Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On April 5, 2013, the Governor signed Senate Bill 1168 which conformed to the definition of federal adjusted gross income (federal taxable income for corporations) including federal changes made during 2012 and did not add any new non-conformity additions or subtractions. However, additions and subtractions created for prior non-conformity adjustments for issues such as bonus depreciation or the increased § 179 expenses are still in place. The instructions issued with the 2012 Arizona tax returns are correct. For a complete list of the additions and subtractions that apply to 2012 see the 2012 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
Arizona did not conform to a portion of the FAA Modernization and Reform Act (Public Law 112-95, Section 1106) that allows individuals that were qualified airline employees that received certain payments made by a commercial passenger airline carrier under the approval of a federal bankruptcy court in a case filed after 9/11/2001 and before 1/1/2007, to make contributions to a traditional Individual Retirement Account (IRA) and treat the contributions as if they were made in the year in which the airline payments were received. A Taxpayer that amends their federal tax returns due to this provision for any tax year prior to 2012 should not amend their Arizona return for those years. Instead the Arizona taxpayers will be allowed a credit on their 2013 Arizona individual income tax return based on the reduction in tax that would have occurred if they would have been allowed to amend their Arizona 2001 through 2011 returns for the provision in Public law 112-95, Section 1106.