Arizona Tax Compliance Map

Email: phx4ww@evershinecpa.com
or

Contact by phone in the Texas time zone:
The Engaging Manager Ian Lin, a well-English speaker
Tel: +1-510-996-2685

GLA – United States – Arizona Corporate Income Tax

GLA-US(AZ)-01 GLA Tax Entity

Question from client:
Is United States corporate income tax a federal income tax? A state income tax? Or is there a federal and states income tax?
What if the federal income tax and the states income tax are levied separately or levied together?
What is the standard tax rate? What is the special tax rate?

Answer from Evershine RD:
United States (U.S.) companies must pay both Federal Tax and State Tax.

Federal
Federal Corporate Income Tax Rate is 21%.
S corporation is exempt from federal income tax and exempt from paying taxes at the corporate level.

States – Arizona
In Arizona, the state legislature has authority to impose tax.
The state Constitution of Arizona does not contain any provision permitting localities to impose an income tax on corporations.
For tax year 2022, the Arizona corporate income tax rate is 4.9% and fixed dollar minimum corporate income tax is $50.
Arizona does not impose an alternative minimum corporate income tax on corporations.
In Arizona, C corporations are subject to corporate income tax.

GLA-US(AZ)-02 Registration

Question from client:
Which government unit is responsible for the collection of United States corporate income tax?
The registration of the country’s corporate income tax status, that is, the tax certificate number application procedure, paper certificate number application? Or online account application? URL?
What is the advance certificate number for applying for this certificate number?
Do I need to use the industrial and commercial certificate electronic card to apply?

Answer from Evershine RD:

Federal
Federal taxes are governed by Inland Revenue Service (IRS).
Employer Identification Number (EIN) serves as a tax ID number for organizations.
EIN can be registered online via www.irs.gov/ein and get the EIN immediately online.
It must be registered under the responsible party, who is someone in control and must be an individual.

States – Arizona
The Arizona Department of Revenue (ADOR) is the agency authorized to administer, collect taxes, issue regulations, prescribe forms and conduct investigations and hearings that are deemed necessary to administer the tax.
Register for AZ Taxes User account at https://www.aztaxes.gov/Home/WelcomeRegister.

GLA-US(AZ)-03 GLA Order (OD)

Question from client:
What is the order of United States corporate income tax return (information flow determines tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pays? At the same time as the declaration and payment?

Answer from Evershine RD:
Deposit first (DF). Pay by installment first and declare later.

GLA-US(AZ)-04 Mechanism of Filing (MOF)

Question from client:
What is the return method for United States corporate income tax return (information flow determines the tax base)?
Filing cycle: monthly? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: website URL?

Answer from Evershine RD:

Federal
Filing deadline for final corporate tax return:
C corporation – 15^th day of the 4th month following the fiscal year.
S corporation – 15^th day of the 3rd month following the fiscal year.

Filing form:
C corporation – 1120 (income tax), 1120-W (estimated tax)
S corporation – 1120S (income tax), 1120-W (estimated tax)

Filing method:
File returns either on paper or electronically.
If file electronically and choose to make their own income tax returns, purchase software approved for electronic filing and take steps to register and complete the IRS e-filing application. Should discuss various electronic filing methods with the software vendor.
Otherwise, check with a tax professional to prepare their electronic income tax returns earlier and ensure they are an IRS-authorized electronic document provider. Visit https://www.irs.gov/tax-professionals/e-file-provider-services

States – Arizona
Filing deadline for Final corporate tax return:
On or before the 15^th day of the 4^th month after the close of the tax year.
E-filing is a mandatory requirement. More than a dozen third-party software vendors are approved to submit income tax returns for companies.

Filing deadline for Estimated corporate tax return
On or before the 15^th day of the 4^th, 6^th, 9^th, and 12^th months of the taxable year.
If taxpayer makes its estimated tax payments by EFT, the taxpayer should not submit Form 120ES to the department.
It is calculated by way of lower of:

1. 90% of the tax shown on the return for the taxable year; or
2. 100% of the tax shown on the return of the corporation for the previous taxable year.

Estimated tax payments are made in 4 installments of 25% of the total estimated tax due for the tax year.

Filing Form:
Form 120 – Final tax return for C corporations.
Form 120A – Final tax return for wholly Arizona corporation that files on a separate company basis.
Form 120S – Final tax return for S corporations.
Form 120ES – Estimated corporate tax return.

Filing Method:
Login to https://www.aztaxes.gov/Home/Login for e-file of taxes.

GLA-US(AZ)-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for United States corporate income tax payment (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT? Or the above methods coexist?

Answer from Evershine RD:

Federal

Payment deadline for estimated corporate tax return (Form 1120-W):
15th day of the 4th, 6th, 9th, and 12th months of the tax year.
It is 25% of the corporation’s estimated total taxes for the current year or 25% of the corporation’s taxable income for the previous year (the latter option is not available to corporations with annual income of over $1 million).
Installment payments are not required if the estimated tax is less than $500.
Any corporation that is required to deposit estimated taxes must do so through electronic funds transfer. A U.S. bank account is not required for such transfers if other requirements are met.

Payment method:
EFTPS – Electronic Federal Tax Payment System via https://www.eftps.gov/eftps/.

States – Arizona
Payment deadline for Final corporate tax return:
On or before the 15^th day of the 4^th month after the close of the tax year.

