Bill Text: AZ SB1222 | 2013 | Fifty-first Legislature 1st Regular | Introduced
Bill Title: Income tax credits; repeal; dates
Spectrum: Partisan Bill (Democrat 6-0)
Status: (Introduced - Dead) 2013-01-30 - Referred to Senate FIN Committee [SB1222 Detail]
Download: Arizona-2013-SB1222-Introduced.html
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REFERENCE TITLE: income tax credits; repeal; dates |
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State of Arizona Senate Fifty-first Legislature First Regular Session 2013
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SB 1222 |
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Introduced by Senator Farley; Representative Steele: Senator Pancrazi; Representatives Dalessandro, Gabaldón, Otondo
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AN ACT
Amending sections 43-223, 43-1071, 43-1072, 43-1072.01, 43-1073 and 43-1074, Arizona Revised Statutes; amending section 43‑1074.01, Arizona Revised Statutes, as amended by laws 2012, chapter 3, section 47; amending sections 43-1079, 43-1079.01, 43-1081, 43‑1081.01, 43-1083, 43-1083.02, 43-1084, 43‑1087, 43-1088, 43‑1089, 43-1089.01, 43-1089.02, 43-1089.03, 43-1090, 43‑1161, 43-1164.03, 43‑1167 and 43-1167.01, arizona revised statutes; amending section 43-1168, Arizona revised statutes, as amended by laws 2012, chapter 3, section 54; amending sections 43-1170, 43-1170.01, 43‑1175, 43‑1176, 43-1178, 43-1181, 43-1183 and 43-1184, Arizona Revised Statutes; relating to taxation of income.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 43-223, Arizona Revised Statutes, is amended to read:
43-223. Requirements for new income tax credits established by the legislature
Any new individual or corporate income tax credit that is enacted by the legislature shall include in its enabling legislation:
1. A specific review year for the joint legislative income tax credit review committee to review the credit. The specific review year shall be the fifth full calendar year following the date the credit is enacted.
2. A specific repeal date for the tax credit. The repeal date shall be from and after December 31 of the seventh full calendar year following the date the credit is enacted. The required repeal does not affect the carryforward of any tax credit to which a taxpayer is entitled. A taxpayer may continue to apply the amounts carried forward to subsequent years' income tax liabilities as provided by the credit.
2. 3. A purpose clause that explains the rationale and objective of the tax credit.
Sec. 2. Section 43-1071, Arizona Revised Statutes, is amended to read:
43-1071. Credit for income taxes paid to other states; definitions
A. For taxable years ending before January 1, 2021 and subject to the following conditions, residents shall be allowed a credit against the taxes imposed by this chapter for net income taxes imposed by and paid to another state or country on income taxable under this chapter:
1. The credit shall be allowed only for taxes paid to the other state or country on income that is derived from sources within that state or country and that is taxable under its laws irrespective of the residence or domicile of the recipient.
2. The credit shall not be allowed if the other state or country allows residents of this state a credit against the taxes imposed by that state or country for taxes paid or payable under this chapter.
3. The credit shall not exceed the proportion of the tax payable under this chapter as the income subject to tax in the other state or country and also taxable under this title bears to the taxpayer's entire income on which the tax is imposed by this chapter.
B. If any taxes paid to another state or country for which a taxpayer has been allowed a credit under this section are at any time credited or refunded to the taxpayer:
1. The taxpayer shall immediately report that fact to the department.
2. A tax equal to the credit allowed for the taxes credited or refunded by the other state or country is due and payable from the taxpayer on notice and demand from the department.
3. Interest shall be added to and collected as a part of the tax at the rate determined pursuant to section 42‑1123 from the date the credit was allowed under this chapter to the date of the notice and demand.
4. If the tax and interest are not paid within ten days from the date of notice and demand, there shall be collected as a part of the tax interest on the unpaid amount of tax and interest at the rate of twelve per cent a year from the date of the notice and demand until the amount is paid.
C. The credit against the taxes imposed by this chapter for net income taxes paid to another state or country shall not be allowed to any taxpayer or any class of taxpayers if the allowances of the credit will result in any invalid or illegal discrimination against another taxpayer or another class of taxpayers.
D. For taxable years beginning on or after January 1, 2002 and ending before January 1, 2021 and subject to the following conditions, a resident of this state, who is also considered to be a resident of another state under the laws of the other state, is allowed a credit against the taxes imposed by this title for net income taxes imposed by and paid to that state on income taxable under this title as follows:
1. The credit is allowed only if the other state taxes the income to the resident of this state and does not allow the taxpayer a credit against taxes imposed by that state on that income for taxes paid or payable on that income under this title.
2. The credit is allowed only for the proportion of the taxes paid to the other state as the income taxable under this title and also subject to tax in the other state bears to the entire income on which the taxes paid to the other state are imposed.
3. The credit may not exceed the proportion of the tax payable under this title as the income taxable under this title and also subject to tax in the other state bears to the entire income taxable under this title.
4. For the purpose of the credit allowed under this subsection, "income taxable under this title and also subject to tax in the other state" means income that would be sourced to the other state if the other state were imposing its income tax on the taxpayer as if the taxpayer was a nonresident of that other state.
E. For the purposes of this section, net income taxes imposed by another country include taxes that qualify for a credit under sections 901 and 903 of the internal revenue code and the regulations under those sections.
F. For the purposes of this section:
1. "Entire income on which the other state's or country's tax is imposed" means the other state's or country's income computed under the equivalent of section 43‑1094 but does not include any exemption allowable under the equivalent of section 43‑1023.
2. "Entire income on which the tax is imposed by this chapter" means Arizona adjusted gross income as defined and computed under section 43‑1001 but does not include any exemption allowed under section 43‑1023.
3. "Income subject to tax in the other state or country and also taxable under this title" means the portion of income that is included in entire income on which the tax is imposed by this chapter that is also included in the entire income on which the other state's or country's tax is imposed. The taxpayer shall increase or reduce the portion of income that is included in the entire income on which the tax is imposed by this chapter by any related additions under section 43-1021 and by any related subtractions under section 43‑1022. The taxpayer shall increase or reduce the portion of income that is included in the entire income on which the other state's or country's tax is imposed by any related additions and subtractions under the other state's equivalent of sections 43‑1021 and 43‑1022, as applicable.
4. "Tax payable under this chapter" means the income tax imposed by this state on the taxpayer's taxable income as defined under section 43‑1001 minus any tax credit amount claimed for the taxable year under this article but not including the credit amount allowed under this section.
Sec. 3. Section 43-1072, Arizona Revised Statutes, is amended to read:
43-1072. Earned credit for property taxes; residents sixty-five years of age or older; definitions
A. For taxable years ending before January 1, 2021, there shall be allowed to each resident a credit against the taxes imposed by this title for a taxable year for property taxes accrued or rent, or both, paid in that taxable year, in accordance with subsection B of this section, if all of the following apply:
1. Such resident attained the age of sixty-five years prior to or during the taxable year or such resident is a recipient of public monies under title 16 of the social security act, as amended.
2. Such person paid either property taxes or rent during the taxable year.
3. Such person either:
(a) Did not live with a spouse or any other persons and had an income from all sources in the taxable year of less than three thousand seven hundred fifty-one dollars.
(b) Lived with a spouse or one or more persons and the combined income from all sources in the taxable year of all persons residing in the residence was less than five thousand five hundred one dollars.
B. The credit allowed under this section is the amount of property taxes actually paid during the taxable year or the amount computed as follows, whichever is less:
1. For a person eligible under subsection A, paragraph 3, subdivision (a) of this section, according to the following table:
Household Income Tax Credit
$ 0-1,750 $502
1,751-1,850 479
1,851-1,950 457
1,951-2,050 435
2,051-2,150 412
2,151-2,250 390
2,251-2,350 368
2,351-2,450 345
2,451-2,550 323
2,551-2,650 301
2,651-2,750 279
2,751-2,850 256
2,851-2,950 234
2,951-3,050 212
3,051-3,150 189
3,151-3,250 167
3,251-3,350 145
3,351-3,450 123
3,451-3,550 100
3,551-3,650 78
3,651-3,750 56
2. For a person eligible under subsection A, paragraph 3, subdivision (b) of this section, according to the following table:
Household Income Tax Credit
$ 0-2,500 $502
2,501-2,650 479
2,651-2,800 457
2,801-2,950 435
2,951-3,100 412
3,101-3,250 390
3,251-3,400 368
3,401-3,550 345
3,551-3,700 323
3,701-3,850 301
3,851-4,000 279
4,001-4,150 256
4,151-4,300 234
4,301-4,450 212
4,451-4,600 189
4,601-4,750 167
4,751-4,900 145
4,901-5,050 123
5,051-5,200 100
5,201-5,350 78
5,351-5,500 56
C. The owner or lessor of property leased or rented solely for residential purposes, on request, shall furnish to the tenants of the property a written statement of the percentage of rental payments that are attributable to property tax for purposes of this section.
D. Disposition of the claimant's allowable credit shall be as provided below:
1. If the allowable amount of such claim exceeds the income taxes otherwise due on the claimant's income, the amount of the claim not used as an offset against income taxes, after audit by the department, shall be paid in the same manner as a refund granted under chapter 6, article 1 of this title. Refunds made pursuant to this paragraph are subject to setoff under section 42-1122.
2. The amount of any claim otherwise payable for credit for property taxes accrued or rent may be applied by the department against any liability outstanding on the books of the department against the claimant or against the claimant's spouse who was a member of the claimant's household in the taxable year.
E. The department shall make available suitable forms with instructions for claimants. Claimants who certify on the prescribed form that they have no income tax liability for the taxable year shall not be required to file an individual income tax return. The claim shall be in such form as the department may prescribe but shall require the social security numbers of persons who were allowed to claim as dependents for the taxes imposed by this title claimants filing pursuant to this section. The claimant shall also submit a copy of the claimant's property tax statement or a suitable representation of the statement as prescribed by the department. The department shall audit a sufficient number of claims to enforce the provisions of this chapter.
F. No claim with respect to property taxes or with respect to rent shall be allowed or paid unless the claim is actually filed on or before April 15 for the next preceding calendar year. The department may, upon on request, may grant for a period of not to exceed six months an extension of time for filing the claim.
G. Only one claimant per household per year shall be entitled to a tax credit pursuant to this section.
H. In For the purposes of this section, unless the context otherwise requires:
1. "Claimant" means a person who has filed a claim for credit under this section and was a resident of this state during the entire taxable year. In the case of a claim for rent, the claimant shall have rented property in this state during the entire taxable year except as otherwise provided by this section. If two individuals of a household are able to meet the qualifications for a claimant, they may determine between them as to whom the claimant shall be. If they are unable to agree, the matter shall be referred to the department and its decision shall be final. If a homestead is occupied by two or more individuals and more than one individual is able to qualify as a claimant, and some or all of the qualified individuals are not related, the individuals may determine among them as to whom the claimant shall be. If they are unable to agree, the matter shall be referred to the department, and its decision shall be final.
2. "Gross rent" means rental paid for the right of occupancy of a homestead or space rental paid to a landlord for the parking of a mobile home. If the department is satisfied that the gross rent charge was paid solely for purposes of receiving a credit pursuant to this section, it shall not allow a claim.
3. "Homestead" means the principal dwelling, whether owned or rented by the claimant. "Homestead" may also include a mobile home and the land upon which it is located.
4. "Household" means the household of the claimant and such other persons as resided with the claimant in the claimant's homestead during the taxable year.
5. "Household income" means all income received by all persons of a household in a taxable year while members of the household.
6. "Income" means the sum of the following:
(a) Adjusted gross income as defined by the department.
(b) The amount of capital gains excluded from adjusted gross income.
(c) Nontaxable strike benefits.
