Assigned to FIN                                                                                                                          FOR COMMITTEE

 

 

ARIZONA STATE SENATE

Phoenix, Arizona

 

FACT SHEET FOR H.B. 2457

 

sales tax; contractor’s solar exemption

 

Purpose

 

Exempts, from the transaction privilege tax (TPT), the gross proceeds of sales or gross income derived from contracts to provide solar energy devices and accelerates the sunset of the exemption from January 1, 2011 to December 31, 2003. Clarifies the deduction cap applies to the contract rather than each solar energy device. Contains a Proposition 108 clause.

 

Background

 

In 1991, the Arizona State Legislature enacted two TPT exemptions applicable to solar energy devices. One was for the sale of such devices under the retail classification, and the other was for the contractor’s cost of the device installed under the prime contracting classification. When the exemptions were added, both exemptions were set to expire on December 31, 1996. However, the expiration of the TPT exemption under the retail classification has since been eliminated. In 2000, the Legislature reauthorized the TPT exemption for prime contractors and made the exemption applicable retroactively to January 1, 1997 (Laws 2000, Chapter 217). This exemption is set to expire on January 1, 2011.

 

H.B. 2457 provides a TPT exemption for the gross proceeds of sales or gross income derived from contracts to provide and install solar energy devices and accelerates the sunset of the exemption from January 1, 2011 to December 31, 2003. This bill also clarifies the deduction cap applies to the contract rather than each solar energy device.

 

According to Joint Legislative Budget Committee staff estimates, this legislation will cost a total of $24,500 in FY 2003-2004 ($21,500 from the state general fund and $3,000 from Proposition 301 education revenues) and $49,000 in FY 2004-2005 ($43,000 from the state general fund and $6,000 from Proposition 301 education revenues).

 

Provisions

 

1.      Exempts, from TPT, the gross proceeds of sales or gross income derived from contracts to provide and install solar energy devices and accelerates the sunset of the exemption from January 1, 2011 to December 31, 2003.

 

2.      Specifies that the $5,000 deduction cap applies to the contract instead of each solar energy device.

 

3.      Becomes effective on signature of the Governor.

 

 

 

 

 

House Action

 

EUT                 1/30/02            DPA        9-0-0-1

WM                 3/28/02            DPA        9-0-0-1

3rd Read             4/8/02                        46-4-10-0

 

 

Prepared by Senate Staff

April 11, 2002