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REFERENCE TITLE: investment management services; excise tax |
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State of Arizona House of Representatives Fifty-third Legislature Second Regular Session 2018
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HB 2639 |
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Introduced by Representatives Salman: Alston, Blanc, Descheenie, Fernandez, Friese, Gabaldón, Gonzales, Senator Mendez
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AN ACT
Amending Title 42, chapter 5, Arizona Revised Statutes, by adding article 10; relating to investment management services.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 42, chapter 5, Arizona Revised Statutes, is amended by adding article 10, to read:
ARTICLE 10. INVESTMENT MANAGEMENT SERVICES EXCISE TAX
42-5451. Definitions
In this article, unless the context otherwise requires:
1. "Asset" means any of the following:
(a) Securities as defined in section 475(c)(2) of the Internal Revenue Code.
(b) Commodities as defined in section 475(e)(2) of the internal revenue code.
(c) Real estate that is held for a rental or investment purpose.
(d) Interest in a partnership.
(e) Any option or derivative contract to an asset described in subdivision (a), (b), (c) or (d) of this paragraph.
2. "Investment management services" means a business that is held by a person who provides, directly or indirectly, in the active conduct of a trade or business, a substantial quantity of any of the following services to the business:
(a) Advising as to investing in, purchasing or selling any specified asset.
(b) Managing, acquiring or disposing of any specified asset.
(c) Arranging financing with respect to acquiring specified assets.
(d) Engaging in any activity supporting a service described in subdivision (a), (b) or (c) of this paragraph.
42-5452. Levy of tax
A. From and after December 31, 2018, a tax is levied on each partnership, including an investment partnership, and S corporation engaging or continuing in the business of conducting investment management services. The tax is levied and imposed at a rate of twenty percent on the fees calculated by reference to the performance of the investment portfolio funds and not from the investment itself. The tax is not levied and imposed on fees calculated by reference to the total assets under management of a business engaged in investment management services.
B. A person who provides services as a partner of a business that conducts investment management services is liable for the tax imposed by this section in the partner's separate or individual capacity.
42-5453. Administration; disposition of revenues
A. Unless the context otherwise requires, article 1 of this chapter governs the administration of the tax imposed under this article.
B. Section 42-1116 governs the disposition of monies received from taxes collected pursuant to section 42‑5452.
Sec. 2. Exemption from rulemaking
For the purposes of this act, the department of revenue is exempt from the rulemaking requirements of title 41, chapter 6, Arizona Revised Statutes, for one year after the effective date of this act.
Sec. 3. Short title
Title 42, chapter 5, article 10, Arizona Revised Statutes, as added by this act, may be cited as the "Carried Interest Fairness Act".
Sec. 4. 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.