House Engrossed

State of Arizona House of Representatives Forty-ninth Legislature Seventh Special Session 2010

HOUSE BILL 2012

 

AN ACT

 

amending sections 5‑504, 5‑522, 5‑554, 5‑572 and 5‑804, Arizona Revised Statutes; Amending title 6, Arizona Revised Statutes, by adding chapter 16; amending sections 9‑626, 15‑1682.03, 28‑4802, 28‑5808 and 28‑6543, Arizona Revised Statutes; repealing title 28, chapter 24, article 1, Arizona Revised Statutes; amending section 36‑274, Arizona Revised Statutes; repealing sections 41‑175 and 41‑502, Arizona Revised Statutes; providing for the delayed repeal of title 41, chapter 3, article 1, Arizona Revised Statutes; amending sections 41‑2306, 42‑1004, 42‑1114, 42‑1118, 42‑1125, 42‑1129, 42‑1151, 42‑1152, 42‑1153 and 42‑1201, Arizona Revised Statutes; amending title 42, chapter 1, article 5, Arizona Revised Statutes, by adding section 42‑1207; amending sections 42‑2003, 42‑2066, 42‑5014, 42‑5029, 42‑5070, 42‑5073 and 42‑5074, Arizona Revised Statutes; amending title 43, chapter 4, article 2, Arizona Revised Statutes, by adding sections 43‑418 and 43‑419; amending sections 43‑581, 43‑582, 48‑5103, 48‑5104 and 48‑5314, Arizona Revised Statutes; making appropriations; relating to revenue budget reconciliation.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 

Be it enacted by the Legislature of the State of Arizona:

Section 1.  Section 5-504, Arizona Revised Statutes, is amended to read:

START_STATUTE5-504.  Commission; director; powers and duties; definitions

A.  The commission shall meet with the director not less than once each quarter to make recommendations and set policy, receive reports from the director and transact other business properly brought before the commission.

B.  The commission shall oversee a state lottery to produce the maximum amount of net revenue consonant with the dignity of the state.  To achieve these ends, the commission shall authorize the director to adopt rules in accordance with title 41, chapter 6.  Rules adopted by the director may include provisions relating to the following:

1.  Subject to the approval of the commission, the types of lottery games and the types of game play‑styles to be conducted.

2.  The method of selecting the winning tickets or shares for noncomputerized online games, except that no method may be used which that, in whole or in part, depends on the results of a dog race, a horse race or any sporting event.

3.  The manner of payment of prizes to the holders of winning tickets or shares, including providing for payment by the purchase of annuities in the case of prizes payable in installments, except that the commission staff shall examine claims and may not pay any prize based on altered, stolen or counterfeit tickets or based on any tickets which that fail to meet established validation requirements, including rules stated on the ticket or in the published game rules, and confidential validation tests applied consistently by the commission staff.  No particular prize in a lottery game may be paid more than once, and in the event of a binding determination that more than one person is entitled to a particular prize, the sole remedy of the claimants is the award to each of them of an equal portion of the single prize.

4.  The method to be used in selling tickets or shares, except that no elected official's name may be printed on such tickets or shares.  The overall estimated odds of winning some prize or some cash prize, as appropriate, in a given game shall be printed on each ticket or share.

5.  The licensing of agents to sell tickets or shares, except that a person who is under eighteen years of age shall not be licensed as an agent.

6.  The manner and amount of compensation to be paid licensed sales agents necessary to provide for the adequate availability of tickets or shares to prospective buyers and for the convenience of the public, including provision for variable compensation based on sales volume.

7.  Matters necessary or desirable for the efficient and economical operation and administration of the lottery and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares.

C.  The commission shall authorize the director to issue orders and shall approve orders issued by the director for the necessary operation of the lottery.  Orders issued under this subsection may include provisions relating to the following:

1.  The prices of tickets or shares in lottery games.

2.  The themes, game play‑styles, and names of lottery games and definitions of symbols and other characters used in lottery games, except that each ticket or share in a lottery game shall bear a unique distinguishable serial number.

3.  The sale of tickets or shares at a discount for promotional purposes.

4.  The prize structure of lottery games, including the number and size of prizes available.  Available prizes may include free tickets in lottery games and merchandise prizes.

5.  The frequency of drawings, if any, or other selections of winning tickets or shares, except that:

(a)  All drawings shall be open to the public.

(b)  The actual selection of winning tickets or shares may not be performed by an employee or member of the commission.

(c)  Noncomputerized online game drawings shall be witnessed by an independent observer.

6.  Requirements for eligibility for participation in grand drawings or other runoff drawings, including requirements for the submission of evidence of eligibility within a shorter period than that provided for claims by section 5‑518.

7.  Incentive and bonus programs designed to increase sales of lottery tickets or shares and to produce the maximum amount of net revenue for this state.

D.  Notwithstanding title 41, chapter 6 and subsection B of this section, the director, subject to the approval of the commission, may establish a policy, procedure or practice that relates to an existing online game or a new online game which that is the same type and has the same type of game play‑style as an online game currently being conducted by the lottery or may modify an existing rule for an existing online game or a new online game which that is the same type and has the same type of game play‑style as an online game currently being conducted by the lottery, including establishing or modifying the matrix for an online game by giving notice of the establishment or modification at least thirty days before the effective date of the establishment or modification.

E.  The commission shall maintain and make the following information available for public inspection at its offices during regular business hours:

1.  A detailed listing of the estimated number of prizes of each particular denomination expected to be awarded in any instant game currently on sale.

2.  After the end of the claim period prescribed by section 5‑518, a listing of the total number of tickets or shares sold and the number of prizes of each particular denomination awarded in each lottery game.

3.  Definitions of all play symbols and other characters used in each lottery game and instructions on how to play and how to win each lottery game.

F.  Any information that is maintained by the commission and that would assist a person in locating or identifying a winning ticket or share or that would otherwise compromise the integrity of any lottery game is deemed confidential and is not subject to public inspection.

G.  The commission, in addition to other games authorized by this article, shall establish two special games for each year to be conducted concurrently with other lottery games authorized under subsection B of this section.  The monies for prizes, for operating expenses and for payment to the commerce and economic development commission fund, as provided in section 5‑522, subsection A, paragraph 2, shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system. The monies shall be derived from the revenues of the special games, and monies for prizes do not become an expense to the lottery commission's annual appropriation as provided in section 5‑505, subsection D and section 5‑522, subsection J  H.  Monies saved from the revenues of the special games, by reason of operating efficiencies, shall become other revenue of the lottery commission and revert to the state general fund.

H.  The commission, in addition to other games authorized by this article, may establish multistate lottery games to be conducted concurrently with other lottery games authorized under subsections B and G of this section.  The monies for prizes, for operating expenses and for payment to the local transportation assistance fund, as provided in section 28‑8101, and the state general fund shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system.  The monies shall be derived from the revenues of multistate lottery games.

I.  The commission or director shall not establish or operate any online or electronic keno game or any game played on the internet.

J.  The commission or director shall not establish or operate any lottery game or any type of game play‑style, either individually or in combination, that uses gaming devices or video lottery terminals as those terms are used in section 5‑601.02, including monitor games that produce or display outcomes or results more than once per hour.

K.  The director shall print, in a prominent location on each lottery ticket or share, a statement that help is available if a person has a problem with gambling and a toll-free telephone number where problem gambling assistance is available.  The director shall require all licensed agents to post a sign with the statement that help is available if a person has a problem with gambling and the toll-free telephone number at the point of sale as prescribed and supplied by the director.  The requirements of this subsection apply to tickets and shares printed after July 18, 2000.

L.  For the purposes of this section:

1.  "Game play‑style" means the process or procedure that a player must follow to determine if a lottery ticket or share is a winning ticket or share.

2.  "Matrix" means the odds of winning a prize and the prize payout amounts in a given game.END_STATUTE

Sec. 2.  Section 5-522, Arizona Revised Statutes, is amended to read:

START_STATUTE5-522.  Use of monies in state lottery fund; report

A.  The monies in the state lottery fund shall be expended only for the following purposes and in the order provided:

1.  For the expenses of the commission incurred in carrying out its powers and duties and in the operation of the lottery.

2.  For payment to the commerce and economic development commission fund established by section 41‑1505.10 of not less than twenty‑one and one‑half per cent of the revenues received from the sale of two special lottery games conducted for the benefit of economic development.

3.  Except as provided in subsection F of this section, for payment to the local transportation assistance fund established by section 28‑8101 of not less than nine million dollars, increasing each year that total revenues to the state lottery fund increase up to a maximum of eighteen million dollars each fiscal year, except that payments pursuant to this paragraph shall not increase by more than ten per cent per year.

B.  Of the monies remaining in the state lottery fund after the appropriations authorized in subsection A of this section, up to a maximum of twenty‑three million dollars each fiscal year shall be deposited in the local transportation assistance fund established by section 28‑8101 and up to a maximum of seven million six hundred fifty thousand dollars each fiscal year shall be deposited in the county assistance fund established by section 41‑175.  Monies distributed pursuant to this subsection shall be in addition to monies distributed pursuant to subsection A, paragraph 3 of this section.

C.  Notwithstanding subsection B of this section, if the state lottery director determines at the beginning of any fiscal year that monies available to cities, towns and counties under this section may not equal thirty million six hundred fifty thousand dollars, the director shall not authorize deposits to the county assistance fund until the deposits to the local transportation assistance fund equal twenty‑three million dollars.

D.  B.  Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections subsection A, B and C of this section, ten million dollars shall be deposited in the Arizona state parks board heritage fund established by section 41‑502 and ten million dollars shall be deposited in the Arizona game and fish commission heritage fund established by section 17‑297.

E.  C.  Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A,  and B, C and D of this section, and appropriations and deposits to the local transportation assistance fund authorized by this section, five million dollars shall be allocated to the department of economic security for the healthy families program established by section 8‑701, four million dollars shall be allocated to the Arizona board of regents for the Arizona area health education system established by section 15‑1643, three million dollars shall be allocated to the department of health services to fund the teenage pregnancy prevention programs established in Laws 1995, chapter 190, sections 2 and 3, two million dollars shall be allocated to the department of health services for the health start program established by section 36‑697, two million dollars shall be deposited in the disease control research fund established by section 36‑274 and one million dollars shall be allocated to the department of health services for the federal women, infants and children food program.  The allocations in this subsection shall be adjusted annually according to changes in the GDP price deflator as defined in section 41‑563 and the allocations are exempt from the provisions of section 35‑190, relating to lapsing of appropriations.  If there are not sufficient monies available pursuant to this subsection, the allocation of monies for each program shall be reduced on a pro rata basis.

F.  D.  Notwithstanding subsection A, paragraph 3 of this section, If the state lottery director determines that monies available to the state general fund may not equal thirty‑one million eighty million six hundred fifty thousand dollars in a fiscal year, the director shall not authorize deposits to the local transportation assistance Arizona game and fish commission heritage fund pursuant to subsection A, paragraph 3 B of this section until the deposits to the state general fund equal thirty‑one million eighty million six hundred fifty thousand dollars in a fiscal year.

G.  E.  Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A through F  D of this section, one million dollars or the remaining balance in the fund, whichever is less, is appropriated to the department of economic security for grants to nonprofit organizations, including faith based organizations, for homeless emergency and transitional shelters and related support services.  The department of economic security shall submit a report on the amounts, recipients, purposes and results of each grant to the governor, the speaker of the house of representatives and the president of the senate on or before December 31 of each year for the prior fiscal year and shall provide a copy of this report to the secretary of state.

H.  F.  Beginning in fiscal year 2009‑2010 2010‑2011, of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A through G  E of this section, and after a total of at least forty‑six million four hundred ninety thousand ninety‑six million one hundred forty thousand dollars has been deposited in the state general fund, the remaining balance in the state lottery fund shall be deposited in the university capital improvement lease‑to-own and bond fund established by section 15‑1682.03, up to a maximum of eighty per cent of the total annual payments of lease-to-own and bond agreements entered into by the Arizona board of regents.

I.  G.  All monies remaining in the state lottery fund after the appropriations and deposits authorized in this section shall be deposited in the state general fund.

J.  H.  Except for monies expended for prizes as provided in section 5‑504, subsection G and section 41‑1505.10, monies expended under subsection A of this section are subject to legislative appropriation. END_STATUTE

Sec. 3.  Section 5-554, Arizona Revised Statutes, is amended to read:

START_STATUTE5-554.  Commission; director; powers and duties; definitions

A.  The commission shall meet with the director not less than once each quarter to make recommendations and set policy, receive reports from the director and transact other business properly brought before the commission.

B.  The commission shall oversee a state lottery to produce the maximum amount of net revenue consonant with the dignity of the state.  To achieve these ends, the commission shall authorize the director to adopt rules in accordance with title 41, chapter 6.  Rules adopted by the director may include provisions relating to the following:

1.  Subject to the approval of the commission, the types of lottery games and the types of game play‑styles to be conducted.

2.  The method of selecting the winning tickets or shares for noncomputerized online games, except that no method may be used which that, in whole or in part, depends on the results of a dog race, a horse race or any sporting event.

3.  The manner of payment of prizes to the holders of winning tickets or shares, including providing for payment by the purchase of annuities in the case of prizes payable in installments, except that the commission staff shall examine claims and may not pay any prize based on altered, stolen or counterfeit tickets or based on any tickets which that fail to meet established validation requirements, including rules stated on the ticket or in the published game rules, and confidential validation tests applied consistently by the commission staff.  No particular prize in a lottery game may be paid more than once, and in the event of a binding determination that more than one person is entitled to a particular prize, the sole remedy of the claimants is the award to each of them of an equal portion of the single prize.

4.  The method to be used in selling tickets or shares, except that no elected official's name may be printed on such tickets or shares.  The overall estimated odds of winning some prize or some cash prize, as appropriate, in a given game shall be printed on each ticket or share.

5.  The licensing of agents to sell tickets or shares, except that a person who is under eighteen years of age shall not be licensed as an agent.

6.  The manner and amount of compensation to be paid licensed sales agents necessary to provide for the adequate availability of tickets or shares to prospective buyers and for the convenience of the public, including provision for variable compensation based on sales volume.

7.  Matters necessary or desirable for the efficient and economical operation and administration of the lottery and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares.

C.  The commission shall authorize the director to issue orders and shall approve orders issued by the director for the necessary operation of the lottery.  Orders issued under this subsection may include provisions relating to the following:

1.  The prices of tickets or shares in lottery games.

2.  The themes, game play‑styles, and names of lottery games and definitions of symbols and other characters used in lottery games, except that each ticket or share in a lottery game shall bear a unique distinguishable serial number.

3.  The sale of tickets or shares at a discount for promotional purposes.

4.  The prize structure of lottery games, including the number and size of prizes available.  Available prizes may include free tickets in lottery games and merchandise prizes.

5.  The frequency of drawings, if any, or other selections of winning tickets or shares, except that:

(a)  All drawings shall be open to the public.

(b)  The actual selection of winning tickets or shares may not be performed by an employee or member of the commission.

(c)  Noncomputerized online game drawings shall be witnessed by an independent observer.

6.  Requirements for eligibility for participation in grand drawings or other runoff drawings, including requirements for the submission of evidence of eligibility within a shorter period than that provided for claims by section 5-568.

7.  Incentive and bonus programs designed to increase sales of lottery tickets or shares and to produce the maximum amount of net revenue for this state.

D.  Notwithstanding title 41, chapter 6 and subsection B of this section, the director, subject to the approval of the commission, may establish a policy, procedure or practice that relates to an existing online game or a new online game which that is the same type and has the same type of game play‑style as an online game currently being conducted by the lottery or may modify an existing rule for an existing online game or a new online game which that is the same type and has the same type of game play‑style as an online game currently being conducted by the lottery, including establishing or modifying the matrix for an online game by giving notice of the establishment or modification at least thirty days before the effective date of the establishment or modification.

E.  The commission shall maintain and make the following information available for public inspection at its offices during regular business hours:

1.  A detailed listing of the estimated number of prizes of each particular denomination expected to be awarded in any instant game currently on sale.

2.  After the end of the claim period prescribed by section 5-568, a listing of the total number of tickets or shares sold and the number of prizes of each particular denomination awarded in each lottery game.

3.  Definitions of all play symbols and other characters used in each lottery game and instructions on how to play and how to win each lottery game.

F.  Any information that is maintained by the commission and that would assist a person in locating or identifying a winning ticket or share or that would otherwise compromise the integrity of any lottery game is deemed confidential and is not subject to public inspection.

G.  The commission, in addition to other games authorized by this article, shall establish two special games for each year to be conducted concurrently with other lottery games authorized under subsection B of this section.  The monies for prizes, for operating expenses and for payment to the commerce and economic development commission fund, as provided in section 5-572, subsection A, paragraph 2, shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system. The monies shall be derived from the revenues of the special games, and monies for prizes do not become an expense to the lottery commission's annual appropriation as provided in section 5-555, subsection D and section 5-572, subsection J.  Monies saved from the revenues of the special games, by reason of operating efficiencies, shall become other revenue of the lottery commission and revert to the state general fund.

H.  The commission, in addition to other games authorized by this article, may establish multistate lottery games to be conducted concurrently with other lottery games authorized under subsections B and G of this section.  The monies for prizes, for operating expenses and for payment to the local transportation assistance fund, as provided in section 28‑8101, and the state general fund shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system.  The monies shall be derived from the revenues of multistate lottery games.

I.  The commission or director shall not establish or operate any online or electronic keno game or any game played on the internet.

J.  The commission or director shall not establish or operate any lottery game or any type of game play‑style, either individually or in combination, that uses gaming devices or video lottery terminals as those terms are used in section 5‑601.02, including monitor games that produce or display outcomes or results more than once per hour.

K.  The director shall print, in a prominent location on each lottery ticket or share, a statement that help is available if a person has a problem with gambling and a toll-free telephone number where problem gambling assistance is available.  The director shall require all licensed agents to post a sign with the statement that help is available if a person has a problem with gambling and the toll-free telephone number at the point of sale as prescribed and supplied by the director.  The requirements of this subsection apply to tickets and shares printed after July 18, 2000.

L.  For the purposes of this section:

1.  "Game play‑style" means the process or procedure that a player must follow to determine if a lottery ticket or share is a winning ticket or share.

