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House Engrossed
income tax changes; notification; forms |
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State of Arizona House of Representatives Fifty-seventh Legislature Second Regular Session 2026
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HOUSE BILL 4029 |
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AN ACT
amending title 41, chapter 1, article 1, Arizona Revised Statutes, by adding section 41-112; amending sectionS 42-1005 AND 43-323, Arizona Revised Statutes; relating to income tax.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1.1. Title
41, chapter 1, article 1, Arizona Revised Statutes, is amended by adding
section 41-112, to read:
41-112. Evaluation and determination of income tax law changes; special session analysis and notification
A. Each year, The governor's office of strategic planning and budgeting and the joint legislative budget committee shall individually evaluate and determine if conforming the laws of this state with changes made to the internal revenue code for calculating federal adjusted gross income for the purpose of calculating taxable income in this state will result in an increase or decrease of income tax revenues of $100,000,000 or more compared to the amount of income tax revenues that would be collected if the laws of this state did not conform to the internal revenue code changes.
B. Before September 30 of each year in which the evaluation made by either the governor's office of strategic planning and budgeting or the joint legislative budget committee pursuant to subsection A of this section exceeds an increase or decrease of income tax revenues of $100,000,000 or more, the governor shall determine if a special session of the legislature is necessary to conform the laws of this state to the changes in the internal revenue code and shall notify in writing the president of the senate and the speaker of the house of representatives of that determination and the reasons that support the determination.
Sec. 2.2. Section
42-1005, Arizona Revised Statutes, is amended to read:
42-1005. Powers and duties of director
A. The director shall be directly responsible to the governor for the direction, control and operation of the department and shall:
1. Make such administrative rules as he the director deems necessary and proper to effectively administer the department and enforce this title and title 43.
2. On or before November 15 of each year, issue a written report to the governor and legislature concerning the department's activities during the year. In any election year, a copy of this report shall be made available to the governor-elect and to the legislature-elect.
3. On or before December 15 of each year, issue a supplemental report which that shall also contain proposed legislation recommended by the department for the improvement of the system of taxation in the this state.
4. In addition to the report required by paragraph 2 of this subsection, on or before November 15 of each year, issue a written report to the governor and legislature detailing the approximate costs in lost revenue for all state tax expenditures in effect at the time of the report. For the purpose of this paragraph, "tax expenditure" means any tax provision in state law which that exempts, in whole or in part, any persons, income, goods, services or property from the impact of established taxes, including deductions, subtractions, exclusions, exemptions, allowances and credits.
5. Annually, On or before January 10 September 30 of each year, prepare and submit to the legislature a an initial report containing a summary of all the revisions made to the internal revenue code during the preceding calendar year and on or before january 10 of each year, submit a final report to the legislature.
6. Provide such assistance to the governor and the legislature as they may require.
7. Delegate such administrative functions, duties or powers as he the director deems necessary to carry out the efficient operation of the department.
B. The director may enter into an agreement with the taxing authority of any state which that imposes a tax on or measured by income to provide that compensation paid in that state to residents of this state is exempt in that state from liability for income tax, the requirement for filing a tax return and withholding tax from compensation. Compensation paid in this state to residents of that state is reciprocally exempt from the requirements of title 43.
Sec. 3.3. Section
43-323, Arizona Revised Statutes, is amended to read:
43-323. 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.
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.
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.
H. The department may not prescribe forms for returns pursuant to this section that are inconsistent with the statutes that are in effect on the date that the forms are issued.