(d) Nontaxable interest received from the federal government or any of its instrumentalities.
(e) Payments received from a retirement program paid by this state or any of its political subdivisions.
(f) Payments received from a retirement program paid by the United States through any of its agencies, instrumentalities or programs, except as provided in subsection I of this section.
(g) The gross amount of any pension or annuity not otherwise exempted except as provided in subsection I of this section.
7. "Property taxes" means property taxes levied on a claimant's homestead in this state in any taxable year. For purposes of this paragraph, property taxes are "levied" when the tax roll is delivered to the county treasurer for collection. If a claimant and the claimant's household own their homestead part of the taxable year and rent it or different homesteads for the rest of the same year, provided property taxes were levied on the homestead which was owned by the claimant and the claimant's household, such claimant shall be eligible for a credit pursuant to this section.
I. Income as defined in subsection H, paragraph 6, subdivisions (f) and (g) of this section shall not include monies received from cash public assistance and relief, relief granted under the provisions of this section, railroad retirement benefits, payments received under the federal social security act (49 Stat. 620), payments received under Arizona state unemployment insurance laws, payments received from veterans' disability pensions, payments received as workers' compensation, the gross amount of "loss of time" insurance, and gifts from nongovernmental sources or surplus foods or other relief in kind supplied by a governmental agency.
Sec. 4. Section 43-1072.01, Arizona Revised Statutes, is amended to read:
43-1072.01. Credit for increased excise taxes paid
A. Subject to the conditions prescribed by this section and if approved by the qualified electors voting at a statewide general election, for tax taxable years beginning from and after December 31, 2000 and ending before January 1, 2021, a credit is allowed against the taxes imposed by this chapter for a taxable year for a taxpayer who is not claimed as a dependent by any other taxpayer and whose federal adjusted gross income is:
1. Twenty‑five thousand dollars or less for a married couple or a single person who is a head of a household.
2. Twelve thousand five hundred dollars or less for a single person or a married person filing separately.
B. The credit is considered to be in mitigation of increased tax rates pursuant to section 42‑5010, subsection G and section 42‑5155, subsection D.
C. The amount of the credit shall not exceed twenty‑five dollars for each person who is a resident of this state and for whom a personal or dependent exemption is allowed with respect to the taxpayer pursuant to section 43‑1023, subsection B, paragraph 1 and section 43‑1043, but not more than one hundred dollars for all persons in the taxpayer's household, as defined in section 43‑1072.
D. If the allowable amount of the credit exceeds the income taxes otherwise due on the claimant's income, the amount of the claim not used as an offset against income taxes shall be paid in the same manner as a refund granted under section 42‑1118. Refunds made pursuant to this subsection are subject to setoff under section 42‑1122.
E. The department shall make available suitable forms with instructions for claimants. Claimants who certify on the prescribed form that they have no income tax liability for the taxable year and who do not meet the filing requirements of section 43‑301 are not required to file an individual income tax return. The claim shall be in a form prescribed by the department.
F. For taxable years beginning from and after December 31, 2002, a person who is sentenced for at least sixty days of the taxable year to the custody of the federal bureau of prisons, the state department of corrections or a county jail is not eligible to claim a credit pursuant to this section.
Sec. 5. Section 43-1073, Arizona Revised Statutes, is amended to read:
43-1073. Family income tax credit
A. For taxable years ending before January 1, 2021 and subject to the conditions prescribed by this section, a credit is allowed against the taxes imposed by this chapter for a taxable year for taxpayers whose Arizona adjusted gross income, plus the amount subtracted for exemptions under section 43‑1023, is:
1. Twenty thousand dollars or less in the case of a married couple filing a joint return with no more than one dependent or a single person who is a head of a household with no more than one dependent.
2. Twenty-three thousand six hundred dollars or less in the case of a married couple filing a joint return with two dependents.
3. Twenty-seven thousand three hundred dollars or less in the case of a married couple filing a joint return with three dependents.
4. Thirty‑one thousand dollars or less in the case of a married couple filing a joint return with four or more dependents.
5. Twenty thousand one hundred thirty-five dollars or less in the case of a single person who is a head of a household with two dependents.
6. Twenty-three thousand eight hundred dollars or less in the case of a single person who is a head of a household with three dependents.
7. Twenty-five thousand two hundred dollars or less in the case of a single person who is a head of a household with four dependents.
8. Twenty-six thousand five hundred seventy-five dollars or less in the case of a single person who is a head of a household with five or more dependents.
9. Ten thousand dollars or less in the case of a single person or a married person filing separately.
B. The amount of the credit is equal to forty dollars for each person who is a resident of this state and for whom a personal or dependent exemption is allowed with respect to the taxpayer pursuant to section 43-1043 and section 43-1023, subsection B, paragraph 1, but not to exceed:
1. Two hundred forty dollars in the case of a married couple filing a joint return or a single person who is a head of a household.
2. One hundred twenty dollars in the case of a single person or a married couple filing separately.
3. For any taxpayer, the amount of taxes due under this chapter for the taxable year.
Sec. 6. Section 43-1074, Arizona Revised Statutes, is amended to read:
43-1074. Credit for new employment
A. For taxable years beginning from and after June 30, 2011 and ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for net increases in full‑time employees residing in this state and hired in qualified employment positions in this state as computed and certified by the Arizona commerce authority pursuant to section 41‑1525.
B. Subject to subsection F of this section, the amount of the credit is equal to:
1. Three thousand dollars for each full‑time employee hired in a qualified employment position in the first year or partial year of employment. Employees hired in the last ninety days of the taxable year are excluded for that taxable year and are considered to be new employees in the following taxable year.
2. Three thousand dollars for each full-time employee in a qualified employment position for the full taxable year in the second year of continuous employment.
3. Three thousand dollars for each full-time employee in a qualified employment position for the full taxable year in the third year of continuous employment.
C. The capital investment and the new qualified employment positions requirements of section 41‑1525, subsection B must be accomplished within twelve months after the start of the required capital investment. No credit may be claimed until both requirements are met. A business that meets the requirements of section 41‑1525, subsection B for a location is eligible to claim first year credits for three years beginning with the taxable year in which those requirements are completed. Employees hired at the location before the beginning of the taxable year but during the twelve-month period allowed in this subsection are considered to be new employees for the taxable year in which all of those requirements are completed. The employees that are considered to be new employees for the taxable year under this subsection shall not be included in the average number of full-time employees during the immediately preceding taxable year until the taxable year in which all of the requirements of section 41‑1525, subsection B are completed. An employee working at a temporary work site in this state while the designated location is under construction is considered to be working at the designated location if all of the following occur:
1. The employee is hired after the start of the required investment at the designated location.
2. The employee is hired to work at the designated location after it is completed.
3. The payroll for the employees destined for the designated location is segregated from other employees.
4. The employee is moved to the designated location within thirty days after its completion.
D. To qualify for a credit
under this section, the taxpayer and the employment positions must meet the
requirements prescribed by section 41‑1525.
E. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was claimed and allowed in the first year.
F. The net increase in the number of qualified employment positions is the lesser of the total number of filled qualified employment positions created at the designated location or locations during the taxable year or the difference between the average number of full‑time employees in this state in the current taxable year and the average number of full‑time employees in this state during the immediately preceding taxable year. The net increase in the number of qualified employment positions computed under this subsection may not exceed the difference between the average number of full‑time employees in this state in the current taxable year and the average number of full-time employees in this state during the immediately preceding taxable year.
G. A taxpayer who claims a credit under section 43‑1079 or 43‑1083.01 shall not claim a credit under this section with respect to the same employment positions.
H. If the allowable tax credit exceeds the income taxes otherwise due on the claimant's income, or if there are no state income taxes due on the claimant's income, the amount of the claim not used as an offset against the income taxes may be carried forward as a tax credit against subsequent years' income tax liability for a period not exceeding five taxable years.
I. Co-owners of a business, including partners in a partnership and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, 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 of the business may not exceed the amount that would have been allowed for a sole owner of the business.
J. If the business is sold or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for the qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete. If a person purchases a taxpayer that had qualified for first or second year credits or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets other eligibility requirements of this section. Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.
K. A failure to timely report and certify to the Arizona commerce authority the information prescribed by section 41‑1525, subsection E, and in the manner prescribed by section 41‑1525, subsection F disqualifies the taxpayer from the credit under this section. The department shall require written evidence of the timely report to the Arizona commerce authority.
L. A tax credit under this section is subject to recovery for a violation described in section 41‑1525, subsection H.
Sec. 7. Section 43-1074.01, Arizona Revised Statutes, as amended by Laws 2012, chapter 3, section 47, is amended to read:
43-1074.01. Credit for increased research activities
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title in an amount determined pursuant to section 41 of the internal revenue code, except that:
1. The amount of the credit is based on the excess, if any, of the qualified research expenses for the taxable year over the base amount as defined in section 41(c) of the internal revenue code and is computed as follows:
(a) If the excess is two million five hundred thousand dollars or less, the credit is equal to twenty per cent of that amount.
(b) If the excess is over two million five hundred thousand dollars, the credit is equal to five hundred thousand dollars plus eleven per cent of any amount exceeding two million five hundred thousand dollars, except that:
(i) For taxable years beginning from and after December 31, 2000 through December 31, 2001, the credit shall not exceed one million five hundred thousand dollars.
(ii) For taxable years beginning from and after December 31, 2001 through December 31, 2002, the credit shall not exceed two million five hundred thousand dollars.
(c) For taxable years beginning from and after December 31, 2011, an additional credit amount is allowed if the taxpayer made basic research payments during the taxable year to a university under the jurisdiction of the Arizona board of regents. The additional credit amount is equal to ten per cent of the excess, if any, of the basic research payments over the qualified organization base period amount for the taxable year. The department shall not allow credit amounts under this subdivision and section 43-1168, subsection A, paragraph 1, subdivision (d) that exceed, in the aggregate, a combined total of ten million dollars in any calendar year. Subject to that limit, on application by the taxpayer, the department shall certify credit amounts under this subdivision and section 43-1168, subsection A, paragraph 1, subdivision (d) based on priority placement established by the date that the taxpayer filed the application. The additional credit amount under this subdivision shall not exceed the amount allowed based on actual basic research payments or the department's certification, whichever is less. If an application, if certified in full, would exceed the ten million dollar limit, the department shall certify only an amount within that limit. After the limit is attained, the department shall deny any subsequent applications regardless of whether other certified amounts are not actually claimed as a credit or other taxpayers fail to qualify to actually claim certified amounts. Notwithstanding subsections B and C of this section, any amount of the additional credit under this subdivision that exceeds the taxes otherwise due under this title is not refundable, but may be carried forward to the next five consecutive taxable years. For the purposes of this subdivision, "basic research payments" and "qualified organization base period amount" have the same meanings prescribed by section 41(e) of the internal revenue code without regard to whether the taxpayer is or is not a corporation.
2. Qualified research includes only research conducted in this state, including research conducted at a university in this state and paid for by the taxpayer.
3. If two or more taxpayers, including partners in a partnership and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, share in the eligible expenses, each taxpayer is eligible to receive a proportionate share of the credit.
4. The credit under this section applies only to expenses incurred from and after December 31, 2000.
5. The termination provisions of section 41 of the internal revenue code do not apply.
B. Except as provided by subsection C of this section, if the allowable credit under this section exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the amount of the credit not used to offset taxes may be carried forward to the next fifteen consecutive taxable years. The amount of credit carryforward from taxable years beginning from and after December 31, 2000 through December 31, 2002 that may be used in any taxable year may not exceed the taxpayer's tax liability under this title or five hundred thousand dollars, whichever is less, minus the credit under this section for the current taxable year's qualified research expenses. The amount of credit carryforward from taxable years beginning from and after December 31, 2002 that may be used in any taxable year may not exceed the taxpayer's tax liability under this title minus the credit under this section for the current taxable year's qualified research expenses. A taxpayer who carries forward any amount of credit under this subsection may not thereafter claim a refund of any amount of the credit under subsection C of this section.
