent taxes, penalties and interest. END_STATUTE
Sec. 2. Section 42-1004, Arizona Revised Statutes, is amended to read:
42-1004. General powers and duties of the department; res judicata; remedies; enforcement; special collections account
A. The department shall administer and enforce the provisions of this title, title 43 and other laws assigned to it and has all the powers and duties prescribed by law for such purposes. In all proceedings prescribed by law, the department may act on behalf of this state. In addition, the department shall:
1. Formulate policies, plans and programs to effectuate the missions and purposes of the department.
2. Employ and remove personnel subject to the provisions of title 41, chapter 4, articles 5 and 6, determine the conditions of employment and prescribe the duties and powers of administrative, professional, technical, secretarial, clerical and other personnel as may be necessary in the performance of its duties, and contract for the services of outside advisors, consultants and aides as may be reasonably necessary.
3. Make contracts and incur obligations within the general scope of its activities and operations subject to the availability of its funds.
4. Contract with or assist other departments, agencies or institutions of the state, local, Indian tribal and federal governments in the furtherance of its purposes, objectives and programs.
5. Accept grants, matching funds and direct payments from public or private agencies for the conduct of programs which are consistent with the overall purposes and objectives of the department.
6. Provide information and advice within the scope of its duties subject to the laws on confidentiality of information and departmental rules adopted pursuant to such laws.
7. Advise with and make recommendations to the governor and the legislature on all matters concerning its objectives.
8. Have an official seal which shall be judicially noticed.
9. Provide an integrated, coordinated and uniform system of tax administration and revenue collection for the state.
B. The department may:
1. With the approval of the attorney general:
(a) Abate any balance owed by a taxpayer if the balance is uncollectible. Related liens, if any, are extinguished on abatement.
(b) Abate all or part of the unpaid portion of any tax if the director determines that the administration and collection costs involved would exceed the amount of the tax.
2. Offer publications relating to the administration of state taxes for sale at a price equal to the pro rata cost of publication and distribution. Monies received from the sale of publications shall be placed in a revenue publications revolving fund. Monies in the fund:
(a) Shall be used to meet publication and distribution expenses.
(b) Are exempt from the provisions of section 35‑190 relating to lapsing of appropriations.
3. Enter into contingent fee contracts to collect delinquent state taxes, penalties and interest due under title 43 and chapter 5, article 1 of this title, consistent with the requirements of chapter 2, article 1 of this title. No contract may be entered into for:
(a) The collection of delinquent state taxes which exceed five hundred dollars for an individual resident, Arizona corporation or partnership.
(b) the hiring of auditors on a contingent fee basis except auditors that are hired to enforce the provisions of title 44, chapter 3.
C. In the determination of any issue of law or fact under this title or title 43, neither the department, nor any officer or agency having any administrative duties under this title or title 43, nor any court is bound by the determination of any other executive officer or administrative agency of this state. In the determination of any case arising under this title or title 43, the rule of res judicata is applicable only if the liability involved is for the same year or period as was involved in another case previously determined under this title or title 43.
D. The remedies of this state provided for in this title and title 43 are cumulative, and no action taken by the department constitutes an election by this state to pursue any remedy to the exclusion of any other remedy provided by law.
E. The attorney general shall prosecute in the name of this state all actions necessary to enforce this title and title 43. The attorney general may defend all actions brought against this state or an officer or agency of this state arising under this title and title 43. The attorney general may delegate the prosecuting authority to any county attorney for prosecution in that county.
F. A special collections account is established in the state general fund. All monies collected pursuant to contracts authorized by subsection B, paragraph 3 of this section shall be deposited in the special collections account. The department shall pay from the account all fees and court costs provided for in the contracts authorized under subsection B, paragraph 3 of this section. The department shall allocate the remainder of the amounts collected under subsection B, paragraph 3 of this section to the state or the political subdivision in the proportion that the monies would have been distributed pursuant to chapter 5 of this title or section 43‑206, respectively.
