Senate Bill 1405 Summary

• Amends Arizona Revised Statutes Section 43-1147 to modify how multistate service providers allocate business income for tax purposes.

• Allows multistate service providers to elect treating service sales as Arizona sales using a combination of income-producing activity sales and market sales, with phased transition percentages from 2013-2016.

• Defines "multistate service provider" as either taxpayers deriving over 85% of sales from services to out-of-state purchasers, or regionally accredited institutions of higher education with campuses in Arizona having over 2,000 on-campus students.

• For higher education institutions, election is limited to treatment of educational services sales (tuition, fees, transcripts, and graduation fees).

• Effective for taxable years beginning after December 31, 2019.