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Committee advances bill requiring municipalities to notify affected businesses before changing local tax options
Summary
House Bill 21 19 was returned with a due‑pass recommendation after testimony from cities, League of Arizona Cities and Towns, Department of Revenue and tax groups debating whether cities have the data and how notice should be provided; several stakeholders proposed amendments to route notice through ADOR.
The House Ways and Means Committee returned House Bill 21 19 with a due‑pass recommendation after hearing competing testimony on whether cities have the mailing information and administrative ability to notify affected businesses when a municipality adopts or repeals model‑city tax options.
Vince Perez, staff, explained the bill would require a municipality that proposes to adopt or repeal a model city tax code option to notify all affected businesses in the effective business classification by mail at least 60 days before the municipal action. Representative Carter, the bill sponsor, said the notice is intended to help tax preparers and taxpayers avoid inadvertent noncompliance.
Yaris Beth Caballero and Lee Grafstrom, representing the League of Arizona Cities and Towns, testified in respectful opposition, saying cities and towns do not maintain the business taxpayer mailing lists required by the bill and that the Department of Revenue (ADOR) currently administers Transaction Privilege Tax (TPT) registration and correspondence. Grafstrom urged moving the notification responsibility to ADOR or coordinating with the department. “We don't take applications for TPT licenses. That's entirely done by the Department of Revenue,” Grafstrom said.
Jennifer Stilo of the Arizona Tax Research Association and Chad Heinrich of the National Federation of Independent Business supported the bill. Stilo described repeated taxpayer confusion where state and local tax bases differ and cited a Peoria example in which a group of businesses was surprised by a local audit and subsequent city action to adjust effective dates; she said upfront notice would prevent such outcomes. “This legislation is narrow but it's very important because taxpayers are not subject to tax at the state level but they are at the city level,” Stilo said.
Molly Murphy, director of legislative affairs at ADOR, told the committee the department has historically shared TPT license lists with cities and could look at implementation details and administrative burden. She did not take a formal position at the hearing.
Committee members discussed possible amendments to route notification through ADOR or to add a statutory cross‑reference to ADOR's licensing processes; some members said they would vote no in committee but reserve the right to change on the floor pending clarifying amendments. The committee returned the bill with a due‑pass recommendation by a roll call of six ayes, two nays and one absent.
If enacted, the bill would require municipalities to notify affected taxpayers by mail 60 days before adopting or removing a model or local option, or would be amended to set ADOR as the responsible entity for sending notice, depending on legislative changes to address the implementation concerns aired in committee.
