Filing Notices of Penalties and Interest

Individuals who plan on filing their taxes late may incur a late file penalty of 4.5 percent of the tax required to be shown on the return for each month or fraction of a month the return is late.

The late payment penalty is .5 percent of the tax due on the return each month or fraction of a month the payment is late. Please see here for more information about penalties.

Moreover, when filing under an extension, taxpayers must pay 90 percent of the tax shown on their returns by the original due date of the return. If 90 percent is not paid, an extension underpayment penalty will be charged from the original due date until the date paid. This penalty is .5 percent of the tax unpaid for each month, or fraction of a month the tax remains unpaid.

Individuals who fail to make a required estimated tax payment, underpayment of the correct amount or late payment will be charged an underpayment of estimated tax penalty. To determine the amount of penalty and interest, taxpayers must complete Arizona Form 221.

For unpaid tax situations, interest is charged on any unpaid tax from the due date of the return until the date of payment. The Arizona interest rate is the same as the federal rate.

Taxpayers should also note that they can face penalties for underpayment of estimated taxes, even when getting a refund. If their Arizona gross income exceeds the prescribed thresholds for the current or prior taxable year for a person’s filing status, Arizona law requires that individual make estimated payments to cover the amount not covered by withholding during the taxable year.

Estimated tax payments are due April 15, June 17, September 16, 2024, and January 15, 2025. Individuals who did not make these payments on a timely basis may owe a penalty.

Also, for those individuals who make a tax payment and his or her bank fails to honor that payment, a fee of $50 is charged for each payment not paid or dishonored by a bank or other depository institution. This includes payment by check, draft, negotiable order of withdrawal or similar instrument, or an electronic funds transfer (EFT), automated clearing house (ACH) debit or ACH credit drawn on a bank or other depository institution.