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                                                                                                              Arizona Form 
2020       Credit for Qualified Facilities                                                                              349             
                                                                        For example, Company A, is a calendar year filer. Company A 
CONTACTS FOR QUALIFIED FACILITY TAX                                     received pre-approval from Commerce for a qualified facility on 
INCENTIVES          PROGRAM                                             March 11, 2019, and received its post-approval on March 14, 
Arizona   Commerce Authority                                            2020. Because Company A completed everything necessary to 
 Application forms  Program guidelines                                earn the credit in calendar year 2020, the first fifth of the credit 
                                                                        must be claimed on the tax return for calendar year 2020. 
 Website: www.azcommerce.com                                             
                                                                        NOTE:    Each fifth of the credit for qualified facilities must be 
Program   Manager                           (602) 845-1200              claimed on a timely filed original income tax return, including 
Arizona   Department of Revenue                                         extensions.  If you do not claim this credit on a timely filed 
 Tax forms and instructions   Information and assistance              original return, you cannot claim this credit on an amended 
                                                                        return.  Failing to claim this credit on a timely filed return will 
 Website: www.azdor.gov 
                                                                        result in loss of this credit for that taxable year.   
Taxpayer assistance                         (602) 255-3381               
                                                                        The taxpayer may claim all five annual installments of a credit 
From  area codes 520 and 928, toll-free     (800) 352-4090              that was preapproved before January 1, 2031 by the Arizona 
                                                                        Commerce Authority notwithstanding any intervening repeal or 
                General Instructions                                     other termination of the credit.  
Arizona Revised Statutes (A.R.S.) §§ 43-1083.03 and 43-1164.04 
provide refundable individual and corporate income tax credits          The amount of the credit for qualified facilities a taxpayer may 
                                                                        claim can never exceed the amount indicated  on the  post-
 for expanding or locating a qualified facility in this state.  
                                                                        approval from Commerce.  
NOTE: Only capital investments in a qualified facility that are 
made not more than thirty-six months before submitting an               NOTE: The business must submit a copy of the Certification of 
application for preapproval are included in the computation of          Qualification  (Certification)  from Commerce  with Form 349 
                                                                        when  claiming the credit.  
the  credit.   
                                                                        Co-owners of a business, including partners in a partnership and 
A “qualified facility” means a facility in this state that devotes at 
                                                                        shareholders of an S corporation, may each claim only the pro 
least 80% of the property and payroll at the facility to one or more 
                                                                        rata share of the apportioned credit based on ownership interest. 
of the following:  
                                                                        The total of the apportioned credits allowed to all such owners 
•    Qualified manufacturing,                                           may not exceed the amount that would have been allowed for a 
•    Qualified headquarters,                                             sole owner of the business. 
•    Qualified research.                                                The credit is available to an exempt organization that is subject to 
This credit is effective for taxable years beginning from and after     corporate income tax on unrelated business taxable income 
December 31, 2012, through December 31, 2030, and is limited            (UBTI). The credit must result from the activities that generate 
to 10% of the lesser of:                                                 UBTI. 
•    The  taxpayer's total capital investment in the qualified 
     facility, or,                                                                          Credit Recapture 
•    $200,000 for each net new full-time employment position(s)         During the pre-approval process with Commerce, the applicant 
     with  job duties associated with the qualified facility.           must consent to adjustment or recapture of the income tax credit 
The credit is apportioned and claimed in five equal annual              in the case of noncompliance with A.R.S. § 41-1512.  
installments in each of five consecutive taxable years and is in        If, within five taxable years after first receiving the credit for 
lieu of the credit for New Employment claimed on Form 345,              qualified facilities, the Certification is rescinded by Commerce, 
with respect to the same employment positions.                          the taxpayer is disqualified from the apportioned credits for 
To claim this credit a business must apply for, and receive pre-         subsequent taxable years and may be subject to recapture. 
approval from the Arizona Commerce Authority (Commerce).                On a determination that the taxpayer has committed fraud or 
Commerce cannot pre-approve income tax credits for any one              relocated outside of this state within five taxable years of first 
taxpayer in excess of $30 million in any calendar year.                 receiving a credit, all credits previously allowed are subject to 
Commerce cannot pre-approve income tax credits in excess of              recapture.  
$70  million annually                                                   The recapture of the credit is computed by increasing the amount 
Once pre-approval is received, the business must incur at least         of taxes imposed in the year following the year of termination or 
$250,000 in qualifying investment within 12 months of pre-               revocation by the full amount of all credits previously allowed. 
approval.  
The tax year of pre-approval determines the "allocation year.”                          Specific Instructions 
The allocation year is the calendar year to which the credit was        Complete the name and taxpayer identification number (TIN) 
 applied to the annual credit cap.                                      section at the top of the form. Indicate the period covered by the 
The business must enter into a managed review with Commerce             taxable  year. Include the completed form with the tax return. 
prior to applying for post-approval. The business must obtain           All returns, statements, and other documents filed with the 
post-approval from Commerce prior to claiming the credit. The           department require a TIN. The TIN for a corporation, an 
first fifth of the apportioned credit is claimed on the tax return that S corporation, an  exempt organization  with UBTI,  or a 
includes  the post-approval date.                                       partnership is the taxpayer's employer identification number (EIN).

