Arizona Estimated Tax Notice for Partnerships and S Corporations Making the Pass-Through Entity Tax Election

First and second quarter Arizona estimated tax payments are not required in 2022 for partnerships or S corporations making the pass-through entity election under A.R.S. § 43-1014.

A.R.S. § 43-1014(B)(3) requires partnerships and S corporations to pay estimated tax pursuant to  A.R.S. § 43-581.  A.R.S. § 43-581(C) provides that, for taxable years beginning from and after December 31, 2021, an entity that is treated as a partnership or S corporation for federal income tax purposes that elects to pay the tax under A.R.S. § 43-1014 and whose taxable income for the taxable year exceeds $150,000 in the preceding taxable year must make estimated tax payments during the taxable year in a manner consistent with how estimated individual income tax payments are made. Individuals subject to estimated tax payments in Arizona must make quarterly payments by April 15, June 15, and September 15 of the current year and January 15 of the following year.

Because ADOR is currently unable to process electronic estimated tax payments for the new pass-through entity tax, the first two estimated tax payments of 2022 due in April and June will be waived for partnerships and S corporations subject to estimated tax payments under A.R.S. § 43-581(C).  Partnership and S corporations that do not make the April and June estimated tax payments will not incur a penalty under A.R.S. § 43-1125(Q): ADOR will notify affected taxpayers of any required action needed to request abatement.

ADOR anticipates being able to accept electronic estimated payments in time for the third quarter payment due on September 15, 2022, at which time a minimum payment of 25% of the entity's estimated tax for the 2022 tax year will be due.

Wednesday, March 2, 2022