Important Tax Change: AZ House Bill 2324

Effective July 1, 2013

 

Attention Business Owners:  if you hold one or more transaction privilege tax license(s) with the “commercial real property” rental classification, you may be affected by AZ House of Representatives Bill 2324 which was effective 7/1/13. This bill changes the tax liability of some commercial leases.

 

As of July 1, 2013, commercial lease income is EXEMPT when derived from leases between affiliated companies, businesses, persons or reciprocal insurers if:
  • Lessor holds a controlling interest in the lessee
  • Lessee holds a controlling interest in the lessor
  • An affiliated entity holds a controlling interest in both the lessor and lessee
  • An unrelated person holds a controlling interest in both the lessor and lessee

A “controlling interest” refers to 80% ownership of the voting shares of a corporation or of the interests in a company, business or person other than a corporation. More detailed information can be found at AZ DOR House website http://www.azleg.gov/legtext/51leg/1r/laws/0027.pdf.

Feel free to contact our accounting professionals at 928-445-8633 to obtain a form to submit to your city’s tax and licensing division or to discuss any questions you may have.