Tax Insights

Your Guide to State, Local, Federal, Estate + International Taxation

Arizona corporate e-file becomes mandatory

The march to e-filing tax returns has been a slow one. In fact, it started over 30 years ago in 1986 when the Internal Revenue Service (IRS) began a small test program where only five tax preparers from the metropolitan areas of Cincinnati, Raleigh-Durham and Phoenix agreed to participate. I was actually doing taxes in Phoenix in 1986 so I apparently missed my chance at be an e-filing pioneer by not being selected. But then that’s probably a good thing as I was pretty green back then.

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Legislation in Arizona signed into law in 2017 makes it mandatory for corporations starting in 2021 to e-file their income tax returns for tax year 2020. Likewise, taxpayers are statutorily obligated to file and pay fiduciary and withholding tax electronically. Beginning in 2021, businesses with an annual transaction privilege and/or use tax (TPT) liability of $500 or more during the prior calendar year must file and pay TPT electronically.  Additionally, businesses with $125 average quarterly liability for withholding tax during the prior tax year are required to file and pay withholding electronically.

Getting individuals and businesses to file and pay taxes electronically at both the state and federal level has been a slow-motion endeavor for many reasons. Technical tax issues, technology issues, budget issues, security issues, resistance to change and more. But it seems that sooner or later, paper filings and payments will be a thing of that past for all matter of taxes whether we like it or not.  If I long for the “good old days”, I’ll just have to drive my 65 Ford to work. But then that ride can be pretty bumpy!

Contact us if you have any questions.

Dale Jensen, CPA