The bill centers on how the work contractors do and the materials they use are taxed. Because of SB 1446, contractors who do maintenance, repair, replacement and qualified alteration jobs will not be required to have a Transaction Privilege Tax (TPT) license. The contractors will simply pay tax upfront as they buy their materials. The legislation also clarifies the process for contractors who keep their TPT license. This will greatly streamline the process for contractors, and the state will have much better control over revenues.
“I am so pleased to see this important bill become law in Arizona. This has been a continuing work in progress to reform TPT going back to 2012, so this has been three years in the making. We listened to all the parties involved and made changes when necessary. This finished product is a good example of legislation working for Arizonans,” said Senator Lesko.
With this law, Arizona now has a tax system that closely mirrors how contractors operate, with reduced risk for contractors and a simplified audit and tax payment process. Contractors will also now be able to interpret projects and bids the same way. Because of the learning curve to this new procedure, the law says if a contractor acts in good faith to properly report taxes, but was in error, there will be no interest, penalties or additional tax due.
“It is my intent to continue to work with the contractor community and the cities to move to a system where all contractors pay tax on only materials, just like what is already done in 46 other states,” said Sen. Lesko.