Arizona Individual Income Tax Returns

1
Arizona Individual Income Tax Returns

• More than 2.6 million individual income tax
  returns received by ADOR for a tax year
• Paper , e-file and 2D bar code
• Resident (140, 140a, 140ez), non-resident returns
  (140nr) and part-year returns (140py)
• Growth in e-filed returns
• Approximately 70 of individual income tax
  returns were e-filed for tax year 2012
• E-file just over 50 of all returns in tax year
  2007

2
ADOR IIT Enforcement Efforts

• Over 95 of Individual Income Tax Audits are
  directly linked to information received from the
  IRS.
• Identify Non-filers
• Compare differences between state and federal
  returns
• Other Audit leads
• FY 13 approx. 65,000 IIT audits
• FY 13 approx. 30M in Audit Assessments
• FY 13 approx. 21M in Collections

3
Individual Income Tax Data

• Arizona individual income tax data
• E-file and 2D bar code returns capture primary
  fields plus
• Detail on additions to income, subtractions from
  income, exemptions, adjustments to itemized
  deductions (Arizona schedule A) and credits
• Paper returns capture primary fields
• Limitations of Arizona data
• Data is limited depending on how return was filed
  (paper vs. e-file/2D)
• Additional data available from e-file/2D bar code
  returns

4
Individual Income Tax Data

• Federal individual income tax data for Arizona
  filers
• IRS federal information sharing program strict
  limitations on federal data
• IRS Statistics of Income (SOI) summary of
  various federal income tax return data also
  provided at the state level
• Limitations of Federal data
• Lag in data availability first look at tax year
  2012 would be fall 2013, but does not contain a
  full tax year at that point available following
  fall 2014
• First look at IRS SOI data by state tax year
  2012 released spring 2014 estimates based on
  samples

5
Individual Income Tax Model

• Individual income tax model simulates the state
  tax for the total return population given
• Changes in federal law
• Changes in state data due to federal law
• And/or proposed state changes
• Returns in the sample contain federal information
  from IRS and data provided on Arizona returns
• Model output provide values for additions,
  subtractions, exemptions, and deductions for a
  tax year
• The impact of credits are not included in the
  model due to the unpredictability of taxpayer
  behavior
• Current model contains tax year 2006 data grown
  to represent tax year 2013

6
Summary of Individual Income Tax Data

• Arizona data
• Primary fields summary of all return data
• Detail on additions/subtractions/adjustments to
  itemized deductions from model
• Credits
• Pull returns to capture data process to compile
  data from e-file/2D has improved
• Larger volume credits use reports from outside
  sources (Public School extracurricular report/STO
  annual report)
• Federal data for Arizona filers
• Components of income/additions/subtractions/exempt
  ions/ itemized deductions
• Federal SOI or from model

7
ADOR Reports

• ADOR Annual Report provides summary data on all
  tax types administered by the Department
• Tax Expenditure Report summary of state tax
  expenditures (exemptions, deductions, exclusions
  and credits) and estimated costs where available
• Individual Income Tax Statistics individual
  income tax data compiled by state, county and
  city levels
• Arizona Income Tax Credits summary of
  individual and corporate income tax credits
• Tax Facts summary of monthly tax revenue data

8
Individual Income Tax Data and Sources

• Primary return data Individual Income Tax
  Statistics (summary of return data)
• Federal subtractions from income Tax
  Expenditure Report (model)
• Arizona exemptions Tax Expenditure Report
  (model)
• Arizona subtractions from income Tax
  Expenditure Report (model)
• Standard and Itemized Deductions - Tax
  Expenditure Report (model)
• Credits Tax Expenditure Report Income Tax
  Credit Report, (return research, reports from
  outside sources)