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Arizona Form 349
The TIN for an individual is the taxpayer's Social Security (c) Number of Employees – the total number of employees at
Number or an Internal Revenue Service individual taxpayer the facility for which the position(s) was vacant for more
identification number. A taxpayer that fails to include its TIN than 150 days since the credit was approved.
may be subject to a penalty. (d) Reduction – $4,000.
(e) Total – multiply the amount in column (c) by $4,000
Part 1 - Listing of Post-Approved Qualified
[column (d)]. Enter the result.
Facilities and Apportioned Credit Amount
Line 9
List the qualified facilities for which you are entitled to claim a
credit for this taxable year. The first fifth of the credit(s) for If you had more than two facilities with full-time employment
qualified facilities must be claimed on the tax return that includes positions vacant for more than 150 days, include a separate
the post-approval date and must be filed timely, including any schedule providing the same information required for lines 7 and
8. Total the amounts on the included schedule. Enter that total.
extensions.
Line 10
Lines 1 and 2
Enter the following information in the columns indicated on lines Add the amounts in column (e) of lines 7 through 9. Enter the
1 and 2: total.
(a)1 Allocation Year – the calendar year to which the credit was Part 3 - Net Credit
applied to the annual credit cap. This date will be noted on Line 11
the post-approval document received from Commerce.
Subtract the amount on line 10 from the amount on line 6. Enter
(a)2 First Installment Tax Year Ending – the tax year the first
the difference. If less than zero, enter “0”.
installment of the credit may be claimed. This date is found
on the post-approval letter received from Commerce. Enter Part 4 - Credit Recapture
the date in MMDDYYY format. Line 12
(a)3 Post-Approval Number – the priority placement number
Enter the date on which the certification of the business as a
issued to each facility by Commerce.
qualified facility was terminated or revoked.
(b) Apportioned Credit Amount – list the apportioned credit
amount (one-fifth per year for 5 years) indicated on the Post- Line 13
Approval for the qualified facility. Enter the total amount(s) of the credit(s) previously claimed by
you for the facility(ies) whose certification was terminated or
Line 3
revoked. If more than one certification was terminated or
If you received this credit from more than two qualified facilities,
revoked, enter the total amount. Include a schedule providing the
include a separate schedule providing the same information
detailed amount(s) of credit being recaptured.
required for lines 1 and 2. Total the credit(s) on a separate
schedule, and include it with this form. Enter that total on line 3. Note to lines 14 and 15: If you received a credit recapture from
more than one partnership and/or S corporation, total the
Note to lines 4 and 5: If you received a pass through of this
amount(s) of credit recapture passed through from all Forms
credit from more than one partnership and/or S corporation,
349-P and/or Forms 349-S and enter the total. Include a copy of
total the amounts received from all Forms 349-P and/or Forms
each Form 349-P and/or Form 349-S you received with your
349-S and enter the amount. Include a copy of each Form 349-P
return.
and/or Form 349-S you received with your return.
Line 14
Line 4
Enter the partner’s portion of this credit to be recaptured from
partnerships on Form 349-P, line 3c Form 349-P, Part 2, line 7.
Enter the total amount of this credit passed through from
Line 5 Line 15
Enter the total amount of this credit passed through from S Enter the S corporation shareholder’s portion of this credit to be
recaptured from Form 349-S, Part 2, line7.
corporations on Form 349-S, line 3c.
Line 6 Line 16
Add the amounts in column (b) of lines 1 through 5. Enter the Add lines 13 through 15. Enter the total. This is your total
recapture amount.
total.
Part 2 - Full-Time Employment Positions Part 5 - S Corporation Credit Election and
Vacant More than 150 Days Shareholder’s Share of Credit and Credit
Recapture
Lines 7 and 8
If you had full-time employment positions that were vacant for Lines 17, 17a, & 17b – S Corporation Credit Election
more than 150 days since this credit was approved, enter the The S corporation must complete line 17 and line 17a or line 17b.
requested information in the columns provided for lines 7 and 8: The S corporation must make an irrevocable election either to
claim the current taxable year credit at the corporate level or to
(a) Allocation Year – the calendar year to which the credit was
pass the credit through to its shareholders. The S corporation
originally applied to the annual credit cap.
election is made by:
(b) Post-Approval Number – the priority placement number
issued to the facility by Commerce.