C. For taxable years beginning from and after December 31, 2009, if a taxpayer who claims a credit under this section employs fewer than one hundred fifty persons in the taxpayer's trade or business and if the allowable credit under this section exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, in lieu of carrying the excess amount of credit forward to subsequent taxable years under subsection B of this section, the taxpayer may elect to receive a refund as follows:
1. The taxpayer must apply to the Arizona commerce authority for qualification for the refund pursuant to section 41‑1507 and submit a copy of the authority's certificate of qualification to the department of revenue with the taxpayer's income tax return.
2. The amount of the refund is limited to seventy-five per cent of the amount by which the allowable credit under this section exceeds the taxpayer's tax liability under this title for the taxable year. The remainder of the excess amount of the credit is waived.
3. The refund shall be paid in the manner prescribed by section 42‑1118.
4. The refund is subject to setoff under section 42‑1122.
5. If the department determines that a credit refunded pursuant to this subsection is incorrect or invalid, the excess credit issued may be treated as a tax deficiency pursuant to section 42‑1108.
D. A taxpayer that claims a credit for increased research and development activity under this section shall not claim a credit under section 43‑1085.01 for the same expenses. END_STATUTE
Sec. 8. Section 43-1079, Arizona Revised Statutes, is amended to read:
43-1079. Credit for increased employment in military reuse zones; definition
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for net increases in employment by the taxpayer of full‑time employees who are working in a military reuse zone, established under title 41, chapter 10, article 3, and who are primarily engaged in providing aviation or aerospace services or in manufacturing, assembling or fabricating aviation or aerospace products. The amount of the credit is a dollar amount allowed for each new employee, determined as follows:
1. With respect to each employee other than a dislocated military base employee:
1st year of employment $ 500
2nd year of employment $1,000
3rd year of employment $1,500
4th year of employment $2,000
5th year of employment $2,500
2. With respect to each dislocated military base employee:
1st year of employment $1,000
2nd year of employment $1,500
3rd year of employment $2,000
4th year of employment $2,500
5th year of employment $3,000
B. 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 amount of the claim not used to offset the taxes under this title may be carried forward as a credit against subsequent years' income tax liability for the period, not to exceed five taxable years, if the business remains in the military reuse zone.
C. The net increase in the number of employees for purposes of this section shall be determined by comparing the taxpayer's average employment in the military reuse zone during the taxable year with the taxpayer's previous year's fourth quarter employment in the zone, based on the taxpayer's report to the department of economic security for unemployment insurance purposes but considering only employment in the zone.
D. Co‑owners of a business, including partners in a partnership and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, 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 for a sole owner of the business.
E. A credit is not allowed under this section with respect to an employee whose place of employment is relocated by the taxpayer from a location in this state to the military reuse zone, unless the employee is engaged in aviation or aerospace services or in manufacturing, assembling or fabricating aviation or aerospace products and the taxpayer maintains at least the same number of employees in this state but outside the zone.
F. A taxpayer who claims a credit under section 43‑1074 or 43‑1083.01 may not claim a credit under this section with respect to the same employees.
G. For the purposes of this section, "dislocated military base employee" means a civilian who previously had permanent full‑time civilian employment on the military facility as of the date the closure of the facility was finally determined under federal law, as certified by the Arizona commerce authority.
Sec. 9. Section 43-1079.01, Arizona Revised Statutes, is amended to read:
43-1079.01. Credit for employing national guard members
A. For taxable years beginning from and after December 31, 2005 and ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for a taxpayer whose employee is a member of the Arizona national guard if the employee is placed on active duty. The amount of the credit is one thousand dollars for each employee who is placed on active duty by the Arizona national guard.
B. To qualify for the credit:
1. The employee must be a member of the Arizona national guard who is employed by the taxpayer in a full-time equivalent position when the employee is placed on active duty.
2. Each member of the Arizona national guard who is employed must have served during the taxable year on active duty for training that exceeds the required annual training period, including any activation for federal or state contingencies or emergencies.
C. If the allowable 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 amount of the claim not used to offset taxes under this title may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' income tax liability.
D. The credit under this section may be claimed only once by the taxpayer in any taxable year with respect to each employee who is placed on active duty by the Arizona national guard, but may be claimed again for that employee in a subsequent taxable year if that employee remains on active duty or is placed again on active duty in a subsequent taxable year.
E. Co-owners of a business, including partners in a partnership and shareholders of an S corporation as defined in section 1361 of the internal revenue code, 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.
Sec. 10. Section 43-1081, Arizona Revised Statutes, is amended to read:
43-1081. Credit for pollution control equipment
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for expenses that the taxpayer incurred during the taxable year to purchase real or personal property that is used in the taxpayer's trade or business in this state to control or prevent pollution. The amount of the credit is equal to ten per cent of the purchase price.
B. Property that qualifies for the credit under this section includes that portion of a structure, building, installation, excavation, machine, equipment or device and any attachment or addition to or reconstruction, replacement or improvement of that property that is directly used, constructed, or installed in this state for the purpose of meeting or exceeding rules or regulations adopted by the United States environmental protection agency, the department of environmental quality or a political subdivision of this state to prevent, monitor, control or reduce air, water or land pollution that results from the taxpayer's direct operating activities in conducting a trade or business in this state.
C. The credit allowed pursuant to this section does not apply to:
1. The purchase of any personal property that is attached to a motor vehicle.
2. Any property that has a substantial use for a purpose other than the purposes described in subsection B of this section.
3. Any portion of pollution control property that is included as a standard and integral part of another property.
D. Amounts that qualify for a credit under this section must be includible in the taxpayer's adjusted basis for the property. The adjusted basis of any property with respect to which the taxpayer has claimed a credit shall be reduced by the amount of credit claimed with respect to that asset. This credit does not affect the deductibility for depreciation or amortization of the remaining adjusted basis of the asset.
E. Co‑owners of a business, including partners in a partnership and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, 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.
F. 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 taxable years' income tax liability.
G. The maximum credit that a taxpayer may claim under this section is five hundred thousand dollars in a taxable year.
Sec. 11. Section 43-1081.01, Arizona Revised Statutes, is amended to read:
43-1081.01. Credit for agricultural pollution control equipment
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for expenses that a taxpayer, involved in the commercial production of livestock, livestock products or agricultural, horticultural, viticultural or floricultural crops or products, incurred during the taxable year to purchase tangible personal property that is primarily used in the taxpayer's trade or business in this state to control or prevent pollution. The amount of the credit is equal to twenty‑five per cent of the cost of the real or personal property. The maximum credit that a taxpayer may claim under this section is twenty-five thousand dollars in a taxable year.
B. Property that qualifies for the credit under this section includes the portion of a structure, building, installation, excavation, machine, equipment or device and any attachment or addition to or reconstruction, replacement or improvement of that property that is directly used, constructed or installed in this state to prevent, monitor, control or reduce air, water or land pollution.
C. Amounts that qualify for a credit under this section must be includible in the taxpayer's adjusted basis for the property. The adjusted basis of any property with respect to which the taxpayer has claimed a credit shall be reduced by the amount of credit claimed with respect to that asset. This credit does not affect the deductibility for depreciation or amortization of the remaining adjusted basis of the asset.
D. Co-owners of a business, including partners in a partnership and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, 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.
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 amount of the claim not used to offset the taxes under this title may be carried forward to the next five consecutive taxable years as a credit against subsequent years' income tax liability.
F. A taxpayer who claims a credit for pollution control equipment under this section shall not claim a credit under section 43‑1081 for the same equipment or expense.
Sec. 12. Section 43-1083, Arizona Revised Statutes, is amended to read:
43-1083. Credit for solar energy devices
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for each resident who is not a dependent of another taxpayer for installing a solar energy device, as defined in section 42-5001, during the taxable year in the taxpayer's residence located in this state. The credit is equal to twenty-five per cent of the cost of the device.
B. The maximum credit in a taxable year may not exceed one thousand dollars. The person who provides the solar energy device shall furnish the taxpayer with an accounting of the cost to the taxpayer. A taxpayer may claim the credit under this section only once in a tax year and may not cumulate over different tax years tax credits under this section exceeding, in the aggregate, one thousand dollars for the same residence.
C. 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 amount of the claim not used to offset taxes under this title may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' income tax liability.
D. 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.
E. The credit allowed under this section is in lieu of any allowance for state tax purposes for exhaustion, wear and tear of the solar energy device under section 167 of the internal revenue code.
F. To qualify for the credit under this section the solar energy device and its installation shall meet the requirements of title 44, chapter 11, article 11.
G. A solar hot water heater plumbing stub out that was installed by the builder of a house or dwelling unit before title was conveyed to the taxpayer does not qualify for a credit under this section, but the taxpayer may claim a credit for the device under section 43‑1090 or 43‑1176 under the circumstances, conditions and limitations prescribed by section 43‑1090, subsection C or section 43-1176, subsection C, as applicable.
Sec. 13. Section 43-1083.02, Arizona Revised Statutes, is amended to read:
43-1083.02. Renewable energy production tax credit; definitions
A. Subject to subsection B of this section, for taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for the production of electricity using renewable energy resources.
B. The taxpayer is eligible for the credit:
1. If the taxpayer holds title to a qualified energy generator that first produces electricity from and after December 31, 2010 and before January 1, 2021.
2. For ten consecutive calendar years beginning with the calendar year in which the qualified energy generator begins producing electricity that is transmitted through a transmission facility to a grid connection with a public or private electric transmission or distribution utility system. That same date applies with respect to that generator until the expiration of the ten‑year period regardless of whether the generator is sold to another taxpayer or goes out of production before the expiration of the ten-year period.
C. The credit authorized by this section is based on the electricity that is generated by a qualified energy generator during a calendar year. For a taxpayer that files on a fiscal year basis, the credit shall be claimed on the return for the taxable year in which the calendar year ends.
D. Subject to subsection G of this section, the amount of the credit is:
1. One cent per kilowatt-hour of the first two hundred thousand megawatt-hours of electricity produced by a qualified energy generator in the calendar year using a wind or biomass derived qualified energy resource.
2. The following amounts for electricity produced by a qualified energy generator using a solar light derived or solar heat derived qualified energy resource:
(a) Four cents per kilowatt-hour in the first calendar year in which the qualified energy generator produces electricity.
(b) Four cents per kilowatt-hour in the second calendar year in which the qualified energy generator produces electricity.
(c) Three and one-half cents per kilowatt-hour in the third calendar year in which the qualified energy generator produces electricity.
(d) Three and one-half cents per kilowatt-hour in the fourth calendar year in which the qualified energy generator produces electricity.
(e) Three cents per kilowatt-hour in the fifth calendar year in which the qualified energy generator produces electricity.
(f) Three cents per kilowatt-hour in the sixth calendar year in which the qualified energy generator produces electricity.
(g) Two cents per kilowatt-hour in the seventh calendar year in which the qualified energy generator produces electricity.
(h) Two cents per kilowatt-hour in the eighth calendar year in which the qualified energy generator produces electricity.
(i) One and one-half cents per kilowatt-hour in the ninth calendar year in which the qualified energy generator produces electricity.
(j) One cent per kilowatt-hour in the tenth calendar year in which the qualified energy generator produces electricity.
E. To qualify for the purposes of this section, an energy generator may be located within one mile of an existing qualified energy generator only if the owner of the energy generator or the owner's corporate affiliates are not the owner of or the corporate affiliate of the owner of the existing qualified energy generator.