Sec. 3. Section 42-1114, Arizona Revised Statutes, is amended to read:
42-1114. Suit to recover taxes
A. The department may bring an action in the name of this state to recover the amount of any taxes, penalties and interest due and unpaid. The department of law shall prosecute the action. In the action a writ of attachment may be issued and no bond or affidavit previous to issuing the attachment is required. In the action, a certificate by the department of revenue showing the delinquency is prima facie evidence of the levy of the tax, of the delinquency and of the compliance by the department of revenue with all the provisions of law relating to the computation and levy of the tax.
B. The department of revenue may bring an appropriate action in any court of competent jurisdiction in the United States or any foreign country in the name of this state to recover the amount of any taxes, interest and penalties due. The department of law shall prosecute the action.
C. The action shall not commence more than six ten years after the amount of taxes determined to be due becomes final unless the taxpayer and the department extend the six ten year limitation or enforced collection has been stayed by operation of federal or state law. If enforced collection has been stayed, the period of limitations shall be extended by the period of time that the department was stayed from engaging in enforced collections. If an action is not commenced within the six ten year period or within the period extended by agreement, the lien of the tax is extinguished as provided in section 42‑1151.
Sec. 4. Section 42-1129, Arizona Revised Statutes, is amended to read:
42-1129. Payment of tax by electronic funds transfer or other immediately available monies
A. The department may require by rule, consistent with the state treasurer's cash management policies, that any taxpayer that owed twenty thousand dollars or more for the preceding taxable year in connection with any tax administered pursuant to this article, except individual income tax, shall pay the tax liability on or before the payment date prescribed by law in monies that are immediately available to the state on the date of the transfer as provided by subsection B of this section.
B. A payment in immediately available monies shall be made by electronic funds transfer, or any other means required by the department, with the state treasurer's approval, that ensures the availability of the monies to this state on the date of payment.
C. The taxpayer shall furnish evidence as prescribed by the department that the payment was remitted on or before the due date.
D. A failure to make a timely payment in immediately available monies as prescribed pursuant to this section by electronic funds transfer is subject to the civil penalties prescribed by section 42‑1125, subsection D a civil penalty equal to five per cent of the payment due.
Sec. 5. Section 42-1201, Arizona Revised Statutes, is amended to read:
42-1201. Levy and distraint; definition
A. If a person liable to pay any tax neglects or refuses to pay the tax, the department may collect the tax, and such other sums as are sufficient to cover the expenses of the levy, by levy upon:
1. All property and rights to property, except property exempt under section 42‑1204, belonging to the person or on which there is a lien as provided in article 4 of this chapter or section 42‑17153 for the payment of the tax.
2. The accrued salary or wages of any officer, employee or elected official of this state or its political subdivisions, or any agency or instrumentality of this state or its political subdivisions, by serving a notice of levy on:
(a) The department of administration in the case of state wages or salaries.
(b) The chief disbursing officer of a political subdivision of the state in the case of wages or salaries paid by the political subdivision.
B. The levy shall not be made more than six ten years after the amount of tax determined to be due becomes final. The taxpayer and the department may extend the six ten year limitation prescribed by this subsection for any length of time by executing a written agreement before the expiration of the six ten year limitation. If enforced collection has been stayed by operation of federal or state law, the period of limitations shall be extended by the period of time that the department was stayed from engaging in enforced collections.
C. As used in this chapter, "levy" includes the power of distraint and seizure by any means. Except as otherwise provided in subsection E or F of this section, a levy extends only to property possessed and obligations existing at the time of the levy or within twenty‑one days after the date of the levy. In any case in which the department may levy upon property or rights to property, it may seize and sell the property or rights to the property, whether real or personal, tangible or intangible.
D. If any property or right to property upon which a levy has been made under subsection A of this section is not sufficient to satisfy the claim of the department for which the levy is made, the department may as often as may be necessary proceed to levy in like manner upon any other property liable to levy of the person against whom such claim exists, until the amount due, together with all expenses, is fully paid.
