Penalty Abatement

The Penalty Review Unit (PRU) administers the penalty system Arizona designed to ensure a fair and consistent program of tax compliance. Statutes provide that the Department may abate penalties for reasonable cause. For purposes of abating the penalties imposed under statute, “reasonable cause” means the taxpayer exercised ordinary business care and prudence, but was unable to file the return, furnish the requested information or provide for payment of a tax liability within the prescribed time.

A request for the abatement of a penalty, or penalties, can be requested to the Penalty Review Unit with the Arizona Form 290 – Request for Penalty Abatement. The account must be in compliance and provide clear and concise information to allow for a prompt reply by the Department.  A decision is based on information and evidence provided with the request.  Therefore, documentation that supports the basis of your request must be included.  Requests without supporting documentation may be denied.

A request for abatement of audit assessed penalties should be directed to the appropriate audit unit. Generally, an audit assessment notification will provide the auditor name and contact information.

Penalties and/or Fees Not Considered for Abatement:

  • Interest
  • Transaction privilege tax licensing fees
  • Audit assessed penalties
  • Reconsideration of any disallowed accounting credit(s) for transaction privilege tax

Please note: For Property Management Companies, please visit the PMC Resource Page for additional information.

A taxpayer cannot settle through the penalty abatement process if disputing a penalty assessment with supporting documentation. The PRU reviews the requests of penalties appropriately assessed.

Working with ADOR on Penalty Disputes

Penalty disputes can be settled with ADOR. Taxpayers can find contact information on the notice received, or they may contact one of the units below:

Customer Care

Local:  (602) 255-3381

Toll-free:  (800) 352-4090

 

Arizona Department of Revenue

Customer Care

PO Box 29086

Phoenix, AZ 85038-9086

Taxpayers can also learn more about the penalty abatement process in the Department’s Publication 700, Penalty Abatement. They can also read about the standards for abatement of penalties based on reasonable cause in General Tax Ruling (GTR) 04-2. 

Additionally, taxpayers may call the PRU’s general line at (602) 716-7802; however, the Department does not accept penalty abatement requests by telephone, nor are decisions rendered by walk-in or telephone contact.

Starting a Request for Penalty Abatement

To start a request for a penalty abatement, taxpayers will fill out Arizona Form 290, print and see how to file the request below. It is required that the account is in compliance, meaning there are no delinquent tax returns for tax accounts, and all non-audit tax liabilities are paid when making the request. Incomplete information and/or non-compliance may result in the request being returned. The request must be signed by an authorized individual, or the request cannot be reviewed. To see who is authorized to make the request, see Who Must Sign, on Part 4, of the Arizona Form 290 instructions.

Taxpayers will then file in one of the following ways:

By fax to:

(602) 716-6787

By mail to:

Arizona Department of Revenue
Penalty Review Unit
1600 West Monroe Street
Phoenix, AZ 85007-2612

By email to:

[email protected]

By drop-off at an Arizona Department of Revenue location

Delays on Penalty Review Unit Decisions

Some of the most common reasons include the following:

  • The account is non-compliant. Tax liability must be paid first before requesting abatement.
  • There are delinquent returns that must be filed and processed.
  • The person requesting abatement is not an authorized individual. See Who Must Sign, on Part 4, of the Arizona Form 290 instructions.
  • There is no printed name on the request, and the signature is illegible to verify who is making the request.
  • The specific period(s) are not individually listed. If more than one period is being requested, list each period separately.
  • The Tax Identification Number for the accounts are not shown on the request.
  • The penalty or fee being requested is not considered for abatement. See what penalties, and/or fees, are not considered above.
  • The inquiry is a billing dispute.

Helpful links:

Arizona Form 290 – Request for Penalty Abatement

Publication 700 – Penalty Abatement

General Tax Ruling (GTR) 04-2

Form 285 General Disclosure/Representation Authorization Form