F. To be eligible for the credit under this section, the taxpayer must apply to the department, on a form prescribed by the department, for certification of the credit. The department shall only accept applications beginning January 2 through January 31 of the year following the calendar year for which the credit is being requested. The application shall include:
1. The name, address and social security number or federal employer identification number of the applicant.
2. The location of the taxpayer's facility that produces electricity using renewable energy resources for which the credit is claimed.
3. The amount of the credit that is claimed.
4. The date the qualified energy generator began producing commercially marketable amounts of electricity.
5. Any additional information that the department requires.
G. The department shall review each application under subsection F of this section and certify to the taxpayer the amount of the credit that is authorized. The amount of the credit for any calendar year shall not exceed two million dollars per facility that produces electricity using renewable energy resources. Credits are allowed under this section and section 43‑1164.03 on a first come, first served basis. The department shall not authorize tax credits under this section and section 43-1164.03 that exceed in the aggregate a total of twenty million dollars for any calendar year. The first time that a taxpayer submits a qualified application for a qualified energy generator under subsection F of this section, the department shall add the taxpayer's name to a credit authorization list that is maintained in the order in which qualified applications are first received by the department on behalf of the qualified energy generator. A taxpayer's position on the credit authorization list shall be determined in the first year the taxpayer submits an application under subsection F of this section for the qualified energy generator. The taxpayer's position on the credit authorization list for a particular qualified energy generator shall remain unchanged for the ten years that are specified in subsection B, paragraph 2 of this section or until a year in which the taxpayer fails to submit a timely application under subsection F of this section or otherwise fails to comply with this section. If a taxpayer is removed from the credit authorization list for a qualified energy generator, the taxpayer may establish a new position on the credit authorization list in a subsequent year by filing a timely application for a qualified energy generator that qualifies for the credit. If an application is received that, if authorized, would require the department to exceed the twenty million dollar limit, the department shall grant the applicant only the remaining credit amount that would not exceed the twenty million dollar limit. After the department authorizes twenty million dollars in tax credits, the department shall deny any subsequent applications that are received for that calendar year. The department shall not authorize any additional tax credits that exceed the twenty million dollar limit even if the amounts that have been certified to any taxpayer were not claimed or a taxpayer otherwise fails to meet the requirements to claim the additional credit.
H. Co-owners of a qualified energy generator, 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 credit allowed under this section based on ownership interest. The total of the credits allowed all such owners of the qualified energy generator may not exceed the amount that would have been allowed for a sole owner of the generator.
I. If the allowable tax credit for a taxpayer exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the amount of the claim not used to offset taxes under this title may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' income tax liability.
J. The department shall adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purposes of this section.
K. For the purposes of this section:
1. "Biomass" means organic material that is available on a renewable or recurring basis, including:
(a) Forest-related materials, including mill residues, logging residues, forest thinnings, slash, brush, low-commercial value materials or undesirable species, salt cedar and other phreatophyte or woody vegetation removed from river basins or watersheds and woody material harvested for the purpose of forest fire fuel reduction or forest health and watershed improvement.
(b) Agricultural-related materials, including orchard trees, vineyard, grain or crop residues, including straws and stover, aquatic plants and agricultural processed coproducts and waste products, including fats, oils, greases, whey and lactose.
(c) Animal waste, including manure and slaughterhouse and other processing waste.
(d) Solid woody waste materials, including landscape or right-of-way tree trimmings, rangeland maintenance residues, waste pallets, crates and manufacturing, construction and demolition wood wastes, excluding pressure‑treated, chemically‑treated or painted wood wastes and wood contaminated with plastic.
(e) Crops and trees planted for the purpose of being used to produce energy.
(f) Landfill gas, wastewater treatment gas and biosolids, including organic waste byproducts generated during the wastewater treatment process.
2. "Qualified energy generator" means a facility that has at least five megawatts generating capacity, that is located on land in this state owned or leased by the taxpayer, that produces electricity using a qualified energy resource and that sells that electricity to an unrelated entity, unless the electricity is sold to a public service corporation.
3. "Qualified energy resource" means a resource that generates electricity through the use of only the following energy sources:
(a) Solar light.
(b) Solar heat.
(c) Wind.
(d) Biomass.
Sec. 14. Section 43-1084, Arizona Revised Statutes, is amended to read:
43-1084. Credit for agricultural water conservation system
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for expenses that the taxpayer incurred during the taxable year to purchase and install an agricultural water conservation system in this state. The amount of the credit is equal to seventy-five per cent of the qualifying expenses.
B. To qualify for the credit under this section:
1. The agricultural water conservation system must be primarily designed to substantially conserve water on land that is used by the taxpayer or the taxpayer's tenant to:
(a) Produce crops, fruits or other agricultural products.
(b) Raise, harvest or grow trees.
(c) Sustain livestock.
2. The expense must be consistent with a conservation plan that the taxpayer has filed and that is in effect with the United States department of agriculture soil conservation service.
C. Co-owners of the land on which the water conservation system is installed, including partners in a partnership and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, 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.
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 taxable years' income tax liability.
E. The credit allowed by this section is in lieu of any deduction for such expenses allowed by the internal revenue code and included under section 43-1042 in computing taxable income.
Sec. 15. Section 43-1087, Arizona Revised Statutes, is amended to read:
43-1087. Credit for employment of temporary assistance for needy families recipients
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for net increases in qualified employment by the taxpayer of recipients of temporary assistance for needy families as defined in section 46‑101 who are residents of this state. The amount of the credit is equal to the sum of the following:
1. One‑fourth of the taxable wages paid to each employee in qualified employment positions, not to exceed five hundred dollars per qualified employment position, in the first year or partial year of employment. Wages that were subsidized as provided by section 46‑299 shall not be included.
2. One‑third of the taxable wages paid to each employee in qualified employment positions, not to exceed one thousand dollars per qualified employment position, in the second year of continuous employment. Wages that were subsidized as provided by section 46‑299 shall not be included.
3. One‑half of the taxable wages paid to each employee in qualified employment positions, not to exceed one thousand five hundred dollars per qualified employment position, in the third year of continuous employment. Wages that were subsidized as provided by section 46‑299 shall not be included.
B. The credit allowed in this section is in lieu of any wage expense deduction taken for state tax purposes.
C. To qualify for a credit under this section:
1. All of the employees with respect to whom a credit is claimed must reside in this state and must be recipients of temporary assistance for needy families as defined in section 46‑101 at the time the employee is hired.
2. A qualified employment position must meet all of the following requirements:
(a) The position must be classified as full‑time employment.
(b) The employment must include health insurance coverage for the employee if the employer offers this coverage for employees who are not recipients of temporary assistance for needy families.
(c) The employer must pay compensation at least equal to the minimum wage or a wage comparable to that paid to employees who are not receiving temporary assistance for needy families based on the employee's training, skills and job classification.
(d) The employee must have been employed for at least ninety days during the first taxable year. An employee who is hired during the last ninety days of the taxable year shall be considered a new employee during the next taxable year. Periods for which the employee's wages were subsidized as provided by section 46‑299 shall not be included as periods of employment.
(e) The employee was not employed by the taxpayer within twelve months before the current date of hire.
(f) The employee position is not eligible for any other employment credit pursuant to this title based on wages paid.
D. The net increase in the number of qualified employment positions shall be determined by comparing the average number of qualified employment positions during the taxable year with the immediately preceding taxable year based on the taxpayer’s report to the department of economic security for unemployment purposes.
E. If the allowable tax credit exceeds the income taxes otherwise due on the claimant’s income, the amount of the claim not used as an offset against income taxes may be carried forward as a tax credit against subsequent years’ income tax liability for the period, not to exceed five consecutive taxable years.
F. Co‑owners of a business, including partners in a partnership and shareholders of an S corporation as defined in section 1361 of the internal revenue code, may 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 the owners of the business may not exceed the amount that would have been allowed for a sole owner of the business.
G. The department may adopt rules necessary for the administration of this section.
Sec. 16. Section 43-1088, Arizona Revised Statutes, is amended to read:
43-1088. Credit for contribution to qualifying charitable organizations; definitions
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for voluntary cash contributions by the taxpayer or on the taxpayer's behalf pursuant to section 43‑401, subsection G during the taxable year to a qualifying charitable organization not to exceed:
1. Two hundred dollars in any taxable year for a single individual or a head of household.
2. Four hundred dollars 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. 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 forward the amount of the claim not used to offset the taxes under this title for not more than five consecutive taxable years' income tax liability.
D. The credit allowed by this section:
1. Is allowed only if the taxpayer itemizes deductions pursuant to section 43‑1042 for the taxable year.
2. Is in lieu of a deduction pursuant to section 170 of the internal revenue code and taken for state tax purposes.
E. Taxpayers taking a credit authorized by this section shall provide the name of the qualifying charitable organization and the amount of the contribution to the department of revenue on forms provided by the department.
F. A qualifying charitable organization shall provide the department of revenue with a written certification that it meets all criteria to be considered a qualifying charitable organization. The organization shall also notify the department of any changes that may affect the qualifications under this section.
G. The charitable organization's written certification must be signed by an officer of the organization under penalty of perjury. The written certification must include the following:
1. Verification of the organization's status under section 501(c)(3) of the internal revenue code or verification that the organization is a designated community action agency that receives community services block grant program monies pursuant to 42 United States Code section 9901.
2. Financial data indicating the organization's budget for the organization's prior operating year and the amount of that budget spent on services to residents of this state who either:
(a) Receive temporary assistance for needy families benefits.
(b) Are low income residents of this state.
(c) Are chronically ill or physically disabled children.
3. A statement that the organization plans to continue spending at least fifty per cent of its budget on services to residents of this state who receive temporary assistance for needy families benefits, who are low income residents of this state or who are chronically ill or physically disabled children.
4. A statement that the organization does not provide, pay for or provide coverage of abortions and does not financially support any other entity that provides, pays for or provides coverage of abortions.
H. The department shall review each written certification and determine whether the organization meets all the criteria to be considered a qualifying charitable organization and notify the organization of its determination. The department may also periodically request recertification from the organization. The department shall compile and make available to the public a list of the qualifying charitable organizations.
I. For the purposes of this section:
1. "Chronically ill or physically disabled children" has the same meaning prescribed in section 36‑260.
2. "Low income residents" means persons whose household income is less than one hundred fifty per cent of the federal poverty level.
3. "Qualifying charitable organization" means a charitable organization that is exempt from federal income taxation under section 501(c)(3) of the internal revenue code or is a designated community action agency that receives community services block grant program monies pursuant to 42 United States Code section 9901. The organization must spend at least fifty per cent of its budget on services to residents of this state who receive temporary assistance for needy families benefits or low income residents of this state and their households or to chronically ill or physically disabled children who are residents of this state. Taxpayers choosing to make donations through an umbrella charitable organization that collects donations on behalf of member charities shall designate that the donation be directed to a member charitable organization that would qualify under this section on a stand‑alone basis. Qualifying charitable organization does not include any entity that provides, pays for or provides coverage of abortions or that financially supports any other entity that provides, pays for or provides coverage of abortions.
4. "Services" means cash assistance, medical care, child care, food, clothing, shelter, job placement and job training services or any other assistance that is reasonably necessary to meet immediate basic needs and that is provided and used in this state.
Sec. 17. Section 43-1089, Arizona Revised Statutes, is amended to read:
43-1089. Credit for contributions to school tuition organization
A. For taxable years ending before January 1, 2021, 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 pursuant to section 43‑401, subsection G during the taxable year to a school tuition organization that is certified pursuant to chapter 16 of this title at the time of donation. Except as provided by subsection C of this section, the amount of the credit shall not exceed:
1. Five hundred dollars in any taxable year for a single individual or a head of household.
2. One thousand dollars 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 shall 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.
