Phoenix, Arizona
estimated sales
tax payment; repeal
Purpose
Removes, beginning on July 1, 2004, the estimated tax payment requirement for businesses. Provides for the transfer of monies equal to the amount of the fiscal impact of this measure, from the budget stabilization fund to the state general fund, and requires the Treasurer to transfer the amount previously transferred to the state general fund back to the budget stabilization fund.
Background
In 1989, a requirement for estimated payments was established for businesses with an annual transaction privilege, telecommunication excise and county excise tax liability of $100,000 or more. This required the taxpayer to remit tax collections each month from the first 15 days of the month at the same time the tax return is due for the prior months collections. This measure was enacted as a means of accelerating state revenue collections into FY 1989-1990. In July of 1993, required estimated tax payments were eliminated for the time period of July through May of each year, however, the June estimated tax payment remains.
This measure eliminates the June required estimated tax payments. The Department of Revenue (DOR) indicates that estimated transaction privilege, telecommunication excise and county excise taxes totaling $117.1 million were received in FY 1999-2000, and that this legislation will cause a one time shift in state general fund revenue away from FY 2005-2006. Using an eight percent annual growth rate each year from FY 1999-2000 to FY 2005-2006, there is an estimated adverse state general fund impact of $185.8 million in FY 2005-2006. The fiscal impact is realized in FY 2005-2006 due to the repayment of the budget stabilization fund in FY 2004-2005.
1. Specifies that estimated tax payments are to be made through June 30, 2004 for businesses with an annual transaction privilege, telecommunication excise and county excise tax liability of $100,000 or more.
2. Removes, beginning July 1, 2004, the estimated tax payment requirement for businesses with an annual transaction privilege, telecommunication excise and county excise tax liability of $100,000 or more.
3. Requires the State Treasurer to transfer the amount reported by the Director of DOR from the budget stabilization fund to the state general fund.
4. Requires the Treasurer, on July 1, 2005, to transfer the amount previously transferred from the budget stabilization fund to the state general fund back to the budget stabilization fund with interest that is equal to the average rate earned by the monies in the budget stabilization fund during FY 2004-2005.
5. Requires the Director of DOR to report to the Governor, State Treasurer, the Legislature, the Governor’s Office of Strategic Planning and Budgeting and the Joint Legislative Budget Committee regarding the estimated fiscal impact as a result of the fund transfers.
6. Contains an effective date beginning on January 1, 2005.
Amendments Adopted by Committee
1. Changes the following dates for conforming purposes:
· From June 1, 2004 to June 1, 2005, the date the Director of DOR must report the estimated amount of the fiscal impact of this measure in FY 2005.
· From June 20, 2004 to June 20, 2005, the date the Treasurer must transfer money from the budget stabilization fund to the state general fund.
· From July 1, 2004 to July 1, 2005, the date the Treasurer must transfer monies from the state general fund to the budget stabilization fund.
· From FY 2004 to FY 2005, the year for which the average interest rate earned in the budget stabilization fund must be calculated to determine the amount, including interest, that must be transferred back to the budget stabilization fund.
· From January 1, 2004 to January 1, 2005, the effective date of this measure.
2. Specifies that the Director of DOR must report the estimated amount of the fiscal impact of this measure to the state general fund for FY 2005.
House Action Senate Action
WM 2/27/01 DPA 10-0-0-0 FIN 3/26/01 DPA 6-2-0-0
3rd Read 3/12/01 49-4-7-0
Prepared by Senate Staff
March 27, 2001