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STRATEGIC OUTCOMES |
ACTION |
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Department: |
☐ Safe & Prosperous |
☐ Motion |
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Finance |
☐ Active & Appealing |
☒ Resolution |
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☒ Respected & Responsible |
☐ Ordinance - Introduction |
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Division: |
☐ Connected & Engaged |
☐ Ordinance - Adoption |
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Administration |
☐ Unique & Creative |
☐ Public Hearing |
TITLE:
title
Intergovernmental Agreement: Arizona Department of Revenue
end
SUMMARY RECOMMENDATION:
Summary Recommendation
Authorize an Intergovernmental Agreement with the Arizona Department of Revenue for the uniform administration, licensing, collection, and auditing of transaction privilege tax, use tax, severance tax, jet fuel excise and use tax, and rental occupancy taxes imposed by the State or cities or towns. (Finance/Administration) (Douglas Allen)
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STRATEGIC OUTCOME:
This item supports the City Council’s strategic outcome of Respected and Responsible, as it assures the City is being good stewards of public funds.
REPORT:
The proposed intergovernmental agreement (the 2023 IGA) was negotiated with the Arizona Department of Revenue (ADOR) and Attorney General’s office by the City Tax Administrators Council Rulings Group, which includes the League of Arizona Cities and Towns, and with the assistance of several city attorneys and a multitude of tax and Information Technology experts from many municipalities.
Local Transaction Privilege Tax (TPT) administration is governed by A.R.S. § 42-6001. This statute requires ADOR to administer the transaction privilege and use taxes imposed by all cities and towns and to enter into an intergovernmental agreement (IGA) with each city and town to clearly define the working relationship between the ADOR and Arizona cities and towns.
This IGA establishes the framework for collaboration between the Department and the cities and towns for every aspect of TPT administration. It provides the principles, requirements, and responsibilities of both the City and the Department, and it defines the many specific operational processes related to tax collection, the protection of taxpayer confidentiality, and information security.
The 2023 IGA replaces the current IGA and represents a complete rewrite of the prior Agreement. Great emphasis was placed on improving the thoroughness and consistency of the Agreement as well as minimizing the need to look through multiple sections to answer a single question or resolve a specific issue.
The most notable changes are the 2023 IGA adds or clarifies the definitions of various terms including City Services, Collection, Development Fees, Options Chart, Primary Point of Contact, Profile, Independent Contractor, State Tax, Tax Information, Authorized Access Lists, and Qualified Recipients of Information, and all defined terms are now capitalized throughout the Agreement for easy recognition.
Taxpayer confidentiality measures have been significantly strengthened, placing additional emphasis on the protection of Tax Information provided under Arizona statutes, and refining the details surrounding authorized access, disclosure restrictions, and remedies for improper disclosure such as the possible suspension of Tax Information sharing.
New procedures have been established for both the cities and the Department to regularly maintain the Authorized Access Lists that control who can see detailed taxpayer information, including clarifying confidentiality training requirements and adding that all responsibilities and restrictions apply to Independent Contractors in the same manner as they apply to regular employees.
The new IGA addresses the developing scope of city assistance offered to the Department with the addition of delinquent tax collection activities and new collections reports along with new language that covers cities assisting with reviews of selected refund claims. In addition to the services that have long been provided by city and town auditors, these new areas expand the ways that we can partner with the Department, leveraging our personnel to help the DOR achieve more efficient operations.
The 2023 IGA also provides new or improved coverage for several miscellaneous topics including the City's responsibility for reviewing its City Profile and the Model City Tax Code website; workers' compensation issues when sharing office space with other jurisdictions; the expiration, termination, or amendment of the Agreement; and the disclosure of aggregated financial information.
Finally, this version rewrote much of the previous IGA’s handling and protection of confidential taxpayer information. Changes were made relative to identifying retention requirements and authorized disposal methods, critical information security protocols, and various software system requirements that cities and towns must follow to protect any confidential taxpayer data stored on their computer systems.
FISCAL REQUIREMENTS:
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CITY FUNDS: |
$ 0.00 |
BUDGETED: |
$ 0.00 |
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STATE FUNDS: |
$ 0.00 |
AVAILABLE TO TRANSFER: |
$ 0.00 |
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FEDERAL FUNDS: |
$ 0.00 |
IN CONTINGENCY: |
$ 0.00 |
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OTHER SOURCES: |
$ 0.00 |
FUNDING: ACCOUNT/FUND #/CIP |
TOTAL $ 0.00
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NONE |
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To total; right click number & choose “Update Field” |
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FISCAL IMPACT STATEMENT:
This IGA maintains status quo revenue collections for the City and administrative fees for ADOR.
ADDITIONAL INFORMATION:
SUPPORTING DOCUMENTS NOT ATTACHED TO THE CITY COUNCIL ACTION FORM THAT ARE ON FILE IN THE OFFICE OF THE CITY CLERK:
NONE
IF CITY COUNCIL ACTION INCLUDES A CONTRACT, LEASE OR AGREEMENT, WHO WILL BE RESPONSIBLE FOR ROUTING THE DOCUMENT FOR SIGNATURE AFTER CITY COUNCIL APPROVAL?
☐ Department
☐ City Clerk’s Office
☐ Document to be recorded
☐ Document to be codified
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Acting City Administrator: |
Date: |
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John D. Simonton |
02/12/2023 |
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Reviewed by City Attorney: |
Date: |
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Richard W. Files |
02/09/2023 |