Employer Withholding Filing Obligations
Every employer who compensates an employee for services performed within Arizona shall deduct and retain from the compensation an amount prescribed by the Department.
Employers withholding Arizona income tax from employees’ wages and salaries must register their Employee Identification Number (EIN) with the Arizona Department of Revenue (ADOR) to file withholding returns. Registration must be done by completing the Arizona Joint Tax Application, (Arizona Form JT-1), available once enrolled for an user account on AZTaxes.gov or here. Completing and submitting Arizona Form JT-1 also begins the process of registering the employer for unemployment compensation insurance with the Arizona Department of Economic Security.
Once registered with ADOR, the business' withholding ID number with the Arizona Department of Revenue is the company's EIN.
Arizona Unemployment Insurance Employer Account Number
The Arizona Department of Economic Security provides the Arizona unemployment insurance employer account number. If a company is determined liable to pay unemployment insurance (UI) taxes, a “Determination of Unemployment Insurance Liability” form will be mailed by the Arizona Department of Economic Security (DES). It will specify the Arizona UI employer account number. See DES' website for more information on their process: https://des.az.gov/content/applying-unemployment-insurance-tax-account-number
If a letter from DES is not received, please contact DES to check on the status of the UI employer account number.
Arizona-based businesses should visit Business One Stop (B1S) if forming their business for the first time.
Arizona Business One Stop is an online portal that provides a single online location with personalized tools to plan, start, grow, move and close businesses in Arizona. It is a secure digital experience that does not require in-person interaction.
Please note: New Business One Stop TPT licenses submissions will direct you to pay at AZTaxes.gov. TPT filings, payments, and renewals are only available at AZTaxes.gov at this time.
Remitting Amounts Withheld to the Department
Employers withholding Arizona income tax from their employees’ compensation must remit those amounts to the Department. Several deposit schedules may apply to the employer. The schedule an employer must use will depend on the amount of Arizona income tax withheld.
- Annually: An employer whose previous 4 quarter Arizona withholding average is less than $200 (and who meets additional criteria).
- Quarterly: An employer whose previous 4 quarter Arizona withholding average is more than $200 but less than or equal to $1,500.
- Monthly, Semi-weekly, or Next Business Day: An employer whose previous 4 quarter Arizona withholding average is more than $1,500, must deposit its Arizona withholding at the same time it makes its federal withholding deposit.
See Withholding Tax Procedure (WTP) 16-1, Procedure for Determining When an Employer Must Remit Arizona Withholding Tax, for information on how to determine which deposit schedule applies to you.
Payment by Electronic Funds Transfer
Employers are required to pay their tax liability by electronic funds transfer (EFT) if the employer owes $500 or more for any taxable year beginning from and after December 31, 2020.
Arizona does not offer a general withholding electronic filing or electronic payment waiver for the 2022 tax year and beyond.
NOTE: An employer who is required to pay by EFT but who fails to do so is subject to a penalty of 5% of the amount of the payment not made by EFT. See A.R.S. § 42-1125(O).
For additional information on electronic funds transfer, refer to A.R.S. § 42‑1129 and the related Arizona Administrative Code rules (A.A.C. R15-10-301 through R15-10-307) for detailed information.
Electronic Filing of Withholding Tax Returns
For the 2022 tax year and beyond, all W-2s are required to be submitted by electronic methods. For information on electronically filing withholding returns, click here.
NOTE: Arizona law states that all amounts withheld are to be treated as if the withholding was from wages paid to an employee. If you file federal Form 941 to report federal withholding on Arizona wages and federal Form 945 to report federal withholding on Arizona non-wage payments for the same EIN, file one withholding return to reconcile the total Arizona withholding for the reporting period. Do not file more than one original withholding return for the same EIN for the same reporting period.
Arizona Form A1-APR, Arizona Annual Payment Withholding Tax Return
Employers and other entities that pay Arizona income tax withheld on an annual basis must File Arizona Form A1-APR to pay the income tax withheld and to reconcile their payments for the year. Arizona Form A1-APR is due January 31 of the year following the calendar year for which Arizona income tax was withheld. Submit federal Forms W-2 and W-2c reporting Arizona wages and/or Arizona income tax withheld, and federal Forms W-2G and 1099 reporting Arizona income tax withheld, with Arizona Form A1-APR.
If the Arizona Annual Reconciliation form (Form A1-R or Form A1-APR) was filed electronically, any federal attachments mailed to the Department (Optical Media or paper) should be attached to a paper Form A1-T.
NOTE: If January 31 falls on a Saturday, Sunday or legal holiday, the return is considered timely if filed by the next business day.
Employers may apply for a 30-day extension of time to file Arizona Form A1-APR. Employers must show good cause when requesting an extension. Mail the extension request before January 31 of the next year. For details on requesting an extension, see WTP 11-1, Procedure for Requesting Extension of the Filing Deadline for Annual Withholding Returns.
NOTE: The extension of time to file Arizona Form A1-R also applies to federal Forms W-2, W-2c, W-2G, and 1099. The state copies of the federal forms are an integral part of the reconciliation required on these forms. The extension granted to file Arizona Form A1-APR also applies to the state copies of the federal forms.
Arizona Form A1-QRT, Quarterly Withholding Tax Return
Employers required to make Arizona withholding payments on a quarterly, monthly, semi-weekly, or one-banking day basis file Arizona Form A1-QRT. File Arizona Form A1-QRT quarterly to reconcile Arizona withholding payments made during the calendar quarter. An employer with zero withholding tax liability for the quarter must file Arizona Form A1-QRT for that quarter.
