voluntary disclosure systems state and city voluntary disclosure procedures should be uniform ...
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Voluntary Disclosure SystemsVoluntary Disclosure Systems
State and City Voluntary Disclosure Procedures Should be Uniform
Procedures, Requirements, and Allowances Should be Codified Within the Taxpayer’s Bill of Rights for both the State and MCTC
Application for Voluntary Disclosure to One Jurisdiction Should Result in Disclosure for All Jurisdictions
Model City Tax Code SimplificationModel City Tax Code SimplificationBy December 31, 2013: Eliminate All “Green Page” Exceptions Complete Reduction of Current Options
27 Options Presently Identified for Removal 14 Options Identified for Incorporation into
the Standard Language Renumber the Remainder in a Single Series
Classification Changes: Separate Food for Home Consumption; Split Residential & Commercial Rental; Replace Transporting for Hire with the State’s Pipeline & Transportation Statutes
Retail Classification StandardizationRetail Classification Standardization
Make All Immediately Feasible Changes to the State and MCTC Retail Classifications, Effective July 1, 2013
Identify Differences Requiring Fiscal Impact Research & Gather Data Needed for Further Consideration
Be Prepared to Act on Any Remaining Differences If Congressional Action Allows Taxation of All Remote Sellers.
Standardize City TPT LicensingStandardize City TPT LicensingBy June 30, 2013; Effective January 1, 2014 Reform Article III of the MCTC
Single License Fee Per Jurisdiction Annual License Renewal Quarterly Proration for First Year Uniform Temporary License Provisions Add Penalty Waiver Provisions
Retain Permanent License Option For Now
Online Portal ProjectOnline Portal Project Expedite Portal Creation to be Online ASAP Revised Goal: Operational Target Date of January
1, 2014 for Self-Collecting Cities Single Point to File Returns and Pay Single Point of Licensing and Renewal Detailed Reporting Capability for Revenues
and Exemptions by Tax Classification Automate Upload Capability for Taxpayers
Once Vetted, Add the State Return and Licensing to Create a Single Point of Administrative Contact
State AdministrationState Administration DOR will absorb all responsibility for the
18 cities that collect their own sales tax, passed by 6/30/2014, in place 1/1/2015
Self-collecting cities cover 74% of the State’s population; 77% of city revenues
Unlike self-collecting cities, DOR cannot provide segregated, detailed information about city taxpayers and revenues
No guarantee that the legislature can or will fund DOR at an adequate level
Single Point of AuditSingle Point of Audit Make DOR the sole auditing authority,
eliminating all local audit programs Adequate audit activity ensures a level
playing field and keeps tax rates low Local audit programs invest in taxpayer
education; work closely with local business owners; address local issues
DOR’s focus is required to be on larger taxpayers and statewide issues
Multi-jurisdictional auditing (MJAC) is a proven system offering single audits available to all businesses in Arizona
Eliminate Contracting TaxEliminate Contracting Tax Replace with a Retail tax on construction
materials, paid at the point of purchase We are NOT opposed to sensible changes
to simplify Contracting, HOWEVER: A massive tax break for the Contracting
industry, dressed up as simplification Dismantles 80 years of solid public policy
developed to address reliance on growth. Jeopardizes State and local budgets,
primarily relying on data from a 1999 study, without current information indicating the true impact on revenues
Eliminate Contracting Tax Eliminate Contracting Tax (cont’d)(cont’d) Without additional data, the level of
noncompliance is purely speculative. Lack of accurate information could significantly impact the State’s General Fund
Shifts revenues away from the local demands created by growth
Statewide, municipalities will lose up to $168M in local sales tax.
Cities, towns, and counties will not make up this loss through Retail taxes.
Eliminate Contracting Tax Eliminate Contracting Tax (cont’d)(cont’d) Construction is essentially a
manufacturing and repairing process. Under this proposal, the product will be treated differently than all other manufactured products.
Giving preferential treatment to the Construction industry ultimately comes at the expense of all others
SOLUTION: Commission a study by third party to gather information and model impacts proposed by policy change.
ConclusionsConclusions• DOR is strapped for resources. Given the many
strains on the General Fund, cost-free alternatives should be utilized. State Administration demands a significant funding increase to work.
• Local auditing supplements State activity. Losing local audits leads to lower revenues, lower compliance, and rising taxes, without improving on the current multi-jurisdictional system.
• Much more information and study is needed before fiscal stability is risked, simply to give one industry a big tax break.