It is certainly shaping up to be an interesting 2014 when it comes to governmental issues that will be impacting construction. It appears as though there will be legislation addressing the ability of the Registrar of Contractors (ROC) to conduct background checks and/or inquiries into contractors’ taxes. We expect to see further activity from the Department of Labor (DOL) this year as it relates to misclassification of employees.
In an attempt to better inform members of ASA about these issues, the Government Relations-Advocacy Committee will be sending a bi-monthly email to the members. This email is focused on an update on Transaction Privilege Tax (TPT).
As you may know, the 2013 Legislative Session produced major changes to Arizona’s Transaction Privilege Tax or TPT.
House Bill 2111 (effective January 1, 2015) exempts service contractors who work directly for a property owner from TPT under the prime contracting classification. So, contractors who work directly for a property owner to repair, maintain, or replace existing property will now pay retail tax at the point of purchase for materials. The bill also requires the Arizona Department of Revenue (DOR) to conduct all future audits and administer an online portal where taxpayers can pay all state, county, or municipal TPT and affiliated excise taxes online.
What does all of this mean? Candidly, it does not sound like anyone, including the folks at DOR can answer this question yet. The good news is that the Arizona State Contractors Coalition (ASCC), of which ASA is a member, has organized a “TPT Task Force” that will work closely with the DOR to ensure that any questions or concerns raised by the contracting community will be addressed in the implementation process through rule, or by law if necessary. Ultimately, the goal is to make sure that we are involved in the process so that contractors’ concerns are hopefully addressed as this begins to roll out.
As the year progresses and have a better sense of how this will impact your business, there will be further updates. In the meantime, if you have any questions or concerns you would like to raise, please send them on to either Richard Usher or Matthew Meaker, or attend an ASA GRA committee meeting on the first Thursday of the month at Hill and Usher.