Clarifying Measure May Cause Loss Of Millions In Arizona Tax Revenue

By Howard Fischer, Capitol Media Services
Published: Thursday, March 21, 2019 - 8:05am
Updated: Thursday, March 21, 2019 - 9:30am

Arizona could lose millions of dollars in tax revenue if a measure to clarify what online purchases are — and are not — is passed.

Specifically, the bill focuses on digital products, like cloud-based services. But it has run into a fiscal problem. The Arizona Department of Revenue estimates the state could lose $33 million, but Sen. Michelle Ugenti-Rita says the report is just an estimate.

"I don't care about the revenue hit. I really don't. Because they aren't supposed to be taxing. They are taxing without statutory authority. That either offends you or it doesn't. I've been very clear. It offends me. It's insulting to think that a department could get away with that," Ugenti-Rita said.

According to the state Department of Revenue, two challenges to the agency's policy of taxing software hosted outside of the state have been rejected. The next step is tax court.

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