HB2004 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 43-222, Arizona Revised Statutes, is amended to read:

START_STATUTE43-222. Income tax credit review schedule

The joint legislative income tax credit review committee shall review the following income tax credits:

1. For years ending in 0 and 5, sections 43-1079.01, 43-1088, 43-1089.04, 43-1167.01 and 43-1175.

2. For years ending in 1 and 6, sections 43-1072.02, 43-1073.02, 43-1074.02, 43-1075, 43-1076.01, 43-1077, 43-1078, 43-1083, 43-1083.02, 43-1162, 43-1164.03 and 43-1183.

3. For years ending in 2 and 7, sections 43-1073, 43-1082, 43-1085, 43-1086, 43-1089, 43-1089.01, 43-1089.02, 43-1089.03, 43-1164, 43-1165, and 43-1181.

4. For years ending in 3 and 8, sections 43-1074.01, 43-1168, 43-1170 and 43-1178.

5. For years ending in 4 and 9, sections 43-1073.01, 43-1081.01, 43-1083.03, 43-1084, 43-1164.04, 43-1164.05 and 43-1184. END_STATUTE

Sec. 2. Section 43-323, Arizona Revised Statutes, is amended to read:

START_STATUTE43-323. Place and form of filing returns

A. All returns required by this title shall be in such a form as the department may from time to time prescribe and shall be filed with the department.

B. The department shall prescribe a short form return for individual taxpayers who:

1. Are eligible and elect to pay tax based on the optional tax tables pursuant to section 43-1012.

2. Elect to claim the optional standard deduction pursuant to section 43-1041, subsection A, but not the increased amount for charitable deductions under section 43-1041, subsection I.

3. Elect not to file for credits against income tax liability other than those contained in sections 43-1072, 43-1072.01, 43-1072.02, 43-1073, and 43-1073.01 and 43-1073.02.

4. Are not required to add any income under section 43-1021 and do not elect any subtractions under section 43-1022, except for the exemptions allowed under section 43-1023.

C. The department may provide a simplified return form for individual taxpayers who:

1. Are eligible and elect to pay tax based on the optional tax tables pursuant to section 43-1012.

2. Are residents for the full taxable year.

3. File as single individuals or married couples filing joint returns under section 43-309.

4. Are not sixty-five years of age or older or blind at the end of the taxable year.

5. Claim no exemptions under section 43-1023 for the taxable year.

6. Elect to claim the optional standard deduction under section 43-1041, subsection A, but not the increased amount for charitable deductions under section 43-1041, subsection I.

7. Are not required to add any income under section 43-1021 and do not elect to claim any subtractions under section 43-1022 or file for any credits under chapter 10, article 5 of this title, except the credits provided by sections 43-1072.01, 43-1072.02, and 43-1073, 43-1073.01 and 43-1073.02.

8. Do not elect to contribute a portion of any tax refund as provided by any provision of chapter 6, article 1 of this title. Notwithstanding any provision of chapter 6, article 1 of this title, a simplified return form under this subsection shall not include any space for the taxpayer to so contribute a portion of a refund.

D. The department shall prepare blank forms for the returns and furnish them on request. Failure to receive or secure the form does not relieve any taxpayer from making any return required.

E. An individual income tax preparer who prepares more than ten original income tax returns that are timely filed during any taxable year that begins from and after December 31, 2017 shall file electronically all individual tax returns prepared by that tax preparer, for that taxable year and each subsequent taxable year. An individual income tax preparer may not charge a separate fee to the taxpayer for filing a return using the department's electronic filing program. This subsection does not apply if the taxpayer elects to have the return filed on paper or if the return cannot be filed electronically for reasons outside of the tax preparer's control.

F. Fiduciary returns, partnership returns, withholding returns and corporate returns shall be filed electronically for taxable years beginning from and after December 31, 2019, or when the department establishes an electronic filing program, whichever is later. Any person who is required to file electronically pursuant to this subsection may apply to the director, on a form prescribed by the department, for an annual waiver from the electronic filing requirement. The director may grant the waiver, which may be renewed for one subsequent year, if any of the following applies:

1. The taxpayer has no computer.

2. The taxpayer has no internet access.

3. Any other circumstance considered to be worthy by the director exists.

G. A waiver is not required if the return cannot be electronically filed for reasons beyond the taxpayer's control, including situations in which the taxpayer was instructed by either the internal revenue service or the department of revenue to file by paper. END_STATUTE

Sec. 3. Title 43, chapter 10, article 5, Arizona Revised Statutes, is amended by adding section 43-1073.02, to read:

START_STATUTE43-1073.02. Family support tax credit; definitions

A. For taxable years beginning from and after December 31, 2025, a credit is allowed against the taxes imposed by this chapter for each qualified child of a taxpayer as provided by this section.

