Arizona – Targeting Sales Tax Simplification – To Be Continued

As I wrote back in July, in May 2012, Arizona’s Governor, Jan Brewer signed an Executive Order establishing a Transaction Privilege Task Force in hopes of simplifying Arizona’s tax code in order to reduce taxpayer frustration, and improve compliance with the task of filing transaction privilege taxes.

To recap, the task force met monthly over twelve months and represented every facet of the transaction privilege (sales) tax with tax experts, business owners, municipal representatives, and indirect tax representatives from various Fortune 500 businesses that conduct business in the state.   While there were various renditions of the tax simplification bill produced by the Governor’s Task Force, on Tuesday, June 25^th, 2013, Governor Brewer signed House Bill 2111, Arizona’s Transaction privilege (Sales) tax simplification bill which will become effective on January 1, 2015.

Amidst all of the anticipation of sales tax professionals nationwide, Arizona Department of Revenue (DOR) Director, David Raber, announced on October 7^th, 2014, that the Department of Revenue would be delaying the implementation of the single point of administration or TPT Simplification for one additional year.

In his letter to Ken Strobeck, Arizona’s DOR Executive Director, on October 7, 2014, Raber cited the complexity and scale of programming necessitated by the city-required, location-based data elements in the Department’s tax system as the culprit in the delay of rolling out the tax simplification project. Raber also committed to project milestones and updated timelines to “ensure a complete and successful implementation by January 1, 2016” which include:

• The implementation of a new joint tax application (JT-1) with geocoding: July 1, 2015

• Enhance the AZTaxes.gov e-file system: October 1, 2015

• Release the new form for filing monthly TPT returns (TPT-1), which will allow taxpayers to report data by business location: October 1, 2015

• Implement bulk filing capabilities for taxpayers to file by business location: October 1, 2015

• Generate location based reporting required by cities: October 1, 2015

• Implement an electronic license renewal process for all taxpayers:December 1, 2015

Perhaps in the midst of this project that seems to have been ongoing for over two years, DOR Management and Directors have realized just how complex sales and use tax can be and they will work diligently over the next year to provide the taxpayers a solution that is user-friendly, capable, and free of bugs and time-out issues (especially during the December 2015 due January 2016 filings).

For additional information on the state of Arizona and the Sales Tax Simplification Task Force and new law, you may visit – http://www.azdor.gov/TPTSimplification.aspx