State employees who don't file their income tax returns on time could be out of work.

In an effort to improve electronic tax filing, the Department of Revenue argued for stiffer penalties in front of State House lawmakers Wednesday. Authors of House Bill 2280 buried the provision that would require employees not only e-file their state tax returns, but also risk being fired if they file late.

DOR agency director Grant Nulle called the idea “good government,” and defended making the data available to state agencies.

The bill author, Representative Don Shooter of Yuma, said it would modernize tax collection.

"This bill takes us from the 1980s into the 20th century,'' Shooter said, "We're going to work on the 21st century as soon as we get this done.

DOR records currently show 80 percent of Arizona employees already file their taxes electronically.

But, it’s the sharing of employee tax information that Scottsdale’s State Representative Jay Lawrence took issue with and went as far as calling it “spying.”

“That is spying,” Lawrence said. “We’re going to turn in anyone that has not filed on time? That’s not the purview of the Department of Revenue.”

Several other lawmakers pointed out tax penalties are harsh enough and asked why employees outside the Department of Revenue should be fired, when tax filing is not their expertise.

Representative Shooter promised to make changes when the legislation reaches the House floor.