F. The tax credit is not allowed if the taxpayer designates the taxpayer's contribution to the school tuition organization for the direct benefit of any dependent of the taxpayer or if the taxpayer designates a student beneficiary as a condition of the taxpayer's contribution to the school tuition organization. The tax credit is not allowed if the taxpayer, with the intent to benefit the taxpayer's dependent, agrees with one or more other taxpayers to designate each taxpayer's contribution to the school tuition organization for the direct benefit of the other taxpayer's dependent.
G. For the purposes of this section, a contribution, for which a credit is claimed, that is made on or before the fifteenth day of the fourth month following the close of the taxable year may be applied to either the current or preceding taxable year and is considered to have been made on the last day of that taxable year.
Sec. 18. Section 43-1089.01, Arizona Revised Statutes, is amended to read:
43-1089.01. Tax credit; public school fees and contributions; definitions
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for the amount of any fees or cash contributions by a taxpayer or on the taxpayer's behalf pursuant to section 43‑401, subsection G during the taxable year to a public school located in this state for the support of extracurricular activities or character education programs of the public school, but not exceeding:
1. Two hundred dollars for a single individual or a head of household.
2. Three hundred dollars in taxable year 2005 for a married couple filing a joint return.
3. Four hundred dollars in taxable year 2006 and any subsequent 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. 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.
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 site council of the public school that receives contributions that are not designated for a specific purpose shall determine how the contributions are used at the school site. If a charter school does not have a site council, the principal, director or chief administrator of the charter school shall determine how the contributions that are not designated for a specific purpose are used at the school site. If at the end of a fiscal year a public school has unspent contributions that were previously designated for a specific purpose or program and that purpose or program has been discontinued or has not been used for two consecutive fiscal years, these contributions shall be considered undesignated in the following fiscal year for the purposes of this subsection.
F. A public school that receives fees or a cash contribution pursuant to subsection A of this section shall report to the department, in a form prescribed by the department, by February 28 of each year the following information:
1. The total number of fee and cash contribution payments received during the previous calendar year.
2. The total dollar amount of fees and contributions received during the previous calendar year.
3. The total dollar amount of fees and contributions spent by the school during the previous calendar year, categorized by specific extracurricular activity or character education program.
G. For the purposes of this section:
1. "Character education programs" means a program described in section 15‑719.
2. "Extracurricular activities" means school sponsored activities that require enrolled students to pay a fee in order to participate, including fees for:
(a) Band uniforms.
(b) Equipment or uniforms for varsity athletic activities.
(c) Scientific laboratory materials.
(d) In‑state or out‑of‑state trips that are solely for competitive events. Extracurricular activities do not include any senior trips or events that are recreational, amusement or tourist activities.
3. "Public school" means a school that is part of a school district, a joint technical education district or a charter school.
Sec. 19. Section 43-1089.02, Arizona Revised Statutes, is amended to read:
43‑1089.02. Credit for donation of school site
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title in the amount of thirty per cent of the value of real property and improvements donated by the taxpayer to a school district or a charter school for use as a school or as a site for the construction of a school.
B. To qualify for the credit:
1. The real property and improvements must be located in this state.
2. The real property and improvements must be conveyed unencumbered and in fee simple, except that:
(a) The conveyance must include as a deed restriction and protective covenant running with title to the land the requirement that as long as the donee holds title to the property the property shall only be used as a school or as a site for the construction of a school, subject to subsection I or J of this section.
(b) In the case of a donation to a charter school, the donor shall record a lien on the property as provided by subsection J, paragraph 3 of this section.
3. The conveyance shall not violate section 15‑341, subsection D and or section 15‑183, subsection V U.
C. For the purposes of this section, the value of the donated property is the property's fair market value as determined in an appraisal as defined in section 32‑3601 that is conducted by an independent party and that is paid for by the donee.
D. If the property is donated by co-owners, including partners in a partnership and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, each donor may claim only the pro rata share of the allowable credit under this section based on the ownership interest. If the property is donated by a husband and wife who file separate returns for a taxable year in which they could have filed a joint return, they may determine between them the share of the credit each will claim. The total of the credits allowed all co-owner donors may not exceed the allowable credit.
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. The credit under this section is in lieu of any deduction pursuant to section 170 of the internal revenue code taken for state tax purposes.
G. On written request by the donee, the donor shall disclose in writing to the donee the amount of the credit allowed pursuant to this section with respect to the property received by the donee.
H. A school district or charter school may refuse the donation of any property for purposes of this section.
I. If the donee is a school district:
1. The district shall notify the school facilities board established by section 15‑2001 and furnish the board with any information the board requests regarding the donation. A school district shall not accept a donation pursuant to this section unless the school facilities board has reviewed the proposed donation and has issued a written determination that the real property and improvements are suitable as a school site or as a school. The school facilities board shall issue a determination that the real property and improvements are not suitable as a school site or as a school if the expenses that would be necessary to make the property suitable as a school site or as a school exceed the value of the proposed donation.
2. The district may sell any donated property pursuant to section 15‑342, but the proceeds from the sale shall only be used for capital projects. The school facilities board shall withhold an amount that corresponds to the amount of the proceeds from any monies that would otherwise be due the school district from the school facilities board pursuant to section 15-2041.
J. If the donee is a charter school:
1. The charter school shall:
(a) Immediately notify the sponsor of the charter school by certified mail and shall furnish the sponsor with any information requested by the sponsor regarding the donation during the ten year period after the conveyance is recorded.
(b) Notify the sponsor by certified mail, and the sponsor shall notify the state treasurer, in the event of the charter school’s financial failure or if the charter school:
(i) Fails to establish a charter school on the property within forty‑eight months after the conveyance is recorded.
(ii) Fails to provide instruction to pupils on the property within forty-eight months after the conveyance is recorded.
(iii) Establishes a charter school on the property but subsequently ceases to operate the charter school on the property for twenty‑four consecutive months or fails to provide instruction to pupils on the property for twenty-four consecutive months.
2. The charter school, or a successor in interest, shall pay to the state treasurer the amount of the credit allowed under this section, or if that amount is unknown, the amount of the allowable credit under this section, if any of the circumstances listed in paragraph 1, subdivision (b) of this subsection occur occurs. If the amount is not paid within one year after the treasurer receives notice under paragraph 1, subdivision (b) of this subsection, a penalty and interest shall be added, determined pursuant to title 42, chapter 1, article 3.
3. A tax credit under this section constitutes a lien on the property, which the donor must record along with the title to the property to qualify for the credit. The amount of the lien is the amount of the allowable credit under this section, adjusted according to the average change in the GDP price deflator, as defined in section 41-563, for each calendar year since the donation, but not exceeding twelve and one-half per cent more than the allowable credit. The lien is subordinate to any liens securing the financing of the school construction. The lien is extinguished on the earliest of the following:
(a) Ten years after the lien is recorded. After that date, the charter school, or a successor in interest, may request the state treasurer to release the lien.
(b) On payment to the state treasurer by the donee charter school, or by a successor in interest, of the amount of the allowable credit under this section, either voluntarily or as required by paragraph 2 of this subsection. After the required amount is paid, the charter school or successor in interest may request the state treasurer to release the lien.
(c) On conveyance of fee simple title to the property to a school district.
(d) On enforcement and satisfaction of the lien pursuant to paragraph 4 of this subsection.
4. The state treasurer shall enforce the lien by foreclosure within one year after receiving notice of any of the circumstances described in paragraph 1, subdivision (b) of this subsection.
5. Subject to paragraphs 3 and 4 of this subsection, the charter school may sell any donated property.
Sec. 20. Section 43-1089.03, Arizona Revised Statutes, is amended to read:
43-1089.03. Credit for contributions to certified school tuition organization
A. For taxable years ending before January 1, 2021, 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 pursuant to section 43‑401, subsection I G during the taxable year to a school tuition organization that is certified pursuant to chapter 16 of this title at the time of donation. Except as provided by subsection C of this section, the amount of the credit shall not exceed:
1. Five hundred dollars in any taxable year for a single individual or a head of household.
2. One thousand dollars 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 shall 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.
F. The tax credit is not allowed if the taxpayer designates the taxpayer's contribution to the school tuition organization for the direct benefit of any dependent of the taxpayer or if the taxpayer designates a student beneficiary as a condition of the taxpayer's contribution to the school tuition organization. The tax credit is not allowed if the taxpayer, with the intent to benefit the taxpayer's dependent, agrees with one or more other taxpayers to designate each taxpayer's contribution to the school tuition organization for the direct benefit of the other taxpayer's dependent.
G. For the purposes of this section, a contribution, for which a credit is claimed, that is made on or before the fifteenth day of the fourth month following the close of the taxable year may be applied to either the current or preceding taxable year and is considered to have been made on the last day of that taxable year.
H. A taxpayer may not claim a credit under this section and also under section 43‑1089 with respect to the same contribution. If a taxpayer's contribution to a school tuition organization exceeds the amount of the credit allowed under section 43‑1089, a taxpayer may claim a credit under this section and also under section 43‑1089. If a taxpayer's contribution to a school tuition organization does not exceed the amount of the credit allowed by section 43‑1089, the contribution is considered to have been made pursuant to section 43‑1089.
Sec. 21. Section 43-1090, Arizona Revised Statutes, is amended to read:
43-1090. Credit for solar hot water heater plumbing stub outs and electric vehicle recharge outlets installed in houses constructed by taxpayer
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for costs incurred during the taxable year of installing or including in one or more houses or dwelling units located in this state and constructed by the taxpayer one or more:
1. Solar hot water plumbing stub outs. To qualify for the credit, the stub out must:
(a) Include two insulated three-fourths inch copper pipes and at least two pairs of wires for monitoring and control purposes that project from the dwelling roof or other suitable location and that are connected to the domestic hot water transport and storage system.
(b) Be located and configured to allow sufficient solar access and exposure and to allow ready installation of solar water heating devices without further expense or effort to reach, use or serve the domestic hot water system of the house or dwelling unit.
2. Electric vehicle recharge outlets. To qualify for the credit, the outlet must be connected to the utility system by a dedicated line that:
(a) Is capable of operating at normal secondary voltages.
(b) Meets applicable local building safety codes.
(c) Is commensurate and consistent with electric vehicle recharging needs and methods.
B. The credit shall not exceed seventy-five dollars for each installation for each separate house or dwelling unit.
C. The taxpayer may elect to transfer a credit under this section to a purchaser or transferee of the house or dwelling unit. If the taxpayer elects to transfer the credit, the taxpayer shall deliver to the purchaser or transferee a written statement that the taxpayer has elected not to claim the credit and that the purchaser or transferee may claim the credit, subject to the conditions and limitations prescribed by this section.
D. If the allowable 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 amount of the credit not used to offset taxes under this title may be carried forward to the next five consecutive taxable years as a credit against subsequent years' income tax liability.
E. Co-owners of a business, including partners in a partnership and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, 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.
F. The credit allowed under this section is in lieu of any expenses taken for installing solar stub outs or electric vehicle recharge outlets to reach in computing Arizona taxable income.
Sec. 22. Section 43-1161, Arizona Revised Statutes, is amended to read:
43-1161. Credit for new employment
A. For taxable years
beginning from and after June 30, 2011
and ending before January 1, 2021, a credit is allowed against
the taxes imposed by this title for net increases in full‑time employees
residing in this state and hired in qualified employment positions in this
state as computed and certified by the Arizona commerce authority pursuant to
section 41‑1525.
B. Subject to subsection F of this section, the amount of the credit is equal to:
1. Three thousand dollars for each full‑time employee hired in a qualified employment position in the first year or partial year of employment. Employees hired in the last ninety days of the taxable year are excluded for that taxable year and are considered to be new employees in the following taxable year.
2. Three thousand dollars for each full-time employee in a qualified employment position for the full taxable year in the second year of continuous employment.
3. Three thousand dollars for each full-time employee in a qualified employment position for the full taxable year in the third year of continuous employment.
