ARIZONA STATE SENATE
Phoenix, Arizona
sales tax rates; preexisting
contracts
Purpose
Retroactive to June 1, 2001,
exempts, from the 0.6 percent increase in the transaction privilege tax (TPT)
passed by the voters in the 2000 general election, contracts and written bids
entered into by prime contractors before November 8, 2000. Contains a Proposition 105 clause.
Background
Proposition 301, passed by
the voters in the 2000 general election, levied an additional six-tenths of a
percent TPT and use tax (sales tax) beginning June 1, 2001. Some contractors accepted contracts prior to
the passage of this proposition that included sales tax calculated at the prior
rate of five percent. If payment is
made pursuant to these contracts after June 1, 2001 and the contractor uses a
cash basis accounting method, the contractor will be responsible for the amount
of taxes calculated at the new rate. In
many cases, contractors, because of the terms agreed to in the contract, cannot
charge the customer for the additional sales tax.
H.B. 2499, retroactive to
June 1, 2001, exempts, from the 0.6 percent TPT increase passed by the voters
in the 2000 general election, contracts and written bids entered into by prime
contractors before November 8, 2000, unless the contract or written bid allows
the contractor to collect the amount of the tax increase from the
purchaser.
A Joint Legislative Budget
Committee staff fiscal note has been requested.
Provisions
1. Exempts, from the 0.6 percent TPT increase passed by the voters in the 2000 general election (A.R.S. §42-2010, subsection G), any gross proceeds or income derived from a contract entered into or a written bid signed prior to November 8, 2000, unless the contract or written bid allows the contractor to recover the amount of the tax increase from the purchaser. Requires a three-fourths vote of each legislative chamber.
2. Disallows the application of any future TPT rate increases, enacted by the Legislature or a vote of the people, to contracts or written bids entered into before the enactment of this measure.
3. Disallows the application of any future TPT rate increase, as a result of an election or action by the Legislature, county or improvement district, to contracts or written agreements entered into prior to the date of the rate increase.
4. Disallows the application of any future TPT rate increases, enacted by the Legislature or a vote of the people, to contracts or written bids entered into before the enactment of this measure, conditional upon the Proposition 105 requirement provision failing.
5. Requires the prime contractor to provide adequate documentation to the Department of Revenue to qualify for an exemption from the rate increase, which verifies the date of the contract or written bid.
6. Contains a retroactivity date of June 1, 2001.
CED 2/11/02 DPA 7-2-0-1
APPROP 3/25/02 DPA 12-1-0-3
3rd Read 4/1/02 DPA 45-7-8-0
Prepared by Senate Staff
April 8, 2002