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ARIZONA HOUSE OF REPRESENTATIVES57th Legislature, 2nd Regular Session |
Senate: FIN DP 7-0-0-0 | Third Read 27-0-3-0House: WM DPA 5-3-0-0 | 38-18-4-0 Final Read: 18-11-1-0 |
SB 1180: DOR; income tax forms; conformity
Sponsor: Senator Mesnard, LD 13
Vetoed by the Governor
Overview
Requires the Department of Revenue (DOR) to prescribe forms and instructions to the taxpayer assuming the Legislature will enact full conformity and if the Legislature enacts nonconformity DOR will publish forms and instructions related to the nonconformity.
History
Current law conforms Arizona's income tax calculation to the Internal Revenue Code (IRC) of 1986, as amended, in effect on January 1, 2025, including those provisions that became effective during 2024 with the specific adoption of all retroactive effective dates, but excluding any changes to the code enacted after January 1, 2025 (A.R.S. § 43-105).
Generally, each year changes are made to the IRC that affect the Arizona income tax calculation. Tax conformity with the IRC is deemed necessary because the calculation of Arizona corporate income tax begins with federal taxable income and the Federal Adjusted Gross Income (FAGI) is the starting point for individual income tax.
Conformity means an amendment to the IRC that results in adoption of the definition of the internal revenue code for the taxable year.
Nonconformity means either:
1) conformity plus another amendment to this title that does not conform to specific provisions of the IRC the taxable year.
2) no amendment to the IRC for the taxable year.
On July 4, 2025, major federal tax changes were enacted through H.R. 1 that impact federal taxable income and FAGI which the state would conform to by updating the statutory definition of the IRC.
Provisions
1. Prevents DOR from assessing interest or penalties on a nonconformity deficiency on or before the extended return due date for the second year following the close of that taxable year. (Sec. 1)
2. Specifies that if nonconformity occurs, DOR shall supplement the published forms and instructions related to the nonconformity and specifies the dates they are required to be published. (Sec. 1)
3. Requires DOR to also account for conformity changes that affect the calculation of itemized deductions when prescribing income tax forms and instructions. (Sec. 2)
4. Specifies that if the legislature enacts nonconformity, DOR is required to supplement the published forms and instructions related to the abatement of penalties and interest due to nonconformity. (Sec. 2)
5. Contains a legislative intent clause. (Sec. 3)
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9. Initials VP/CS SB 1180
10. 06/29/2026 Page 0 Vetoed by the Governor
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