Arizona Department of Revenue—Sunset Factors—Department did not comply with all conflict-of-interest requirements, ensure it collected and reported all State income taxes, and plan for eventual replacement of its main IT system

The Arizona Department of Revenue (Department) is responsible for administering various taxes, including transaction privilege, use, and severance taxes; corporate income, individual income, and withholding taxes; and luxury tax. It also administers unclaimed property (i.e., abandoned or inactive accounts or assets) and the State property tax laws through the 15 county assessors. We found that the Department did not comply with some conflict-of-interest requirements, had not ensured that it collected and reported all State income taxes, and should begin planning for the eventual replacement of its primary information technology system. Additionally, the Department supports 3 commissions and 1 committee, and we found that 1 of the commissions did not adhere to all open meeting law requirements. Finally, the Department should document the complaint-resolution processes for its Taxpayer Assistance Office and Criminal Investigation Unit (CI Unit) and track the CI Unit’s complaint-resolution timeliness. Our report also provides information about the Native American Veterans Income Tax Settlement Fund.