Arizona Department of Revenue Arizona Tax Conference Update

Arizona Department of Revenue Arizona Tax Conference Update 2018 | Tucson, AZ By: Dr. Grant Nülle, Deputy Director Arizona Department of Revenue

Agenda • ADOR Mission, Vision & High-level Summary • Legislative Update • ADOR Strategic Priorities & Execution • ADOR Major Projects 2

Mission & Vision PURSUANT TO ARIZONA REVISED STATUTES (A. R. S. ) TITLES 42 AND 43 FY 19 ANNUAL OPERATING BUDGET $ 78. 4 MILLION 511 Employees

Revenue collections approached $18 billion in FY 2018 – Highest Total in Arizona History

Revenue distributions primarily fund state operations, cities/towns & counties

6. 4 million returns processed in 2018 Highest Total in Arizona History

ADOR’s multi-faceted operations touch every part of Arizona - FY 18 highlights • $11. 3 million in individual income tax fraud stopped • 50, 000+ new TPT licenses issued • $63 million in unclaimed property returned – an All -Time High • Property Tax Unit valued 960+ centrally valued properties & trained more than 100 certified county appraisers 7

Bills implemented by ADOR in 2018 1, 400 1, 206 1, 000 Number of Bills 800 600 346 400 157 200 - 29 Total Bills Introduced Total Bills Signed DOR Bills Tracked Total Bills w/ DOR Impact

Making it easier to do business with ADOR’s customers SB 1385 (Chapter 218): – Expanded the list of Principal Corporate Officers to chief executive officer, president, secretary, treasurer, vice president of tax, chief financial officer, chief operating officer, chief tax officer or any other corporate officer with authority to bind the taxpayer on matters related to state taxes – Provides a Verbal Power of Attorney allowing ADOR to disclose taxpayer information for one-time purposes in a meeting – Expedites the ability of taxpayers and ADOR to seek resolution to appeals to ADOR assessments and denied refund requests via Tax Court

11/24/2020

Strategic Priorities & Execution

ADOR Key Priorities • Optimize Taxpayer Services • Accelerate Processing of Tax Returns • Maximize Taxpayer Education & Compliance • Stabilize Core IT Infrastructure • Combat Tax Fraud • Increasing rates of E-File / E-Pay 12

How we get there deploying the AMS • Set Goals • Identify Gaps Between Our Performance & Goals • Execute Countermeasures to Close Gaps • Measure Performance via Scorecard Metrics 13

Measuring to manage & drive agency performance – the AMS

Operating at the speed of business: Average speed to answer: < 1 minute : 36: 01 : 28: 49 : 21: 37 : 14: 25 : 07: 13 : 00: 01 Jan Years 2016 : 03: 53 2017 : 24: 00 2018 : 09: 43 Feb : 05: 25 : 27: 21 : 06: 04 Mar : 04: 03 : 28: 01 : 03: 41 Apr : 07: 39 : 14: 58 : 00: 48 May : 09: 06 : 03: 00: 53 Jun : 09: 35 : 10: 41 : 01 Jul : 15: 19 : 04: 59 : 00: 33 Aug : 06: 02 : 04: 31 Sep : 04: 27 : 03: 16 Oct : 04: 02 : 03: 23 Nov : 06 : 02: 41 Dec : 13: 41 : 06: 41

Arizona has among the fastest income tax processing times in the nation 16

$600 $550 [CATEGORY NAME] [VALUE]million FY 2015 $541 million $500 $450 $400 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 11/24/2020 Education & Compliance Results (FY 2007 -2018) [CATEGORY NAME] (in millions $) $615 million

Traditional collection & audit activities are only one facet of a broader strategy to increase revenue ADOR is emphasizing front-end compliance, taxpayer education and advanced data analytics to bolster its efforts, including: – Increasing rates of E-File & E-Pay of taxes to speed processing, reduce errors and improve compliance – Emphasizing education & outreach to help taxpayers understand reporting obligations and voluntarily comply – Adapting collections & audit techniques to a 21 st century business model, driven by data analytics, advanced fraud detection techniques and partnerships with vendors & local governments

FY 2019 Efficiency Savings • $500, 000 in savings realized from vacating private leased space • Reduce postage costs though increased electronic correspondence with taxpayers • Reduce paper storage costs by removing statutory requirement to hold documents ADOR does not need • Reduce tax return processing costs by virtually eliminating informational reporting from tax-exempt organizations • ADOR returned $1. 9 million in annual efficiency savings to the Legislature beginning FY 2019, among the highest state agencies

Serving taxpayers by creating capacity: major ADOR projects • Finish TPT reform – Completed calendar year 2017 • Partner with ADOT to simplify vehicle use tax administration – Completed Nov. 1, 2017 • Residential rental tax e-file solution – Completed Jan. 2018 • Electronic self-serve 1099 -G – Completed Jan. 2018 • IT infrastructure modernization – Deploy $11 million state investment – Completed June 2018 • Consolidating tax return processing and Cloud storage of TPT filings – To be completed in 2018 • Deploy corporate e-file solution – Targeting mid-2019

THANK YOU!