TPT Reform Update Presented by Lee Grafstrom, Tax Policy Analyst – League of AZ Cities & Towns GFOAz Winter Training February 15, 2017

Where Are We Now? TPT Reform Update Single Audit – New rules began January 2015 New Reports – Program, June 2016 Tax License Renewal – 2017 State Administration – January 2017

Audit TPT Reform Update Cities can do any “local” or City-Tax-Only audits DOR will do all “multijurisdictional” audits Technically, DOR “leads” all audits City auditors may perform any audit functions and work on behalf of DOR

New Reports to the Cities New License Report License Update Report TPT Reform Update New Reports to the Cities New License Report License Update Report City Payment Journal Deduction Report No-Money Report Fund Distribution Report

Recap of Tax Law TPT Reform Update MCTC Article III eliminated the option to hold up a Tax License for other approvals A.R.S. 42-5005 requires all Tax licensing be administered by ADOR for all cities and towns, beginning 1/1/2015 All new applications and annual renewals for a Tax License will be handled by DOR

Business License – Purpose TPT Reform Update Business License – Purpose Provides the ability to regulate the approval process and have independent knowledge of all business activity within the city Provides significant demographic data used by various city functions, such as economic development, planning, zoning, police & fire A full Business License program assists city efforts to review tax payments and reports received from ADOR

What If We Don’t? TPT Reform Update Changes to MCTC and State statute preclude waiting for other approvals for a Tax License No unifying process that ensures all approvals are acquired by all businesses Generally, ADOR only licenses businesses that generate a tax liability: a limited view of businesses in your city Identifying all businesses in the city is not possible if you rely on ADOR data alone