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online sales tax issue

Legislative Session Improves Business Landscape in Arizona

The Arizona Small Business Association (ASBA), the largest trade association in Arizona representing over 11,000 member businesses in all 15 counties, tracked 65 bills during Arizona’s 51st Legislature (Jan. 14 – June 13, 2013), eight of which were Priority Bills. ASBA has announced all eight Priority Bills passed.

“We have a strong sense of responsibility to our members and Arizona’s business community,” states Jerry Bustamante, ASBA sr. vice president of public policy. “We understand that our actions influence how our elected officials vote and that our members hold us to a high standard.”

To advocate for businesses throughout Arizona, ASBA focused on five legislative priorities: 1) Taxation, 2) Regulation, 3) Economic Development, 4) Health Care and 5) Education.

“Bills signed into law such as HB 2147 and 2324 are excellent examples of a good public policy that, collectively, make Arizona more business-friendly and provide relief to existing businesses,” says Rick Murray, CEO of ASBA. “HB 2111, commonly known as TPT, on the other hand, is a single bill that will make a dramatic contribution that will completely change the landscape in which businesses operate. TPT will provide a much needed overhaul to an overly burdensome tax system.”

Bustamante adds, “ASBA is proud to have been part of, and have taken a leadership role in, the coalition of business groups that fought to reform TPT and bring much-needed relief to Arizona.”

The following were ASBA’s 2013 Priority Bills:

HB 2111: Transaction Privilege Tax Change (TPT)

  • Sponsor: Rep. Debbie Lesko, LD 21
  • Summary: This is the Transaction Privilege Tax (TPT) simplification bill that intends to significantly reform how sales taxes are collected in Arizona. The intent of the bill is to provide Arizona businesses with, and return Arizona to, a single organization that manages all tax and audit activities. The Arizona Department of Revenue would be charged with creating an online portal to provide a single location to get a TPT permit, file TPT returns and make TPT payments for all jurisdictions in the state.
  • Result: After much debate and compromise, HB 2111 passed out of the House with a 58-1 vote, passed out of the Senate with a 29-0 vote on the legislature’s final day and will soon arrive on Governor Brewer’s desk to be signed into law.

HB 2147: Unemployment Benefits; Proof; Eligibility

  • Sponsor: Rep. Warren Petersen, LD 12
  • Summary: This bill is the latest effort to reform how unemployment benefits are delivered in Arizona and attempts to level the playing field where businesses have been at a disadvantage. This bill provides much-needed relief to Arizona businesses by shifting the burden of proof on an applicant who resigned their employment but claims they were fired. Unemployment insurance applicants, rather than the employer, will have to demonstrate that they involuntarily left employment.
  • Result: HB 2147 passed out of the House with a 34-24 vote, passed out of the Senate with a 17-12 vote and was signed into law by the Governor.

HB 2324: TPT Exemption; Leases; Affiliated Companies

(Municipal Tax Code; Leases)

  • Sponsor: Rep. Eddie Farnsworth, LD 12
  • Summary: This bill exempts commercial leases from TPT tax when the owner of the business and the building being leased is one in the same. Municipalities and special taxing districts are prohibited from levying a transaction privilege or use tax on gross income derived from leasing real property between affiliated companies, businesses or persons, or by a reciprocal insurer. Cities that do collect such taxes may continue to require payment until October of 2013.
  • Result: HB 2324 passed out of the House with a 58-0 vote, passed out of the Senate with a 29-0 vote and was signed into law by the Governor.

HB 2336: Taxation; Retail Classification; Cash Equivalents

  • Sponsor: Rep. Tom Forese, LD 17
  • Summary: This bill exempts a number of items referred to as “cash equivalents” purchased in advanced in a dollar value denomination from retail TPT tax. These cash equivalents are gift cards, vouchers, money orders and traveler’s checks. No TPT is paid to buy a gift card, but TPT is paid when a gift card is used to purchase goods.
  • Result: HB 2336 passed out of the House with a 59-0 vote, passed out of the Senate with a 29-0 vote on the legislature’s final day and will soon arrive on Governor Brewer’s desk to be signed into law.

HB 2599: Procurement Code; Amendments

  • Sponsor: Rep. Justin Pierce, LD 25
  • Summary: This bill amends Arizona’s procurement code to more closely scrutinize state employees involved in purchasing decisions who move back and forth between government and private sector jobs. The bill also makes technical changes in how the state selects the winner of an RFP, and its overall intent is for government to operate more like the private sector.
  • Result: HB 2599 passed out of the House with a 59-0 vote, passed out of the Senate with a 24-0 vote and was signed into law by the Governor.

SB 1168: Internal Revenue Code Conformity

  • Sponsor: Steve Yarbrough, LD 17
  • Summary: This bill makes changes to Arizona’s income tax laws to ensure that they conform to the federal IRS code in effect as of January 1, 2013.
  • Result: SB 1168 passed out of the Senate with a 28-0 vote, passed out of the House with a 58-0 vote and was signed into law by the Governor.

SB 1169: Prop 117, Conformity

  • Sponsor: Steve Yarbrough, LD 17
  • Summary: This bill makes various changes to the Arizona revised statutes in order to conform to Proposition 117 (property tax assessed valuation; limitation), which was passed by Arizona voters during the 2012 general election. Proposition 117 had nothing to do with the tax rate, but caps at five percent the maximum increase in property value that taxable real property can grow in a certain year.
  • Result: SB 1169 passed out of the Senate with a 28-0 vote, passed out of the House with a 58-0 vote and was signed into law by the Governor.

SB 1233: Limited Liability Companies; Ownership Interests

  • Sponsor: Senator Adam Driggs, LD 28
  • Summary: We refer to this bill as the estate planning bill. This bill amends the Limited Liability Company Act by adding a new provision that governs members as it relates to forms of ownership. An interest in a limited liability company (LLC) may be held by two or more people as joint tenants with right of survivorship, or by a married couple as community property with right of survivorship, except as prohibited or restricted in an operating agreement.
  • Result: SB 1233 passed out of the Senate with a 28-0 vote, passed out of the House with a 56-0 vote and was signed into law by the Governor.

ASBA develops its policy positions and statements through its Public Policy Committee, which is comprised of ASBA members providing volunteer leadership and key ASBA staff. Under the direction of ASBA’s Board of Directors, the Public Policy Committee is charged with conducting research, surveying the membership, developing ASBA legislative priorities tracking bills and taking action to influence the passage or defeat of bills. Learn more about ASBA and its role in public policy, visit www.asba.com or call 602-306-4000 or 520.327.0222.