2.  "Matrix" means the odds of winning a prize and the prize payout amounts in a given game. END_STATUTE

Sec. 4.  Section 5-572, Arizona Revised Statutes, is amended to read:

START_STATUTE5-572.  Use of monies in state lottery fund; report

A.  If there are any bonds or bond related obligations payable from the state lottery revenue bond debt service fund, the state lottery revenue bond debt service fund shall be secured by a first lien on the monies in the state lottery fund after the payment of operating costs of the lottery, as prescribed in section 5‑555, subsection A, paragraph 1, until the state lottery bond debt service fund contains sufficient monies to meet all the requirements for the current period as required by the bond documents.  Debt service for revenue bonds issued pursuant to this chapter shall be paid first from monies that would have otherwise been deposited pursuant to this section in the state general fund. After the requirements for the current period have been satisfied as required by the bond documents, the monies in the state lottery fund shall be expended only for the following purposes and in the order provided:

1.  For the expenses of the commission incurred in carrying out its powers and duties and in the operation of the lottery.

2.  For payment to the commerce and economic development commission fund established by section 41‑1505.10 of not less than twenty‑one and one‑half per cent of the revenues received from the sale of two special lottery games conducted for the benefit of economic development.

3.  Except as provided in subsection F of this section, for payment to the local transportation assistance fund established by section 28‑8101 of not less than nine million dollars, increasing each year that total revenues to the state lottery fund increase up to a maximum of eighteen million dollars each fiscal year, except that payments pursuant to this paragraph shall not increase by more than ten per cent per year.

B.  Of the monies remaining in the state lottery fund after the appropriations authorized in subsection A of this section, up to a maximum of twenty‑three million dollars each fiscal year shall be deposited in the local transportation assistance fund established by section 28‑8101 and up to a maximum of seven million six hundred fifty thousand dollars each fiscal year shall be deposited in the county assistance fund established by section 41‑175.  Monies distributed pursuant to this subsection shall be in addition to monies distributed pursuant to subsection A, paragraph 3 of this section.

C.  Notwithstanding subsection B of this section, if the state lottery director determines at the beginning of any fiscal year that monies available to cities, towns and counties under this section may not equal thirty million six hundred fifty thousand dollars, the director shall not authorize deposits to the county assistance fund until the deposits to the local transportation assistance fund equal twenty‑three million dollars.

D.  B.  Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections subsection A, B and C of this section, ten million dollars shall be deposited in the Arizona state parks board heritage fund established by section 41‑502 and ten million dollars shall be deposited in the Arizona game and fish commission heritage fund established by section 17‑297.

E.  C.  Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A,  and B, C and D of this section, and appropriations and deposits to the local transportation assistance fund authorized by this section, five million dollars shall be allocated to the department of economic security for the healthy families program established by section 8‑701, four million dollars shall be allocated to the Arizona board of regents for the Arizona area health education system established by section 15‑1643, three million dollars shall be allocated to the department of health services to fund the teenage pregnancy prevention programs established in Laws 1995, chapter 190, sections 2 and 3, two million dollars shall be allocated to the department of health services for the health start program established by section 36‑697, two million dollars shall be deposited in the disease control research fund established by section 36‑274 and one million dollars shall be allocated to the department of health services for the federal women, infants and children food program.  The allocations in this subsection shall be adjusted annually according to changes in the GDP price deflator as defined in section 41‑563 and the allocations are exempt from the provisions of section 35‑190,  relating to lapsing of appropriations.  If there are not sufficient monies available pursuant to this subsection, the allocation of monies for each program shall be reduced on a pro rata basis.

F.  D.  Notwithstanding subsection A, paragraph 3 of this section, If the state lottery director determines that monies available to the state general fund may not equal thirty‑one million eighty million six hundred fifty thousand dollars in a fiscal year, the director shall not authorize deposits to the local transportation assistance Arizona game and FISH COMMISSION heritage fund pursuant to subsection A, paragraph 3 B of this section until the deposits to the state general fund equal thirty‑one million eighty million six hundred fifty thousand dollars in a fiscal year.

G.  E.  Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A through F  D of this section, one million dollars or the remaining balance in the fund, whichever is less, is appropriated to the department of economic security for grants to nonprofit organizations, including faith based organizations, for homeless emergency and transitional shelters and related support services.  The department of economic security shall submit a report on the amounts, recipients, purposes and results of each grant to the governor, the speaker of the house of representatives and the president of the senate on or before December 31 of each year for the prior fiscal year and shall provide a copy of this report to the secretary of state.

H.  F.  Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A through G  E of this section, and after a total of at least forty‑six million four hundred ninety thousand ninety‑six million one hundred forty thousand dollars has been deposited in the state general fund, the remaining balance in the state lottery fund shall be deposited in the university capital improvement lease‑to-own and bond fund established by section 15‑1682.03, up to a maximum of eighty per cent of the total annual payments of lease-to-own and bond agreements entered into by the Arizona board of regents.

I.  G.  All monies remaining in the state lottery fund after the appropriations and deposits authorized in this section shall be deposited in the state general fund.

J.  H.  Except for monies expended for prizes as provided in section 5‑554, subsection G and section 41‑1505.10 and for debt service of revenue bonds as provided in subsection A of this section, monies expended under subsection A of this section are subject to legislative appropriation. END_STATUTE

Sec. 5.  Section 5-804, Arizona Revised Statutes, is amended to read:

START_STATUTE5-804.  Administrative powers and duties

A.  The board of directors, on behalf of the authority, may:

1.  Adopt and use a corporate seal.

2.  Sue and be sued.

3.  Enter into contracts, including intergovernmental agreements under title 11, chapter 7, article 3, as necessary to carry out the purposes and requirements of this chapter.

4.  Enter into an intergovernmental agreement under title 11, chapter 7, article 3 with the Arizona exposition and state fair board for the joint use of properties and facilities, sharing administration, personnel and resources and other matters that are beneficial to the purposes of the multipurpose facility and the state fair.

5.  Adopt administrative rules as necessary to administer and operate the authority and any property under its jurisdiction.

6.  Acquire by any lawful means and operate, maintain, encumber and dispose of real and personal property and interests in property.

7.  Retain legal counsel and other consultants as necessary to carry out the purposes of the authority.

8.  Enter into contracts with a professional football league for its championship game or with a nonprofit community based organization that operates or administers an intercollegiate national championship game that provide for the payment to the league or organization of transaction privilege tax revenues derived pursuant to section 42‑5073, subsection G  F, paragraph 1 from sales of admissions to these championship games if the authority has fully paid the current year's required principal and interest payments on any outstanding authority bonds for which these revenues were pledged pursuant to article 3 of this chapter.

9.  Enter into contracts with a nonprofit community based organization that sponsors an intercollegiate national championship game that provides provide for the payment to the organization of a ticket surcharge or facility user fee associated with parking if the authority has fully paid the current year's required principal and interest payments on any outstanding authority bonds for which these revenues were pledged pursuant to article 3 of this chapter.

B.  The board of directors shall:

1.  Appoint from among its members a chairman, a secretary and such other officers as may be necessary to conduct its business.

2.  Employ an executive director and prescribe the terms and conditions of employment.

3.  Keep and maintain a complete and accurate record of all of its proceedings.  The board is a public body for purposes of title 38, chapter 3, article 3.1 and title 39, chapter 1.

4.  Provide for the use, maintenance and operation of the properties and interests owned or controlled by the authority.

5.  On or before September 12, 2002, approve a site for the construction of the multipurpose facility proposed at any time before that date by site hosts. END_STATUTE

Sec. 6.  Title 6, Arizona Revised Statutes, is amended by adding chapter 16, to read:

CHAPTER 16

FINANCIAL INSTITUTIONS DATA MATCH AND DATA EXCHANGE

ARTICLE 1.  GENERAL PROVISIONS

START_STATUTE6-1601.  Financial institutions data match and data exchange; surrender of assets of delinquent taxpayer; nonliability

A.  Financial institutions may enter into agreements with the department of revenue for data match and data exchange as prescribed by section 42-1207.

B.  On receipt of a notice of levy, a financial institution shall encumber or surrender, as appropriate, assets held by the financial institution on behalf of a delinquent taxpayer.  If the financial institution receives two notices of levy on the same day for the same person, a levy issued to collect child support pursuant to section 25-521 has priority over a levy issued pursuant to this section.

C.  Notwithstanding any other law, a financial institution is not subject to civil liability for either:

1.  Disclosing to the department of revenue or its agent a person's financial record pursuant to section 42-1207 or any acts of omission that are inadvertent and made in good faith.

2.  Encumbering or surrendering any assets held by the financial institution in response to a notice of levy that is issued by the department of revenue or for any action taken in good faith to comply with this section.

D.  The remedy under subsection B of this section is limited to collection of delinquent taxes, penalties and interest. END_STATUTE

Sec. 7.  Section 9-626, Arizona Revised Statutes, is amended to read:

START_STATUTE9-626.  Construction progress reports; auditor general performance measures

A.  The eligible city shall report progress on the development of any eligible project to the joint committee on capital review twice annually during construction of the eligible project.

B.  Within five years after the filing of the certificate of completion of construction of an eligible project pursuant to section 9‑622, and after consultation with the eligible city, the auditor general shall conduct or contract for an economic and fiscal impact analysis of the eligible project in its fifth year of operation following the filing of the certificate of completion of construction.  At a minimum, the analysis shall:

1.  Estimate the effects of direct, indirect and induced economic activity in this state associated with:

(a)  Regional and national conventions and trade shows held at the site of the eligible project, the total amount of state general fund revenues derived from that economic activity and the estimated average annual attendance at those events assuming:

(i)  The eligible project had not been completed.

(ii)  The eligible project has been completed.

(b)  The construction of the eligible project and the total amount of state general fund revenues derived from the construction activity.

2.  Compute the total cumulative amount of distributions pursuant to section 9‑602 for the first through fifth years following the filing of the certificate of completion of construction for the eligible project pursuant to section 9‑622 and from the first through each subsequent fifth year.

3.  Compute the net cumulative distributions for the eligible project by subtracting the amount determined pursuant to paragraph 1, subdivision (b) of this subsection from either the amounts determined pursuant to paragraph 2 of this subsection or, if applicable, the amount of state monies paid under a lease purchase agreement pursuant to section 41‑791.04.

4.  Based on the analysis conducted pursuant to this subsection, estimate the minimum required attendance at the eligible project for the fifth year following the filing of the certificate of completion of construction of an eligible project pursuant to section 9‑622 and each year thereafter.  The estimates shall be computed as follows:

(a)  Divide the total state general fund revenues estimated pursuant to paragraph 1, subdivision (a), item (ii) of this subsection by the attendance estimated pursuant to paragraph 1, subdivision (a), item (ii) of this subsection.

(b)  Divide the net cumulative distribution amounts for the fifth year following the filing of the certificate of completion of construction of an eligible project pursuant to section 9‑622 and each year thereafter computed pursuant to paragraph 3 of this subsection by the quotient computed pursuant to subdivision (a) of this paragraph.

(c)  Add the average annual attendance estimated pursuant to paragraph 1, subdivision (a), item (i) of this subsection to each of the quotients determined pursuant to subdivision (b) of this paragraph.  The resulting sums are the minimum required attendance amounts for each year.

C.  Beginning in the fifth calendar year following the filing of the certificate of completion of construction of an eligible project pursuant to section 9‑622 and each year thereafter, the auditor general shall:

1.  Estimate the average annual attendance at regional and national conventions and trade shows held at the site of the eligible project using any appropriate method to estimate the attendance.  The eligible city shall cooperate with and assist the auditor general in developing the estimates.

2.  Compute the ratio of the cumulative sum of the estimated attendance amounts developed pursuant to paragraph 1 of this subsection for all years through the current year to the cumulative sum of the minimum required attendance amounts for those years computed pursuant to subsection B, paragraph 4, subdivision (c) of this section.

3.  Notify the president of the senate, the speaker of the house of representatives and the governor of:

(a)  The minimum required attendance amounts for those years computed pursuant to subsection B, paragraph 4, subdivision (c) of this section.

(b)  The attendance estimate developed pursuant to paragraph 1 of this subsection.

(c)  The ratio computed pursuant to paragraph 2 of this subsection.

D.  Except as provided in paragraph 4 of this subsection, if the ratio computed pursuant to subsection C, paragraph 2 of this section is less than one:

1.  The auditor general shall compute the difference between the estimated state general fund revenues and the net cumulative distributions by multiplying the net cumulative distributions computed pursuant to subsection B, paragraph 3 of this section by the difference between the ratio computed pursuant to subsection C, paragraph 2 of this section and one.

2.  The auditor general shall notify the state treasurer of:

(a)  The ratio computed pursuant to subsection C, paragraph 2 of this section.

(b)  The difference computed pursuant to paragraph 1 of this subsection.

3.  At the time of the next regularly scheduled distribution, the state treasurer shall withhold from the amount that would otherwise be distributed to the eligible city from the local transportation assistance fund pursuant to section 28‑8102 42‑5029 an amount equal to the amount stated in the notice received pursuant to paragraph 2 of this subsection.  If the amount available for distribution is less than the amount to be withheld, the state treasurer shall continue withholding from subsequent distributions until the full amount stated in the notice has been withheld.

4.  The eligible city may request and the auditor general shall conduct or contract for a complete economic and fiscal impact analysis of the eligible project.  If an analysis is requested:

(a)  The auditor general shall not notify the state treasurer pursuant to paragraph 2 of this subsection, and the state treasurer shall not withhold pursuant to paragraph 3 of this subsection, pending completion of the analysis.

(b)  The analysis shall be similar to the analysis described in subsection B of this section, except that the analysis shall examine the operations of the eligible project in the year for which the ratio is less than one.

(c)  The analysis, at a minimum, shall estimate the total cumulative incremental revenues to the state general fund resulting from the completion of the eligible project including the revenues resulting from the construction activity associated with the completion of the eligible project.

(d)  And the analysis demonstrates that the total cumulative incremental revenues to the state general fund exceed the total cumulative amount of distributions pursuant to section 9‑602 as computed in subsection B, paragraph 3 of this section, the auditor general shall not notify the state treasurer pursuant to paragraph 2 of this subsection and the state treasurer shall not withhold pursuant to paragraph 3 of this subsection.

(e)  And the analysis demonstrates that the total cumulative incremental revenues to the state general fund are less than the total cumulative amount of distributions pursuant to section 9‑602 as computed in subsection B, paragraph 3 of this section:

(i)  The auditor general shall subtract the amount of the total cumulative incremental revenues to the state general fund from the amount of the total cumulative distributions.

(ii)  The auditor general shall notify the state treasurer of the difference computed pursuant to item (i) of this subdivision.

(iii)  At the time of the next regularly scheduled distribution, the state treasurer shall withhold from the amount that would otherwise be distributed to the eligible city from the local transportation assistance fund pursuant to section 28‑8102 42‑5029 an amount equal to the amount stated in the notice received pursuant to item (ii) of this subdivision.  If the amount available for distribution is less than the amount to be withheld, the state treasurer shall continue withholding from subsequent distributions until the full amount stated in the notice has been withheld.

E.  The eligible city shall reimburse the auditor general for any costs incurred in complying with the requirements of this section. END_STATUTE

Sec. 8.  Section 15‑1682.03, Arizona Revised Statutes, is amended to read:

START_STATUTE15-1682.03.  University capital improvement lease-to-own and bond fund; lease-to-own and bond capital improvement agreements

A.  The university capital improvement lease-to-own and bond fund is established consisting of the monies provided by the Arizona board of regents pursuant to this section, monies deposited pursuant to section 5‑522 and monies appropriated by the legislature.  The board shall administer the fund. On notice from the board, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.  Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

B.  Through revenues of the state university system, the board shall annually provide monies to the fund of at least twenty per cent of the aggregate annual payments of lease-to-own and bond agreements entered into by the board pursuant to this section.

C.  The board shall distribute monies in the fund to make payments pursuant to lease-to-own and bond agreements entered into by the board pursuant to this section.  The board may enter into lease-to-own and bond agreements for the purposes of building renewal projects and new facilities. New lease-to-own and bond agreements entered into pursuant to this section shall not exceed one hundred sixty‑seven million six hundred seventy-one thousand two hundred dollars in fiscal year 2008‑2009 and four hundred million dollars in fiscal year 2009‑2010.  The board may enter into lease‑to‑own and bond transactions up to a maximum of eight hundred million dollars.

D.  Notwithstanding section 5-522, subsection H  F, the amount of state lottery revenues distributed to the university capital improvement lease‑to‑own and bond fund in fiscal year 2009-2010 and fiscal year 2010-2011 shall not exceed an amount sufficient for up to eighty per cent of the annual payments of the first one hundred sixty-seven million six hundred seventy-one thousand two hundred dollars of new lease-to-own and bond agreements entered into pursuant to this section.  The full amount of state lottery revenues distributed to the university capital improvement lease-to-own and bond fund pursuant to section 5-522, subsection H  F shall be made available to the board for the remaining new lease-to-own and bond agreements up to eight hundred million dollars beginning in fiscal year 2011-2012.

E.  In entering into lease-to-own and bond agreements pursuant to this section, the board shall not obligate this state to provide any additional monies from the state lottery fund above the amounts authorized in this section and section 5-522, subsection H  F.  In entering into lease-to-own and bond agreements pursuant to this section, the board shall not obligate any state general fund monies. END_STATUTE

Sec. 9.  Section 28-4802, Arizona Revised Statutes, is amended to read:

START_STATUTE28-4802.  Fees

A.  Except as provided in subsection B of this section, the owner of record of a vehicle at the time of abandonment of the vehicle is liable to the department for the transfer of ownership or disposal in the an amount of fifty dollars prescribed by the director by rule if the vehicle was:

1.  Abandoned and junked pursuant to article 3 of this chapter on private property or public land or on or within the right‑of‑way of a street or highway.

2.  Abandoned on private property or public land or on or within the right‑of‑way of a street or highway and the department issues a transfer of ownership pursuant to the procedures prescribed by this chapter.

3.  Abandoned and junked pursuant to article 3 of this chapter and towed with the written permission of the state land commissioner from state trust land located within the boundaries of an incorporated city or town.

