ABC Taxes, Tips & Tools

July 1 is the start of the Ari­zona State fis­cal year which is why sev­eral changes are going into effect on that date. 

AZ With­hold­ing Tax Change: On July 1, 2010 an employer must with­hold Ari­zona state income tax accord­ing to the new A4s, which they should have obtained from all of their employ­ees prior to that date. We have pre­vously  blogged about the change com­ing to the Ari­zona A4. On July 1st Arizona’s state income tax with­hold­ing rate will decou­ple from the fed­eral with­hold­ing rate. Every employee needs to do a new A4. An employer should not advise employ­ees about how to com­plete the form except to point out the form comes with work­sheet to assist them. That said, a quick and dirty cal­cu­la­tion would be to see how much tax you owed to the state last year and divide it by your Ari­zona state income; but of course this assumes that your income, expenses, mar­i­tal sta­tus, depen­dents, items of credit and deduc­tion, etc. are sim­i­lar to last year, which it may not be.

AZ Child Sup­port Gar­nish­ments Change: If you are an employer who does gar­nish­ments for things like child sup­port in Ari­zona through CLEARINGHOUSE, please be advised that the fee will increase from $2.25 to $5.00  start­ing July 1.

In addi­tion to these changes that go into effect in less than a week, there are other things you should aware of. 

Trans­ac­tion Priv­i­lege Tax License Change:  You are prob­a­bly aware that the Ari­zona “sales tax” increased 1% statewide on June 1st, and you should have already adjusted your soft­ware, point of sales sys­tems and reg­is­ters.  How­ever some­time in Sep­tem­ber the AZ DOR is going to be send­ing out Trans­ac­tion Priv­i­lege Tax renewal forms.  The only peo­ple who won’t have to renew their licenses are those who got their licenses on or after July 1, 2009.  The law increases the fee to obtain, change or renew a license to $40 up from $12 for a period of 1 year and 2 weeks start­ing June 15, 2010;  means the change will be in effect for the state’s entire upcom­ing fis­cal year.  It’s not expected to be a big rev­enue raiser, but the AZ DOR hopes to get peo­ple who have never filed a TPT return or who haven’t filed in a long time off the sales tax rolls.  If you’e had your license a year or longer, you will need to pay for the renewal if you want to keep it.

Non­con­for­mity with Fed­eral 2009 tax forms: This change qui­etly went into effect on April 27, 2010.  The State of Ari­zona decided not to con­form to the Fed­eral Tax code after the first tax dead­line had passed.  If you filed your tax form on or before April 15, 2010 and you had any of the fol­low­ing items of income, deduc­tion or credit on your tax return-you may need to file an amended Ari­zona tax return and pay addi­tional tax.  You do not need to amend your fed­eral tax return, just Arizona’s. 

• Unem­ploy­ment: you need to add the $2400 the fed­eral gov­ern­ment exempted from gross income back into your Ari­zona income and pay the addi­tional tax.
• Auto­mo­bile Sales Tax deduc­tion: you need to remove the auto­mo­bile sales tax from your deduc­tions, which will increase your income and you may owe addi­tional tax.
• Haiti Con­tri­bu­tions made between Jan­u­ary 11 and before March 1, 2010 that were taken as a char­i­ta­ble deduc­tion in 2009.  These con­tri­bu­tions will be eli­gi­ble char­i­ta­ble deduc­tions on your Ari­zona taxes in 2010.  Again this will increase your income and you may owe addi­tional tax.
• Dis­charge of Indebt­ed­ness (DOI) Income From Busi­ness Indebt­ed­ness Dis­charged by the Reac­qui­si­tion of a Debt Instru­ment–the feds allowed it to be added rat­ably over 5 years, AZ did not. 
• Orig­i­nal Issue Dis­count (OID) on Reac­qui­si­tion of Debt Instru­ment–the feds allowed the income to be deferred, AZ did not. 
• Spe­cial Fed­eral Net Oper­at­ing Loss (NOL) Car­ry­back Rules for 2008 and 2009 Losses-the feds allowed a spe­cial longer car­ry­back period of 3, 4, or 5 years, instead of 2, AZ did not. 

 The amended tax form is 140X for indi­vid­ual tax­pay­ers and it can be found on the AZ DOR web­site.  There is more infor­ma­tion about AZ 2009 non­con­for­mity here. These links take you to the Ari­zona Depart­ment of Rev­enue web­site and you will be sub­ject to their pri­vacy poli­cies etc.; Art and Busi­ness Con­sult­ing LLC is not affil­i­cated with the AZ DOR. 

If you live in another state, check with your state’s depart­ment of rev­enue regard­ing con­for­mity issues with respect to your state. 

As always Art and Busi­ness Con­sult­ing is here to help.  If you need help fil­ing an amended Ari­zona tax return, or any other with a small busi­ness and or tax issue, please give us a call.

The usual dis­claimers: Although ABC has made every effort to insure the accu­racy of Taxes, Tips and Tools, mis­in­for­ma­tion, dis­in­for­ma­tion, changes, mis­takes, typos and hack­ers hap­pen, there­fore Art & Busi­ness Con­sult­ing LLC takes no respon­si­bil­ity for any action taken or results based on the infor­ma­tion sup­plied here in. The con­tent of this blog gen­er­ally applies to busi­ness and indi­vid­ual tax­a­tion in the United States of Amer­ica.  Inter­nal Rev­enue Ser­vice Cir­cu­lar 230 Dis­clo­sure:  As pro­vided for in Trea­sury reg­u­la­tions, advice (if any) relat­ing to fed­eral taxes that is con­tained in this com­mu­ni­ca­tion (includ­ing attach­ments) is not intended or writ­ten to be used, and can­not be used for the pur­pose of (1) avoid­ing penal­ties under the Inter­nal Rev­enue Code or (2) pro­mot­ing, mar­ket­ing or rec­om­mend­ing to another party any plan or arrange­ment address herein.  Art & Busi­ness Con­sult­ing LLC cur­rently does not have a cer­ti­fied pub­lic accoun­tant, human resource spe­cial­ist, finan­cial plan advi­sor or an attor­ney on staff; this infor­ma­tion is purely for edu­ca­tional pur­poses and not to be con­strued as legal or finan­cial advice. Art & Busi­ness Con­sult­ing LLC and its employ­ees, mem­bers and asso­ciates are not engage to prac­tice law; you always should dis­cuss legal mat­ters with your attor­ney before talk­ing to any­one else.