The due dates to file Arizona Form A1-QRT are:
- April 30, for the 1st quarter,
- July 31, for the 2nd quarter,
- October 31, for the 3rd quarter, and
- January 31, for the 4th quarter.
Extended due dates are available to employers that have made every payment on time for the previous quarter. Those employers have an additional 10 days in which to file Arizona Form A1-QRT.
The extended due dates are:
- May 10, for the 1st quarter,
- August 10, for the 2nd quarter,
- November 10, for the 3rd quarter, and
- February 10, for the 4th quarter.
NOTE: If any due date falls on a Saturday, Sunday, or legal holiday, the return is considered timely if filed the next business day.
Arizona Form A1-R, Withholding Reconciliation Tax Return
Employers filing Arizona Form A1-QRT file Arizona Form A1-R to reconcile the amount of tax withheld during the year to the amount of tax liability reported during the year. It is also used to transmit the state copies of these federal forms.
Arizona Form A1-R is due January 31 of the year following the calendar year for which Arizona income tax was withheld. Submit federal Forms W-2 and W-2c reporting Arizona wages and/or Arizona income tax withheld, and federal Forms W-2G and 1099 reporting Arizona income tax withheld, with Arizona Form A1-APR.
If the Arizona Annual Reconciliation form (Form A1-R or Form A1-APR) was filed electronically, any federal attachments mailed to the Department (Optical Media or paper) should be attached to a paper Form A1-T.
NOTE: If January 31 falls on a Saturday, Sunday or legal holiday, the return is considered timely if filed by the next business day.
Employers may apply for a 30-day extension of time to file Arizona Form A1-R. Employers must show good cause when requesting an extension. Mail the extension request before January 31 of the next year. For details on requesting an extension, see WTP 11-1, Procedure for Requesting Extension of the Filing Deadline for Annual Withholding Returns.
NOTE: The extension of time to file Form A1-R also applies to federal Forms W-2, W-2c, W-2G, and 1099. The state copies of the federal forms are an integral part of the reconciliation required on these forms. The extension granted to file Form A1-R also applies to the state copies of the federal forms.
Filing an Amended Withholding Return
If needing to amend a withholding form, check Box A, “Amended Return” and complete the form using your corrected withholding information. Complete Part 5 to explain why you are amending your return.
If you amend a return for a quarter in a prior calendar year, you must also file an amended Form A1-R for that year. Include the state copies of federal Forms W-2, W-2c, W-2G, and 1099 with the amended Form A1-R.
Unless the employer was granted a waiver to file its original return by paper or was directed by the IRS or the Department to file the original withholding return by paper, amended the withholding shall be submitted electronically using either AZFSET or a registered transmitter.
NOTE: Amended withholding forms cannot be submitted through AZTaxes. If the AZTaxes.gov data entry method is used to file the original return, the amended return must be filed by paper. Mail the amended return to the address indicated in the instructions.
Withholding Returns and Federal Forms W-2 and 1099
Federal Forms W-2 and W-2c reporting Arizona wages and/or Arizona income tax withholding, and federal Forms W-2G and 1099 reporting Arizona income tax withheld are an integral part of the reconciliation for Arizona Form A1-R, Withholding Reconciliation Tax Return, and for Arizona Form A1-APR, Annual Payment and Withholding Tax Return and must be included with the return. The filing due date for the federal forms is on or before January 31, or the extended due date of the return. Beginning in 2020, federal Forms W-2, W-2c, W-2G, and 1099s are to be electronically submitted to the Department.
For more information refer to Publication 701.
Please note:
At present, ADOR is not accepting federal Form 1099-NEC electronically. Therefore, each federal Form 1099-NEC required to be submitted to ADOR must be submitted as a .txt file on Optical Media (as defined in Publication 701) or by a paper document. If providing the information by Optical Media, ensure State Income Tax Withheld is included in the file.
ADOR only requires submission of Form 1099 that reports Arizona income tax withheld. Taxpayers only need to submit Form 1099-NEC if there is Arizona withheld.
All federal attachments (including Form 1099-NEC) are due with Arizona reconciliation forms.
W-2 Adjustment Verification
If ADOR receives an Arizona income tax return and finds the Social Security Number (SSN) and/or name on the W-2 form do not match the identification number and/or name on the tax return, ADOR will need to verify the withholding amount shown on the return before issuing a tax refund.
To accomplish the verification, ADOR will need the following information:
- A copy of the taxpayer’s SSN card or letter from the Social Security Administration that identifies him or her.
- Additional identifying information that verifies the taxpayer. ADOR will determine if this information is sufficient to allow a refund.
A taxpayer can also request each employer to complete an Employer Affidavit. To initiate the request, the taxpayer will:
- Complete the top employee authorization portion of the Employer Affidavit; and,
- Submit the form via mail to:
Arizona Department of Revenue
PO Box 29099
Phoenix, AZ 85038-9099
Or email it to [email protected].
The Department will then send the Employer Affidavit to the taxpayer’s employer(s) for wage and withholding verification. Upon receiving the information from the taxpayer’s employer(s), ADOR will complete the review and contact the taxpayer with the determination.
If the taxpayer agrees with the changes on the Tax Correction Notice (TCN) and a tax balance is due, the taxpayer will remit payment with the top portion of page 1 of the TCN to:
Arizona Department of Revenue
PO Box 29085
Phoenix, AZ 85038-9085