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Arizona Form 349
• Entering the date the S corporation taxable year ends in the NOTE: Trusts and estates that are partners in a partnership are
box provided. not eligible to claim this credit. However, the share of a
• Checking the box on line 17a electing to claim the current partnership owned by a grantor trust that is disregarded for
taxable year credit at the corporate level; or, federal income tax purposes is treated as owned by the grantor.
• Checking the box on line 17b electing to pass the current The grantor may claim his or her share of the credit.

taxable year credit through to its shareholders.
• The election statement must be signed by one of the officers Part 7 - Credit Recapture Summary
of the S corporation who is also a signatory to Arizona Form Line 18
120S. Enter the taxable year(s) for which you claimed a credit for a
If the S corporation elects to claim the credit at the corporate business as a qualified facility whose certification has been
level, continue to Part 7. terminated or revoked.
If the S corporation elects to pass this credit through to its Line 19
shareholders, proceed to the instructions for completing Form Enter the total amount of this credit originally claimed on prior
349-S on page 5. returns.
If passing this credit through to the shareholders: Individuals, C corporations, S corporations that claimed the
• Complete Form 349-S for each shareholder. credit at the corporate level, and exempt organizations with
• Provide each shareholder with a copy of his or her UBTI: Enter the amount from Part 4, line 16.
completed Form 349-S. Individuals: Also, enter this amount on Form 301, Part 2, line 30.
• Include a copy of each completed Form 349-S with your tax C corporations, S corporations that claimed the credit at the
return. corporate level, and exempt organizations with UBTI: Also, enter
• Keep a copy of each completed Form 349-S for your this amount on Form 300, Part 2, line 20.
records.
Each S corporation shareholder is entitled to only a pro rata share Part 8 - Total Apportioned Credit Claimed This
of pass-through credit based on ownership interest in the S Taxable Year
corporation. The total of the credit allowed to all shareholders Line 20
may not exceed the amount that would have been allowed for a Enter the current year's apportioned credit for qualified facilities.
sole owner. Individuals, C corporations, S corporations that elected to claim
NOTE: Trusts and estates that are shareholders of S the credit at the corporate level, and exempt organizations with
corporations, are not eligible to claim this credit. However, the UBTI - enter the amount from Part 3, line 11.
share of an S corporation owned by a grantor trust that is Partnerships -enter “0”.
disregarded for federal income tax purposes is treated as owned
by the grantor. The grantor may claim his or her share of the S corporations that passed the credit through to individual
credit. shareholders -enter “0”.

Enter this amount and check the box for Form 349 on your tax
Part 6 - Partner’s Share of Credit and Credit return as instructed below:
Recapture Individuals - Also, enter the amount on Form 140, line 58; or
A partnership claiming this credit must pass it through to its Form 140NR, line 65; or Form 140PY, line 67; or Form 140X,
partners. Skip to the instructions for completing Form 349-P on line 43.
page 4. C corporations - Also, enter the amount on Form 120, line 22; or
• Complete Form 349-P for each partner. Form 120A, line 14; or Form 120X, line 22(c).
• Provide a completed copy of Form 349-P to each partner. Exempt organizations with UBTI - Also, enter the amount on
• Provide a copy of the Certificate of Renewable Energy Form 99T, line 12.
Production Tax Credit received from Commerce to each S corporations that elected to claim the credit at the corporate
partner. level - Also, enter the amount on Form 120S, line 18.
• Include a copy of each completed Form 349-P with your tax
return.
• Keep a copy of each completed Form 349-P for your
records.
• Do not complete the remainder of this form.
Each partner is entitled to only a pro rata share of each credit
based on the partner’s ownership interest in the partnership. The
total of each credit allowed to all partners may not exceed the
amount that would have been allowed for a sole owner.

