Assigned to FIN AS PASSED BY COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
AMENDED
FACT SHEET FOR S.B. 1230
tax exemptions; affidavit
Purpose
Modifies administration and requirements relating to property tax exemption eligibility
affidavits (eligibility affidavit) and Arizona Department of Revenue (ADOR) transaction privilege
tax (TPT) exemption letters.
Background
All property in Arizona is subject to taxation with certain exceptions. ADOR prescribes
the procedure, affidavits and forms that effectuate property tax exemptions. Certain property that
is not used or held for profit is exempt from property tax, including: 1) educational and library
property; 2) religious property; 3) cemeteries; and 4) low-income property owned and operated by
an Indian tribe or tribal housing authority. Certain property used for educational or religious
purposes and property leased to veterans' organizations is exempt from property tax if the property
is used for the exempted purpose (A.R.S. § 42-11132; 42-11132.01; and 42-11132.02).
A person that claims a property tax exemption must file an eligibility affidavit with the
county assessor when initially claiming the exemption and when claiming the exemption in
subsequent years. If outlined 501(c)3 nonprofit organizations (nonprofit) file with the county
assessor evidence of the organization's tax-exempt status, the organization is exempt from the
requirement of filing subsequent eligibility affidavits until all or part of the property is conveyed
to a new owner or is no longer used for the exempted purpose. At that time the organization must
notify the assessor of the change in writing (A.R.S. Title 42, Chapter 11). If a person does not file
an eligibility affidavit or furnish evidence between the first Monday in January and March 1 of
each year, the person waives the right to a property tax exemption (A.R.S. § 42-11152 and
42-11153).
Arizona does not provide an overall TPT exemption for nonprofit organizations. Sales to
nonprofits are generally subject to TPT and use tax, unless the nonprofit is a qualified hospital or
health care organization. A qualifying hospital, qualifying health care organization, qualifying
community health care center and a nonprofit that provides rehabilitation programs for mentally
or physically disabled persons must apply for an annual TPT exemption letter from ADOR
(ADOR).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
FACT SHEET – Amended
S.B. 1230
Page 2
Provisions
Property Tax Eligibility Affidavits
1. Removes the requirement for a nonprofit to file subsequent annual eligibility affidavits with
the county assessor for the following types of property:
a) educational and library property;
b) religious property; and
c) low-income Indian housing.
2. Requires a nonprofit to file evidence of the nonprofit's tax-exempt status with the county
assessor, rather than allowing the nonprofit to file the evidence with the county assessor to be
exempt from the requirement to file subsequent annual eligibility affidavits.
3. Requires the following to notify the county assessor in writing if there is any event that
disqualifies the person or property from the exemption:
a) a nonprofit;
b) the owner of a cemetery, historic private burial site or historic private cemetery;
c) an Indian tribe or tribal housing authority;
d) an educational, religious or charitable organization that owns property that is leased to an
educational institution;
e) an educational, religious or charitable organization that owns property leased to a church,
religious assembly or religious institution; and
f) a veterans' organization that owns property leased to a veterans' organization.
Exemption Letter
4. Requires a qualifying community health center, qualifying health care organization or
qualifying hospital or any other entity that is recognized as a 501(c) nonprofit and that is
required to obtain an exemption letter from ADOR to:
a) apply to ADOR for the exemption letter and fully answer any eligibility questions required
by ADOR for the purposes of the exemption letter; and
b) notify ADOR in writing if the entity no longer qualifies for the exemption letter.
5. Stipulates that, if ADOR approves the exemption letter application, the exemption letter is
valid until the recognized nonprofit no longer qualifies for the exemption letter.
6. Holds the nonprofit liable, if the nonprofit no longer qualifies for the exemption letter, in an
amount equal to any tax, penalty and interest that the seller would have been required to pay if
the seller had not been furnished the exemption letter regardless of whether the entity notifies
ADOR.
7. Exempts a nonprofit from liability for any imposed use tax with payment of the amount of
liability.
8. Requires the liability amount to be treated as tax revenues collected from the seller in order to
designate the distribution base for purposes of remission and distribution of TPT revenues. FACT SHEET – Amended
S.B. 1230
Page 3
Miscellaneous
9. Applies eligibility affidavit filing requirements to taxable periods beginning January 1, 2024.
10. Makes technical and conforming changes.
11. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Replaces the qualified hospital exemption letter renewal requirement changes with a
requirement for any nonprofit that is required to obtain an exemption letter from ADOR to
apply for the exemption letter and notify ADOR in writing if the entity no longer qualifies for
the exemption letter.
2. Removes the requirement for a widow, widower, person with a disability or veteran with a
disability to file subsequent annual eligibility affidavits.
Senate Action
FIN 2/6/23 DPA 7-0-0
Prepared by Senate Research
February 7, 2023
MG/MC/sr