Arizona’s new electronic filing and payment requirements

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

electronic filing, electronic payment, ADOR, Arizona, taxArizona Governor Doug Ducey has recently signed H.B. 2280 which is a bill that will phase in electronic filing and payment requirements for almost all Arizona taxpayers from now until 2021. Some main groups that are affected by this law are those who pay state and local sales and use taxes, corporate income tax, tax return preparers and those who file partnership and fiduciary returns.

Since January 1, 2017, taxpayers who conduct business in two or more locations have been required to file their returns electronically. However, with this bill, which went into effective August 9, 2017, taxpayers regardless of the number of locations will be required to pay electronically if their anticipated tax liability in the current year or their actual tax liability from the previous year are at least the following:

  • $20,000 beginning January 1, 2018
  • $10,000 beginning January 1, 2019
  • $5,000 beginning January 1, 2020
  • $500 beginning January 1, 2021

If you are required to make an electronic payment and do not, you will be subject to a 5% penalty.

Corporate income tax, partnership and fiduciary tax returns will be required for electronic filing at the later date of January 1, 2021 or until the electronic filing system is implemented.

This bill requires those tax return preparers of individual tax returns who prepare more than 10 returns for the tax year 2018 or later to electronically file unless a paper return is elected by the taxpayer. It disallows the preparers from charging a separate fee to the taxpayer for the electronic filing of the return when using the Arizona Department of Revenue’s electronic filing program.

If you are against the electronic filing or have clients that are against it, here is a little silver lining. Those taxpayers that do not have computer or internet access are allowed to file an application before December 31 of each year to receive a waiver to the electronic filing requirements.

Also, as motivation, if you are a taxpayer who takes advantage of the accounting and reporting expense credit on your return, the state has increased the credit for those who electronically file from 1% to 1.2% of tax due not to exceed $12,000 in any calendar year.

Kelsey Olsen