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Construction Law

Unpaid Taxes a Reduced Threat to Contractor's License

Under a law that went into effect July 22, the ROC is no longer required to investigate a licensee's tax obligations.

 

Thanks to a new law passed during the recently completed legislative session, the Arizona Registrar of Contractors (ROC) will no longer be required to investigate whether contractors and/or their officers are current with their tax obligations. Also, the ROC can no longer suspend or revoke, on its own initiative, a contractor's license for failure to pay income taxes, withholding taxes or transaction privilege (sales) taxes.

Senate Bill 1170 provides for tax-related license suspension or revocation by the ROC only when the Arizona Department of Revenue notifies the ROC that "a tax debt ... incurred in the operation of the licensed business has become final" and the taxpayer neglects or refuses to pay.

The new law removes the ROC's discretion to withhold issuing a license or in suspending or revoking a contractor's license due to issues relating to the payment of taxes. Many believed that the complexities of city, state and federal taxes are outside the expertise of the ROC.

S1160 was sponsored by Senators Gail Griffin, David Farnsworth, David Gowan, Darin Mitchell and David Stevens. It was signed into law by Gov. Brewer on April 23 and went into effect July 22.