E. The effect of a levy on salary or wages payable to or received by a taxpayer is continuous from the date the levy is first made until the liability out of which the levy arose is satisfied or becomes unenforceable.
F. With respect to a levy described in subsection E of this section, the department shall promptly release the levy when the liability out of which the levy arose is satisfied or becomes unenforceable and shall promptly notify the person upon whom the levy was made that the levy has been released.
Sec. 6. Title 42, chapter 1, article 5, Arizona Revised Statutes, is amended by adding section 42-1207, to read:
42-1207. Financial institutions data match; prohibited disclosure; civil liability; fee; definition
A. The department may enter into agreements with financial institutions that conduct business in this state to develop and operate a data match system to assist the department in the collection of delinquent taxes, penalties and interest. The data match system shall use automated data exchange procedures to the maximum extent possible.
B. Any data exchanges between financial institutions and the department under an agreement pursuant to subsection A shall occur quarterly. The data exchanges shall include the name, address of record, social security number or other taxpayer identification number and any other identifying information for each delinquent taxpayer who maintains an account at the institution and who owes delinquent taxes as identified by the department by name and social security number or other taxpayer identification number.
C. The department or its agent may only disclose a person's financial record under this section in order to enforce the collection of a person's delinquent tax obligation.
D. A department employee who knowingly or negligently discloses a person's financial records in violation of subsection C is subject to civil liability in an amount equal to the greater of either:
1. One thousand dollars for each act of unauthorized disclosure of a financial record with respect to which the department employee is found liable.
2. The sum of the actual damages sustained by the plaintiff as a result of the unauthorized disclosure and, in the case of a wilful disclosure or a disclosure that is the result of gross negligence, punitive damages, including costs and attorney fees.
E. The department may pay a reasonable fee to a financial institution for conducting a data match. The fee shall not exceed the actual costs incurred by the financial institution.
F. For the purposes of this section, "financial institution" means state and federally chartered banks, trust companies, federal and state savings and loan associations, federal and state credit unions, consumer lenders, international banking facilities and financial institution holding companies, insurance companies, benefit associations, safe deposit companies, money market mutual funds and similar institutions authorized to do business in this state and any party affiliated with these financial institutions.
Sec. 7. Section 42-2066, Arizona Revised Statutes, is amended to read:
42-2066. Statute of limitations on tax debts
A. A taxpayer's obligations for any tax, interest or penalty required to be collected by the department for any tax period are extinguished, if not previously satisfied, six ten years after the amount of tax determined to be due becomes final unless one of the following circumstances applies:
1. The department has commenced a suit to collect the debt pursuant to section 42‑1114.
2. The taxpayer has agreed in writing to extend this time period before the time period expires.
3. Enforced collection has been stayed by the operation of federal or state law during the period. The period of limitations prescribed by this section is extended by the period of time that the department was stayed from engaging in enforced collections.
B. If a tax obligation is extinguished pursuant to this section, any related liens for those obligations are also extinguished.
Sec. 8. Section 42-5005, Arizona Revised Statutes, is amended to read:
42-5005. Privilege licenses; revocation; violation; classification
A. Every person who receives gross proceeds of sales or gross income upon which a privilege tax is imposed by this article, desiring to engage or continue in business, shall make application to the department for a privilege license accompanied by a fee of twelve fifty dollars. Such licenses shall be effective indefinitely renewed annually. Such person shall not engage or continue in business until the person has obtained a privilege license.
B. If the applicant is not in arrears in payment of any tax imposed by this article, the department shall issue a license authorizing the applicant to engage and continue in such business, upon the condition that the applicant complies with this article. The license number shall be continuous.
C. The privilege license shall not be transferable upon a change of ownership or change of location of the business. For the purposes of this subsection:
1. "Location" means the business address appearing in the application for the license and on the privilege license.
2. "Ownership" means any right, title or interest in the business.
3. "Transferable" means the ability to convey or change the right or privilege to engage or continue in business by virtue of the issuance of the privilege license.
