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ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
conformity; internal revenue code
Purpose
Conforms Arizona tax statutes to the U.S. Internal Revenue Code (U.S. IRC) as of January 1, 2022, to reflect changes adopted by the U.S. Congress during 2021.
Background
The Arizona Legislature periodically updates the statutory definition of the U.S. 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 U.S. IRC. Tax conformity with the U.S. 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.
The Arizona Department of Revenue states that the limited number of tax provisions included in the Infrastructure Investment and Jobs Act and the Paycheck Protection Program Extension Act of 2021 will have a negligible or unknown revenue impact to Arizona.
Provisions
1. Updates the statutory definition of Internal Revenue Code to include all provisions in effect as of January 1, 2022, including provisions that became effective during 2020, with the specific adoption of all retroactive effective dates, excluding any changes to the U.S. IRC enacted after January 1, 2022.
2. Defines Internal Revenue Code, for computing income tax for taxable years beginning January 1, 2022, to include all provisions in effect as of January 1, 2022, with the specific adoption of all retroactive effective dates, excluding any changes to the U.S. IRC enacted after January 1, 2022.
3. Makes technical and conforming changes.
4. Becomes effective on the general effective date.
Prepared by Senate Research
February 4, 2022
MG/slp