C. The capital investment and the new qualified employment positions requirements of section 41‑1525, subsection B must be accomplished within twelve months after the start of the required capital investment. No credit may be claimed until both requirements are met. A business that meets the requirements of section 41‑1525, subsection B for a location is eligible to claim first year credits for three years beginning with the taxable year in which those requirements are completed. Employees hired at the location before the beginning of the taxable year but during the twelve-month period allowed in this subsection are considered to be new employees for the taxable year in which all of those requirements are completed. The employees that are considered to be new employees for the taxable year under this subsection shall not be included in the average number of full-time employees during the immediately preceding taxable year until the taxable year in which all of the requirements of section 41‑1525, subsection B are completed. An employee working at a temporary work site in this state while the designated location is under construction is considered to be working at the designated location if all of the following occur:
1. The employee is hired after the start of the required investment at the designated location.
2. The employee is hired to work at the designated location after it is completed.
3. The payroll for the employees destined for the designated location is segregated from other employees.
4. The employee is moved to the designated location within thirty days after its completion.
D. To qualify for a credit under this section, the taxpayer and the employment positions must meet the requirements prescribed by section 41‑1525.
E. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was claimed and allowed in the first year.
F. The net increase in the number of qualified employment positions is the lesser of the total number of filled qualified employment positions created at the designated location or locations during the taxable year or the difference between the average number of full‑time employees in this state in the current taxable year and the average number of full‑time employees in this state during the immediately preceding taxable year. The net increase in the number of qualified employment positions computed under this subsection may not exceed the difference between the average number of full‑time employees in this state in the current taxable year and the average number of full-time employees in this state during the immediately preceding taxable year.
G. A taxpayer who claims a credit under section 43‑1164.01 or 43‑1167 shall not claim a credit under this section with respect to the same employment positions.
H. If the allowable tax credit exceeds the income taxes otherwise due on the claimant's income, or if there are no state income taxes due on the claimant's income, the amount of the claim not used as an offset against the income taxes may be carried forward as a tax credit against subsequent years' income tax liability for a period not exceeding five taxable years.
I. 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 of the business may not exceed the amount that would have been allowed for a sole owner of the business.
J. If the business is sold or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for the qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete. If a person purchases a taxpayer that had qualified for first or second year credits or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets other eligibility requirements of this section. Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.
K. A failure to timely report and certify to the Arizona commerce authority the information prescribed by section 41‑1525, subsection E, and in the manner prescribed by section 41‑1525, subsection F disqualifies the taxpayer from the credit under this section. The department shall require written evidence of the timely report to the Arizona commerce authority.
L. A tax credit under this section is subject to recovery for a violation described in section 41‑1525, subsection H.
Sec. 23. Section 43-1164.03, Arizona Revised Statutes, is amended to read:
43-1164.03. Renewable energy production tax credit; definitions
A. Subject to subsection B of this section, For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for the production of electricity using renewable energy resources.
B. The taxpayer is eligible for the credit:
1. If the taxpayer holds title to a qualified energy generator that first produces electricity from and after December 31, 2010 and before January 1, 2021.
2. For ten consecutive calendar years beginning with the calendar year in which the qualified energy generator begins producing electricity that is transmitted through a transmission facility to a grid connection with a public or private electric transmission or distribution utility system. That same date applies with respect to that generator until the expiration of the ten-year period regardless of whether the generator is sold to another taxpayer or goes out of production before the expiration of the ten-year period.
C. The credit authorized by this section is based on the electricity that is generated by a qualified energy generator during a calendar year. For a taxpayer that files on a fiscal year basis, the credit shall be claimed on the return for the taxable year in which the calendar year ends.
D. Subject to subsection G of this section, the amount of the credit is:
1. One cent per kilowatt-hour of the first two hundred thousand megawatt-hours of electricity produced by a qualified energy generator in the calendar year using a wind or biomass derived qualified energy resource.
2. The following amounts for electricity produced by a qualified energy generator using a solar light derived or solar heat derived qualified energy resource:
(a) Four cents per kilowatt-hour in the first calendar year in which the qualified energy generator produces electricity.
(b) Four cents per kilowatt-hour in the second calendar year in which the qualified energy generator produces electricity.
(c) Three and one-half cents per kilowatt-hour in the third calendar year in which the qualified energy generator produces electricity.
(d) Three and one-half cents per kilowatt-hour in the fourth calendar year in which the qualified energy generator produces electricity.
(e) Three cents per kilowatt-hour in the fifth calendar year in which the qualified energy generator produces electricity.
(f) Three cents per kilowatt-hour in the sixth calendar year in which the qualified energy generator produces electricity.
(g) Two cents per kilowatt-hour in the seventh calendar year in which the qualified energy generator produces electricity.
(h) Two cents per kilowatt-hour in the eighth calendar year in which the qualified energy generator produces electricity.
(i) One and one-half cents per kilowatt-hour in the ninth calendar year in which the qualified energy generator produces electricity.
(j) One cent per kilowatt-hour in the tenth calendar year in which the qualified energy generator produces electricity.
E. To qualify for the purposes of this section, an energy generator may be located within one mile of an existing qualified energy generator only if the owner of the energy generator or the owner's corporate affiliates are not the owner of or the corporate affiliate of the owner of the existing qualified energy generator.
F. To be eligible for the credit under this section, the taxpayer must apply to the department, on a form prescribed by the department, for certification of the credit. The department shall only accept applications beginning January 2 through January 31 of the year following the calendar year for which the credit is being requested. The application shall include:
1. The name, address and social security number or federal employer identification number of the applicant.
2. The location of the taxpayer's facility that produces electricity using renewable energy resources for which the credit is claimed.
3. The amount of the credit that is claimed.
4. The date the qualified energy generator began producing commercially marketable amounts of electricity.
5. Any additional information that the department requires.
G. The department shall review each application under subsection F of this section and certify to the taxpayer the amount of the credit that is authorized. The amount of the credit for any calendar year shall not exceed two million dollars per facility that produces electricity using renewable energy resources. Credits are allowed under this section and section 43‑1083.02 on a first come, first served basis. The department shall not authorize tax credits under this section and section 43-1083.02 that exceed in the aggregate a total of twenty million dollars for any calendar year. The first time that a taxpayer submits a qualified application for a qualified energy generator under subsection F of this section, the department shall add the taxpayer's name to a credit authorization list that is maintained in the order in which qualified applications are first received by the department on behalf of the qualified energy generator. A taxpayer's position on the credit authorization list shall be determined in the first year the taxpayer submits an application under subsection F of this section for the qualified energy generator. The taxpayer's position on the credit authorization list for a particular qualified energy generator shall remain unchanged for the ten years that are specified in subsection B, paragraph 2 of this section or until a year in which the taxpayer fails to submit a timely application under subsection F of this section or otherwise fails to comply with this section. If a taxpayer is removed from the credit authorization list for a qualified energy generator, the taxpayer may establish a new position on the credit authorization list in a subsequent year by filing a timely application for a qualified energy generator that qualifies for the credit. If an application is received that, if authorized, would require the department to exceed the twenty million dollar limit, the department shall grant the applicant only the remaining credit amount that would not exceed the twenty million dollar limit. After the department authorizes twenty million dollars in tax credits, the department shall deny any subsequent applications that are received for that calendar year. The department shall not authorize any additional tax credits that exceed the twenty million dollar limit even if the amounts that have been certified to any taxpayer were not claimed or a taxpayer otherwise fails to meet the requirements to claim the additional credit.
H. Co-owners of a qualified energy generator, including corporate partners in a partnership and members of a limited liability company, may each claim the pro rata share of the credit allowed under this section based on ownership interest. The total of the credits allowed all such owners of the qualified energy generator may not exceed the amount that would have been allowed for a sole owner of the generator.
I. If the allowable tax credit for a taxpayer exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the amount of the claim not used to offset taxes under this title may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' income tax liability.
J. The department shall adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purposes of this section.
K. For the purposes of this section:
1. "Biomass" means organic material that is available on a renewable or recurring basis, including:
(a) Forest-related materials, including mill residues, logging residues, forest thinnings, slash, brush, low-commercial value materials or undesirable species, salt cedar and other phreatophyte or woody vegetation removed from river basins or watersheds and woody material harvested for the purpose of forest fire fuel reduction or forest health and watershed improvement.
(b) Agricultural-related materials, including orchard trees, vineyard, grain or crop residues, including straws and stover, aquatic plants and agricultural processed coproducts and waste products, including fats, oils, greases, whey and lactose.
(c) Animal waste, including manure and slaughterhouse and other processing waste.
(d) Solid woody waste materials, including landscape or right-of-way tree trimmings, rangeland maintenance residues, waste pallets, crates and manufacturing, construction and demolition wood wastes, excluding pressure‑treated, chemically‑treated or painted wood wastes and wood contaminated with plastic.
(e) Crops and trees planted for the purpose of being used to produce energy.
(f) Landfill gas, wastewater treatment gas and biosolids, including organic waste byproducts generated during the wastewater treatment process.
2. "Qualified energy generator" means a facility that has at least five megawatts generating capacity, that is located on land in this state owned or leased by the taxpayer, that produces electricity using a qualified energy resource and that sells that electricity to an unrelated entity, unless the electricity is sold to a public service corporation.
3. "Qualified energy resource" means a resource that generates electricity through the use of only the following energy sources:
(a) Solar light.
(b) Solar heat.
(c) Wind.
Sec. 24. Section 43-1167, Arizona Revised Statutes, is amended to read:
43-1167. Credit for increased employment in military reuse zones; definition
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for net increases in employment by the taxpayer of full‑time employees who are working in a military reuse zone, established under title 41, chapter 10, article 3, and who are primarily engaged in providing aviation or aerospace services or in manufacturing, assembling or fabricating aviation or aerospace products. The amount of the credit is a dollar amount allowed for each new employee, determined as follows:
1. With respect to each employee other than a dislocated military base employee:
1st year of employment $ 500
2nd year of employment $1,000
3rd year of employment $1,500
4th year of employment $2,000
5th year of employment $2,500
2. With respect to each dislocated military base employee:
1st year of employment $1,000
2nd year of employment $1,500
3rd year of employment $2,000
4th year of employment $2,500
5th year of employment $3,000
B. 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 amount of the claim not used to offset the taxes under this title may be carried forward as a credit against subsequent years' income tax liability for the period, not to exceed five taxable years, if the business remains in the military reuse zone.
C. The net increase in the number of employees for purposes of this section shall be determined by comparing the taxpayer's average employment in the military reuse zone during the taxable year with the taxpayer's previous year's fourth quarter employment in the zone, based on the taxpayer's report to the department of economic security for unemployment insurance purposes but considering only employment in the zone.
D. 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 for a sole owner of the business.
E. A credit is not allowed under this section with respect to an employee whose place of employment is relocated by the taxpayer from a location in this state to the military reuse zone unless the employee is engaged in aviation or aerospace services or in manufacturing, assembling or fabricating aviation or aerospace products and the taxpayer maintains at least the same number of employees in this state but outside the zone.
F. A taxpayer who claims a credit under section 43‑1161 or 43‑1164.01 may not claim a credit under this section with respect to the same employees.
G. For the purposes of this section, "dislocated military base employee" means a civilian who previously had permanent full‑time civilian employment on the military facility as of the date the closure of the facility was finally determined under federal law, as certified by the Arizona commerce authority.
Sec. 25. Section 43-1167.01, Arizona Revised Statutes, is amended to read:
43-1167.01. Credit for employing national guard members
A. For taxable years beginning from and after December 31, 2005 and ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for a taxpayer whose employee is a member of the Arizona national guard if the employee is placed on active duty. The amount of the credit is one thousand dollars for each employee who is placed on active duty by the Arizona national guard.
