This bill proposes updates to section 42-1125 of the Arizona Revised Statutes regarding tax administration. It introduces new language that clarifies the application of penalties for taxpayers who fail to file returns on time. Specifically, it stipulates that if the tax required to be shown on the return is zero, the same penalty structure applies, ensuring that the penalty is either four and one-half percent of the tax or $25, whichever is greater. Additionally, the total penalty is capped at either twenty-five percent of the tax required to be shown or $100, whichever is greater.

The bill also includes a retroactive application clause, stating that these changes will apply to taxable periods beginning from and after December 31, 2025. Overall, the bill aims to streamline the penalty assessment process while ensuring that taxpayers with zero tax liability are still subject to penalties under the same framework as those with positive tax amounts.