ARIZONA STATE SENATE
Phoenix, Arizona
contract auditors;
contingent fees; prohibition
Prohibits the State from
hiring contract auditors on a contingency fee basis.
The Department of Revenue
(DOR) contracts persons on a contingent fee basis for the collection of taxes,
interest and penalties already due to the State. DOR does not currently
contract on a contingent fee basis for auditing purposes except for unclaimed
property issues. DOR states that the
contracting of persons on a contingent fee basis for the purpose of unclaimed
property issues is a general practice among states. Fees for persons contracted on a contingent fee basis are
calculated based on the amount of taxes collected or assessed.
The Arizona Chamber of
Commerce (Chamber) is concerned that if auditors were hired on a contingent fee
basis, the auditor’s evaluations would be biased because contingent fee
auditors are paid a fee based on the amount assessed. The Chamber believes that contract auditors should be hired on a
set fee basis with the exemption of unclaimed property audits.
H.B. 2243 prohibits DOR from
contracting auditors on a contingency fee basis other than unclaimed property
issues. DOR states that this
legislation simply codifies DOR’s long-standing practice of prohibiting
contingency fee auditors for transaction privilege tax and income tax issues.
There is no anticipated
fiscal impact associated with this legislation.
1. Prohibits DOR from hiring auditors on a contingent fee basis.
2. Allows DOR to hire auditors on a contingency fee basis for the enforcement of unclaimed property provisions.
3. Provides for a general effective date.
WM 2/12/02 DPA 8-0-0-2
CED 3/25/02 DP 8-0-0-2
3rd Read 4/04/02 55-0-5-0
Prepared by Senate Staff
April 11, 2002