B.  The owner of record of a vehicle at the time of abandonment is liable to the department for the transfer of ownership or disposal in the an amount of two hundred dollars prescribed by the director by rule if the vehicle was:

1.  Abandoned and junked pursuant to article 3 of this chapter and towed with the written permission of the governing authority off of national forest, state park, bureau of land management or state trust land located outside the boundaries of an incorporated city or town.

2.  Abandoned and towed with the written permission of the governing authority off of national forest, state park, bureau of land management or state trust land located outside the boundaries of an incorporated city or town and the department issues a transfer of ownership pursuant to the procedures prescribed by this chapter.

3.  Abandoned outside the right‑of‑way of a street or highway located outside the boundaries of an incorporated city or town.

C.  In addition to the registration fee or driver license fee prescribed by sections 28‑2003 and 28‑3002, the department shall collect the fee prescribed in subsections A and B of this section as an additional registration fee at the time the owner of the vehicle subsequently registers another vehicle in this state or as an additional driver license fee at the time the owner of the vehicle subsequently applies for or renews a driver license issued by this state.  The department shall deposit, pursuant to sections 35‑146 and 35‑147, the additional fee collected for the transfer of ownership or disposal in the abandoned vehicle administration fund established by section 28‑4804, except that ninety per cent of the fees collected pursuant to subsection A of this section and sixty per cent of the fees collected pursuant to subsection B of this section shall be deposited in the state highway fund.

D.  The department:

1.  Shall notify the owner of an abandoned vehicle for which ownership has been transferred or of a junk vehicle that has been disposed of about the additional fee at the time of a subsequent vehicle registration or driver license application or renewal.

2.  Shall provide a complete description of the abandoned or junked vehicle, the vehicle identification number of the vehicle and the date on which the vehicle was disposed of or ownership was transferred by the department.

3.  May waive the additional fee if the person provides proof satisfactory to the director that the vehicle had been transferred or assigned to another person before the day of abandonment.

4.  May prescribe by rule a fee of not more than ten dollars for processing an abandoned vehicle report.END_STATUTE

Sec. 10.  Section 28-5808, Arizona Revised Statutes, is amended to read:

START_STATUTE28-5808.  Vehicle license tax distribution

A.  Except as provided in subsection D of this section, the director shall distribute monies collected by the director pursuant to section 28‑5801, except monies deposited in the state general fund, on the first and fifteenth calendar day of each month as follows:

1.  On the first calendar day, the director shall deposit, pursuant to sections 35‑146 and 35‑147, all of the Arizona highway user revenue fund monies received from the first through the fifteenth calendar day of the preceding month in the Arizona highway user revenue fund, except that on the first calendar day the director shall deposit, pursuant to sections 35‑146 and 35‑147, in the parity compensation fund established by section 41‑1720, 1.51 per cent of the portion of vehicle license tax revenues that otherwise would be deposited in the state highway fund from the first through the fifteenth calendar day of the preceding month.

2.  On the fifteenth calendar day, the director shall deposit, pursuant to sections 35‑146 and 35‑147, all of the Arizona highway user revenue fund monies received from the sixteenth through the last day of the preceding month in the Arizona highway user revenue fund, except that on the fifteenth calendar day, the director shall deposit, pursuant to sections 35‑146 and 35‑147, in the parity compensation fund established by section 41‑1720, 1.51 per cent of the portion of vehicle license tax revenues that otherwise would be deposited in the state highway fund from the sixteenth through the last day of the preceding month.  On the fifteenth calendar day, the director shall distribute or deposit all other monies received during the entire preceding month as follows:

(a)  The county general fund monies to the county general fund.

(b)  The county transportation monies to the state treasurer to be apportioned among the counties for any purposes related to transportation, as determined by the board of supervisors, on the basis that the population of the unincorporated area of each county bears to the population of the unincorporated areas of all counties in this state.

(c)  The incorporated cities and towns monies to the incorporated cities and towns of the county in proportion to the population of each.

3.  The deposit of the monies in the parity compensation fund pursuant to paragraphs 1 and 2 of this subsection shall not impact the distribution of vehicle license tax revenues to the state general fund and to cities, towns and counties pursuant to this section.

B.  The director shall distribute monies collected by the director pursuant to sections 28‑5804, 28‑5805, 28‑5806 and 28‑5810, except monies deposited in the state general fund, on the first and fifteenth calendar day of each month as follows:

1.  On the first calendar day, the director shall deposit, pursuant to sections 35‑146 and 35‑147, 37.61 per cent of all monies received from the first through the fifteenth calendar day of the preceding month in the highway user revenue fund.

2.  On the fifteenth calendar day, the director shall deposit, pursuant to sections 35‑146 and 35‑147, 37.61 per cent of all monies received from the sixteenth through the last day of the preceding month in the highway user revenue fund and distribute or deposit the following amounts as a percentage of all monies received pursuant to sections 28‑5804, 28‑5805, 28‑5806 and 28‑5810 during the entire preceding month as follows:

(a)  20.45 per cent to the county general fund.

(b)  4.91 per cent to the state treasurer to be apportioned among the counties for any purposes related to transportation, as determined by the board of supervisors, on the basis that the population of the unincorporated area of each county bears to the population of the unincorporated areas of all counties in this state.

(c)  20.45 per cent to the incorporated cities and towns of the county in proportion to the population of each.

(d)  Except as provided in subsection C of this section, 1.64 per cent shall be deposited, pursuant to sections 35‑146 and 35‑147, in the state highway fund established by section 28‑6991.

(e)  4.09 per cent in the state highway fund established by section 28‑6991.

(f)  10.85 per cent shall be deposited, pursuant to sections 35‑146 and 35‑147, in the state general fund to aid school financial assistance.

C.  Through September 30, 2003, if the department's authorized share of federal surface transportation program monies in each year is more than forty‑two million dollars, the director shall deposit each year in equal installments during the year an annual amount equal to the difference between this state's authorized share of federal surface transportation program monies and forty‑two million dollars from the amount prescribed in subsection B, paragraph 2, subdivision (d) of this section in the local transportation assistance fund established by section 28‑8101.  Monies deposited in the local transportation assistance fund pursuant to this subsection shall be distributed to eligible cities, towns and counties as provided in section 28‑8103.  The amount distributed pursuant to this subsection shall not exceed the amount prescribed in subsection B, paragraph 2, subdivision (d) of this section.

D.  C.  For purposes of this section the population of a county, city or town shall be determined as provided by section 28‑6532 or 42‑5033.01.  If an incorporated city or town has had no federal enumeration of population, the supervisors shall both:

1.  Appoint a qualified person to take an accurate census of the incorporated city or town.

2.  Certify the results to the county treasurer, and the incorporated city or town shall share in the distribution as provided by this section.

D.  On the fifteenth calendar day of each month, the director shall transfer to the state general fund from the portion of vehicle license tax revenues that otherwise would be deposited in the state highway fund pursuant to section 28‑6538, subsection A, paragraph 1, the following amounts:

1.  An amount equal to ninety per cent of the fees collected pursuant to section 28‑4802, subsection A in the preceding month.

2.  An amount equal to sixty per cent of the fees collected pursuant to section 28‑4802, subsection B in the preceding month. END_STATUTE

Section 11.  Section 28-6543, Arizona Revised Statutes, is amended to read:

START_STATUTE28-6543.  Local revenues; requirements

A.  Each fiscal year a county with a population of more than four hundred thousand persons or an incorporated city or town with a population of more than thirty thousand persons that is located in such a county shall:

1.  Budget and spend local revenues as defined in article IX, section 20, Constitution of Arizona, for street and highway purposes in an amount at least equal to the average amount of local revenues budgeted and spent for these purposes in any four of the five fiscal years during the period beginning with fiscal year 1981‑1982 and ending with fiscal year 1985‑1986.

2.  Through its chief financial officer, certify in writing to the department whether or not the county, city or town has complied with the requirements of paragraph 1 of this subsection.

3.  File the certification on or before December 31 after the completion of each fiscal year.

B.  Failure to certify as required by subsection A, paragraph 2 of this section is a failure to comply with subsection A, paragraph 1 of this section.

C.  In determining the amount of local revenues budgeted and spent for street and highway purposes during a fiscal year pursuant to subsection A of this section, a county or incorporated city or town shall not consider any of the following:

1.  Monies distributed from the Arizona highway user revenue fund.

2.  Monies distributed from the local transportation assistance fund established by section 28‑8101.

3.  2.  Monies spent by the county or incorporated city or town for street and highway purposes directly needed by an emergency declared by the governor. END_STATUTE

Sec. 12.  Repeal

Title 28, chapter 24, article 1, Arizona Revised Statutes, is repealed.

Sec. 13.  Section 36‑274, Arizona Revised Statutes, is amended to read:

START_STATUTE36-274.  Disease control research fund; lapsing; investment

A.  The disease control research fund is established consisting of monies received from the state lottery fund pursuant to section 5‑522, subsection E  C, monies appropriated by the legislature and any gifts, contributions or other monies received by the commission from any source, except monies from the health research fund established by section 36‑275. The commission shall administer the disease control research fund.

B.  The commission may expend monies in the disease control research fund for projects or services pursuant to section 36‑273 and for expenses incurred by the commission in carrying out the purposes of this article, including filing applications and maintaining patents.

C.  As a condition of each contract for cancer research projects or services, the commission shall require that the recipient shall not use fund monies for any purpose, including any administrative or building purposes, other than the specific cancer research grant project contract.

D.  Monies in the disease control research fund are exempt from the provisions of section 35‑190 relating to lapsing of appropriations.

E.  On notice from the commission, the state treasurer shall invest and divest monies in the disease control research fund as provided by section 35‑313, and monies earned from investment shall be credited to the fund. END_STATUTE

Sec. 14.  Repeal

Section 41-175, Arizona Revised Statutes, is repealed.

Sec. 15.  Repeal; reversion

A.  Section 41-502, Arizona Revised Statutes, is repealed.

B.  Any monies remaining in the Arizona state parks board heritage fund shall revert to the state general fund on June 30, 2011.

Sec. 16.  Delayed repeal

Title 41, chapter 3, article 1, Arizona Revised Statutes, is repealed from and after June 30, 2011.

Sec. 17.  Section 41-2306, Arizona Revised Statutes, is amended to read:

START_STATUTE41-2306.  Tourism fund

A.  The tourism fund is established consisting of separate accounts derived from:

1.  Revenues deposited pursuant to section 42‑5029.  All monies in this account are continuously appropriated to the office of tourism for the purposes of operations and statewide tourism promotion.

2.  1.  Revenues deposited pursuant to section 5‑835, subsection B or C.  All monies in this account are continuously appropriated to the office of tourism, which, in consultation with a consortium of destination marketing organizations in the county in which the tourism and sports authority is established, shall be spent only to promote tourism within that county and shall not be spent for administrative or overhead expenses.  Fifty per cent of the revenues deposited in the tourism fund pursuant to this subsection may be expended by the office of tourism for operational and administrative purposes.

3.  2.  Revenues deposited pursuant to section 42‑6108.01.  The legislature shall appropriate all monies in this account to the office of tourism, which, in conjunction with the destination marketing organization in the county in which the tax revenues are collected, shall be spent only to promote tourism within that county and shall not be spent for administrative or overhead expenses.

4.  Revenues deposited pursuant to section 5‑601.02(H)(3)(b)(iv).  The office of tourism shall administer the account.  The account is not subject to appropriation, and expenditures from the fund are not subject to outside approval notwithstanding any statutory provision to the contrary.  Monies received pursuant to section 5‑601.02 shall be deposited directly with this account.  On notice from the office of tourism, the state treasurer may invest and divest monies in the account as provided by section 35‑313, and monies earned from investment shall be credited to the account.  No monies in the account shall revert to or be deposited in any other fund, including the state general fund.  Monies in this account shall supplement, not supplant, current funds in other accounts of the tourism fund.  Monies in this account shall be spent only to promote tourism within the state and shall not be used for administrative or overhead expenses.

B.  Monies in the fund are exempt from the provisions of section 35‑190 relating to lapsing of appropriations. END_STATUTE

Sec. 18.  Section 42-1004, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1004.  General powers and duties of the department; res judicata; remedies; enforcement; special collections account

A.  The department shall administer and enforce the provisions of this title, title 43 and other laws assigned to it and has all the powers and duties prescribed by law for such purposes.  In all proceedings prescribed by law the department may act on behalf of this state.  In addition, the department shall:

1.  Formulate policies, plans and programs to effectuate the missions and purposes of the department.

2.  Employ and remove personnel subject to the provisions of title 41, chapter 4, articles 5 and 6, determine the conditions of employment and prescribe the duties and powers of administrative, professional, technical, secretarial, clerical and other personnel as may be necessary in the performance of its duties, and contract for the services of outside advisors, consultants and aides as may be reasonably necessary.

3.  Make contracts and incur obligations within the general scope of its activities and operations subject to the availability of its funds.

4.  Contract with or assist other departments, agencies or institutions of the state, local, Indian tribal and federal governments in the furtherance of its purposes, objectives and programs.

5.  Accept grants, matching funds and direct payments from public or private agencies for the conduct of programs which are consistent with the overall purposes and objectives of the department.

6.  Provide information and advice within the scope of its duties subject to the laws on confidentiality of information and departmental rules adopted pursuant to such laws.

7.  Advise with and make recommendations to the governor and the legislature on all matters concerning its objectives.

8.  Have an official seal which shall be judicially noticed.

9.  Provide an integrated, coordinated and uniform system of tax administration and revenue collection for the state.

B.  The department may:

1.  With the approval of the attorney general:

(a)  Abate any balance owed by a taxpayer if the balance is uncollectible.  Related liens, if any, are extinguished on abatement.

(b)  Abate all or part of the unpaid portion of any tax if the director determines that the administration and collection costs involved would exceed the amount of the tax.

2.  Offer publications relating to the administration of state taxes for sale at a price equal to the pro rata cost of publication and distribution.  Monies received from the sale of publications shall be placed in a revenue publications revolving fund.  Monies in the fund:

(a)  Shall be used to meet publication and distribution expenses.

(b)  Are exempt from the provisions of section 35‑190 relating to lapsing of appropriations.

3.  Enter into contingent fee contracts to collect delinquent state taxes, penalties, and interest due and other amounts owed to the department under title 43 and chapter 5, article 1 of this title, consistent with the requirements of chapter 2, article 1 of this title.  No contract may be entered into for: 

(a)  The collection of delinquent state taxes which exceed five hundred dollars for an individual resident, Arizona corporation or partnership.

(b)  the hiring of auditors on a contingent fee basis except auditors that are hired to enforce the provisions of title 44, chapter 3.

C.  In the determination of any issue of law or fact under this title or title 43, neither the department, nor any officer or agency having any administrative duties under this title or title 43, nor any court is bound by the determination of any other executive officer or administrative agency of this state.  In the determination of any case arising under this title or title 43, the rule of res judicata is applicable only if the liability involved is for the same year or period as was involved in another case previously determined under this title or title 43.

D.  The remedies of this state provided for in this title and title 43 are cumulative, and no action taken by the department constitutes an election by this state to pursue any remedy to the exclusion of any other remedy provided by law.

E.  The attorney general shall prosecute in the name of this state all actions necessary to enforce this title and title 43.  The attorney general may defend all actions brought against this state or an officer or agency of this state arising under this title and title 43.  The attorney general may delegate the prosecuting authority to any county attorney for prosecution in that county.

F.  A special collections account is established in the state general fund.  All monies collected pursuant to contracts authorized by subsection B, paragraph 3 of this section shall be deposited in the special collections account.  The department shall pay from the account all fees and court costs provided for in the contracts authorized under subsection B, paragraph 3 of this section.  The department shall allocate the remainder of the amounts collected under subsection B, paragraph 3 of this section to the state or the political subdivision in the proportion that the monies would have been distributed pursuant to chapter 5 of this title or section 43‑206, respectively. END_STATUTE

Sec. 19.  Section 42-1114, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1114.  Suit to recover taxes

A.  The department may bring an action in the name of this state to recover the amount of any taxes, penalties, and interest or other amounts owed by the taxpayer to the department that are due and unpaid.  The department of law shall prosecute the action.  In the action a writ of attachment may be issued and no bond or affidavit previous to issuing the attachment is required.  In the action a certificate by the department of revenue showing the delinquency is prima facie evidence of the levy of the tax, of the delinquency and of the compliance by the department of revenue with all the provisions of law relating to the computation and levy of the tax.

B.  The department of revenue may bring an appropriate action in any court of competent jurisdiction in the United States or any foreign country in the name of this state to recover the amount of any taxes, interest and penalties or any other amounts owed by the taxpayer to the department that are due.  The department of law shall prosecute the action.

C.  The action shall not commence more than six ten years after the amount of taxes determined to be due becomes final unless the taxpayer and the department extend the six ten year limitation or enforced collection has been stayed by operation of federal or state law.  If enforced collection has been stayed, the period of limitations shall be extended by the period of time that the department was stayed from engaging in enforced collections.  If an action is not commenced within the six year period or within the period extended by agreement, the lien of the tax is extinguished as provided in section 42‑1151.END_STATUTE

Sec. 20.  Section 42-1118, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1118.  Refunds, credits, offsets and abatements

A.  If the department determines that any amount of tax, penalty or interest has been paid in excess of the amount actually due, the department shall credit the excess amount against any tax administered pursuant to this article, including any penalty, or interest or other amounts owed by the taxpayer to the department.  If it is determined that the amount cannot be credited against a tax or installment of taxes due from the taxpayer, the department may:

1.  Refund the entire amount of tax, interest and penalty, in a lump sum or in not more than five annual installments, to the taxpayer from whom it was collected.

2.  Issue to the taxpayer a credit voucher for the entire amount of tax, interest and penalty collected, to be carried forward and applied against future tax liabilities until exhausted.

3.  Refund part, and issue a credit voucher for the balance, of the tax, interest and penalties as provided in paragraphs 1 and 2 of this subsection.

