Arizona Department of Revenue
It is the Arizona Department of Revenue’s position that the column’s author missed several key points pertaining to the benefits of the Transaction Privilege Tax (TPT) Program that readers should be aware of.
Under TPT, the Arizona Department of Revenue is the single point of administration and collection of state and city taxes for all business. This means local governments, like Apache Junction, no longer require city staff to perform TPT services as ADOR provides services like processing TPT returns, answering taxpayer inquiries, audit and collections services, and revenue distribution. For local Apache Junction businesses, they do not have to file two or more TPT returns – one with ADOR and another with the city or cities where the taxable activity occurred – they need to only file one return for all taxing jurisdictions.
For the first 10 months of 2017, $10.5 million in local tax collections has been distributed back to Apache Junction, a 6.7 percent increase from the $9.8 million the City collected for the same time last year. In addition to TPT distribution, Apache Junction’s portion from the State’s Urban Revenue Share Program, which is from corporate and individual income tax, totaled more than $4.7 million in 2016-2017. So, Apache Junction’s annual contribution of about $78,000 for TPT administration is well below the millions of dollars the municipality gets back from TPT distribution and urban revenue share.
We agree the implementation of TPT has been a complex process involving for more than 100 cities and counties, but, the end result is a streamlined program that enables hundreds of thousands of businesses to register, file returns, and make TPT payments via a central portal, with revenue distributed back to the cities every week.
We also felt it was necessary to respond to the column’s reporting of the Department’s audit program. In all due respect, to state there have been continuing layoffs of state auditors is incorrect and to report there are only six auditors is old information. There are currently 11 auditors working in corporate income tax, as part of an audit area that has close to 200 staff. The Department continues to hire more auditors based on need and budget.
Also, drawing inferences from staffing levels are unreliable as historical comparisons show the number of auditors alone does not equate to more revenue being collected. There are many other factors that influence collection levels, including: the economic cycle, compliance levels, taxpayer choices, electronic filing and the Department’s focus on education and outreach. Regarding corporate audit, it is a complex area involving extensive tax portfolios, as well as a shrinking pool of corporate tax revenue due to enacted tax reforms.
As well, focusing on a single audit category fails to provide the complete revenue picture for readers. The fact is, total audit and collections’ revenue has increased year-over-year for the past three fiscal years, which helps fund important services and programs in Arizona. For example, year-over-year, the total was $574 million in 2016-2017 compared to $562 million in 2015-2016, about a 2 percent increase.
The Arizona Department of Revenue is constantly looking for ways to deliver better, faster and more cost effective-customer service for Arizonans. We take this responsibility very seriously and want to address any concerns that may exist, so we can continue to improve customer service.
The Agency hopes this feedback is helpful for updating your readers.