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Arizona Form 349
Part 2 - Notification of Credit Recapture
Form 349-P,

Distribution to Partners of a To notify the partners of the amount of the credit that
Partnership must be recaptured (complete lines 4 through 7):
Enter the taxable year for which this credit is being passed Line 4
through to your partners. Enter the partnership’s name and EIN in the spaces
Complete Form 349-P for each partner of the partnership, provided.
except for trust or estate partners. However, a partnership Line 5
ownership share that is owned by a grantor trust that is Enter the partner’s name and TIN in the spaces provided.
disregarded for federal income tax purposes is treated as
owned by the grantor. The grantor may claim his or her Line 6
share of the credit. Enter the post-approval number received from Commerce
The partnership must furnish each partner with their and the date the certification was terminated or revoked in
completed copy of Form 349-P, including additional the spaces provided.
schedules as needed. Line 7
NOTE: Form 349-P can be used to distribute the Enter the total amount of the credit(s) previously passed
partnership’s share of this credit to its partners, or it can be through to the partner for the facility(ies) whose certification
used to notify the partners of the amount of the credit to be was terminated or revoked. This is the partner’s portion of
recaptured. the credit to be recaptured.

Part 1 - Distribution of the Credit This is the partner’s portion of the credit to be
To distribute the credit to the partners of the partnership recaptured.
(complete lines 1 through 3):
Line 1
Enter the partnership name, EIN, and the post-approval
received from Commerce in the spaces provided.
Line 2
Enter the partner’s name and TIN in the spaces provided.
Line 3a
Enter the amount of this credit from the partnership’s
Form 349, Part 3, line 11.
Line 3b
Enter the partner’s ownership percentage.
Line 3c
Multiply line 3a by line 3b and enter the result.

This is the partner’s portion of the credit.

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Arizona Form 349
Form 349-S, Distribution to Part 2 Notification of Credit Recapture
Shareholders of an S Corporation To notify the shareholders of the amount of the credit
that must be recaptured (complete lines 4 through 7):
Enter the taxable year for which this credit is being passed
through to your shareholders. Line 4
Complete Form 349-S for each shareholder of the S Enter the S corporation name and EIN in the spaces
corporation, except for trust or estate shareholders. provided.
However, an S corporation ownership share that is owned by Line 5
a grantor trust that is disregarded for federal income tax
Enter the shareholder’s name and TIN in the spaces
purposes is treated as owned by the grantor. The grantor
provided.
may claim his or her share of the credit.
The S corporation must furnish each shareholder with a Line 6
completed copy of Form 349-S, including additional Enter the post-approval number received from Commerce
schedules as needed. and the date the certification was terminated or revoked in
the spaces provided.
NOTE: Form 349-S can be used to distribute the S
corporation’s share of this credit to its shareholders, or it Line 7
can be used to notify the shareholders of the amount of the Enter the total amount of the credit(s) previously passed
credit to be recaptured. through to the shareholder for the facility(ies) whose

certification was terminated or revoked. This is the
Part 1 - Distribution of the Credit shareholder’s portion of the credit to be recaptured.
To distribute the credit to the S corporation shareholders
(complete lines 1 through 3): This is the shareholder’s portion of the credit to be
recaptured.
Line 1
Enter the S corporation name, EIN, and the post-approval
number received from Commerce in the spaces provided.
Line 2
Enter the shareholder’s name and TIN in the spaces
provided.
Line 3a
Enter the amount of this credit from the S corporation’s
Form 349, Part 3, line 11.
Line 3b
Enter the shareholder’s ownership percentage.
Line 3c
Multiply line 3a by line 3b and enter the result.

This is the shareholder’s portion of the credit.

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