Payment deadline for Estimated corporate tax
On or before the 15^th day of the 4^th, 6^th, 9^th, and 12^th months of the taxable year.
Corporation that has an income tax liability of at least $1,000 is required to pay estimated tax.

Payment method:
Arizona requires corporate taxpayers to pay tax via electronic funds transfer if they have actual or estimated tax liability of at least $500 for a tax year beginning in 2021 and thereafter.

Visit https://www.aztaxes.gov/Home/Login to make EFT payments using the following payment method:

1. Checking or savings account/ e-check/ Automated clearing house (ACH) debit. If use ACH, taxpayers must apply by submitting Form 10366, Electronic Funds Transfer (EFT) Disclosure Agreement.
2. Online credit card payment.
3. Payment through FedWire is allowed in emergency situations with prior approval by the department.

TPT – United States – Arizona Transaction Privilege and Use Tax

TPT-US(AZ)-01 VAT Tax Entity

Question from client:
Is United States Transaction Privilege Tax (TPT) levied at Federal? States? Or is there a federal plus States TPT?
What if the Federal and States TPT are levied separately or levied together?
What is the standard TPT rate? What are the special TPT rate?

Answer from Evershine RD:
There is no VAT in the United States.
The U.S. federal government currently does not levy either a national VAT or a national general sales tax. Nor do any states impose a VAT.
U.S. state TPT rates range between 2.9% and 7.25%.
Many municipalities also levy local sales taxes.

States – Arizona
The state of Arizona levies a Transaction Privilege Tax (TPT) on the privilege of doing business in the state.
While the TPT isn’t a sales tax, it is a tax on vendors for the privilege of doing business in the state that gets passed down to the customer.
ADOR collects the tax for the counties and cities; however, tax rates vary depending on the type of business activity, the city and county.
Total Combined TPT Rate = State/County + City Rates
Combined State/County Rates are shown on Table 1 of the TPT Tables.
City Tax Rates are shown on Table 2 of the TPT Tables.

Refer to the link below for TPT and Other Tax Rate Tables for February 1, 2022. https://azdor.gov/sites/default/files/media/TPT_RATETABLE_02012022.pdf.
For example, the combined State and County tax rate for transactions in the Amusement classification in Pima County is 6.1%, according to Table 1.
Whereas City tax rate is 2% according to Table 2. Hence, the total combined rate is 8.1%.

TPT-US(AZ)-02 Registration

Question from client:
Which government unit is responsible for the levying of Transaction Privilege Tax in United States?
The registration of United States Transaction Privilege Tax levy status, that is, the application procedure for Transaction Privilege Tax certificate number, paper certificate number application? Or online account application? URL?
What is the advance certificate number for applying for a Transaction Privilege Tax certificate number?
Do I need to use an industrial and commercial certificate electronic card to apply?

Answer from Evershine RD:
States customarily require sellers, vendors, and retailers to register with the state to obtain a permit to collect and remit sales and use tax, provided certain thresholds are met.
You need a sales permit when you have physical presence or economic nexus of $100,000 annual sales.
Businesses that conduct taxable transactions in several states are required to register separately in each state.

States – Arizona
The Arizona Department of Revenue (ADOR) is in charge with the collection of the state transaction privilege tax.
TPT license can be obtained by registering through https://www.aztaxes.gov/Home/Register, by mailing in the Joint Tax Application (JT-1) or submitting the JT-1 form in-person at a Department of Revenue office.
Whether applying online or by mail, expect 3-5 business days to receive a TPT License.

TPT-US(AZ)-03 WWT Order (OD)

Question from client:
What is the order of United States Transaction Privilege Tax declaration (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? First declare and then pay? At the same time as the declaration and payment?

Answer from Evershine RD:
Same period (SP): Filing of TPT return and pay the taxes.

TPT-US(AZ)-04 Mechanism of Filing (MOF)

Question from client:
What is the return method for United States Transaction Privilege Tax declaration (information flow determines the tax base)?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: Website URL?

Answer from Evershine RD:
U.S. state Transaction Privilege Tax laws most commonly require filings (with payment) monthly, although smaller sellers and special situations may be accorded less frequent filing intervals.
The most common times specified for filing and payment are 15 or 20 days after the close of a month.

States – Arizona
TPT filing frequency is determined by the amount of a business’ total estimated annual combined Arizona, county and municipal TPT liability.

Deadline

Forms and returns

The transaction privilege tax and use tax are to be paid and reported to the Department of Revenue using an Arizona Form TPT-2: Transaction Privilege, Use and Severance Tax Return.

Electronic filing
Filing TPT at www.AZTaxes.gov.
Taxpayers whose combined state and local TPT meets annual liability of $500 or more must file electronically.

TPT-US(AZ)-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for United States Sales and Use Tax payment (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
OCT payment at the bank counter? Or the above methods coexist?

Answer from Evershine RD:

States – Arizona
Deadline

Visit TPT at www.AZTaxes.gov to make payment.

Payment methods:

1. ACH Debit or E-Check
2. Credit Cards

Please be aware below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Phoenix Evershine BPO Service Limited Corp.
E-mail: phx4ww@evershinecpa.com
or
Contact by phone in the Texas time zone:
The Engaging Manager Ian Lin, a well-English speaker
Tel: +1-510-996-2685
or
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please send an email to HQ4phx@evershinecpa.com
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