B.  If the total amount withheld from income under section 43‑401 exceeds the amount of the tax on the employee's entire taxable income as computed under title 43, the department shall refund the amount of the excess deducted without requiring a filing of a refund claim as provided in this section.  The failure of the department to make the refund does not limit the right of the taxpayer to file a claim for a refund pursuant to this section if the claim is not barred under section 42‑1106.  The department shall not refund amounts less than one dollar unless specifically requested by the taxpayer at the time the return or claim for refund is filed.

C.  Any overpayment that may result from withholdings or estimates pursuant to section 43‑401, 43‑581 or 43‑582 shall not be credited or refunded unless an Arizona income tax return has been filed for the tax year for which the withholdings or estimates were made.

D.  The department shall give a vendor who has a duty to collect use tax pursuant to chapter 5, article 4 of this title and who has not collected that tax full credit or offset for any use tax, interest and penalty paid to the department by the purchaser when issuing a determination of a deficiency pursuant to section 42‑1108.  This credit or offset shall be computed from the date of the use tax payment by the purchaser.  If the purchaser has been audited by the department for use tax for the period of the purchase, the purchaser is considered to have paid the use tax to the department.  For other purchases, the vendor may submit an affirmation by a purchaser on a form prescribed by the department that use tax was paid on the purchase.  A fully completed certificate, taken in good faith by the vendor, constitutes proof that the vendor is entitled to this credit or offset.  The department may require a purchaser who has submitted the certificate to establish the accuracy and completeness of the information contained in the certificate.  If the purchaser cannot establish the accuracy and completeness of the information, the purchaser is liable for a penalty equal to the amount of tax and interest that would have been paid by the seller and for the additional penalties pursuant to section 42‑1125.  Payment of the penalty relieves the purchaser of any responsibility for paying the use tax.  The department may require this proof and may assess the purchaser within the later of the period of limitations set forth in section 42‑1104 or one year from the date the notice of proposed deficiency is issued to the vendor if the purchaser does not establish the accuracy of the information contained in the certificate.

E.  Each claim for refund shall be filed with the department in writing and shall identify the claimant by name, address and tax identification number.  Each claim shall provide the amount of refund requested, the specific tax period involved and the specific grounds on which the claim is founded.  Refunds are subject to setoff for debts pursuant to section 42‑1122.

F.  A motor vehicle manufacturer that repurchases a vehicle pursuant to section 44‑1263 or for reasons of consumer satisfaction may apply for a refund of the taxes paid under chapter 5 of this title if that manufacturer has refunded the amount of tax to the consumer.  A refund is allowed under this subsection only if the manufacturer provides satisfactory proof to the department that tax amounts attributed to the sale of the vehicle were collected from the consumer and that the manufacturer refunded an amount of tax to the consumer.  Any refund provided under this subsection is in lieu of any refund on the vehicle that the dealer may otherwise be entitled to receive.  A manufacturer must apply for a refund under this subsection within four years after repurchasing the vehicle.  For the purposes of this subsection:

1.  "Consumer" has the same meaning prescribed in section 44‑1261.

2.  "Motor vehicle manufacturer" means a corporation engaged in the business of producing passenger cars, trucks and multipurpose passenger vehicles as described in 49 Code of Federal Regulations section 571.3.

3.  "Satisfactory proof" includes copies of checks and a purchase or lease agreement that lists the vehicle identification number and that itemizes the amount that was collected as tax from the consumer.

G.  The department shall not imprint the full social security number or other taxpayer identifier used pursuant to section 42‑1105 on any taxpayer refund check, voucher or other credit documentation issued to the taxpayer under this section.

H.  If any amount has been erroneously determined to be due from any person but not yet collected, the department shall cancel the amount or amounts on its records.

I.  If, with or after the filing of a protest or an appeal with the department, the state board of tax appeals or the court, a taxpayer pays the tax protested or appealed before the department, board or court acts upon the protest or the appeal, such body shall treat the protest or the appeal as a claim for refund or an appeal from the denial of a claim for refund filed under this section. END_STATUTE

Sec. 21.  Section 42-1125, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1125.  Civil penalties; definition

A.  If a taxpayer fails to make and file a return for a tax administered pursuant to this article on or before the due date of the return or the due date as extended by the department, then, unless it is shown that the failure is due to reasonable cause and not due to wilful neglect, four and one‑half per cent of the tax required to be shown on such return shall be added to the tax for each month or fraction of a month elapsing between the due date of the return and the date on which it is filed.  The total penalty shall not exceed twenty‑five per cent of the tax found to be remaining due.  The penalty so added to the tax is due and payable on notice and demand from the department.  For the purpose of computing the penalty imposed under this subsection, the amount required to be shown as tax on a return shall be reduced by the amount of any part of the tax which is paid on or before the beginning of such month and by the amount of any credit against the tax which may be claimed on the return.  If the amount required to be shown as tax on a return is less than the amount shown as tax on such return the penalty described in this subsection shall be applied by substituting such lower amount.

B.  If a taxpayer fails or refuses to file a return on notice and demand by the department, the taxpayer shall pay a penalty of twenty‑five per cent of the tax, which is due and payable on notice and demand by the department, in addition to any penalty prescribed by subsection A of this section, unless it is shown that the failure is due to reasonable cause and not due to wilful neglect.  This penalty is payable on notice and demand from the department.

C.  If a taxpayer fails or refuses to furnish any information requested in writing by the department, the department may add a penalty of twenty‑five per cent of the amount of any deficiency tax assessed by the department concerning the assessment of which the information was required, unless it is shown that the failure is due to reasonable cause and not due to wilful neglect.

D.  If a person fails to pay the amount shown as tax on any return within the time prescribed, a penalty of one‑half of one per cent, not to exceed a total of ten per cent, shall be added to the amount shown as tax for each month or fraction of a month during which the failure continues, unless it is shown that the failure is due to reasonable cause and not due to wilful neglect.  If the department determines that the person's failure to pay was due to reasonable cause and not due to wilful neglect and that a payment agreement pursuant to section 42‑2057 is appropriate, the department shall not impose the penalty unless the taxpayer fails to comply with the payment agreement.  If the taxpayer is also subject to a penalty under subsection A of this section for the same tax period, the total penalties under subsection A of this section and this subsection shall not exceed twenty‑five per cent. For the purpose of computing the penalty imposed under this subsection:

1.  The amount shown as tax on a return shall be reduced by the amount of any part of the tax that is paid on or before the beginning of that month and by the amount of any credit against the tax that may be claimed on the return.

2.  If the amount shown as tax on a return is greater than the amount required to be shown as tax on that return, the penalty shall be applied by substituting the lower amount.

E.  If a person fails to pay any amount required to be shown on any return that is not so shown within twenty‑one calendar days after the date of notice and demand, a penalty of one‑half of one per cent, not to exceed a total of ten per cent, shall be added to the amount of tax for each month or fraction of a month during which the failure continues, unless it is shown that the failure is due to reasonable cause and not due to wilful neglect.  If the taxpayer is also subject to penalty under subsection A of this section for the same tax period, the total penalties under subsection A of this section and this subsection shall not exceed twenty‑five per cent.  For the purpose of computing the penalty imposed under this subsection, any amount required to be shown on any return shall be reduced by the amount of any part of the tax that is paid on or before the beginning of that month and by the amount of any credit against the tax that may be claimed on the return.

F.  In the case of a deficiency, for which a determination is made of an additional amount due, which is due to negligence but without intent to defraud, the person shall pay a penalty of ten per cent of the amount of the deficiency.

G.  If part of a deficiency is due to fraud with intent to evade tax, fifty per cent of the total amount of the tax, in addition to the deficiency, interest and other penalties provided in this section, shall be assessed, collected and paid as if it were a deficiency.

H.  If the amount, whether determined by the department or the taxpayer, required to be withheld by the employer pursuant to title 43, chapter 4 is not paid to the department on or before the date prescribed for its remittance, the department may add a penalty of twenty‑five per cent of the amount required to be withheld and paid, unless it is shown that the failure is due to reasonable cause and not due to wilful neglect.

I.  A person who, with or without intent to evade any requirement of this article or any lawful administrative rule of the department of revenue under this article, fails to file a return or to supply information required under this article or who, with or without such intent, makes, prepares, renders, signs or verifies a false or fraudulent return or statement or supplies false or fraudulent information shall pay a penalty of not more than one thousand dollars.  This penalty shall be recovered by the department of law in the name of this state by an action in any court of competent jurisdiction.

J.  If the taxpayer files what purports to be a return of any tax administered pursuant to this article but which is frivolous or which is made with the intent to delay or impede the administration of the tax laws, that person shall pay a penalty of five hundred dollars.

K.  If a taxpayer who is required to file or provide an information return under this title or title 43 fails to file the return at the prescribed time or files a return which fails to show the information required, that taxpayer shall pay a penalty of one hundred dollars for each month or fraction of a month during which the failure continues unless it is shown that the failure is due to reasonable cause and not due to wilful neglect.  The total penalties under this subsection shall not exceed five hundred dollars.

L.  If it appears to the superior court that proceedings before it have been instituted or maintained by a taxpayer primarily for delay or that the taxpayer's position is frivolous or groundless, the court may award damages in an amount not to exceed one thousand dollars to this state.  Damages so awarded shall be collected as a part of the tax.

M.  A person who is required under section 43‑413 to furnish a statement to an employee and who wilfully furnishes a false or fraudulent statement, or who wilfully fails to furnish a statement required by section 43‑413, is for each such failure subject to a penalty of fifty dollars.

N.  A person who is required to collect or truthfully account for and pay a tax administered pursuant to this article, including any luxury privilege tax, and who wilfully fails to collect the tax or truthfully account for and pay the tax, or wilfully attempts in any manner to evade or defeat the tax or its payment, is, in addition to other penalties provided by law, liable for a penalty equal to the total amount of the tax evaded, not collected or not accounted for and paid.  Except as provided in subsections S  T, T  U and U  V of this section, no other penalty under this section relating to failure to pay tax may be imposed for any offense to which this subsection applies.

O.  For reporting periods beginning from and after February 28, 2011, if a taxpayer who is required under section 42‑1129 to make payment by electronic funds transfer fails to do so, that taxpayer shall pay a penalty of five per cent of the amount of tax due on the return unless it is shown that the failure is due to reasonable cause and not due to wilful neglect.

O.  P.  Unless due to reasonable cause and not to wilful neglect:

1.  A person who fails to provide that person's taxpayer identification number in any return, statement or other document as required by section 42‑1105, subsection A shall pay a penalty of five dollars for each such failure.

2.  A person, when filing any return, statement or other document for compensation on behalf of a taxpayer, who fails to include that person's own taxpayer identification number and the taxpayer's identification number shall pay a penalty of fifty dollars for each such failure.

3.  A person, when filing any return, statement or other document without compensation on behalf of a taxpayer, who fails to include that person's own taxpayer identification number and the taxpayer's identification number is not subject to a penalty.

No other penalty under this section may be imposed if the only violation is failure to provide taxpayer identification numbers.

P.  Q.  If a taxpayer fails to pay the full amount of estimated tax required by title 43, chapter 5, article 6, a penalty is assessed equal to the amount of interest that would otherwise accrue under section 42‑1123 on the amount not paid for the period of nonpayment, not exceeding ten per cent of the amount not paid.  The penalty prescribed by this subsection is in lieu of any other penalty otherwise prescribed by this section and in lieu of interest prescribed by section 42‑1123.

Q.  R.  The department of law, with the consent of the department of revenue, may compromise any penalty for which it may bring an action under this section.

R.  S.  Penalties shall not be assessed under subsection D of this section on additional amounts of tax paid by a taxpayer at the time the taxpayer voluntarily files an amended return.  This subsection does not apply if:

1.  The taxpayer is under audit by the department.

2.  The amended return was filed on demand or request by the department.

3.  The total additional tax paid and due for the tax period represents a substantial understatement of tax liability.  For the purposes of this paragraph, there is a substantial understatement of tax for any tax period if the amount of the understatement for the tax period exceeds the greater of ten per cent of the actual tax liability for the tax period or two thousand dollars.

S.  T.  In addition to other penalties provided by law, a person who knowingly and intentionally does not comply with any requirement under chapter 3, article 5 of this title relating to cigarettes shall pay a penalty of one thousand dollars.  A person who knowingly and intentionally does not pay any luxury tax that relates to cigarettes imposed by chapter 3 of this title shall pay a penalty that is equal to ten per cent of the amount of the unpaid tax.

T.  U.  A cigarette manufacturer, cigarette importer or cigarette distributor, as defined in section 42-3001, who knowingly and intentionally sells or possesses cigarettes with false manufacturing labels or cigarettes with counterfeit tax stamps, or who obtains cigarettes through the use of a counterfeit license, shall pay the following penalties:

1.  For a first violation involving two thousand or more cigarettes, one thousand dollars.

2.  For a subsequent violation involving two thousand or more cigarettes, five thousand dollars.

U.  V.  The civil penalties in this section are in addition to any civil penalty under chapter 3, article 5 of this title.

V.  W.  For the purposes of this section, and only as applied to the taxes imposed by chapter 5, articles 1 through 6 and chapter 6, articles 1, 2 and 3 of this title, "reasonable cause" means a reasonable basis for the taxpayer to believe that the tax did not apply to the business activity or the storage, use or consumption of the taxpayer's tangible personal property in this state. END_STATUTE

Sec. 22.  Section 42-1129, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1129.  Payment of tax by electronic funds transfer

A.  The department may require by rule, consistent with the state treasurer's cash management policies, that any taxpayer that owed twenty thousand dollars or more for the preceding taxable year in connection with any tax administered pursuant to this article, except individual income tax, shall pay the tax liability on or before the payment date prescribed by law in monies that are immediately available to the state on the date of the transfer as provided by subsection B of this section.

B.  A payment in immediately available monies shall be made by electronic funds transfer or any other means required by the department, with the state treasurer's approval, that ensures the availability of the monies to this state on the date of payment.

C.  The taxpayer shall furnish evidence as prescribed by the department that the payment was remitted on or before the due date.

D.  A taxpayer who is required to make payment by electronic funds transfer but who fails to do so is subject to the civil penalties prescribed by section 42‑1125, subsection O.

D.  E.  A failure to make a timely payment in immediately available monies as prescribed pursuant to this section is subject to the civil penalties prescribed by section 42‑1125, subsection D. END_STATUTE

Sec. 23.  Section 42-1151, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1151.  Lien

A.  If any tax, interest, or penalty which or other amount owed by the taxpayer to the department that the department is required to collect is not paid by a taxpayer when due, such unpaid amounts constitute a lien upon all property and rights to property, whether real or personal, belonging to the taxpayer or acquired by the taxpayer from the date the amounts are assessed or the date the return prescribing the liability is filed until the liability for the assessed amounts is satisfied except that the lien is extinguished if an action is not commenced within the period prescribed in section 42-1114.

B.  The lien prescribed in this section is not valid against the following until the notice of the lien is filed as prescribed in section 42‑1152:

1.  A mechanic's lienholder who holds a lien pursuant to title 33, chapter 7, article 6.  The lien exists on the later of the date the lien becomes valid against subsequent purchasers without actual notice or the date the lienholder begins to furnish the services, labor or materials.

2.  A purchaser who, for adequate and full consideration in money or money's worth, acquires an interest in property, other than a lien or security interest, which is valid against subsequent purchasers without actual notice.  Any of the following which is not a lien or security interest is an interest in property:

(a)  A lease of property.

(b)  A written executory contract to purchase or lease property.

(c)  An option to purchase or lease property or any interest in property.

(d)  An option to review or extend a lease of property.

3.  A holder of a security interest in property acquired by contract to secure payment or performance of an obligation or to indemnify against loss or liability.  A security interest exists:

(a)  If the property exists and the interest has become protected against a subsequent judgment lien arising out of an unsecured obligation.

(b)  To the extent that the holder has parted with money or money's worth.

4.  A judgment lien creditor.

C.  Although a notice of lien has been filed as prescribed by section 42‑1152, the lien is not valid against:

1.  Personal property purchased in casual sale as provided in section 6323 of the internal revenue code.

2.  Residential property subject to a mechanic's lien for certain repairs and improvements as provided in section 6323 of the internal revenue code. END_STATUTE

Sec. 24.  Section 42-1152, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1152.  Filing of lien; notice; recording

A.  The notice prescribed in section 42‑1151, subsection B may be filed by the department against the taxpayer's real property located in any county by recording a notice of lien in the form prescribed by subsection C of this section in the office of the county recorder.

B.  The notice prescribed in section 42‑1151, subsection B may be filed by the department against the taxpayer's personal property or rights to personal property located within this state by recording a notice of lien in the form prescribed by subsection C of this section in the office of the secretary of state.

C.  A notice of lien recorded under this section shall specify the nature of the tax, the amount of tax, interest and penalty and other amounts owed by the taxpayer to the department that are due, the taxable periods for which such amounts are due and the name and last known address of the taxpayer liable for such amounts. END_STATUTE

Sec. 25.  Section 42-1153, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1153.  Release or subordination of lien

A.  The department may, at any time, may release all or any portion of the property subject to the lien from the lien or subordinate the lien to other liens if it determines that either:

1.  The taxes are sufficiently secured by a lien on other property of the taxpayer.

2.  The release or subordination of the lien will not endanger or jeopardize the collection of such taxes.

B.  In its discretion and at any time, the department may withdraw a notice of lien that was recorded pursuant to this article if the department determines that any of the following conditions apply applies:

1.  The department's interests are best served by withdrawing the notice.

2.  Filing the lien was premature or otherwise in violation of the department's administrative procedures.

3.  Withdrawing the notice will facilitate collecting the outstanding amount of taxes, interest and penalties.

4.  The taxpayer has entered into an installment payment agreement, unless the agreement provides otherwise.

C.  If any lien imposed by section 42‑1151 has been satisfied and a notice of the lien had been recorded by the department pursuant to section 42‑1152, the department shall issue a release of the lien to the person against whom the lien was claimed.  The department shall record the lien release in any county where the original lien was recorded and in the office of the secretary of state if applicable.

D.  If a balance owed by a taxpayer has been abated pursuant to section 42‑1004, subsection B, paragraph 1, subdivision (a), the department is not required to record a release of the lien under this section, but on the taxpayer's written request, the department shall provide a certificate of release to the taxpayer.

