AZ SB1540

Establishes the Department of Revenue Tax Fraud Interdiction Fund consisting of civil penalties and fines collected from specific tax violations under sections 42-1125 and 42-1127.

Requires fifty percent of fund monies to be used for detecting violations and enhancing tax fraud analytics, and fifty percent to be transferred to the Attorney General for prosecuting violations.

Authorizes the Department of Revenue to contract with data analytics service providers for up to three years to detect tax violations, with compensation potentially based on collections attributable to the service provider.

Requires data analytics service provider employees to meet the same security and bond requirements as Department employees and strictly prohibits retention or use of taxpayer information beyond specifically authorized purposes.

Subjects data analytics service providers and employees to confidentiality requirements and penalties under section 42-2004 for unauthorized disclosure of taxpayer information.