B. To qualify for the credit:
1. The employee must be a member of the Arizona national guard who is employed by the taxpayer in a full-time equivalent position when the employee is placed on active duty.
2. Each member of the Arizona national guard who is employed must have served during the taxable year on active duty for training that exceeds the required annual training period, including any activation for federal or state contingencies or emergencies.
C. If the allowable 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 amount of the claim not used to offset taxes under this title may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' income tax liability.
D. The credit under this section may be claimed only once by the taxpayer in any taxable year with respect to each employee who is placed on active duty by the Arizona national guard, but may be claimed again for that employee in a subsequent taxable year if that employee remains on active duty or is placed again on active duty in a subsequent taxable year.
E. 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.
Sec. 26. Section 43-1168, Arizona Revised Statutes, as amended by Laws 2012, chapter 3, section 54, is amended to read:
43-1168. Credit for increased research activity
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title in an amount determined pursuant to section 41 of the internal revenue code, except that:
1. The amount of the credit is computed as follows:
(a) Add:
(i) The excess, if any, of the qualified research expenses for the taxable year over the base amount as defined in section 41(c) of the internal revenue code.
(ii) The basic research payments determined under section 41(e)(1)(A) of the internal revenue code.
(b) If the sum computed under subdivision (a) of this paragraph is two million five hundred thousand dollars or less, the credit is equal to twenty per cent of that amount.
(c) If the sum computed under subdivision (a) of this paragraph is over two million five hundred thousand dollars, the credit is equal to five hundred thousand dollars plus eleven per cent of any amount exceeding two million five hundred thousand dollars, except that:
(i) For taxable years beginning from and after December 31, 2000 through December 31, 2001, the credit shall not exceed one million five hundred thousand dollars.
(ii) For taxable years beginning from and after December 31, 2001 through December 31, 2002, the credit shall not exceed two million five hundred thousand dollars.
(d) For taxable years beginning from and after December 31, 2011 and ending before January 1, 2021, an additional credit amount is allowed if the taxpayer made basic research payments during the taxable year to a university under the jurisdiction of the Arizona board of regents. The additional credit amount is equal to ten per cent of the excess, if any, of the basic research payments over the qualified organization base period amount for the taxable year. The department shall not allow credit amounts under this subdivision and section 43‑1074.01, subsection A, paragraph 1, subdivision (c) that exceed, in the aggregate, a combined total of ten million dollars in any calendar year. Subject to that limit, on application by the taxpayer, the department shall certify credit amounts under this subdivision and section 43‑1074.01, subsection A, paragraph 1, subdivision (c) based on priority placement established by the date that the taxpayer filed the application. The additional credit amount under this subdivision shall not exceed the amount allowed based on actual basic research payments or the department's certification, whichever is less. If an application, if certified in full, would exceed the ten million dollar limit, the department shall certify only an amount within that limit. After the limit is attained, the department shall deny any subsequent applications regardless of whether other certified amounts are not actually claimed as a credit or other taxpayers fail to qualify to actually claim certified amounts. Notwithstanding subsections B and D of this section, any amount of the additional credit under this subdivision that exceeds the taxes otherwise due under this title is not refundable, but may be carried forward to the next five consecutive taxable years. For the purposes of this subdivision, "basic research payments" and "qualified organization base period amount" have the same meanings prescribed by section 41(e) of the internal revenue code.
2. Qualified research includes only research conducted in this state, including research conducted at a university in this state and paid for by the taxpayer.
3. If two or more taxpayers, including corporate partners in a partnership, share in the eligible expenses, each taxpayer is eligible to receive a proportionate share of the credit.
4. The credit under this section applies only to expenses incurred from and after December 31, 1993.
5. The termination provisions of section 41 of the internal revenue code do not apply.
B. Except as provided by subsection D of this section, if the allowable credit under this section exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the amount of the credit not used to offset taxes may be carried forward to the next fifteen consecutive taxable years. The amount of credit carryforward from taxable years beginning from and after December 31, 2000 through December 31, 2002 that may be used under this subsection in any taxable year may not exceed the taxpayer's tax liability under this title or five hundred thousand dollars, whichever is less, minus the credit under this section for the current taxable year's qualified research expenses. The amount of credit carryforward from taxable years beginning from and after December 31, 2002 that may be used under this subsection in any taxable year may not exceed the taxpayer's tax liability under this title minus the credit under this section for the current taxable year's qualified research expenses. A taxpayer that carries forward any amount of credit under this subsection may not thereafter claim a refund of any amount of the credit under subsection D of this section.
C. If a taxpayer has qualified research expenses that are carried forward from taxable years beginning before January 1, 2001, the amount of the expenses carried forward shall be converted to a credit carryforward by multiplying the amount of the qualified expenses carried forward by twenty per cent. A credit carryforward determined under this subsection may be carried forward to not more than fifteen years from the year in which the expenses were incurred. The amount of credit carryforward from taxable years beginning before January 1, 2001 that may be used under this subsection in any taxable year may not exceed the taxpayer's tax liability under this title or five hundred thousand dollars, whichever is less, minus the credit under this section for the current taxable year's qualified research expenses. The total amount of credit carryforward from taxable years beginning before January 1, 2003 that may be used in any taxable year under subsection B and this subsection may not exceed the taxpayer's tax liability under this title or five hundred thousand dollars, whichever is less, minus the credit under this section for the current taxable year's qualified research expenses.
D. For taxable years beginning from and after December 31, 2009, if a taxpayer who claims a credit under this section employs fewer than one hundred fifty persons in the taxpayer's trade or business and if the allowable credit under this section exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, in lieu of carrying the excess amount of credit forward to subsequent taxable years under subsection B of this section, the taxpayer may elect to receive a refund as follows:
1. The taxpayer must apply to the Arizona commerce authority for qualification for the refund pursuant to section 41‑1507 and submit a copy of the authority's certificate of qualification to the department of revenue with the taxpayer's income tax return.
2. The amount of the refund is limited to seventy-five per cent of the amount by which the allowable credit under this section exceeds the taxpayer's tax liability under this title for the taxable year. The remainder of the excess amount of the credit is waived.
3. The refund shall be paid in the manner prescribed by section 42‑1118.
4. The refund is subject to setoff under section 42‑1122.
5. If the department determines that a credit refunded pursuant to this subsection is incorrect or invalid, the excess credit issued may be treated as a tax deficiency pursuant to section 42‑1108.
E. A taxpayer that claims a credit for increased research and development activity under this section shall not claim a credit under section 43‑1164.02 for the same expenses. END_STATUTE
Sec. 27. Section 43-1170, Arizona Revised Statutes, is amended to read:
43-1170. Credit for pollution control equipment
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for expenses that the taxpayer incurred during the taxable year to purchase real or personal property that is used in the taxpayer's trade or business in this state to control or prevent pollution. The amount of the credit is equal to ten per cent of the purchase price.
B. Property that qualifies for the credit under this section includes that portion of a structure, building, installation, excavation, machine, equipment or device and any attachment or addition to or reconstruction, replacement or improvement of that property that is directly used, constructed or installed in this state for the purpose of meeting or exceeding rules or regulations adopted by the United States environmental protection agency, the department of environmental quality or a political subdivision of this state to prevent, monitor, control or reduce air, water or land pollution that results from the taxpayer's direct operating activities in conducting a trade or business in this state.
C. The credit allowed pursuant to this section does not apply to:
1. The purchase of any personal property that is attached to a motor vehicle.
2. Any property that has a substantial use for a purpose other than the purposes described in subsection B of this section.
3. Any portion of pollution control property that is included as a standard and integral part of another property.
D. Amounts that qualify for a credit under this section must be includible in the taxpayer's adjusted basis for the property. The adjusted basis of any property with respect to which the taxpayer has claimed a credit shall be reduced by the amount of credit claimed with respect to that asset. This credit does not affect the deductibility for depreciation or amortization of the remaining adjusted basis of the asset.
E. 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.
F. 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 taxable years' income tax liability.
G. The maximum credit that a taxpayer may claim under this section is five hundred thousand dollars in a taxable year.
Sec. 28. Section 43-1170.01, Arizona Revised Statutes, is amended to read:
43-1170.01. Credit for agricultural pollution control equipment
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for expenses that a taxpayer, involved in the commercial production of livestock, livestock products or agricultural, horticultural, viticultural or floricultural crops or products, incurred during the taxable year to purchase tangible personal property that is primarily used in the taxpayer's trade or business in this state to control or prevent pollution. The amount of the credit is equal to twenty‑five per cent of the cost of the real or personal property. The maximum credit that a taxpayer may claim under this section is twenty‑five thousand dollars in a taxable year.
B. Property that qualifies for the credit under this section includes the portion of a structure, building, installation, excavation, machine, equipment or device and any attachment or addition to or reconstruction, replacement or improvement of that property that is directly used, constructed or installed in this state to prevent, monitor, control or reduce air, water or land pollution.
C. Amounts that qualify for a credit under this section must be includible in the taxpayer's adjusted basis for the property. The adjusted basis of any property with respect to which the taxpayer has claimed a credit shall be reduced by the amount of credit claimed with respect to that asset. This credit does not affect the deductibility for depreciation or amortization of the remaining adjusted basis of the asset.
D. 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.
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 amount of the claim not used to offset the taxes under this title may be carried forward to the next five consecutive taxable years as a credit against subsequent years' income tax liability.
F. A taxpayer who claims a credit for pollution control equipment under this section shall not claim a credit under section 43-1170 for the same equipment or expense.
Sec. 29. Section 43-1175, Arizona Revised Statutes, is amended to read:
43-1175. Credit for employment of temporary assistance for needy families recipients
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for net increases in qualified employment by the taxpayer of recipients of temporary assistance for needy families as defined in section 46‑101 who are residents of this state. The amount of the credit is equal to the sum of the following:
1. One‑fourth of the taxable wages paid to each employee in qualified employment positions, not to exceed five hundred dollars per qualified employment position, in the first year or partial year of employment. Wages that were subsidized as provided by section 46‑299 shall not be included.
2. One‑third of the taxable wages paid to each employee in qualified employment positions, not to exceed one thousand dollars per qualified employment position, in the second year of continuous employment. Wages that were subsidized as provided by section 46‑299 shall not be included.
3. One‑half of the taxable wages paid to each employee in qualified employment positions, not to exceed one thousand five hundred dollars per qualified employment position, in the third year of continuous employment. Wages that were subsidized as provided by section 46‑299 shall not be included.
B. The credit allowed in this section is in lieu of any wage expense deduction taken for state tax purposes.
C. To qualify for a credit under this section:
1. All of the employees with respect to whom a credit is claimed must reside in this state and must be recipients of temporary assistance for needy families as defined in section 46‑101 at the time the employee is hired.
2. A qualified employment position must meet all of the following requirements:
(a) The position must be classified as full‑time employment.
(b) The employment must include health insurance coverage for the employee if the employer offers this coverage for employees who are not recipients of temporary assistance for needy families.
(c) The employer must pay compensation at least equal to the minimum wage or a wage comparable to that paid to employees who are not receiving temporary assistance for needy families based on the employee's training, skills and job classification.
(d) The employee must have been employed for at least ninety days during the first taxable year. An employee who is hired during the last ninety days of the taxable year shall be considered a new employee during the next taxable year. Periods for which the employee's wages were subsidized as provided by section 46‑299 shall not be included as periods of employment.
(e) The employee was not employed by the taxpayer within twelve months before the current date of hire.
(f) The employee position is not eligible for any other employment credit pursuant to this title based on wages paid.
D. The net increase in the number of qualified employment positions shall be determined by comparing the average number of qualified employment positions during the taxable year with the immediately preceding taxable year based on the taxpayer’s report to the department of economic security for unemployment purposes.
