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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
income tax; refunds; veterans' organizations
Purpose
Requires the Arizona Department of Revenue (ADOR) to provide a space on the individual income tax return form in which a taxpayer may voluntarily contribute to a 501(c)(19) veterans' organization. Requires the Director of the Arizona Department of Veterans' Services (ADVS) to establish a separate subaccount within the Veterans' Donations Fund (Fund) to collect the taxpayer contributions.
Background
Current statute requires a space on the individual income tax return form in which the taxpayer may designate an amount of the taxpayer's refund as a voluntary contribution to the Fund. A taxpayer may also donate any amount to the Fund, in lieu of or in addition to the designated portion of the tax refund, by an appropriate indication on the return and by including that amount with the return.
The Director of
ADVS may solicit donations from the public for veterans and the donations may
be used for the benefit of veterans in Arizona. The Fund consists of monies,
gifts and contributions donated to the ADVS and monies from license plate
purchases and individual income tax return contributions. The Fund consists of
separate subaccounts for: 1) the construction and maintenance of the Enduring
Freedom Memorial; 2) grants to women veterans in Arizona;
3) need-based scholarships to children of U.S. military members. ADVS must
annually transfer 15 percent of all revenues received by ADVS that are
deposited in the Fund to the State Homes for Veterans Trust Fund (A.R.S. §§ 41-608
and 43-620).
A veterans' organization exempt under Section 501(c)(19) of the U.S. Internal Revenue Code (U.S. IRC) must be either: 1) a post or organization of which at least 75 percent of the members are past or present members of the U.S. Armed Forces; 2) an auxiliary unit or society of a post or organization; or 3) a trust or foundation of a post or organization. A veteran's organization exempt under Section 501(c)(3) of the U.S. IRC must be organized and operated exclusively for outlined purposes, including charitable purposes, and the earnings of the organization may not benefit any private shareholder or individual (26 U.S.C. § 501).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires ADOR to provide a space on the individual income tax return form in which a taxpayer may designate an amount of the taxpayer's refund as a voluntary contribution to the Fund to be allocated to a 501(c)(19) veterans' organization.
2. Requires ADOR, after subtracting any setoff for debts, to subtract the designated amount from the taxpayer's refund and transfer the amount to the ADVS for deposit in the Fund.
3. Allows a taxpayer to donate any amount to the Fund to be allocated to a 501(c)(19) veterans' organization by an appropriate indication on the return and by including that amount within the return.
4. Requires the Director of ADVS to establish a separate subaccount in the Fund to deposit individual income tax return contributions.
5. Requires the Director of ADVS to annually allocate monies from the established subaccount to a 501(c)(19) veterans' organization.
6. Requires ADOR to determine the initial administrative cost of implementing a voluntary contribution box on individual income tax returns for contributions to veterans' organizations and report the amount to ADVS.
7. Requires ADVS to transfer the administrative cost reported by ADOR to the state General Fund.
8. Applies the outlined veterans' service organization subaccount and donation procedures to taxable years beginning January 1, 2027.
9. Makes technical and conforming changes.
10. Becomes effective on the general effective date.
House Action
WM 2/18/26 DP 8-0-0-1
3rd Read 3/2/26 56-0-3-0-1
Prepared by Senate Research
March 18, 2026
MG/SJ/hk