Every year, before the beginning of every tax season, Arizona has typically determined whether or not it will conform to any new federal tax law changes.
In years past, Arizona has conformed to new federal tax law without too much debate. However, with the new Tax Cuts and Jobs Act that was passed, the issue of conformity has become a hotly contested subject in our state legislature.
The two sides that have emerged in this disagreement are the Republican lead legislature and the Arizona Governor, Doug Ducey. The Republican lead legislature is pushing for conformity (specifically reducing income tax rates) so as to allow taxpayers to enjoy the reduced tax rates that occurred at the federal level. Arizona Gov. Doug Ducey instead is fighting against conformity, as he would like to set aside the money saved by taxpayers with conformity, into a “rainy-day” fund that can be tapped into during economic downturn. At stake is an estimated $150 million.
Through all this turmoil, one question stands out.
What are we supposed to do when we file our Arizona state tax returns? With this uncertainty, tax professionals alike are deciding which course of action is best, filing on time or extending?
If an individual files their Arizona state tax return and conformity is elected, then that individual will most likely have to amend their return so as to take advantage of the lower tax rates. This uncertainty is leading many to believe that extending their Arizona state tax return is the best way to avoid any issues that may arise.
In either case, it is imperative for taxpayers to call their CPAs/tax preparers and determine what will be best for them. This is an analysis we here at Price Kong are doing with each of our clients. We want to provide the best decision for our clients given their respective circumstances.
About the Author:
Arturo received his undergraduate accounting degree from Arizona State University in 2008 and his Masters of Taxation from Arizona State University in 2011. He became a CPA in 2013. Joining the firm in November 2016, Arturo has over 10 years of experience in public accounting.
He is a member of the Arizona Society of Certified Public Accountants, the American Institute of CPAs, and serves as the Treasurer for ICM Food and Clothing Bank. You may reach Arturo at his direct phone: 602-776-6334 or by e-mail at email@example.com.