BILL #    SB 1397	TITLE: internal revenue code; conformity
SPONSOR:    Livingston	STATUS: As Introduced
PREPARED BY:    Lydia Chew

Description

SB 1397 would conform Arizona tax statutes to the Internal Revenue Code as of January 1, 2021, to reflect changes from the Coronavirus Aid, Relief, and Economic Security (CARES) Act and Consolidated Appropriations Act, 2021 (CAA) adopted by the U.S. Congress.

Estimated Impact

We estimate that conforming to the changes made in the CARES Act and CAA would reduce General Fund income tax collections one-time by $(594.8) million over the next several years.

Conformity estimates by federal tax provision are displayed in Table 1 on the following page.

Analysis

Table 1 summarizes the state revenue impact of conformity for CARES Act and CAA provisions. The JLBC Staff derived the $566.9 million estimate for the CARES Act provisions by prorating the nationwide Joint Committee on Taxation (JCT) information. 

DOR estimates that the cost of conforming to the CARES Act provisions is $(547.7) million. DOR has not released information about the methodology used to reach this figure.

Table 1 also reflects the JLBC and DOR estimates of $27.9 million for the CAA provisions.

Local Government Impact

Each year, incorporated cities and towns receive 15% of state income tax collections from 2 years prior. For this reason, SB 1397 would decrease local government distributions one-time by $(89.2) million 2 years after the General Fund impact.

(Continued)

2/19/21