B. To qualify for the credit under this section The taxpayer must be a legal resident of this state and file a return as a resident of this state.

C. Subject to subsection E of this section, the amount of the credit is:

1. $2,000 for each qualifying child for a single individual, married person filing separately or a head of household.

2. $4,000 for each qualifying child for a married couple filing jointly.

D. If the pregnancy and birth occur in different taxable years, subject to subsection E of this section, a taxpayer who is the mother of the qualified child or the spouse of the mother of the qualified child and who can verify that the mother completed a parenting education course during the pregnancy of that qualifying child may claim an additional amount in the taxable year of the birth of that qualified child as follows:

1. $2,000 for a single individual, married person filing separately or a head of household.

2. $4,000 for a married couple filing jointly.

E. The credit amounts provided in subsections C and D of this section are reduced by the following percentages:

1. for a taxpayer whose Arizona Gross income, including the income of the taxpayer's spouse and the other parent of the qualifying child if the parent is not the taxpayer's spouse, is one hundred percent or less of the federal poverty level for the taxpayer's family size, zero percent.

2. for a taxpayer whose Arizona Gross income, including the income of the taxpayer's spouse and the other parent of the qualifying child if the parent is not the taxpayer's spouse, is more than one hundred percent of the federal poverty level for the taxpayer's family size but less than one hundred fifteen percent of the federal poverty level for the taxpayer's family size, twenty-five percent.

3. for a taxpayer whose Arizona Gross income, including the income of the taxpayer's spouse and the other parent of the qualifying child if the parent is not the taxpayer's spouse, is one hundred fifteen percent or more of the federal poverty level for the taxpayer's family size but less than one hundred thirty percent of the federal poverty level for the taxpayer's family size, fifty percent.

4. for a taxpayer whose Arizona Gross income, including the income of the taxpayer's spouse and the other parent of the qualifying child if the parent is not the taxpayer's spouse, is one hundred thirty percent or more of the federal poverty level for the taxpayer's family size but less than one hundred forty-five percent of the federal poverty level for the taxpayer's family size, seventy-five percent.

5. for a taxpayer whose Arizona Gross income, including the income of the taxpayer's spouse and the other parent of the qualifying child if the parent is not the taxpayer's spouse, is one hundred forty-five percent or more of the federal poverty level for the taxpayer's family size, one hundred percent.

F. A taxpayer shall maintain, and provide in the event of an audit, documentation to verify the following:

1. The pregnancy.

2. Completion of the parenting education course.

3. For a single individual, married person filing separately or a head of household, the income of members of the household and the income of the other parent of the qualified child.

4. For a married couple filing jointly, the income of all members of the household.

5. Guardianship, if applicable.

6. Legal residency.

G. If the allowable amount under this section exceeds the taxes otherwise due under this title for the taxable year, after applying all other credits to which the claimant may be entitled and after any setoff under section 42-1122, the excess shall be paid in the same manner as a refund under section 42-1118.

H. The department shall adopt rules and prescribe forms to administer this section, including forms for claiming the credit and affidavits for verifying household income.

I. For the purposes of this section:

1. "Federal poverty level" means the federal poverty guidelines issued annually by the United States department of health and human services.

2. "Legal resident" means a person who is a citizen of the United States or a qualified alien as defined in 8 United States Code section 1641 and who has established residence in this state at the time of filing the return.

3. "Licensed health care provider" means a person or institution that is licensed or certified by this state to provide health care, medical services, nursing services or other health-related services.

4. "Parenting education course" means a course that is at least four hours on parenting topics, including prenatal care, child development and parenting skills, and that is provided by a licensed health care provider, a community organization or an approved online program recognized by the department of health services or a similar entity in another state.

5. "Qualifying child" means a child who is a dependent of the taxpayer as defined in section 152 of the internal revenue code and for whom the taxpayer provides verifiable proof of birth. END_STATUTE

Sec. 4. Purpose

Pursuant to section 43-223, Arizona Revised Statutes, the legislature enacts section 43-1073.02, Arizona Revised Statutes, as added by this act, to support families in this state and encourage women in this state to carry their unborn children to full-term births.