E.  If a tax obligation has been extinguished pursuant to section 42‑2066, the lien for the extinguished tax is also extinguished.  The department is not required to record a release of the lien under this section, but on the taxpayer's written request, the department shall provide a certificate of release to the taxpayer.

F.  E.  A certificate by the department to the effect that any property has been released from the lien or that the lien has been subordinated to other liens is conclusive evidence that the property has been released or that the lien has been subordinated as provided in the certificate. END_STATUTE

Sec. 26.  Section 42-1201, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1201.  Levy and distraint; definition

A.  If a person liable to pay any tax neglects or refuses to pay the tax, the department may collect the tax, interest, penalty, other amounts owed to the department and such other sums as are sufficient to cover the expenses of the levy, by levy upon:

1.  All property and rights to property, except property exempt under section 42‑1204, belonging to the person or on which there is a lien as provided in article 4 of this chapter or section 42‑17153 for the payment of the tax.

2.  The accrued salary or wages of any officer, employee or elected official of this state or its political subdivisions, or any agency or instrumentality of this state or its political subdivisions, by serving a notice of levy on:

(a)  The department of administration in the case of state wages or salaries.

(b)  The chief disbursing officer of a political subdivision of the state in the case of wages or salaries paid by the political subdivision.

B.  The levy shall not be made more than six ten years after the amount of tax determined to be due becomes final.  The taxpayer and the department may extend the six ten year limitation prescribed by this subsection for any length of time by executing a written agreement before the expiration of the six ten year limitation.  If enforced collection has been stayed by operation of federal or state law, the period of limitations shall be extended by the period of time that the department was stayed from engaging in enforced collections.

C.  As used in this chapter, "levy" includes the power of distraint and seizure by any means.  Except as otherwise provided in subsection E or F of this section, a levy extends only to property possessed and obligations existing at the time of the levy or within twenty‑one days after the date of the levy.  In any case in which the department may levy upon property or rights to property, it may seize and sell the property or rights to the property, whether real or personal, tangible or intangible.

D.  If any property or right to property upon which a levy has been made under subsection A of this section is not sufficient to satisfy the claim of the department for which the levy is made, the department may as often as may be necessary proceed to levy in like manner upon any other property liable to levy of the person against whom such claim exists, until the amount due, together with all expenses, is fully paid.

E.  The effect of a levy on salary or wages payable to or received by a taxpayer is continuous from the date the levy is first made until the liability out of which the levy arose is satisfied or becomes unenforceable.

F.  With respect to a levy described in subsection E of this section, the department shall promptly release the levy when the liability out of which the levy arose is satisfied or becomes unenforceable and shall promptly notify the person upon whom the levy was made that the levy has been released. END_STATUTE

Sec. 27.  Title 42, chapter 1, article 5, Arizona Revised Statutes, is amended by adding section 42-1207, to read:

START_STATUTE42-1207.  Financial institutions data match; prohibited disclosure; civil liability; fee; definition

A.  The department may enter into agreements with financial institutions that conduct business in this state to develop and operate a data match system to assist the department in the collection of delinquent taxes, penalties and interest.  The data match system shall use automated data exchange procedures to the maximum extent possible.

B.  Any data exchanges between financial institutions and the department under an agreement pursuant to subsection A shall occur quarterly. The data exchanges shall include the name, address of record, social security number or other taxpayer identification number and any other identifying information for each delinquent taxpayer who maintains an account at the institution and who owes delinquent taxes as identified by the department by name and social security number or other taxpayer identification number.

C.  The department or its agent may only disclose a person's financial record under this section in order to enforce the collection of a person's delinquent tax obligation.

D.  A department employee who knowingly or negligently discloses a person's financial records in violation of subsection C is subject to civil liability in an amount equal to the greater of either:

1.  One thousand dollars for each act of unauthorized disclosure of a financial record with respect to which the department employee is found liable.

2.  The sum of the actual damages sustained by the plaintiff as a result of the unauthorized disclosure and, in the case of a wilful disclosure or a disclosure that is the result of gross negligence, punitive damages, including costs and attorney fees.

E.  The department may pay a reasonable fee to a financial institution for conducting a data match.  The fee shall not exceed the actual costs incurred by the financial institution.

F.  For the purposes of this section, "financial institution" means state and federally chartered banks, trust companies, federal and state savings and loan associations, federal and state credit unions, consumer lenders, international banking facilities and financial institution holding companies, insurance companies, benefit associations, safe deposit companies, money market mutual funds and similar institutions authorized to do business in this state and any party affiliated with these financial institutions. END_STATUTE

Sec. 28.  Section 42-2003, Arizona Revised Statutes, is amended to read:

START_STATUTE42-2003.  Authorized disclosure of confidential information

A.  Confidential information relating to:

1.  A taxpayer may be disclosed to the taxpayer, its successor in interest or a designee of the taxpayer who is authorized in writing by the taxpayer.  A principal corporate officer of a parent corporation may execute a written authorization for a controlled subsidiary.

2.  A corporate taxpayer may be disclosed to any principal officer, any person designated by a principal officer or any person designated in a resolution by the corporate board of directors or other similar governing body.

3.  A partnership may be disclosed to any partner of the partnership. This exception does not include disclosure of confidential information of a particular partner unless otherwise authorized.

4.  An estate may be disclosed to the personal representative of the estate and to any heir, next of kin or beneficiary under the will of the decedent if the department finds that the heir, next of kin or beneficiary has a material interest which will be affected by the confidential information.

5.  A trust may be disclosed to the trustee or trustees, jointly or separately, and to the grantor or any beneficiary of the trust if the department finds that the grantor or beneficiary has a material interest which will be affected by the confidential information.

6.  Any taxpayer may be disclosed if the taxpayer has waived any rights to confidentiality either in writing or on the record in any administrative or judicial proceeding.

7.  The name and taxpayer identification numbers of persons issued direct payment permits may be publicly disclosed.

B.  Confidential information may be disclosed to:

1.  Any employee of the department whose official duties involve tax administration.

2.  The office of the attorney general solely for its use in preparation for, or in an investigation which may result in, any proceeding involving tax administration before the department or any other agency or board of this state, or before any grand jury or any state or federal court.

3.  The department of liquor licenses and control for its use in determining whether a spirituous liquor licensee has paid all transaction privilege taxes and affiliated excise taxes incurred as a result of the sale of spirituous liquor, as defined in section 4-101, at the licensed establishment and imposed on the licensed establishments by this state and its political subdivisions.

4.  Other state tax officials whose official duties require the disclosure for proper tax administration purposes if the information is sought in connection with an investigation or any other proceeding conducted by the official.  Any disclosure is limited to information of a taxpayer who is being investigated or who is a party to a proceeding conducted by the official.

5.  The following agencies, officials and organizations, if they grant substantially similar privileges to the department for the type of information being sought, pursuant to statute and a written agreement between the department and the foreign country, agency, state, Indian tribe or organization:

(a)  The United States internal revenue service, alcohol and tobacco tax and trade bureau of the United States treasury, United States bureau of alcohol, tobacco, firearms and explosives of the United States department of justice, United States drug enforcement agency and federal bureau of investigation.

(b)  A state tax official of another state.

(c)  An organization of states, federation of tax administrators or multistate tax commission that operates an information exchange for tax administration purposes.

(d)  An agency, official or organization of a foreign country with responsibilities that are comparable to those listed in subdivision (a), (b) or (c) of this paragraph.

(e)  An agency, official or organization of an Indian tribal government with responsibilities comparable to the responsibilities of the agencies, officials or organizations identified in subdivision (a), (b) or (c) of this paragraph.

6.  The auditor general, in connection with any audit of the department subject to the restrictions in section 42‑2002, subsection D.

7.  Any person to the extent necessary for effective tax administration in connection with:

(a)  The processing, storage, transmission, destruction and reproduction of the information.

(b)  The programming, maintenance, repair, testing and procurement of equipment for purposes of tax administration.

(c)  The collection of the taxpayer's civil liability.

8.  The office of administrative hearings relating to taxes administered by the department pursuant to section 42‑1101, but the department shall not disclose any confidential information:

(a)  Regarding income tax, withholding tax or estate tax.

(b)  On any tax issue relating to information associated with the reporting of income tax, withholding tax or estate tax.

9.  The United States treasury inspector general for tax administration for the purpose of reporting a violation of internal revenue code section 7213A (26 United States Code section 7213A), unauthorized inspection of returns or return information.

10.  The financial management service of the United States treasury department for use in the treasury offset program.

11.  The United States treasury department or its authorized agent for use in the state income tax levy program and in the electronic federal tax payment system.

12.  The department of commerce for its use in:

(a)  Qualifying motion picture production companies for the tax incentives provided for motion picture production under chapter 5 of this title and sections 43‑1075 and 43‑1163.

(b)  Qualifying applicants for the motion picture infrastructure project tax credits under sections 43‑1075.01 and 43‑1163.01.

(c)  Qualifying renewable energy operations for the tax incentives under sections 42-12006, 43-1083.01 and 43-1164.01.

(d)  Fulfilling its annual reporting responsibility pursuant to section 41‑1511, subsections T and U and section 41-1517, subsections S and T.

13.  A prosecutor for purposes of section 32‑1164, subsection C.

14.  The state fire marshal for use in determining compliance with and enforcing title 41, chapter 16, article 3.1.

C.  Confidential information may be disclosed in any state or federal judicial or administrative proceeding pertaining to tax administration pursuant to the following conditions:

1.  One or more of the following circumstances must apply:

(a)  The taxpayer is a party to the proceeding.

(b)  The proceeding arose out of, or in connection with, determining the taxpayer's civil or criminal liability, or the collection of the taxpayer's civil liability, with respect to any tax imposed under this title or title 43.

(c)  The treatment of an item reflected on the taxpayer's return is directly related to the resolution of an issue in the proceeding.

(d)  Return information directly relates to a transactional relationship between a person who is a party to the proceeding and the taxpayer and directly affects the resolution of an issue in the proceeding.

2.  Confidential information may not be disclosed under this subsection if the disclosure is prohibited by section 42‑2002, subsection C or D.

D.  Identity information may be disclosed for purposes of notifying persons entitled to tax refunds if the department is unable to locate the persons after reasonable effort.

E.  The department, upon the request of any person, shall provide the names and addresses of bingo licensees as defined in section 5‑401, verify whether or not a person has a privilege license and number, a distributor's license and number or a withholding license and number or disclose the information to be posted on the department's web site website or otherwise publicly accessible pursuant to section 42‑1124, subsection F and section 42‑3201, subsection A.

F.  A department employee, in connection with the official duties relating to any audit, collection activity or civil or criminal investigation, may disclose return information to the extent that disclosure is necessary to obtain information which is not otherwise reasonably available.  These official duties include the correct determination of and liability for tax, the amount to be collected or the enforcement of other state tax revenue laws.

G.  If an organization is exempt from this state's income tax as provided in section 43‑1201 for any taxable year, the name and address of the organization and the application filed by the organization upon which the department made its determination for exemption together with any papers submitted in support of the application and any letter or document issued by the department concerning the application are open to public inspection.

H.  Confidential information relating to transaction privilege tax, use tax, severance tax, jet fuel excise and use tax and rental occupancy tax may be disclosed to any county, city or town tax official if the information relates to a taxpayer who is or may be taxable by the county, city or town. Any taxpayer information released by the department to the county, city or town:

1.  May only be used for internal purposes.

2.  May not be disclosed to the public in any manner that does not comply with confidentiality standards established by the department.  The county, city or town shall agree in writing with the department that any release of confidential information that violates the confidentiality standards adopted by the department will result in the immediate suspension of any rights of the county, city or town to receive taxpayer information under this subsection.

I.  The department may disclose statistical information gathered from confidential information if it does not disclose confidential information attributable to any one taxpayer.  In order to comply with the requirements of section 42‑5029, subsection A, paragraph 3, the department may disclose to the state treasurer statistical information gathered from confidential information, even if it discloses confidential information attributable to a taxpayer.

J.  The department may disclose the aggregate amounts of any tax credit, tax deduction or tax exemption enacted after January 1, 1994. Information subject to disclosure under this subsection shall not be disclosed if a taxpayer demonstrates to the department that such information would give an unfair advantage to competitors.

K.  Except as provided in section 42‑2002, subsection C, confidential information, described in section 42‑2001, paragraph 2, subdivision (a), item (iii), may be disclosed to law enforcement agencies for law enforcement purposes.

L.  The department may provide transaction privilege tax license information to property tax officials in a county for the purpose of identification and verification of the tax status of commercial property.

M.  The department may provide transaction privilege tax, luxury tax, use tax, property tax and severance tax information to the ombudsman‑citizens aide pursuant to title 41, chapter 8, article 5.

N.  Except as provided in section 42‑2002, subsection D, a court may order the department to disclose confidential information pertaining to a party to an action.  An order shall be made only upon a showing of good cause and that the party seeking the information has made demand upon the taxpayer for the information.

O.  This section does not prohibit the disclosure by the department of any information or documents submitted to the department by a bingo licensee. Before disclosing the information the department shall obtain the name and address of the person requesting the information.

P.  If the department is required or permitted to disclose confidential information, it may charge the person or agency requesting the information for the reasonable cost of its services.

Q.  Except as provided in section 42‑2002, subsection D, the department of revenue shall release confidential information as requested by the department of economic security pursuant to section 42‑1122 or 46‑291. Information disclosed under this subsection is limited to the same type of information that the United States internal revenue service is authorized to disclose under section 6103(l)(6) of the internal revenue code.

R.  Except as provided in section 42‑2002, subsection D, the department of revenue shall release confidential information as requested by the courts and clerks of the court pursuant to section 42‑1122.

S.  To comply with the requirements of section 42‑5031, the department may disclose to the state treasurer, to the county stadium district board of directors and to any city or town tax official that is part of the county stadium district confidential information attributable to a taxpayer's business activity conducted in the county stadium district.

T.  The department shall release confidential information as requested by the attorney general for purposes of determining compliance with and enforcing section 44‑7101, the master settlement agreement referred to therein and subsequent agreements to which the state is a party that amend or implement the master settlement agreement.  Information disclosed under this subsection is limited to luxury tax information relating to tobacco manufacturers, distributors, wholesalers and retailers and information collected by the department pursuant to section 44‑7101(2)(j).

U.  For proceedings before the department, the office of administrative hearings, the board of tax appeals or any state or federal court involving penalties that were assessed against a return preparer, or an electronic return preparer or a payroll service company pursuant to section 42‑1103.02, or 42‑1125.01 or 43‑419, confidential information may be disclosed only before the judge or administrative law judge adjudicating the proceeding, the parties to the proceeding and the parties' representatives in the proceeding prior to its introduction into evidence in the proceeding.  The confidential information may be introduced as evidence in the proceeding only if the taxpayer's name, the names of any dependents listed on the return, all social security numbers, the taxpayer's address, the taxpayer's signature and any attachments containing any of the foregoing information are redacted and if either:

1.  The treatment of an item reflected on such return is or may be related to the resolution of an issue in the proceeding.

2.  Such return or return information relates or may relate to a transactional relationship between a person who is a party to the proceeding and the taxpayer which directly affects the resolution of an issue in the proceeding.

3.  The method of payment of the taxpayer's withholding tax liability or the method of filing the taxpayer's withholding tax return is an issue for the period.

V.  The department may disclose to the attorney general confidential information received under section 44‑7111 and requested by the attorney general for purposes of determining compliance with and enforcing section 44‑7111.  The department and attorney general shall share with each other the information received under section 44‑7111, and may share the information with other federal, state or local agencies only for the purposes of enforcement of section 44‑7101, section 44‑7111 or corresponding laws of other states.

W.  The department may provide the name and address of qualifying hospitals and qualifying health care organizations, as defined in section 42‑5001, to a business classified and reporting transaction privilege tax under the utilities classification. END_STATUTE

Sec. 29.  Section 42-2066, Arizona Revised Statutes, is amended to read:

START_STATUTE42-2066.  Statute of limitations on tax debts

A.  A taxpayer's obligations for any tax, interest or penalty required to be collected by the department for any tax period are extinguished, if not previously satisfied, six ten years after the amount of tax determined to be due becomes final unless one of the following circumstances applies:

1.  The department has commenced a suit to collect the debt pursuant to section 42‑1114.

2.  The taxpayer has agreed in writing to extend this time period before the time period expires.

3.  Enforced collection has been stayed by the operation of federal or state law during the period.  The period of limitations prescribed by this section is extended by the period of time that the department was stayed from engaging in enforced collections.

B.  If a tax obligation is extinguished pursuant to this section, any related liens for those obligations are also extinguished. END_STATUTE

Sec. 30.  Section 42-5014, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5014.  Return and payment of tax; estimated tax; extensions; abatements

A.  Except as provided in subsection B, C or D of this section, the taxes levied under this article:

1.  Are due and payable monthly in the form required by section 42‑5018 for the amount of the tax, to the department, on or before the twentieth day of the month next succeeding the month in which the tax accrues.

2.  Are delinquent as follows:

(a)  For taxpayers electing to file by mail, if not postmarked on or before the twenty‑fifth day of that month or if not received by the department on or before the business day preceding the last business day of the month.

(b)  For taxpayers electing to file and pay electronically in any month, if not received by the department on or before the last business day of the month.

(c)  For all other taxpayers, if not received by the department on or before the business day preceding the last business day of the month.

B.  The department, for any taxpayer whose estimated annual liability for taxes imposed by this article is between five hundred dollars and one thousand two hundred fifty dollars, may authorize such taxpayer to pay such taxes on a quarterly basis.  The department, for any taxpayer whose estimated annual liability for taxes imposed by this article is five hundred dollars or less, may authorize such taxpayer to pay such taxes on an annual basis.

C.  The department may require a taxpayer whose business is of a transient character to file the return and remit the taxes imposed by this article on a daily, a weekly or a transaction by transaction basis, and those returns and payments are due and payable on the date fixed by the department without a grace period otherwise allowed by this section.  For the purposes of this subsection, "business of a transient character" means sales activity by a taxpayer not regularly engaged in selling within the state conducted from vehicles, portable stands, rented spaces, structures or booths, or concessions at fairs, carnivals, circuses, festivals or similar activities for not more than thirty consecutive days.

