Lawyer Referral Service

LRS Blog


Posted by: Maricopa Lawyers on Jun 20, 2013

Last Thursday, the Arizona legislature received a major overhaul in the sales tax collection system, an often complicated procedure. Senate Bill 2111 was passed unanimously, and was passed through the house with just one vote in opposition. Gov. Brewer okay’d the Arizona tax overhaul after months of impasse, at the end of the night.

 

This new tax would not affect normal day to day consumer purchases, but rather it will make it easier for businesses that pay a transaction privilege tax. The legislation will eliminate the need for audits and filing requirements.

The new legislation will tax new construction which funds various city projects, but it eliminates the tax for home repairs and other repair services. Cities and towns were nervous about this overhaul, stating that they could potentially lose revenue, but Gov. Brewer assured their future by making several compromises.

Local municipalities could still lose revenue though, but the compromises give towns and cities better ways to track their money, along with clarifications about how audits are performed. The tax on contractors, known as TPT, is projected to collect over $3.5 billion dollars for the state within the next year.  Brewer’s original plan would have taken a large amount of revenue from growing cities that are without major retail or wholesale outlets.

The complexity of business taxes in Arizona can be confusing in a myriad of ways such as: being taxed based on revenue and different entities which include the cities, counties, and the state. Businesses were also subjected to audits, and had to file returns in every city, county, and town.  The new system is an attempt to alleviate some of the tax confusion, with the state’s oversight. It will also allow Arizona to collect the sales tax from internet purchases if the law that is currently being debated in congress passes.