Bond for Contractors

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Contractors engaging in taxable construction projects or activities are required to obtain a TPT license. New contractors and out-of-state contractors are required to be licensed with the Registrar of Contractors and, in most cases, must post a bond with the Arizona Department of Revenue (ADOR).  Because of the bonding requirements for a new contractor, the online application is not allowed. The Arizona Joint Tax Application (JT-1) used to apply for a TPT License (and other licenses) may be accessed by clicking the link below. Submit the appropriate bonding paperwork with the paper JT-1; include a copy of the bond.

Download Arizona Joint Tax Application (JT-1) Form (PDF) 

Download Taxpayer Bond for Contractors

 

Bonding Requirements

New contractors, out-of-state contractors without a principal business location in Arizona, and contractors who have displayed a history of TPT noncompliance are generally required to provide a bond to the Department to ensure payment of taxes.   A principal place of business is defined by statute to mean that in the preceding 12 month period a contractor has maintained a facility in Arizona with at least one full-time employee.

  • A.R.S. § 42-5006 requires a contractor to maintain the bond for at least two years if the contractor conducted business for less than one year in Arizona, or if the contractor’s principal place of business is outside of Arizona.  The bond amount ranges depending on the type of contracting being performed. 

 

Bond Amounts - A.C.C. R15-5-601(B).

The businesses subject to these bonds are grouped in accordance with the standard industry classifications by average business activity. The business classes and bond amounts are as follows:

  • $2,000 for:
    • General contractors of residential buildings other than single family;
    • Operative builders;
    • Plumbing, air conditioning, and heating, except electric;
    • Painting, paper hanging;
    • Decorating; f. Electrical work;
    • Masonry stonework and other stonework;
    • Plastering, drywall, acoustical and insulation work;
    • Terrazzo, tile, marble and mosaic work;
    • Carpentry;
    • Floor laying and other floor work;
    • Roofing and sheet metal work;
    • Concrete work;
    • Water well drilling;
    • Structural steel erection;
    • Glass and glazing work;
    • Excavating and foundation work;
    • Wrecking and demolition work;
    • Installation and erection of building equipment;
    • Special trade contractors; and
    • Manufacturers of mobile homes.
  • $7,000 for:
    • General contractors of single family housing;
    • Water, sewer, pipeline, communication and powerline construction.
  • $17,000 for:
    • General contractors of industrial buildings and warehouses;
    • General contractors nonresidential buildings other than single family;
    • Highways and street construction except elevated highways.
  • $22,000 for:
    • Heavy construction;
    • Bridge construction;
    • Tunnel construction; and
    • Elevated highway construction.
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Taxpayer Bond for Contractors Form 74-4023
Bond Exemption Application Form 10205

 

Paperless Annual Bond Exemption Certificates

The Arizona Department of Revenue is no longer issuing paper Annual Bond Exemption Certificates to in-state contractors in good standing. Instead, the Department provides an electronic listing of qualified exempt contractors to each city.

When applying for a building permit, the local city building authorities may confirm with their city that a contractor is on the exemption list.

If not on the list, the city will not issue the permit without certification from the Department of Revenue that the contractor has satisfied bonding requirements as set forth in A.R.S. § 42-5007 or is exempt from bonding obligations for the project. The Department may still issue a one-time exemption certificate for individual projects to qualified contractors.

Benefits of this e-process include contractors no longer having to wait for a mailing from ADOR, cities having access to all qualified contractors through an online information access system and the savings of taxpayer dollars from reduced processing time and supplies for the Department of Revenue.

 

Publication 539 - Taxpayer Bonds

 

Annual Bond Exemption

 

What is an Annual Bond Exemption?

An Annual Bond Exemption serves as documentation to city building authorities that contractors have met the bonding requirements under A.R.S. 42-5007 for projects valued at $50,000 or more.

 

Who may qualify for an Annual Bond Exemption?

To qualify for an annual exemption you must meet all of the following criteri

  1. Start date of transaction privilege license must be at least one year prior to the current date.
  2. Cannot have more than two delinquencies in the past 12 consecutive months.
  3. No more than $500 in tax liabilities currently due.
  4. Mailing or physical address must be an Arizona address.
  5. A minimum of $10.00 paid in tax liability for the past 12 consecutive months.

 

How do I know if I qualified for Annual Bond Exemption?

You can email [email protected] or contact the city building authorities as they have access to the list of qualified contractors.

 

Will I receive an Annual Bond Exemption Certificate?

No. Annual Bond Exemption Certificates are no longer mailed out. 

 

Will I be notified if I did not make it on the Annual Bond Exemption list?

You can email [email protected] to determine if you did not qualify for the Annual Bond Exemption list and the reason(s) why.

 

How will the building authorities know if I qualified?

All building authorities will have access to a list of qualified Annual Bond Exemption recipients.

 

What if a city informs me that I am not on the list?

Contractors that did not qualify for the Annual Bond Exemption would need to submit a one-time bond exemption request to [email protected].

This request must include:

  1. Company Name
  2. Company TPT License Number
  3. Project Address
  4. Value of Contract
  5. Estimated completion date of the project
  6. Business contact name and phone number

 

If I am not on the list, can I be added?

No. The Annual Bond Exemption list is only run once a year.

 

When does the Annual Bond Exemption expire?

The Annual Bond Exemption expires on July 31 of each calendar year.

 

What is the effective date of the Annual Bond Exemption?

The effective date of the Annual Bond Exemption is August 1 of each calendar year.

 

If I didn’t qualify for the Annual Bond Exemption list this year, can I qualify for the list next year?

Yes. On August 1 when the list is run, if the contractor meets all the qualifying criteria, the contractor will be placed on the list.

 

For taxpayer bond information:

Call (602) 716-6056 or

Write to:
Arizona Department of Revenue
Taxpayer Information & Assistance
1600 W Monroe Phoenix, AZ 85007

Email: [email protected]

 

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