Withholding Highlights

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2020 HIGHLIGHTS

Electronic Filing of Withholding Tax Returns

Withholding returns shall be filed electronically for taxable years beginning from and after December 31, 2019, or when the department establishes an electronic filing program.

For 2020, the department has three methods by which employers may file Form A1-APR electronically. These methods are:

  • An employer may register at https://efile.aztaxes.gov/AZFSETPortal [AZ Web File (ASFSET)] to bulk-file its return by uploading a .csv file.
  • An employer may register at https://aztaxes.gov/Home/Page (AZTaxes) and use the data input method to submit its return.
  • Registered transmitters of AZ Web File (AZFSET) can bulk-file using the transmission method.

 

Any employer who is required to file its withholding return electronically may apply to the director for an annual waiver from the electronic filing requirement pursuant to Arizona Revised Statutes (A.R.S) § 43-325(F). The waiver may be granted, which may be renewed for one subsequent year, if any of the following apply:

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

 

A waiver is not required if the withholding return cannot be electronically filed for reasons beyond the employer’s control, including situations in which the employer was instructed by the Internal Revenue Service (IRS), or the department to file by paper.

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

 

Submitting Federal Forms W-2, W-2c, W-2G and 1099 (with Arizona withholding) to the Department

Federal Forms W-2, W-2c, W-2G and 1099 are an integral part of the reconciliation process required for Arizona Form A1-APR.

  • Submit all federal Forms W-2 and W-2c reporting Arizona wages paid and/or Arizona income tax withheld.
  • Submit federal Forms W-2G and/or 1099 reporting Arizona income tax withheld. Federal Forms W-2G and 1099 NOT reporting Arizona income tax withheld are not required to be submitted to the department.

 

For calendar year 2020, an employer may submit federal Forms W-2, W-2c, W-2G or 1099 to the department by:

  • Logging into AZTaxes at https://aztaxes.gov/Home/Page to use the data input method, or to upload the supported federal forms as a .txt file.
  • Logging into AZ Web File (AZFSET) at https://efile.aztaxes.gov/AZFSETPortal to upload the supported federal forms as a .txt file.
  • Submitting the federal information by paper or on a CD, DVD or flash drive (Optical Media). If submitting by Optical Media, see Pub 701 for information.

NOTE: The department does not support the electronic filing of all federal withholding forms (e.g. W-2 series, 1099 series). See Pub 701 for a list of the required federal withholding forms that are currently supported by the department for electronic filing. Any unsupported federal forms reporting Arizona wages or Arizona income tax withheld must be filed as a paper copy or as Optical Media using Form A1-T.

Employers filing Form A1-R or Form A1-APR electronically, may submit the required federal forms:

  • Electronically through AZTaxes or AZFSET, or,
  • By submitting Form A1-T with the required federal forms attached as paper copies or optical media. If submitting Form A1-T, do not include a paper copy of Form A1-R or Form A1-APR. If submitting by Optical Media, see Pub 701 for information.

 

Employers filing Form A1-R or Form A1-APR by paper must submit the required federal forms as paper copies or as Optical Media attached to Form A1-R or Form A1-APR.

 

Electronic Funds Transfer

Employers are required to pay their tax liability by electronic funds transfer (EFT) if the corporation owes:

  • $5,000 or more for any taxable year beginning from and after December 31, 2019, through December 31, 2020.
  • $500 or more for any taxable year beginning from and after December 31, 2020.

 

An employer may apply to the director for an annual waiver from the electronic payment requirement. The application must be received by December 31 of each year. The director may grant the waiver if any of the following applies:

  • The employer has no computer.
  • The employer has no internet access.
  • Any other circumstance considered to be worthy by the director exists, including:
    • The employer has a sustained record of timely payments, and
    • No delinquent tax account with the department.

 

To request a waiver, submit Form 292, Electronic Filing and Payment Waiver Application, to the department. Form 292 is available at: https://azdor.gov/forms/other-forms/electronic-filing-and-payment-waiver-application.

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.