Arizona TPT Electronic Filing Threshold Lowers on January 1, 2021

Effective January 1, 2021, Arizona’s threshold for Transaction Privilege Tax (TPT) electronic filing and paying lowers to $500. Businesses with an annual TPT and/or use tax liability of $500 or more during the prior calendar year will be required to file and pay electronically starting February 2021 for the January 2021 filing period.

This is part of a planned lowering of the electronic filing threshold. Per enacted legislation, the original electronic filing threshold was $20,000 effective January 1, 2018. The threshold lowered to $10,000 effective January 1, 2019, $5,000 effective January 1, 2020, and now lowers to $500 effective January 1, 2021. See our previous news item Arizona Amends Electronic Filing Thresholds for Taxpayers for more info on the legislation.

Arizona provides taxpayer benefits for filing electronically. Taxpayers filing TPT electronically during a calendar year are able to claim a credit of 1.2% of state tax due, with a total calendar year credit limit of $12,000. Note that Arizona imposes the following penalties for not filing and paying electronically:

• Penalty of 5% of the tax due for filing a paper return. Minimum penalty is $25, including filings with zero liability.
• Penalty of 5% of the amount of payment made by check or cash.
• Penalty of 4.5% of the tax required to be shown on the return for each month or fraction of a month the return is late. Minimum of $25 and a maximum 25% of the tax due or $100 per return, whichever is greater.

To file and pay Arizona taxes electronically, visit www.aztaxes.gov. The Arizona DOR notes that if a taxpayer’s estimated annual combined Arizona, county, and municipal TPT liability is less than $2,000, they should consider adjusting their filing frequency to annually. If the change to annual filing is made in 2020, the change will occur for the 2021 filing period.

Affected taxpayers should take note of the threshold change in order to avoid incurring potentially costly penalties. (News & Notices, October 6, 2020, Arizona Department of Revenue website)