This bill proposes amendments to section 42-1125 of the Arizona Revised Statutes, specifically updating the penalties for taxpayers who fail to file their tax returns on time. Under the current law, a penalty of four and one-half percent of the tax due is added for each month the return is late, with a maximum penalty of twenty-five percent of the tax owed. The bill introduces new language that clarifies the penalty application when the tax required to be shown on the return is less than the amount due, allowing for the penalty to be calculated based on the lower amount. Additionally, it modifies the penalty structure for taxpayers who fail to file returns under chapters 5 or 6, allowing for a minimum penalty of $25 or four and one-half percent of the tax due, whichever is greater, and a maximum penalty of $100 or twenty-five percent of the tax due, whichever is greater.

Furthermore, the bill includes a provision that applies these changes retroactively to taxable periods beginning after December 31, 2025. This means that any penalties assessed for late filings during those periods would be subject to the updated rules outlined in the bill. Overall, the proposed changes aim to clarify and potentially reduce penalties for certain taxpayers while maintaining a structured penalty system for late filings.

Statutes affected:
Introduced Version: 42-1125