D.  In 2010, 2011 and 2012, if a business entity under which a taxpayer reports and pays income tax under title 43 has an annual total tax liability under this article, article 6 of this chapter and chapter 6, article 3 of this title in calendar year 2010, 2011 or 2012 of one hundred thousand dollars or more, based on the actual tax liability in calendar year 2009, 2010 or 2011, regardless of the number of offices at which the taxes imposed by this article, article 6 of this chapter or chapter 6, article 3 of this title are collected, or if the taxpayer can reasonably anticipate such liability in calendar year 2010, 2011 or 2012, the taxpayer shall report on a form prescribed by the department and pay an estimated tax payment in June, 2010, 2011 or 2012.  Thereafter, if the business entity under which a taxpayer reports and pays income tax under title 43 has an annual total tax liability under this article, article 6 of this chapter and chapter 6, article 3 of this title of one million dollars or more, based on the actual tax liability in the preceding calendar year, regardless of the number of offices at which the taxes imposed by this article, article 6 of this chapter or chapter 6, article 3 of this title are collected, or if the taxpayer can reasonably anticipate such liability in the current year, the taxpayer shall report on a form prescribed by the department and pay an estimated tax payment each June.  Any other taxpayer may voluntarily elect to pay the estimated tax payment pursuant to this subsection.  The payment shall be made on or before June 20 and is delinquent if not postmarked on or before that date or if not received by the department on or before the business day preceding the last business day of June for those taxpayers electing to file by mail, or delinquent if not received by the department on the business day preceding the last business day of June for those taxpayers electing to file in person.  The estimated tax paid shall be credited against the taxpayer's tax liability under this article, article 6 of this chapter and chapter 6, article 3 of this title for the month of June for the current calendar year. The estimated tax payment shall equal either:

1.  One‑half of the actual tax liability under this article plus one‑half of any tax liability under article 6 of this chapter and chapter 6, article 3 of this title for May of the current calendar year.

2.  The actual tax liability under this article plus any tax liability under article 6 of this chapter and chapter 6, article 3 of this title for the first fifteen days of June of the current calendar year.

E.  The taxpayer shall prepare a return showing the amount of the tax for which the taxpayer is liable for the preceding month, and shall mail or deliver the return to the department in the same manner and time as prescribed for the payment of taxes in subsection A of this section.  If the taxpayer fails to file the return in the manner and time as prescribed for the payment of taxes in subsection A of this section, the amount of the tax required to be shown on the return is subject to the penalty imposed pursuant to section 42-1125, subsection A, without any reduction for taxes paid on or before the due date of the return.  The return shall be verified by the oath of the taxpayer or an authorized agent or as prescribed by the department pursuant to section 42‑1105, subsection B.

F.  Any person who is taxable under this article and who makes cash and credit sales shall report such cash and credit sales separately and upon making application may obtain from the department an extension of time for payment of taxes due on the credit sales.  The extension shall be granted by the department under such rules as the department prescribes.  When the extension is granted, the taxpayer shall thereafter include in each monthly report all collections made on such credit sales during the month next preceding and shall pay the taxes due at the time of filing such report.

G.  The returns required under this article shall be made upon forms prescribed by the department.

H.  The department, for good cause, may extend the time for making any return required by this article and may grant such reasonable additional time within which to make the return as it deems proper, but the time for filing the return shall not be extended beyond the first day of the third month next succeeding the regular due date of the return.

I.  The department, with the approval of the attorney general, may abate small tax balances if the administration costs exceed the amount of tax due.

J.  For the purposes of subsection D of this section, "taxpayer" means the business entity under which the business reports and pays state income taxes regardless of the number of offices at which the taxes imposed by this article, article 6 of this chapter or chapter 6, article 3 of this title are collected. END_STATUTE

Sec. 31.  Section 42-5029, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5029.  Remission and distribution of monies; definition

A.  The department shall deposit, pursuant to sections 35‑146 and 35‑147, all revenues collected under this article and articles 4, 5 and 8 of this chapter pursuant to section 42‑1116, separately accounting for:

1.  Payments of estimated tax under section 42‑5014, subsection D.

2.  Revenues collected pursuant to section 42‑5070.

3.  Revenues collected under this article and article 5 of this chapter from and after June 30, 2000 from sources located on Indian reservations in this state.

4.  Revenues collected pursuant to section 42‑5010, subsection G and section 42‑5155, subsection D.

B.  The department shall credit payments of estimated tax to an estimated tax clearing account and each month shall transfer all monies in the estimated tax clearing account to a fund designated as the transaction privilege and severance tax clearing account.  The department shall credit all other payments to the transaction privilege and severance tax clearing account, separately accounting for the monies designated as distribution base under sections 42‑5010, 42‑5164, 42‑5205 and 42‑5353.  Each month the department shall report to the state treasurer the amount of monies collected pursuant to this article and articles 4, 5 and 8 of this chapter.

C.  On notification by the department, the state treasurer shall distribute the monies deposited in the transaction privilege and severance tax clearing account in the manner prescribed by this section and by sections 42‑5164, 42‑5205 and 42‑5353, after deducting warrants drawn against the account pursuant to sections 42‑1118 and 42‑1254.

D.  Of the monies designated as distribution base the department shall:

1.  Pay twenty‑five per cent to the various incorporated municipalities in this state in proportion to their population to be used by the municipalities for any municipal purpose.

2.  Pay 38.08 per cent to the counties in this state by averaging the following proportions:

(a)  The proportion that the population of each county bears to the total state population.

(b)  The proportion that the distribution base monies collected during the calendar month in each county under this article, section 42‑5164, subsection B, section 42‑5205, subsection B and section 42‑5353 bear to the total distribution base monies collected under this article, section 42‑5164, subsection B, section 42‑5205, subsection B and section 42‑5353 throughout the state for the calendar month.

3.  Pay an additional 2.43 per cent to the counties in this state as follows:

(a)  Average the following proportions:

(i)  The proportion that the assessed valuation used to determine secondary property taxes of each county, after deducting that part of the assessed valuation that is exempt from taxation at the beginning of the month for which the amount is to be paid, bears to the total assessed valuations used to determine secondary property taxes of all the counties after deducting that portion of the assessed valuations that is exempt from taxation at the beginning of the month for which the amount is to be paid. Property of a city or town that is not within or contiguous to the municipal corporate boundaries and from which water is or may be withdrawn or diverted and transported for use on other property is considered to be taxable property in the county for purposes of determining assessed valuation in the county under this item.

(ii)  The proportion that the distribution base monies collected during the calendar month in each county under this article, section 42‑5164, subsection B, section 42‑5205, subsection B and section 42‑5353 bear to the total distribution base monies collected under this article, section 42‑5164, subsection B, section 42‑5205, subsection B and section 42‑5353 throughout the state for the calendar month.

(b)  If the proportion computed under subdivision (a) of this paragraph for any county is greater than the proportion computed under paragraph 2 of this subsection, the department shall compute the difference between the amount distributed to that county under paragraph 2 of this subsection and the amount that would have been distributed under paragraph 2 of this subsection using the proportion computed under subdivision (a) of this paragraph and shall pay that difference to the county from the amount available for distribution under this paragraph.  Any monies remaining after all payments under this subdivision shall be distributed among the counties according to the proportions computed under paragraph 2 of this subsection.

4.  After any distributions required by sections 42‑5030, 42‑5030.01, 42‑5031, 42‑5032 and 42‑5032.01, and after making any transfer to the water quality assurance revolving fund as required by section 49‑282, subsection B, credit the remainder of the monies designated as distribution base to the state general fund.  From this amount: 

(a)  the legislature shall annually appropriate to:

(i)  (a)  The department of revenue sufficient monies to administer and enforce this article and articles 5 and 8 of this chapter.

(ii)  (b)  The department of economic security monies to be used for the purposes stated in title 46, chapter 1.

(iii)  (c)  The firearms safety and ranges fund established by section 17‑273, fifty thousand dollars derived from the taxes collected from the retail classification pursuant to section 42‑5061 for the current fiscal year.

(b)  The state treasurer shall transfer to the tourism fund an amount equal to the sum of the following:

(i)  Three and one‑half per cent of the gross revenues derived from the transient lodging classification pursuant to section 42‑5070 during the preceding fiscal year.

(ii)  Three per cent of the gross revenues derived from the amusement classification pursuant to section 42‑5073 during the preceding fiscal year.

(iii)  Two per cent of the gross revenues derived from the restaurant classification pursuant to section 42‑5074 during the preceding fiscal year.

E.  If approved by the qualified electors voting at a statewide general election, all monies collected pursuant to section 42‑5010, subsection G and section 42‑5155, subsection D shall be distributed each fiscal year pursuant to this subsection.  The monies distributed pursuant to this subsection are in addition to any other appropriation, transfer or other allocation of public or private monies from any other source and shall not supplant, replace or cause a reduction in other school district, charter school, university or community college funding sources.  The monies shall be distributed as follows:

1.  If there are outstanding state school facilities revenue bonds pursuant to title 15, chapter 16, article 7, each month one‑twelfth of the amount that is necessary to pay the fiscal year's debt service on outstanding state school improvement revenue bonds for the current fiscal year shall be transferred each month to the school improvement revenue bond debt service fund established by section 15‑2084.  The total amount of bonds for which these monies may be allocated for the payment of debt service shall not exceed a principal amount of eight hundred million dollars exclusive of refunding bonds and other refinancing obligations.

2.  After any transfer of monies pursuant to paragraph 1 of this subsection, twelve per cent of the remaining monies collected during the preceding month shall be transferred to the technology and research initiative fund established by section 15‑1648 to be distributed among the universities for the purpose of investment in technology and research‑based initiatives.

3.  After the transfer of monies pursuant to paragraph 1 of this subsection, three per cent of the remaining monies collected during the preceding month shall be transferred to the workforce development account established in each community college district pursuant to section 15‑1472 for the purpose of investment in workforce development programs.

4.  After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one‑twelfth of the amount a community college that is owned, operated or chartered by a qualifying Indian tribe on its own Indian reservation would receive pursuant to section 15‑1472, subsection D, paragraph 2 if it were a community college district shall be distributed each month to the treasurer or other designated depository of a qualifying Indian tribe.  Monies distributed pursuant to this paragraph are for the exclusive purpose of providing support to one or more community colleges owned, operated or chartered by a qualifying Indian tribe and shall be used in a manner consistent with section 15‑1472, subsection B.  For the purposes of this paragraph, "qualifying Indian tribe" has the same meaning as defined in section 42‑5031.01, subsection D.

5.  After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one‑twelfth of the following amounts shall be transferred each month to the department of education for the increased cost of basic state aid under section 15‑971 due to added school days and associated teacher salary increases enacted in 2000:

(a)  In fiscal year 2001‑2002, $15,305,900.

(b)  In fiscal year 2002‑2003, $31,530,100.

(c)  In fiscal year 2003‑2004, $48,727,700.

(d)  In fiscal year 2004‑2005, $66,957,200.

(e)  In fiscal year 2005‑2006 and each fiscal year thereafter, $86,280,500.

6.  After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, seven million eight hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments, to the department of education to be used for school safety as provided in section 15‑154 and two hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments to the department of education to be used for the character education matching grant program as provided in section 15‑154.01.

7.  After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, no more than seven million dollars may be appropriated by the legislature each fiscal year to the department of education to be used for accountability purposes as described in section 15‑241 and title 15, chapter 9, article 8.

8.  After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one million five hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments, to the failing schools tutoring fund established by section 15‑241.

9.  After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, twenty‑five million dollars shall be transferred each fiscal year to the state general fund to reimburse the general fund for the cost of the income tax credit allowed by section 43‑1072.01.

10.  After the payment of monies pursuant to paragraphs 1 through 9 of this subsection, the remaining monies collected during the preceding month shall be transferred to the classroom site fund established by section 15‑977.  The monies shall be allocated as follows in the manner prescribed by section 15‑977:

(a)  Forty per cent shall be allocated for teacher compensation based on performance.

(b)  Twenty per cent shall be allocated for increases in teacher base compensation and employee related expenses.

(c)  Forty per cent shall be allocated for maintenance and operation purposes.

F.  The department shall credit the remainder of the monies in the transaction privilege and severance tax clearing account to the state general fund, subject to any distribution required by section 42‑5030.01.

G.  Notwithstanding subsection D of this section, if a court of competent jurisdiction finally determines that tax monies distributed under this section were illegally collected under this article or articles 5 and 8 of this chapter and orders the monies to be refunded to the taxpayer, the department shall compute the amount of such monies that was distributed to each city, town and county under this section.  The department shall notify the state treasurer of that amount plus the proportionate share of additional allocated costs required to be paid to the taxpayer.  Each city's, town's and county's proportionate share of the costs shall be based on the amount of the original tax payment each municipality and county received.  Each month the state treasurer shall reduce the amount otherwise distributable to the city, town and county under this section by one thirty‑sixth of the total amount to be recovered from the city, town or county until the total amount has been recovered, but the monthly reduction for any city, town or county shall not exceed ten per cent of the full monthly distribution to that entity.  The reduction shall begin for the first calendar month after the final disposition of the case and shall continue until the total amount, including interest and costs, has been recovered.

H.  On receiving a certificate of default from the greater Arizona development authority pursuant to section 41‑1554.06 or 41‑1554.07 and to the extent not otherwise expressly prohibited by law, the state treasurer shall withhold from the next succeeding distribution of monies pursuant to this section due to the defaulting political subdivision the amount specified in the certificate of default and immediately deposit the amount withheld in the greater Arizona development authority revolving fund.  The state treasurer shall continue to withhold and deposit the monies until the greater Arizona development authority certifies to the state treasurer that the default has been cured.  In no event may the state treasurer withhold any amount that the defaulting political subdivision certifies to the state treasurer and the authority as being necessary to make any required deposits then due for the payment of principal and interest on bonds of the political subdivision that were issued before the date of the loan repayment agreement or bonds and that have been secured by a pledge of distributions made pursuant to this section.

I.  Except as provided by sections 42‑5033 and 42‑5033.01, the population of a county, city or town as determined by the most recent United States decennial census plus any revisions to the decennial census certified by the United States bureau of the census shall be used as the basis for apportioning monies pursuant to subsection D of this section.

J.  Except as otherwise provided by this subsection, on notice from the department of revenue pursuant to section 42-6010, subsection B, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city or town the amount of the penalty for business location municipal tax incentives provided by the city or town to a business entity that locates a retail business facility in the city or town.  The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount of the penalty has been withheld.  The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section. The state treasurer shall not withhold any amount that the city or town certifies to the department of revenue and the state treasurer as being necessary to make any required deposits or payments for debt service on bonds or other long‑term obligations of the city or town that were issued or incurred before the location incentives provided by the city or town.

K.  On notice from the auditor general pursuant to section 9‑626, subsection D, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city the amount computed pursuant to section 9‑626, subsection D.  The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount specified in the notice has been withheld.  The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section.

K.  L.  For the purposes of this section, "community college district" means a community college district that is established pursuant to sections 15‑1402 and 15‑1403 and that is a political subdivision of this state. END_STATUTE

Sec. 32.  Section 42-5070, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5070.  Transient lodging classification; definition

A.  The transient lodging classification is comprised of the business of operating, for occupancy by transients, a hotel or motel, including an inn, tourist home or house, dude ranch, resort, campground, studio or bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location or other similar structure, and also including a space, lot or slab which is occupied or intended or designed for occupancy by transients in a mobile home or house trailer furnished by them for such occupancy.

B.  The transient lodging classification does not include:

1.  Operating a convalescent home or facility, home for the aged, hospital, jail, military installation or fraternity or sorority house or operating any structure exclusively by an association, institution, governmental agency or corporation for religious, charitable or educational purposes, if no part of the net earnings of the association, corporation or other entity inures to the benefit of any private shareholder or individual.

2.  A lease or rental of a mobile home or house trailer at a fixed location or any other similar structure, and also including a space, lot or slab which is occupied or intended or designed for occupancy by transients in a mobile home or house trailer furnished by them for such occupancy for thirty or more consecutive days.

3.  Leasing or renting four or fewer rooms of an owner‑occupied residential home, together with furnishing no more than a breakfast meal, to transient lodgers at no more than a fifty per cent average annual occupancy rate.

C.  The tax base for the transient lodging classification is the gross proceeds of sales or gross income derived from the business, except that the tax base does not include:

1.  Gross proceeds of sales or gross income derived from business activity that is properly included in another business classification under this article and that is taxable to the person engaged in that business classification, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.

2.  Gross proceeds of sales or gross income from leases or rentals of lodging space to a motion picture production company if, at the time of lease or rental, the motion picture production company presents to the business its certificate of qualification that is issued pursuant to section 42‑5009, subsection H.

D.  For the purposes of this section, the tax base for the transient lodging classification does not include gross proceeds of sales or gross income derived from:

1.  Transactions or activities that are not limited to transients and that would not be taxable if engaged in by a person not subject to tax under this article.

2.  Transactions or activities that are not limited to transients and that would not be taxable if engaged in by a person subject to taxation under section 42‑5062 or 42‑5073 due to an exclusion, exemption or deduction.

3.  Commissions paid to a person that is engaged in transient lodging business subject to taxation under this section by a person providing services or property to the customers of the person engaging in the transient lodging business.

E.  The department shall separately account for revenues collected under the transient lodging classification for purposes of section 42‑5029, subsection D, paragraph 4, subdivision (b).

F.  E.  For the purposes of this section, "transient" means any person who either at the person's own expense or at the expense of another obtains lodging space or the use of lodging space on a daily or weekly basis, or on any other basis for less than thirty consecutive days.END_STATUTE

Sec. 33.  Section 42-5073, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5073.  Amusement classification

A.  The amusement classification is comprised of the business of operating or conducting theaters, movies, operas, shows of any type or nature, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, billiard or pool parlors, bowling alleys, public dances, dance halls, boxing and wrestling matches, skating rinks, tennis courts, except as provided in subsection B of this section, video games, pinball machines, sports events or any other business charging admission or user fees for exhibition, amusement or entertainment, including the operation or sponsorship of events by a tourism and sports authority under title 5, chapter 8.  For purposes of this section, admission or user fees include, but are not limited to, any revenues derived from any form of contractual agreement for rights to or use of premium or special seating facilities or arrangements.  The amusement classification does not include:

1.  Activities or projects of bona fide religious or educational institutions.

2.  Private or group instructional activities.  For the purposes of this paragraph, "private or group instructional activities" includes, but is not limited to, performing arts, martial arts, gymnastics and aerobic instruction.

