Assigned
to FIN & APPROP FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
REVISED
TPT; use tax; exemption; aviation
Purpose
Expands aviation related transaction privilege tax (TPT) deductions and use tax exemptions to include property used for maintaining, repairing or overhauling general aviation aircraft and property used for aircraft repair, remodeling or maintenance, rather than only property used for such purposes by persons who are certified or licensed carriers of persons and property.
Background
TPT is a gross receipts tax levied for the privilege of conducting business in Arizona and is imposed under 16 business classifications. Statute requires businesses to file a TPT return monthly and pay TPT to ADOR by the 20th day of the following month after the tax is incurred (A.R.S. §§ 42-5008 and 42-5014). Use tax is a tax imposed on individuals who purchase taxable products from out-of-state locations or online retailers and as a result, do not pay TPT (ADOR).
The gross
proceeds of sales or gross income derived from sales of certain tangible
personal property must be deducted from the tax base for the retail
classification of TPT, including:
1) aircraft, navigational and communication instruments and other accessories
sold to persons holding supplemental air carrier certificates under federal
aviation regulations; and 2) machinery, tools, equipment and related supplies
used or consumed directly in repairing, remodeling or maintaining aircraft,
aircraft engines or aircraft component parts by or on behalf of a certified or
licensed carrier of persons or property. The outlined aviation-related tangible
personal property is also exempt from use tax (A.R.S. §§ 42-5061
and 42-5159).
The Joint Legislative Budget Committee (JLBC) anticipates that S.B. 1085, beginning in FY 2026, would result in a state General Fund revenue reduction likely in the millions. Due to data constraints, JLBC cannot determine the magnitude of the impact (JLBC fiscal note).
Provisions
1. Expands the aviation related TPT deduction and use tax exemption to include aircraft, navigational and communication instruments and other accessories sold to persons that will use the property for maintaining, repairing, or overhauling general aviation aircraft.
2. Expands the aviation related TPT deduction and use tax exemption to include all machinery, tools, equipment and related supplies used or consumed directly to repair, remodel or maintain aircraft, aircraft engines or aircraft component, rather than only machinery, tools, equipment and related supplies used by persons certified or licensed to carry persons or property.
3. Applies the modified exemption and deduction to taxable periods beginning on or after the first day of the month following the general effective date.
4. Becomes effective on the general effective date.
Revisions
ˇ Updates the fiscal impact statement.
Prepared by Senate Research
February 20, 2025
MG/AL/ci