Title
UPDATE ON TRANSACTION PRIVILEGE TAX SIMPLIFICATION
Staff Contact and Presenter: Vicki Rios, Director, Budget and Finance
Staff Presenter: Tom Duensing, Assistant City Manager
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Purpose and Policy Guidance
The purpose of this item is to provide the Council with an update on tax simplification efforts which are the result of state legislation passed in 2013.
Background
Chapter 255, Laws of Arizona 2013 (commonly referred to by its original bill number, HB2111), made changes to the administration process for Transaction Privilege Taxes and modified certain categories of business activity including Prime Contracting.
The law calls for the Arizona Department of Revenue ("ADOR") to become the single point of administration for licensing, filing and payment of all State, county and municipal transaction privilege taxes. The law also requires ADOR to establish and administer a single online portal so that taxpayers can pay all State, county or municipal transaction privilege taxes online. Implementation of these provisions was originally scheduled to take place on January 1, 2015. The implementation of the new law was delayed several times; however, the ADOR is ready to take over administration on January 1, 2017.
Analysis
The Arizona cities and towns affected by this legislation, including staff from Glendale, and the League of Arizona Cities and Towns (League) are working cooperatively with the ADOR to ensure the smooth transition of tax administration. Staff anticipates that businesses in Glendale will continue to collect and remit the required transaction privilege taxes; however, payments will begin flowing through the state to the city. This may cause delays in cash receipts at the beginning of the transition period in January of 2017. Staff is also working on developing and implementing processes, procedures, and business intelligence technology solutions to monitor the tax and payment data the city will receive from ADOR and proactively addres...
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