3.  The operation or sponsorship of events by the Arizona exposition and state fair board or county fair commissions.

4.  A musical, dramatic or dance group or a botanical garden, museum or zoo that is qualified as a nonprofit charitable organization under section 501(c)(3) of the United States internal revenue code and if no part of its net income inures to the benefit of any private shareholder or individual.

5.  Exhibition events in this state sponsored, conducted or operated by a nonprofit organization that is exempt from taxation under section 501(c)(3), 501(c)(4) or 501(c)(6) of the internal revenue code if the organization is associated with major league baseball teams or a national touring professional golfing association and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.

6.  Operating or sponsoring rodeos that feature primarily farm and ranch animals in this state and that are sponsored, conducted or operated by a nonprofit organization that is exempt from taxation under section 501(c)(3), 501(c)(4), 501(c)(6), 501(c)(7) or 501(c)(8) of the internal revenue code and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.

7.  Sales of admissions to intercollegiate football contests if the contests are both:

(a)  Operated by a nonprofit organization that is exempt from taxation under section 501(c)(3) of the internal revenue code and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.

(b)  Not held in a multipurpose facility that is owned or operated by the tourism and sports authority pursuant to title 5, chapter 8.

8.  Activities and events of, or fees and assessments received by, a homeowners organization from persons who are members of the organization or accompanied guests of members.  For the purposes of this paragraph, "homeowners organization" means a mandatory membership organization comprised of owners of residential property within a specified residential real estate subdivision development or similar area and established to own property for the benefit of its members where both of the following apply:

(a)  No part of the organization's net earnings inures to the benefit of any private shareholder or individual.

(b)  The primary purpose of the organization is to provide for the acquisition, construction, management, maintenance or care of organization property.

9.  Activities and events of, or fees received by, a nonprofit organization that is exempt from taxation under section 501(c)(6) of the internal revenue code if the organization produces, organizes or promotes cultural or civic related festivals or events and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.

10.  Arranging an amusement activity as a service to a person's customers if that person is not otherwise engaged in the business of operating or conducting an amusement themselves personally or through others. This exception does not apply to businesses that operate or conduct amusements pursuant to customer orders and send the billings and receive the payments associated with that activity, including when the amusement is performed by third party independent contractors.  For the purposes of this paragraph, "arranging" includes billing for or collecting amusement charges from a person's customers on behalf of the persons providing the amusement.

B.  The tax base for the amusement classification is the gross proceeds of sales or gross income derived from the business, except that the following shall be deducted from the tax base:

1.  The gross proceeds of sales or gross income derived from memberships, including initiation fees, which provide for the right to use a health or fitness establishment or a private recreational establishment, or any portion of an establishment, including tennis and other racquet courts at that establishment, for participatory purposes for twenty‑eight days or more and fees charged for use of the health or fitness establishment or private recreational establishment by bona fide accompanied guests of members, except that this paragraph does not include additional fees, other than initiation fees, charged by a health or fitness establishment or a private recreational establishment for purposes other than memberships which provide for the right to use a health or fitness establishment or private recreational establishment, or any portion of an establishment, for participatory purposes for twenty‑eight days or more and accompanied guest use fees.

2.  Amounts that are exempt under section 5‑111, subsection H.

3.  The gross proceeds of sales or gross income derived from membership fees, including initiation fees, that provide for the right to use a transient lodging recreational establishment, including golf courses and tennis and other racquet courts at that establishment, for participatory purposes for twenty‑eight days or more, except that this paragraph does not include additional fees, other than initiation fees, that are charged by a transient lodging recreational establishment for purposes other than memberships and that provide for the right to use a transient lodging recreational establishment or any portion of the establishment for participatory purposes for twenty‑eight days or more.

4.  The gross proceeds of sales or gross income derived from sales to persons engaged in the business of transient lodging classified under section 42‑5070, if all of the following apply:

(a)  The persons who are engaged in the transient lodging business sell the amusement to another person for consideration.

(b)  The consideration received by the transient lodging business is equal to or greater than the amount to be deducted under this subsection.

(c)  The transient lodging business has provided an exemption certificate to the person engaging in business under this section.

5.  The gross proceeds of sales or gross income derived from:

(a)  Business activity that is properly included in any other business classification under this article and that is taxable to the person engaged in that classification, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.

(b)  Business activity that is arranged by the person who is subject to tax under this section and that is not taxable to the person conducting the activity due to an exclusion, exemption or deduction under this section or section 42‑5062, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.

(c)  Business activity that is arranged by a person who is subject to tax under this section and that is taxable to another person under this section who conducts the activity, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.

C.  For the purposes of subsection B of this section:

1.  "Health or fitness establishment" means a facility whose primary purpose is to provide facilities, equipment, instruction or education to promote the health and fitness of its members and at least eighty per cent of the monthly gross revenue of the facility is received through accounts of memberships and accompanied guest use fees which provide for the right to use the facility, or any portion of the facility, under the terms of the membership agreement for participatory purposes for twenty‑eight days or more.

2.  "Private recreational establishment" means a facility whose primary purpose is to provide recreational facilities, such as tennis, golf and swimming, for its members and where at least eighty per cent of the monthly gross revenue of the facility is received through accounts of memberships and accompanied guest use fees which provide for the right to use the facility, or any portion of the facility, for participatory purposes for twenty‑eight days or more.

3.  "Transient lodging recreational establishment" means a facility whose primary purpose is to provide facilities for transient lodging, that is subject to taxation under this chapter and that also provides recreational facilities, such as tennis, golf and swimming, for members for a period of twenty‑eight days or more.

D.  Until December 31, 1988, the revenues from hayrides and other animal‑drawn amusement rides, from horseback riding and riding instruction and from recreational tours using motor vehicles designed to operate on and off public highways are exempt from the tax imposed by this section.  Beginning January 1, 1989, the gross proceeds or gross income from hayrides and other animal‑drawn amusement rides, from horseback riding and from recreational tours using motor vehicles designed to operate on and off public highways are subject to taxation under this section.  Tax liabilities, penalties and interest paid for taxable periods before January 1, 1989 shall not be refunded unless the taxpayer requesting the refund provides proof satisfactory to the department that the taxes will be returned to the customer.

E.  If a person is engaged in the business of offering both exhibition, amusement or entertainment and private or group instructional activities, the person's books shall be kept to show separately the gross income from exhibition, amusement or entertainment and the gross income from instructional activities.  If the books do not provide this separate accounting, the tax is imposed on the person's total gross income from the business.

F.  The department shall separately account for revenues collected under the amusement classification for purposes of section 42‑5029, subsection D, paragraph 4, subdivision (b).

G.  F.  For purposes of section 42‑5032.01, the department shall separately account for revenues collected under the amusement classification from sales of admissions to:

1.  Events that are held in a multipurpose facility that is owned or operated by the tourism and sports authority pursuant to title 5, chapter 8, including intercollegiate football contests that are operated by a nonprofit organization that is exempt from taxation under section 501(c)(3) of the internal revenue code.

2.  Professional football contests that are held in a stadium located on the campus of an institution under the jurisdiction of the Arizona board of regents.END_STATUTE

Sec. 34.  Section 42-5074, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5074.  Restaurant classification

A.  The restaurant classification is comprised of the business of operating restaurants, dining cars, dining rooms, lunchrooms, lunch stands, soda fountains, catering services or similar establishments where articles of food or drink are sold for consumption on or off the premises.

B.  The tax base for the restaurant classification is the gross proceeds of sales or gross income derived from the business.  The gross proceeds of sales or gross income derived from the following shall be deducted from the tax base:

1.  Sales to a person engaged in business classified under the restaurant classification if the items sold are to be resold in the regular course of the business.

2.  Sales by a congressionally chartered veterans organization of food or drink prepared for consumption on the premises leased, owned or maintained by the organization.

3.  Sales by churches, fraternal benefit societies and other nonprofit organizations, as these organizations are defined in the federal internal revenue code (26 United States Code section 501), which do not regularly engage or continue in the restaurant business for the purpose of fund‑raising.

4.  Sales by a nonprofit organization that is exempt from taxation under section 501(c)(3), 501(c)(4) or 501(c)(6) of the internal revenue code if the organization is associated with a major league baseball team or a national touring professional golfing association and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.

5.  Sales at a rodeo featuring primarily farm and ranch animals in this state by a nonprofit organization that is exempt from taxation under section 501(c)(3), 501(c)(4), 501(c)(6), 501(c)(7) or 501(c)(8) of the internal revenue code and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.

6.  Sales by any nonprofit organization organized and operated exclusively for charitable purposes and recognized by the United States internal revenue service under section 501(c)(3) of the internal revenue code.

7.  Sales to qualifying hospitals as defined in section 42‑5001.

8.  Sales to a qualifying health care organization as defined in section 42‑5001 if the tangible personal property is used by the organization solely to provide health and medical related educational and charitable services.

9.  Sales of food, drink and condiment for consumption within the premises of any prison, jail or other institution under the jurisdiction of the state department of corrections, the department of public safety, the department of juvenile corrections or a county sheriff.

10.  Sales of catered food, drink and condiment to a motion picture production company.  To qualify for this deduction, at the time of purchase, the motion picture production company must present to the business its certificate of qualification that is issued pursuant to section 42‑5009, subsection H and that establishes its qualification for the deduction.

11.  Sales of articles of prepared or unprepared food, drink or condiment and accessory tangible personal property to a school district or charter school if the articles and accessory tangible personal property are served to persons for consumption on the premises of a public school in the school district or charter school during school hours.

12.  Prepared food, drink or condiment donated by a restaurant to a nonprofit charitable organization that has qualified under section 501(c)(3) of the internal revenue code and that regularly serves meals to the needy and indigent on a continuing basis at no cost.

C.  The tax imposed on the restaurant classification pursuant to this section does not apply to the gross proceeds of sales or gross income from tangible personal property sold to a commercial airline consisting of food, beverages and condiments and accessories used for serving the food and beverages, if those items are to be provided without additional charge to passengers for consumption in flight.  For the purposes of this subsection, "commercial airline" means a person holding a federal certificate of public convenience and necessity or foreign air carrier permit for air transportation to transport persons, property or United States mail in intrastate, interstate or foreign commerce.

D.  The department shall separately account for revenues collected under the restaurant classification for purposes of section 42‑5029, subsection D, paragraph 4, subdivision (b).

E.  D.  For purposes of section 42‑5032.01, the department shall separately account for revenues collected under the restaurant classification from businesses operating restaurants, dining rooms, lunchrooms, lunch stands, soda fountains, catering services or similar establishments:

1.  On the premises of a multipurpose facility that is owned or operated by the tourism and sports authority pursuant to title 5, chapter 8 for consumption on or off the premises.

2.  At professional football contests that are held in a stadium located on the campus of an institution under the jurisdiction of the Arizona board of regents. END_STATUTE

Sec. 35.  Title 43, chapter 4, article 2, Arizona Revised Statutes, is amended by adding sections 43-418 and 43-419, to read:

START_STATUTE43-418.  Registration; payroll service company

A.  For withholding tax returns due to be filed from and after May 31, 2011, a person shall not act as a payroll service company unless the person is registered with the department under this section.

B.  A person shall apply to the department electronically for registration as a payroll service company under this subsection and the department shall grant the application if the application indicates that the person will comply with this section.

C.  A payroll service company registered with the department under this section shall:

1.  Be authorized in writing pursuant to section 42-2003 by each client to act on behalf of the client with respect to this state's withholding tax.

2.  Keep a client's monies held for payment of state withholding taxes or other obligations in an account separate from the payroll service company's own monies.

3.  Make payments electronically and file returns electronically with the department in compliance with the department's requirements for electronic payments and electronic filing.

4.  Electronically provide to the department a client list and electronically update the client list at least monthly, by the first of every month.  The client list shall include at least the name, address, tax identification number and federal deposit frequency of each client.  The address listed for the client must be the client's actual street or post office box address and not the payroll service company's address.

5.  Timely file all returns and timely make all withholding tax payments required under its contracts with its clients.

6.  On request, provide to the department, within the time specified in the request, a copy of any contract with a client.

7.  Comply with all other requirements of this section or rules adopted pursuant to this section.

D.  A payroll service company may terminate its registration by written notice to the department.

E.  For the purposes of this section:

1.  "Client" means another employer for whom a payroll service company provides payroll services for a fee.

2.  "Payroll service company" means a person who has custody or control over a client's monies for the purpose of paying the withheld taxes and filing returns of a client with the department.

3.  "Person" means an individual, fiduciary, partnership, corporation, limited liability company, association or other entity organized under the laws of this state or any other jurisdiction. END_STATUTE

START_STATUTE43-419.  Electronic remittance and filing required by payroll service company; penalty; definitions

A.  For withholding tax returns due to be filed from and after May 31, 2011, a payroll service company remitting amounts due as prescribed in section 43-401, subsection E on behalf of a client shall make all payments electronically.  If a payroll service company remits a payment in a manner other than electronically, the payroll service company shall pay a penalty in the amount of twenty‑five dollars per client, per payment, unless it is shown that the failure to pay electronically is due to reasonable cause and not due to wilful neglect.

B.  For withholding tax returns due to be filed from and after May 31, 2011, a payroll service company reconciling amounts payable during the preceding quarter in accordance with section 43-401, subsection E on behalf of a client shall file all required quarterly returns electronically.  If a payroll service company files a required quarterly return in a manner other than electronically, the payroll service company shall pay a penalty in the amount of twenty‑five dollars per client, per return, unless it is shown that the failure to file electronically is due to reasonable cause and not due to wilful neglect.

C.  For withholding tax returns due to be filed from and after May 31, 2011, a payroll service company filing an annual payment return as allowed by rule and in accordance with section 43-401, subsection E on behalf of a client shall file all required annual returns electronically.  If a payroll service company files a required annual return in a manner other than electronically, the payroll service company shall pay a penalty in the amount of twenty‑five dollars per client, per return, unless it is shown that the failure to file electronically is due to reasonable cause and not due to wilful neglect.

D.  For the purposes of this section, "client", "payroll service company" and "person" have the same meanings prescribed in section 43‑418. END_STATUTE

Sec. 36.  Section 43-581, Arizona Revised Statutes, is amended to read:

START_STATUTE43-581.  Payment of estimated tax; penalty; forms

A.  An individual who is subject to the tax imposed by this title and whose Arizona gross income, as defined by section 43‑1001, or as described by section 43‑1091 in the case of nonresidents, for the taxable year exceeds seventy‑five thousand dollars or one hundred fifty thousand dollars if a joint return is filed and whose Arizona gross income was greater than seventy‑five thousand dollars in the preceding taxable year or one hundred fifty thousand dollars in the preceding taxable year if a joint return is filed, shall make payments of estimated tax during the individual's tax year. The amount of the payments of estimated tax shall be an amount which reasonably reflects a taxpayer's Arizona income tax liability which will be unpaid at the end of the taxpayer's tax year.  This amount shall be paid in four installments on or before the due dates established by the internal revenue code and shall total, when combined with the taxpayer's withholding tax, at least ninety per cent of the tax due for the current taxable year or one hundred per cent of the tax due for the preceding taxable year.

B.  Any other individual who is subject to the tax imposed by this title may make payments of estimated tax during such individual's tax year. The amount of any payment of estimated tax shall be either:

1.  If payments of estimated tax are made pursuant to the internal revenue code, ten, fifteen or twenty per cent of the amount paid to the internal revenue service as estimated tax computed pursuant to the internal revenue code and the income tax act of 1954, as amended, to be paid on or before the due dates established by the internal revenue code.

2.  If no federal estimated tax payments are required to be made, an amount which reasonably reflects a taxpayer's Arizona income tax liability which will be unpaid at the end of such taxpayer's tax year.

C.  The department shall prescribe rules for the payments of estimated tax which shall provide for estimated payments in a manner similar to the manner prescribed in the internal revenue code.

D.  If the taxpayer does not pay the estimated tax required by subsection A of this section on or before the prescribed dates, there is assessed and the department shall collect a penalty upon the unpaid amount as prescribed by section 42‑1125, subsection P  Q.  No penalties or interest shall be assessed or collected if either of the following applies:

1.  The estimated tax payments made pursuant to this section are allowable exceptions under the provisions of section 6654 of the internal revenue code.

2.  The taxpayer's Arizona income tax liability due on the taxpayer's return is less than one thousand dollars.  For the purposes of this paragraph, "Arizona income tax liability due on the taxpayer's return" means the amount of tax due on the return minus the amount of Arizona income tax withheld and tax credits claimed by the taxpayer.

E.  The department shall make available suitable forms and instructions to taxpayers who make estimated tax payments pursuant to this article. END_STATUTE

Sec. 37.  Section 43-582, Arizona Revised Statutes, is amended to read:

START_STATUTE43-582.  Payment of estimated tax by corporations; penalty; forms

A.  A corporation that is subject to the tax imposed by this title shall pay estimated tax during the corporation's taxable year if the corporation's tax liability under this title for the taxable year is at least one thousand dollars.  The tax liability under this title is the excess of the tax imposed by section 43-1111 over any tax credits allowed by this title.

B.  Except as otherwise provided in this section, the amount of the required annual payment is the lesser of:

1.  Ninety per cent of the tax shown on the return for the taxable year or, if no return is filed, ninety per cent of the tax for that year.

2.  One hundred per cent of the tax shown on the corporation's return for the preceding taxable year, except that this paragraph does not apply if:

(a)  The preceding taxable year was not a taxable year of twelve months.

(b)  The corporation did not file a return for the preceding taxable year showing a liability for tax.

C.  The required annual payment under subsection B of this section for a large corporation is the amount prescribed by subsection B, paragraph 1 of this section except for purposes of determining the amount of the first required installment for the taxable year.  Any reduction in the first installment by reason of this subsection shall be recaptured by increasing the amount of the next required installment determined under subsection B, paragraph 1 of this section by the amount of the reduction.  For the purposes of this subsection, "large corporation" means a corporation or unitary group of corporations if the corporation, or a predecessor corporation, had federal taxable income of one million dollars or more for any of the immediately preceding three taxable years, excluding any federal net operating loss or capital loss carrybacks or carryovers.

