Partnership Highlights

2018 HIGHLIGHTS

Partnership returns

A partnership that has no Arizona income, deductions or credits for a taxable year is not required to file a partnership return for that year.

Apportionment Changes

All non-air carrier taxpayers may select an apportionment ratio where the sales factor is weighted at 100% and the property and payroll factors are not included in the calculation.

A multistate service provider may make a binding election to determine Arizona sales of services for purposes of the sales factor using a calculation based on 100% of the market sales. See Schedule MSP and the related instructions for more information including a definition of “multistate service provider”.

Inclusion of federal return with Arizona return.

The department no longer requests you include a copy of your federal return with your Arizona return.

Bipartisan Budget Act of 2015 (P.L. 114-74)

For taxable years beginning after December 31, 2017, partnerships must elect NOT to participate in the federal imputed underpayment assessment program. Only those partnerships that issue 100 or fewer statements under 6031(b) of the Internal Revenue Code, with respect to its partners may elect not to participate.

• If a partnership is issued a federal imputed underpayment adjustment by the IRS, that partnership must file the federal changes to Arizona using Arizona Form 165PA.
• If a partnership does NOT receive a federal imputed underpayment assessment from the IRS, it will file its federal changes to Arizona on an amended Arizona Form 165.