HB 2601 Summary

• Allows taxpayers with unused research and development (R&D) tax credits under sections 43-1074.01 or 43-1168 to convert 85% of the unused balance to offset transaction privilege taxes on construction contracts or receive cash reimbursements for infrastructure and capital expenditures in Arizona.

• Requires taxpayers seeking conversion to make new capital investments (minimum amount to be determined) or create/retain employment positions (minimum number to be determined) in Arizona after December 31, 2016, with jobs paying at least the county median wage.

• Establishes the Arizona Commerce Authority to receive and evaluate conversion applications, with authority to approve conversions up to a $20 million annual limit on a first-come, first-served basis; unused annual capacity rolls over to the following year.

• Requires taxpayers to submit applications containing business information, capital investment schedules, employment details, outstanding credit amounts, and signed affirmations regarding record-keeping, five-year business continuity, and audit cooperation.

• Amends section 42-1118 to allow the Department of Revenue to process conversion claims and issue refunds or cash reimbursements when taxpayers present valid conversion certificates from the Commerce Authority.