D.  The required annual payment for an S corporation, as defined in section 1361 of the internal revenue code, is the lesser of:

1.  The amount determined under subsection B, paragraph 1 of this section.

2.  The sum of:

(a)  The amount determined under subsection B, paragraph 1 of this section for the portion of the tax liability under this title that is attributable to built in gains income or certain capital gains income.

(b)  One hundred per cent of the tax liability under this title that is attributable to excess passive income on the return of the S corporation for the preceding taxable year.

E.  For the purposes of subsection D of this section:

1.  The requirement that the S corporation's return for the previous taxable year show a liability for tax related to excess passive income does not apply.

2.  Subsection D, paragraph 2 of this section does not apply if the preceding taxable year had fewer than twelve months.

F.  Four installments of payments of estimated tax are required each taxable year.  The due dates for the installments are the due dates prescribed by section 6655 of the internal revenue code.  Unless otherwise prescribed by this section, the amount of each installment payment is twenty‑five per cent of the required annual payment, but a lower required installment payment, as established and in the manner prescribed by section 6655 of the internal revenue code, applies if the lower installment is less than twenty-five per cent of the required annual payment.  If a taxable year begins on a date other than January 1, the installment payments are due during months of that fiscal year that correspond to the prescribed months of a calendar year.

G.  If a taxpayer fails to pay the full amount of estimated tax, or any required installment, under this section, the taxpayer is subject to a penalty, as prescribed by section 42‑1125, subsection P  Q.  For the purposes of this subsection:

1.  The amount of underpayment is the excess of the required installment payment over the amount, if any, of the installment paid on or before the due date for the payment.

2.  A payment of estimated tax shall be credited against unpaid required installment payments in the order in which the installments are required to be paid.

H.  The department shall:

1.  Apply this section to taxable years of less than twelve months according to the treasury regulations for section 6655 of the internal revenue code.

2.  Adopt rules that are necessary to administer and enforce this section.

3.  Make available suitable forms and instructions to taxpayers that make estimated tax payments pursuant to this section.END_STATUTE

Sec. 38.  Section 48-5103, Arizona Revised Statutes, is amended to read:

START_STATUTE48-5103.  Public transportation fund

A.  A public transportation fund is established for the authority.  The fund consists of:

1.  Monies appropriated by each municipality that is a member of the authority or the county, if it elected to enter into the authority.  Each member municipality and member county shall appropriate monies to the public transportation fund in an amount determined by the board.

2.  Monies appropriated by a county that has not elected to enter into the authority in an amount determined by the county board of supervisors.

3.  Transportation excise tax revenues that are allocated to the fund pursuant to section 42‑6104 or 42‑6105.  The board shall separately account for monies from transportation excise tax revenues allocated pursuant to section 42‑6105, subsection E, paragraph 3 for:

(a)  A light rail public transit system.

(b)  Capital costs for other public transportation.

(c)  Operation and maintenance costs for other public transportation.

4.  Monies distributed under title 28, chapter 17, article 1.

5.  Grants, gifts or donations from public or private sources.

6.  Monies granted by the federal government or appropriated by the legislature.

7.  Fares or other revenues collected in operating a public transportation system.

8.  Local transportation assistance monies that are distributed to each member under section 28‑8102 and as provided in section 48‑5104.

9.  Local transportation assistance monies that are distributed to a member pursuant to section 28‑8102 and that must be used for public transportation.

10.  Local transportation assistance monies that are distributed pursuant to section 28‑8103, subsection A, paragraph 1.

B.  On behalf of the authority, the fiscal agent shall administer monies paid into the public transportation fund.  Monies in the fund may be spent pursuant to or to implement the regional public transportation system plan, including reimbursement for utility relocation costs as prescribed in section 48‑5107, adopted pursuant to section 48‑5121 and for projects identified in the regional transportation plan adopted by the regional planning agency pursuant to section 28‑6308.

C.  Monies in the fund shall not be spent to promote or advocate a position, alternative or outcome of an election, to influence public opinion or to pay or contract for consultants or advisors to influence public opinion with respect to an election regarding taxes or other sources of revenue for the fund or regarding the regional public transportation system plan. END_STATUTE

Sec. 39.  Section 48-5104, Arizona Revised Statutes, is amended to read:

START_STATUTE48-5104.  Municipality and county participation; withdrawal

A.  A municipality located in a county eligible to establish an authority may elect to enter into the authority by adopting an ordinance declaring its participation.  If an ordinance is adopted, the municipality shall annually apply for monies from the local transportation assistance fund as provided in:

1.  Section 28‑8102 and shall use a portion of those local transportation assistance monies for public transportation each fiscal year.

2.  Section 28‑8103 and shall use those local transportation assistance fund monies as provided in section 28‑8103.

B.  If a municipality with a population of less than sixty thousand persons is unable to use three-fourths of its local transportation assistance monies provided pursuant to section 28‑8102 for public transportation each fiscal year, it shall appropriate any remaining amount of the three‑fourths of its local transportation assistance monies to the public transportation fund as provided in section 48‑5103.  If a municipality with a population of sixty thousand persons or more is unable to use one-third of its local transportation assistance monies provided pursuant to section 28‑8102 for public transportation each fiscal year, it shall appropriate any remaining amount of the one‑third of its local transportation assistance monies to the public transportation fund as provided in section 48‑5103.

C. B.  The county may elect to enter into the authority by adopting a resolution declaring its participation.  The county shall represent persons residing in the unincorporated areas of the county.

D. C.  A member municipality or member county may withdraw from the authority at the end of a fiscal year by adopting an ordinance or resolution not later than ninety days before the end of the fiscal year that states its intention to withdraw.  The withdrawal from the authority shall not result in the cancellation of a contractual agreement entered into between the withdrawing member and the authority. END_STATUTE

Sec. 40.  Section 48-5314, Arizona Revised Statutes, is amended to read:

START_STATUTE48-5314.  Election on regional transportation plan and excise tax

A.  The board shall:

1.  Adopt a twenty year comprehensive multimodal regional transportation plan consistent with the requirements of this article, including transportation corridors by priority and a schedule indicating the dates that construction will begin for projects contained in the plan.

2.  Request by resolution certified to the county board of supervisors that the issue of levying a transportation excise tax pursuant to section 42‑6106 be submitted to the qualified electors at a countywide special election or placed on the ballot at a countywide general election.  Within six months after receiving a certified copy of the resolution, the county board of supervisors shall either call a special election or place the issue on the ballot of a general election, subject to the requirements of this section.

B.  The election ballot shall include a description of each transportation element of the regional transportation plan including a separate percentage share and dollar share of the transportation excise tax revenues allocated to each element.

C.  In addition to any other requirements prescribed by law, the county board of supervisors shall prepare and print a publicity pamphlet concerning the ballot question and mail one copy of the pamphlet to each household containing a registered voter in the county.  The mailings may be made over a period of days but shall be mailed for delivery before the earliest date registered voters may receive early ballots for the election.  The publicity pamphlet shall contain:

1.  The date of the election.

2.  The individual household's polling place and the time the polls will be open.

3.  A summary of the principal provisions of the issue presented to the voters, including the rate of the transportation excise tax, the number of years the tax will be in effect and the projected annual and cumulative amount of revenues to be raised.

4.  A statement describing the purposes for which the transportation excise tax monies may be spent as provided by law, including:

(a)  A summary of the regional transportation plan adopted pursuant to section 48‑5309 and subsection A of this section, including a description of each transportation element of the regional transportation plan.

(b)  A map of proposed routes and transportation corridors of all major transportation projects and public transportation systems.

(c)  The percentage share and dollar amount of transportation excise tax revenues, together with other identified revenues, dedicated for each transportation element, transportation project and public transportation system, and conditions and limitations on the use of the money.

5.  The form of the ballot.

6.  Any arguments for or against the ballot measure.  Affirmative arguments, arranged in the order in which the elections director received them, shall be placed before the negative arguments, also arranged in the order in which they were received.

D.  Not later than ninety days before the date of the election, a person may file with the county elections director an argument, not more than three hundred words in length, advocating or opposing the ballot measure, subject to the following requirements:

1.  The person who files the argument shall also pay to the elections director a publication fee prescribed by the board of supervisors.  Payment of the fee required by this paragraph, or reimbursement of the payor, constitutes sponsorship of the argument.

2.  If the argument is sponsored by one or more individuals, the argument shall be signed by each sponsoring individual.

3.  If the argument is sponsored by one or more organizations, the argument shall be signed by two executive officers of each organization.

4.  If the argument is sponsored by one or more political committees, the argument shall be signed by each committee's chairperson or treasurer.

5.  The names of persons who have signed arguments and the names of sponsoring organizations shall appear with the argument in the pamphlet.  The person or persons signing the argument shall also give their residence or post office address and a telephone number, which shall not appear in the pamphlet.

E.  In addition to any other ballot requirements prescribed by law, the elections director shall cause the following to be printed on the official ballot:

1.  The designation of the measure as follows:  "Relating to county transportation excise (sales) taxes".

2.  Instructions directing the voter to the full text of the official and descriptive titles containing the summary as printed in the sample ballot and posted in the polling place.  The ballot may include the summary of the regional transportation plan.

3.  The questions submitted to the voters as follows:

I.  Do you approve the regional transportation plan for ________________ county?  YES ________  NO _________

(A "YES" vote indicates your approval of the proposed regional transportation plan as developed by the regional transportation authority and described in the election materials.)

(A "NO" vote indicates your disapproval of the proposed regional transportation plan.)

II.  Do you favor the levy of a transaction privilege (sales) tax for regional transportation purposes in ____________ county?  YES __________  NO __________

(A "YES" vote has the effect of imposing a transaction privilege (sales) tax in __________ county for ________ years to provide funding for the transportation projects contained in the regional transportation plan.)

(A "NO" vote has the effect of rejecting the transaction privilege (sales) tax for transportation purposes in __________ county.)

F.  For either ballot question I or II to be approved, both the proposed regional transportation plan and the proposed transaction privilege tax must be approved by a majority of the qualified electors voting on the measure.  If either ballot question I or II fails to be approved by a majority of the qualified electors voting on the measure, both fail.

G.  Except as otherwise provided by this section, the election under this section shall be conducted as nearly as practicable in the manner prescribed for general elections in title 16.

H.  The county election officer shall account for costs specifically incurred with respect to the ballot issue under this section.  Regardless of the outcome of the election, and notwithstanding any other law, the state treasurer shall pay the costs listed in this subsection specifically incurred with respect to the ballot issue.  Payment shall be made under this section from the cities' share of local transportation assistance fund monies distributed under section 28‑8102 to the cities and towns within the county, and from the county's share of the county assistance fund under section 41‑175.  If the transportation excise tax is approved, the regional transportation authority shall reimburse the local transportation assistance fund and the county assistance fund from the first received transportation excise tax revenues.  The following costs incurred by the county elections officer are authorized for payment pursuant to this subsection:

1.  Costs of mailing, publishing, posting and printing ballots, publicity pamphlets, notices, election materials and other matters concerning the election.

2.  Legal and other consulting fees and costs relating to the election.

3.  Telecommunications costs.

4.  Compensation of the election board, county election officers and employees and other labor costs incurred to administer, hold, canvass and announce the results of the election.

5.  Any other costs attributable to the election. END_STATUTE

Sec. 41.  Existing transaction privilege tax licensees; license renewals; intent; exemption from rule making; retroactivity

A.  Notwithstanding section 42‑5005, Arizona Revised Statutes, the director of the department of revenue may prescribe by rule and levy a one‑time transaction privilege tax license renewal fee for all persons who have a valid transaction privilege tax license issued before July 1, 2009.  Notwithstanding section 42‑5005, Arizona Revised Statutes, the director may prescribe by rule a fee for any new licenses issued from and after the effective date of this act until June 30, 2011.  The director shall designate the method for payment of the license fees prescribed pursuant to this section.

B.  It is the intent of the legislature that the additional revenue generated by the transaction privilege tax license fees authorized in this section not exceed $5,384,000 in fiscal year 2010‑2011.

C.  The department of revenue is exempt from the rule making requirements of title 41, chapter 6, Arizona Revised Statutes, for eighteen months after the effective date of this act for the purposes of establishing the transaction privilege tax license fees authorized by this section.

Sec. 42.  Fees for providing services; increases; intent; appropriations; exemption from rule making; retroactivity

A.  Notwithstanding any other law, except as provided in subsection D, the director of each of the following agencies may increase fees in fiscal year 2010‑2011 for services provided in fiscal year 2010-2011:

1.  Department of health services.

2.  Office of pest management.

3.  Radiation regulatory agency.

4.  State land department.

B.  It is the intent of the legislature that the additional revenue generated by the fee increases shall not exceed the amounts listed below:

1.  Department of health services               $600,000.

2.  Office of pest management                   $525,000.

3.  Radiation regulatory agency                 $500,000.

4.  State land department                       $600,000.

C.  Monies received from any fees pursuant to subsection A are appropriated to the respective agencies.

D.  The state land department may not increase a fee pursuant to subsection A for a recreational permit issued by the department.

E.  The agencies described in subsection A are exempt from the rule making requirements of title 41, chapter 6, Arizona Revised Statutes, for the purpose of establishing fees pursuant to this section until July 1, 2011.

F.  This section is effective retroactively to from and after June 30, 2010.

Sec. 43.  Abandoned vehicle fees; intent; exemption from rule making; retroactivity

A.  It is the intent of the legislature that the additional revenue generated by the abandoned vehicle fees authorized by section 28‑4802, Arizona Revised Statutes, as amended by this act, not exceed $12,061,200 in fiscal year 2010‑2011.

B.  The department of transportation is exempt from the rule making requirements of title 41, chapter 6, Arizona Revised Statutes, for eighteen months after the effective date of this act for the purposes of establishing abandoned vehicle fees pursuant to section 28‑4802, Arizona Revised Statutes, as amended by this act.

C.  This section is effective retroactively to from and after June 30, 2010.

Sec. 44.  Department of transportation; vehicle license tax; transfer; five‑year registration

Notwithstanding any other law, the difference between the actual amount of vehicle license tax revenue collected in fiscal year 2010‑2011 as a result of a five‑year registration period and the amount that would have been collected in fiscal year 2010‑2011 if those same vehicles had been registered for a two‑year vehicle registration period authorized pursuant to section 28‑2159, Arizona Revised Statutes, for distribution to the state highway fund pursuant to section 28‑6538, subsection A, paragraph 1, Arizona Revised Statutes, shall be deposited in the state general fund.

Sec. 45.  Arizona state lottery proceeds; fiscal year 2009-2010; transfer; deposit; tax withholding; retroactivity

A.  Notwithstanding section 5‑522, Arizona Revised Statutes, for fiscal year 2009‑2010, any monies that are allocated to the following funds under the lottery distribution specified in section 5‑522, Arizona Revised Statutes, shall be deposited in the state general fund:

1.  The county assistance fund established by section 41‑175, Arizona Revised Statutes.

2.  The local transportation assistance fund pursuant to section 28‑8101, subsection D, Arizona Revised Statutes.

3.  The local transportation assistance fund pursuant to section 28‑8101, subsection E, Arizona Revised Statutes.

4.  The Arizona state parks board heritage fund pursuant to section 41‑502, Arizona Revised Statutes.

B.  This section shall not be construed to reduce or change the priority of distributions prescribed in section 5‑522, Arizona Revised Statutes, to any of the funds that are not specified in subsection A of this section.

C.  Any lottery monies that have been distributed pursuant to section 5‑522, Arizona Revised Statutes, to the funds specified in subsection A of this section on or after February 1, 2010 until the effective date of this act shall be transferred on or before May 31, 2010 to the Arizona state lottery for deposit, pursuant to sections 35‑146 and 35‑147, Arizona Revised Statutes, in the state general fund.  If monies have not been transferred on or before May 31, 2010 pursuant to this subsection from distributions made to the funds specified in subsection A, paragraph 1, 2 and 3 of this section, the Arizona state lottery director shall notify the state treasurer of the amount owed and the treasurer shall withhold the amount, including any additional interest as provided in section 42-1123, Arizona Revised Statutes, from any transaction privilege tax distributions to the city or county.  The treasurer shall deposit the withholdings, pursuant to sections 35-146 and 35‑147, Arizona Revised Statutes, in the state general fund.

D.  This section is effective retroactively to from and after January 31, 2010.

Sec. 46.  Housing trust fund; transfer

If proposition 100 is not approved by the voters at the May 18, 2010 special election, notwithstanding section 41‑3955, Arizona Revised Statutes, the sum of $2,173,300 shall be transferred from the housing trust fund and deposited in the department of revenue administrative fund and the same sum is appropriated from the department of revenue administrative fund in fiscal year 2010‑2011 to the department of revenue.

Sec. 47.  County transfers; fiscal year 2010-2011; county expenditure limitations

A.  Notwithstanding any other law, in fiscal year 2010‑2011, each county with a population of two million or more persons shall transfer $28,600,000 and each county with a population of more than eight hundred thousand persons but less than two million persons shall transfer $6,000,000 to the state treasurer for deposit in the state general fund.

B.  Notwithstanding any other law, a county may meet any statutory funding requirements of this section from any source of county revenue designated by the county, including funds of any countywide special taxing district in which the board of supervisors serves as the board of directors.

C.  Contributions made pursuant to this section are excluded from the county expenditure limitations.

Sec. 48.  County fiscal obligations

Notwithstanding any other law, for fiscal years 2010‑2011 and 2011‑2012, a county may meet any county fiscal obligation from any source of county revenue designated by the county, including funds of any countywide special taxing jurisdiction in which the board of supervisors serves as the board of directors.

Sec. 49.  Retroactivity

Section 41-2306, Arizona Revised Statutes, as amended by this act, applies retroactively to April 1, 2010.

Sec. 50.  Effective dates

A.  Sections 5‑554 and 5‑572, Arizona Revised Statutes, as amended by this act, are effective from and after June 30, 2012.

B.  Section 42‑1129, Arizona Revised Statutes, as amended by this act, is effective from and after February 28, 2011.