D. When the ownership or location of a business upon which a privilege tax is imposed by this article has been changed within the meaning of subsection C of this section, the licensee shall surrender the license to the department. The license shall be reissued to the new owners or for the new location upon application by the taxpayer and payment of the twelve fifty dollar fee.
E. A person engaged in or conducting a business in two or more locations or under two or more business names shall procure a license for each location or business name. This requirement shall not be construed as conflicting with section 42‑5020.
F. If a person violates this article or any rule adopted under this article, the department upon hearing may revoke any privilege license issued to the person. The department shall provide ten days' written notice of the hearing, stating the time and place and requiring the person to appear and show cause why the license or licenses should not be revoked. The department shall provide written notice to the person of the revocation of the license. The notices may be served personally or by mail pursuant to section 42‑5037. After revocation, the department shall not issue a new license to the person unless the person presents evidence satisfactory to the department that the person will comply with this article and with the rules adopted under this article. The department may prescribe the terms under which a revoked license may be reissued.
G. A person who violates any provision of this section is guilty of a class 3 misdemeanor.
Sec. 9. Section 42-5017, Arizona Revised Statutes, is amended to read:
42-5017. Credit for accounting and reporting expenses; definition
A. A credit is allowed against the taxes imposed by this article and article 5 of this chapter for expenses incurred by the taxpayer in accounting and reporting those taxes. The credit is equal to one per cent of the amount of tax due but not to exceed a total of ten thousand dollars in any calendar year for the combined total of all business premises of a taxpayer. Estimated taxes under section 42‑5014, subsection D are not considered a separate reporting period.
B. A taxpayer shall claim the credit for each tax period on forms prescribed and furnished by the department, which may be incorporated in the return form prescribed pursuant to section 42‑5014. A claim for credit is not allowed if the taxpayer fails to pay the tax due, plus any estimated tax liability, before the payment becomes delinquent. A claim for credit under this section is allowed only if the taxpayer files and pays taxes electronically.
C. As used in For the purposes of this section, "taxpayer" means the business entity under which the business reports for state income tax purposes or an entity that is exempt from state income tax.
Sec. 10. Title 43, chapter 4, article 3, Arizona Revised Statutes, is amended by adding section 43-436, to read:
43-436. Payroll service providers; electronic filing; penalty
A. A payroll service provider that files and pays withholding tax on behalf of an employer in this state shall file and pay the withholding tax by electronic means.
B. A failure to file and pay withholding tax pursuant to subsection A is subject to a civil penalty of twenty‑five dollars.
Sec. 11. Department of revenue; appropriations; purposes
In addition to any other appropriation made to the department of revenue for fiscal year 2010‑2011, the following amounts are appropriated to the department of revenue from the state general fund for fiscal year 2010‑2011:
1. The sum of $3,000,000 and 74 FTE positions for the purposes of hiring temporary tax collectors.
2. The sum of $140,000 and 4 FTE positions for the purposes of processing transaction privilege tax licenses.
3. The sum of $65,000 and 4 FTE positions for the purposes of outsourcing a portion of the collection inventory.
4. The sum of $175,000 for the purposes automating the bank levy process.
5. The sum of $4,479,300 and 71 FTE positions for the purposes of restoring the department of revenue's auditors and license compliance officers.
6. The sum of $360,000 and 7 FTE positions for the purposes of increasing collectors to address the department of revenue's business tax inventory.
7. The sum of $275,500 and 4 FTE positions to accommodate the increase in the statute of limitations pursuant to sections 42‑1114, 42‑1201 and 42‑2066, Arizona Revised Statutes, as amended by this act.
Sec. 12. Requirements for enactment; two-thirds vote
Pursuant to article IX, section 22, Constitution of Arizona, this act is effective only on the affirmative vote of at least two-thirds of the members of each house of the legislature and is effective immediately on the signature of the governor or, if the governor vetoes this act, on the subsequent affirmative vote of at least three-fourths of the members of each house of the legislature.