HB 2111

House Bill (HB) 2111: s/e: transaction privilege tax changes

Sponsor: Representative Lesko

Overview: The strike-everything amendment to HB 2111 makes numerous changes to Arizona law regarding transaction privilege tax (TPT), including eliminating self-collecting cities, local audits and construction sales taxes at the state and local level.

League Position: NEUTRAL - With the adoption of the floor amendment sponsored by Senator Yarbrough, the League is neutral on HB 2111.

The League opposes HB 2111 the strike-everything amendment. Moving to the Department of Revenue (DOR) for administration and auditing would greatly hamper the fiscal management abilities of self-collecting cities. Moving construction activity to a materials-only retail transaction will have significant negative impacts on municipal budgets.

Summary: This bill reflects some of the recommendations of the Governor's TPT Simplification Task Force. In addition to providing language for the collection of TPT for the sale of products being shipped out of the state, it includes three issues that cities and towns oppose in their current form;

  1. Moving all cities and towns into the DOR collection program.
  2. Requiring that all audits be conducted by the DOR.
  3. Removing the construction contracting classification from both state statute and from the Model City Tax Code.

Updates

03/22/13: The strike everything amendment was adopted in the Senate Finance Committee. The amendment was further amended to modify the auditing provisions as well as the language regarding the construction contracting tax.

03/26/13: The Senate Appropriations Committee adopted a strike-everything amendment that mirrors the amendments adopted in the Senate Finance Committee. The bill passed on a 6-3 vote and now proceeds to the Senate Rules Committee.