Partnership Highlights

2019 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.

 

Electronic Filing of Partnership Tax Returns
Partnership tax returns shall be filed electronically for taxable years beginning from and after December 31, 2019, or when the department establishes an electronic filing program. Any corporate taxpayer who is required to file its income tax return electronically may apply to the director for an annual waiver from the electronic filing requirement. The waiver may be granted, which may be renewed for one subsequent year, if any of the following apply:

  • The partnership has no computer.
  • The partnership has no internet access.
  • Any other circumstance considered to be worthy by the director.

 

Waivers are granted on an annual basis and expire at the end of the requested tax year. Waivers must be renewed each calendar year. If a waiver is not renewed, you will be subject to statutory electronic filing and payment requirements at the expiration of your waiver. 

A waiver is not required if the partnership tax return cannot be electronically filed for reasons beyond the taxpayer’s control, including situations in which the taxpayer was instructed by either the Internal Revenue Service or the Arizona Department of Revenue to file by paper. Electronic filing of Arizona partnership tax returns is available for the 2019 taxable year. Partnerships may elect to file their Arizona partnership tax return electronically. Please see the department’s website at  www.azdor.gov for a list of approved software vendors.

Please contact the department at [email protected] if you need assistance in electronically submitting your Arizona partnership tax return.