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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
internal revenue code; conformity
Purpose
Conforms Arizona tax statutes to the Internal Revenue Code (IRC) as of January 1, 2020, to reflect changes adopted by the U.S. Congress during 2019.
Background
The Arizona Legislature periodically updates the statutory definition of the IRC to include any federal provisions that became effective in the preceding calendar year as a means of paralleling the computation of Arizona income tax and other statutory references throughout the Arizona Revised Statutes to the amended IRC. Tax conformity with the IRC is deemed necessary because the calculation of Arizona corporate income tax liability begins with federal taxable income. Similarly, federal adjusted gross income is the starting point for individual income tax assessment.
According to the Arizona Department of Revenue, the fiscal impact to the state General Fund associated with this legislation is estimated at $(16.4) million in FY 2020, $(13.1) million in FY 2021 and $7.5 million in FY2022.
Provisions
1. Updates the statutory definition of Internal Revenue Code to include all provisions in effect as of January 1, 2020.
2. Makes technical and conforming changes.
3. Becomes effective on the general effective date.
House Action
WM 2/5/20 DP 7-0-0-3
3rd Read 2/19/20 60-0-0
Prepared by Senate Research
March 9, 2020
MG/gs