E. If the allowable tax credit exceeds the income taxes otherwise due on the claimant's income, the amount of the claim not used as an offset against income taxes may be carried forward as a tax credit against subsequent years' income tax liability for the period, not to exceed five consecutive taxable years.
F. Co‑owners of a business, including corporate partners in a partnership, may 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 of the owners of the business may not exceed the amount that would have been allowed for a sole owner of the business.
G. The department may adopt rules necessary for the administration of this section.
Sec. 30. Section 43-1176, Arizona Revised Statutes, is amended to read:
43-1176. Credit for solar hot water heater plumbing stub outs and electric vehicle recharge outlets installed in houses constructed by taxpayer
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for costs incurred during the taxable year of installing or including in one or more houses or dwelling units located in this state and constructed by the taxpayer one or more:
1. Solar hot water plumbing stub outs. To qualify for the credit the stub out must:
(a) Include two insulated three-fourths inch copper pipes and at least two pairs of wires for monitoring and control purposes that project from the dwelling roof or other suitable location and that are connected to the domestic hot water transport and storage system.
(b) Be located and configured to allow sufficient solar access and exposure and to allow ready installation of solar water heating devices without further expense or effort to reach, use or serve the domestic hot water system of the house or dwelling unit.
2. Electric vehicle recharge outlets. To qualify for the credit, the outlet must be connected to the utility system by a dedicated line that:
(a) Is capable of operating at normal secondary voltages.
(b) Meets applicable local building safety codes.
(c) Is commensurate and consistent with electric vehicle recharging needs and methods.
B. The credit shall not exceed seventy‑five dollars for each installation for each separate house or dwelling unit.
C. The taxpayer may elect to transfer a credit under this section to a purchaser or transferee of the house or dwelling unit. If the taxpayer elects to transfer the credit, the taxpayer shall deliver to the purchaser or transferee a written statement that the taxpayer has elected not to claim the credit and that the purchaser or transferee may claim the credit, subject to the conditions and limitations prescribed by this section.
D. If the allowable 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 amount of the credit not used to offset taxes under this title may be carried forward to the next five consecutive taxable years as a credit against subsequent years' income tax liability.
E. 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.
F. The credit allowed under this section is in lieu of any expenses taken for installing solar stub outs or electric vehicle recharge outlets to reach in computing Arizona taxable income.
Sec. 31. Section 43-1178, Arizona Revised Statutes, is amended to read:
43-1178. Credit for taxes with respect to coal consumed in generating electrical power
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title for a taxpayer that purchases coal consumed in generating electrical power in this state. The credit is equal to thirty per cent of the amount paid by the seller or purchaser as transaction privilege or use tax with respect to the coal sold to the taxpayer.
B. Co-owners of a business, including corporate partners in a partnership, may 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 of the owners of the business may not exceed the amount that would have been allowed for a sole owner of the business.
C. 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 amount of the claim not used as an offset against income taxes may be carried forward to the next five consecutive taxable years as a credit against subsequent years' income tax liability.
D. The credit under this section is in lieu of any allowance for state tax purposes for a deduction for the expenses allowed by the internal revenue code.
Sec. 32. Section 43-1181, Arizona Revised Statutes, is amended to read:
43-1181. Credit of donation of school site
A. For taxable years ending before January 1, 2021, a credit is allowed against the taxes imposed by this title in the amount of thirty per cent of the value of real property and improvements donated by the taxpayer to a school district or a charter school for use as a school or as a site for the construction of a school.
B. To qualify for the credit:
1. The real property and improvements must be located in this state.
2. The real property and improvements must be conveyed unencumbered and in fee simple except that:
(a) The conveyance must include as a deed restriction and protective covenant running with title to the land the requirement that as long as the donee holds title to the property the property shall only be used as a school or as a site for the construction of a school, subject to subsection I or J of this section.
(b) In the case of a donation to a charter school, the donor shall record a lien on the property as provided by subsection J, paragraph 3 of this section.
3. The conveyance shall not violate section 15‑341, subsection D or section 15‑183, subsection U.
C. For the purposes of this section, the value of the donated property is the property's fair market value as determined in an appraisal as defined in section 32‑3601 that is conducted by an independent party and that is paid for by the donee.
D. If the property is donated by co‑owners, including corporate partners in a partnership, each donor may claim only the pro rata share of the allowable credit under this section based on the ownership interest. The total of the credits allowed all co-owner donors may not exceed the allowable credit.
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. The credit under this section is in lieu of any deduction pursuant to section 170 of the internal revenue code taken for state tax purposes.
G. On written request by the donee, the donor shall disclose in writing to the donee the amount of the credit allowed pursuant to this section with respect to the property received by the donee.
H. A school district or charter school may refuse the donation of any property for purposes of this section.
I. If the donee is a school district:
1. The district shall notify the school facilities board established by section 15‑2001 and furnish the board with any information the board requests regarding the donation. A school district shall not accept a donation pursuant to this section unless the school facilities board has reviewed the proposed donation and has issued a written determination that the real property and improvements are suitable as a school site or as a school. The school facilities board shall issue a determination that the real property and improvements are not suitable as a school site or as a school if the expenses that would be necessary to make the property suitable as a school site or as a school exceed the value of the proposed donation.
2. The district may sell any donated property pursuant to section 15‑342, but the proceeds from the sale shall only be used for capital projects. The school facilities board shall withhold an amount that corresponds to the amount of the proceeds from any monies that would otherwise be due the school district from the school facilities board pursuant to section 15‑2041.
J. If the donee is a charter school:
1. The charter school shall:
(a) Immediately notify the sponsor of the charter school by certified mail and shall furnish the sponsor with any information requested by the sponsor regarding the donation during the ten year period after the conveyance is recorded.
(b) Notify the sponsor by certified mail, and the sponsor shall notify the state treasurer, in the event of the charter school's financial failure or if the charter school:
(i) Fails to establish a charter school on the property within forty‑eight months after the conveyance is recorded.
(ii) Fails to provide instruction to pupils on the property within forty-eight months after the conveyance is recorded.
(iii) Establishes a charter school on the property but subsequently ceases to operate the charter school on the property for twenty-four consecutive months or fails to provide instruction to pupils on the property for twenty-four consecutive months.
2. The charter school, or a successor in interest, shall pay to the state treasurer the amount of the credit allowed under this section, or if that amount is unknown, the amount of the allowable credit under this section, if any of the circumstances listed in paragraph 1, subdivision (b) of this subsection occur occurs. If the amount is not paid within one year after the treasurer receives notice under paragraph 1, subdivision (b) of this subsection, a penalty and interest shall be added, determined pursuant to title 42, chapter 1, article 3.
3. A tax credit under this section constitutes a lien on the property, which the donor must record along with the title to the property to qualify for the credit. The amount of the lien is the amount of the allowable credit under this section, adjusted according to the average change in the GDP price deflator, as defined in section 41‑563, for each calendar year since the donation, but not exceeding twelve and one-half per cent more than the allowable credit. The lien is subordinate to any liens securing the financing of the school construction. The lien is extinguished on the earliest of the following:
(a) Ten years after the lien is recorded. After that date, the charter school, or a successor in interest, may request the state treasurer to release the lien.
(b) On payment to the state treasurer by the donee charter school, or by a successor in interest, of the amount of the allowable credit under this section, either voluntarily or as required by paragraph 2 of this subsection. After the required amount is paid, the charter school or successor in interest may request the state treasurer to release the lien.
(c) On conveyance of fee simple title to the property to a school district.
(d) On enforcement and satisfaction of the lien pursuant to paragraph 4 of this subsection.
4. The state treasurer shall enforce the lien by foreclosure within one year after receiving notice of any of the circumstances described in paragraph 1, subdivision (b) of this subsection.
5. Subject to paragraphs 3 and 4 of this subsection, the charter school may sell any donated property.
Sec. 33. Section 43-1183, Arizona Revised Statutes, is amended to read:
43-1183. Credit for contributions to school tuition organization
A. Beginning from and after June 30, 2006 and for taxable years ending before January 1, 2021, 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 a school tuition organization that is certified pursuant to chapter 15 of this title at the time of donation.
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 and is preapproved by the department of revenue pursuant to subsection D of this section.
C. The department of revenue:
1. Shall not allow tax credits under this section and section 20‑224.06 that exceed in the aggregate a combined total of ten million dollars in any fiscal year. Beginning in fiscal year 2007‑2008, the aggregate dollar amount of the tax credit cap from the previous fiscal year shall be annually increased by twenty per cent.
2. Shall preapprove tax credits under this section and section 20‑224.06 subject to subsection D of this section.
3. Shall allow the tax credits under this section and section 20‑224.06 on a first come, first served basis.
D. For the purposes of subsection C, paragraph 2 of this section, before making a contribution to a school tuition organization, the taxpayer under this title or title 20 must notify the school tuition organization of the total amount of contributions that the taxpayer intends to make to the school tuition organization. Before accepting the contribution, the school tuition organization 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 school tuition organization. If the department of revenue preapproves the request, the school tuition organization shall immediately notify the taxpayer, and the department of insurance in the case of a credit under section 20‑224.06, 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 school tuition organization within twenty days after receiving notice from the school tuition organization that the requested amount was preapproved. If the school tuition organization does not receive the preapproved contribution from the taxpayer within the required twenty days, the school tuition organization shall immediately notify the department of revenue, and the department of insurance in the case of a credit under section 20‑224.06, and the department of revenue shall 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. A taxpayer shall not claim a credit under this section and also under section 43‑1184 with respect to the same contribution.
I. The tax credit is not allowed if the taxpayer designates the taxpayer's contribution to the school tuition organization for the direct benefit of any specific student.
J. The department of revenue, with the cooperation of the department of insurance, shall adopt rules and publish and prescribe forms and procedures necessary for the administration of this section.
Sec. 34. Section 43-1184, Arizona Revised Statutes, is amended to read:
43-1184. Credit for contributions to school tuition organization; displaced students; students with disabilities
A. Beginning from and after June 30, 2009 and for taxable years ending before January 1, 2021, 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 a school tuition organization that is certified pursuant to chapter 15 of this title at the time of donation.
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 and is preapproved by the department of revenue pursuant to subsection D of this section.
C. The department of revenue:
1. Shall not allow tax credits under this section and section 20‑224.07 that exceed in the aggregate a combined total of five million dollars in any fiscal year.
2. Shall preapprove tax credits under this section and section 20‑224.07 subject to subsection D of this section.
3. Shall allow the tax credits under this section and section 20‑224.07 on a first come, first served basis.
D. For the purposes of subsection C, paragraph 2 of this section, before making a contribution to a school tuition organization, the taxpayer under this title or title 20 must notify the school tuition organization of the total amount of contributions that the taxpayer intends to make to the school tuition organization. Before accepting the contribution, the school tuition organization 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 school tuition organization. If the department of revenue preapproves the request, the school tuition organization 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 school tuition organization within twenty days after receiving notice from the school tuition organization that the requested amount was preapproved. If the school tuition organization does not receive the preapproved contribution from the taxpayer within the required twenty days, the school tuition organization shall immediately notify the department of revenue and the department shall 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. A taxpayer shall not claim a credit under this section and also under section 43‑1183 with respect to the same contribution.
I. The tax credit is not allowed if the taxpayer designates the taxpayer's contribution to the school tuition organization for the direct benefit of any specific student.
J. The department of revenue shall adopt rules necessary for the administration of this section.
Sec. 35. Effective date
A. Section 43-1074.01, Arizona Revised Statutes, as amended by Laws 2012, chapter 3, section 47 and this act, is effective for taxable years beginning from and after December 31, 2017.
B. Section 43-1168, Arizona Revised Statutes, as amended by Laws 2012, chapter 3, section 54 and this act, is effective for taxable years beginning from and after December 31, 2017.
Sec. 36. 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.
