ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature

Second Regular Session

House: WM DPA 8-1-0-1

HB 2382: TPT; sourcing; validation

Sponsor: Representative Carter, LD 15

Caucus & COW

Overview

Requires the Department of Revenue (DOR) to establish and maintain a taxpayer assistance team (Team) to ensure taxpayers are sourcing the transaction to the correct jurisdiction, levying the correct transaction privilege tax (TPT) rate and outlines duties of the Team.

Requires DOR to establish a process for a third-party provider that offers sourcing services to taxpayers to become certified in Arizona. Requires the Director to establish minimum standards for certification, ensure that those standards are being complied with and post a list of the certified third-party service providers on the DOR website. Provides that a taxpayer using a certified third-party service provider is not liable for failing to pay the correct amount of tax due to an error in sourcing the transaction.

Requires DOR, on or before December 31, 2024, to conduct a taxpayer education campaign and obtain feedback from remote sellers and marketplace facilitators and other TPT license holders located in unincorporated areas of a county on issues related to sourcing and levying the correct tax rate. Requires DOR, on or before March 31, 2025, to submit a report on the taxpayer education campaign and the feedback received to the Governor, Senate President, Speaker of the House of Representatives and the Secretary of State.

History

Current law provides for the licensing, renewal and revocation of state and municipal TPT licenses but excludes any taxpayer assistance (A.R.S. § 42-5005).

Provides that retail sales of tangible personal property be sourced to the seller's business location if the seller receives the order at a business location in Arizona (A.R.S. § 42-5040).

Provisions

1. Requires DOR to establish and maintain a Team to ensure taxpayers are sourcing transactions to the correct jurisdiction and levying the correct TPT rate. (Sec. 1)

2. Requires the Team to conduct a verification on a random sample of TPT licensees to ensure the correct TPT rate and source of the transaction is accurate. (Sec. 1)

3. Requires the Team to notify the taxpayer if they are levying an incorrect rate or sourcing a transaction incorrectly and provide resources to assist the taxpayer in correcting these mistakes. (Sec. 1)

4. Adds language to further define the sourcing for retail sales of tangible personal property and a seller's business location. (Sec. 2)

5. Requires DOR, on or before January 1, 2026, to establish a process for a third-party provider that offers sourcing services to become certified in Arizona. (Sec. 2)

6. Requires a certified third-party service provider to meet all requirements established by DOR. (Sec. 2)

7. Requires the Director to:

a) supervise and regulate certified third-party providers;

b) establish minimum standards for certification and a quality assurance program;

c) post a list of the certified third-party service providers on the DOR website; and

d) adopt rules to administer and enforce this section of law. (Sec. 3)

8. Allows the Director to investigate and audit certified third-party service providers and to require them, their employees or agents to be certified by DOR. (Sec. 3)

9. Allows a person to apply to be a certified third-party service provider on a form prescribed by DOR that includes specific minimum required information. (Sec. 3)

10. Allows a taxpayer to use a certified third-party service provider to assist in sourcing transactions. (Sec. 3)

11. States that a taxpayer that uses a certified third-party service provider for sourcing of transactions involving tangible personal property is not liable for incorrectly reporting the correct amount of tax due to an error in sourcing the transaction. (Sec. 3)

12. Requires DOR, on or before December 31, 2024, to conduct a taxpayer education campaign and obtain feedback from remote sellers and marketplace facilitators and other TPT license holders located in unincorporated areas of a county on issues related to sourcing and levying the correct tax rate. (Sec. 4)

13. Requires DOR, on or before March 31, 2025, to submit a report on the taxpayer education campaign and the feedback received to the Governor, Senate President, Speaker of the House of Representatives and the Secretary of State. (Sec. 4)

Amendments

Ways & Means Committee

1. Ensures the information obtained by the Team will not be used for enforcement purposes. (Sec. 1)

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5. HB 2382

6. Initials VP Page 0 Caucus & COW

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