ARIZONA STATE SENATE
Phoenix, Arizona
FINAL
REVISED
tax administration; federal
conformity
Purpose
Makes changes to various
Department of Revenue (DOR) administrative practices.
Background
Current law may be construed
to imply that Arizona statutes of limitation waivers can be applied as a
blanket waiver on the taxpayer’s entire tax return, even though that same
taxpayer has received a federal waiver for only specific items on the tax
return. This bill eliminates that
implied option by specifically stating that state waivers apply to only those
income items included on the federal waiver.
Currently by statute, DOR
may only release confidential tax information to the principal of a corporation
or partnership. However, some entities
conducting business in the state of Arizona are multinational corporations,
whose principals do not reside in Arizona or even the United States. In such cases, locating the principals is
difficult. Broadening the pool of
allowable individuals to whom DOR may disclose confidential information eases
the ability of tax preparers to obtain authentic powers of attorney.
Current law may be construed
to imply that DOR has the authority to choose whether a taxpayer should file a
copy of the federal audit or an actual amended tax return with DOR after a
federal audit. This bill allows the
taxpayer to choose the reporting method to DOR. The estimated additional cost or work burdens for DOR related to
this change has not yet been determined.
Provisions
1. Limits, beginning tax year 2002, DOR’s ability to assess taxpayers to items contained in a federal waiver and limits the taxpayers' ability to claim refunds to those items contained in the federal waiver.
2. Broadens the pool of allowable individuals to whom DOR's may release confidential corporate taxpayer information to individuals that a principal officer or corporate board of directors designates. Additionally, states that only a principal officer or an individual designated by the corporate board of directors can execute a disclosure authorization statement.
3. Grants taxpayers the choice to file a copy of the federal audit or an amended tax return with DOR. Current law may be construed to imply that DOR has the authority to choose which method.
4. Allows DOR to require an amended return if DOR lacks the necessary information to recompute the taxpayers' liability.
5. Allows taxpayers to request DOR to recalculate the state tax liability as a result of a federal audit and specifies that such recalculations will not be considered a state audit by DOR.
6. Gives the Department the discretion to grant appropriate relief for a determinate number of years to a taxpayer claiming corporate apportionment distortion.
7. Makes technical changes and conforming changes.
8. Provides for a general effective date.
Amendments Adopted by Committee
1. Adds language that specifically states that only a principal officer or a corporate board of directors can designate an authorized individual to whom confidential information can be disclosed to.
2. Adds language that specifically states that only a principal corporate officer of the parent corporation can execute a disclosure authorization statement.
3. Makes technical corrections.
Amendments
Adopted by the House of Representatives
1. Limits, beginning tax year 2002, DOR's ability to assess taxpayers to items contained in a federal waiver and limits the taxpayers' ability to claim refunds to those items contained in the federal waiver.
2. Allows DOR to require an amended return if DOR lacks the necessary information to recompute the taxpayers' liability.
3. Gives DOR the discretion to grant appropriate relief for a determinate number of years to a taxpayer claiming corporate apportionment distortion.
4. Makes technical and conforming changes.
Senate Action House Action
FIN 2/5/01 DPA 8-0-0-0 WM 3/27/01 DP 10-0-0-0
3rd Read 2/19/01 28-0-2-0 3rd Read 4/11/01 55-0-5-0
Signed by the Governor 4/20/01
Chapter 163
Prepared by Senate Staff
May 15, 2001