Enlarge image | PENALTY ABATEMENT This publication is for general information only. It is parent, child, brother, sister, in-law, grandparent designed to assist taxpayers in understanding the or grandchild. process of requesting abatement of penalties. For b. Delay caused by unavoidable absence of the complete details, refer to the Arizona Revised Statutes taxpayer. “Unavoidable absence” is defined as and the Arizona Administrative Code. In case of an absence which is incapable of being inconsistency or omission in this publication, the prevented. Vacation time is not acceptable as language of the Arizona Revised Statutes and the an unavoidable absence. Arizona Administrative Code will govern. Additional Entity returns information can be found in the Department of In the case of corporate, estate, trust, or other Revenue’s General Tax Ruling, GTR 04-2. business returns, delay caused by unexpected Arizona administers a penalty system designed to ensure serious illness of the individual with sole a fair and consistent program of tax compliance. It is the authority to execute the return, or member of Department of Revenue's goal, through consistent such individual’s immediate family. handling of abatement requests, to ensure fair and equal Delay caused by unavoidable absence of the treatment for all taxpayers. The following will assist a individual with sole authority to execute return. taxpayer when considering a request for penalty abatement. Keep in mind, a decision by the department If unexpected illness is the basis of the request for is based on information and evidence provided by you, penalty abatement, the department shall require proof the taxpayer. A prompt and consistent reply can only be of the date of illness. This proof includes, but is not achieved if the department receives documented and limited to, doctor statements. specific information with your request. 3. Death NOTE: Links to Arizona Statute and the Arizona a. In the case of individual returns, delay caused Administrative Code can be found at www.azleg.gov. by the death of a taxpayer or member of Decisions, rulings, and procedures can be found under taxpayer’s immediate family. “Immediate the Legal Research tab at www.azdor.gov family” has the same meaning as defined in number 2 above. On What Basis Can Penalties be Abated? b. In the case of corporate, estate, trust, or other Statutes provide that the department may abate penalties business returns, the delay must have been for reasonable cause. A taxpayer may establish caused by the death of an individual with sole reasonable cause by providing facts and circumstances authority to execute the return, or a member of that show the taxpayer exercised ordinary business care such individual’s immediate family. and prudence in the handling of filing and payment of their taxes, the condition which created the assessment c. For both individual and business returns, a is not a recurring problem with that taxpayer, and there reasonable time frame should apply for filing are specific reasons why the return was not filed and the return and payment of tax. A copy of a paid timely. There is no statutory provision for death certificate must be provided. abatement of interest based on reasonable cause. 4. Absence of records The taxpayer is unable to obtain records necessary Situations Where Reasonable Cause May Exist: to determine the amount of tax due for reasons Following are some situations where reasonable cause beyond the taxpayer's control. An example would may exist. There may be other situations where be a fire which destroys the taxpayer’s records. reasonable cause may exist, which is why it’s important for you to provide specific details or reasons that are Situations Where Reasonable Cause May NOT directly attributable to the failure to file or pay timely Exist: for the periods you are requesting penalty abatement. 1. Ignorance of the law Circumstances beyond the control of the Taxpayer while This does not meet the standard of reasonable cause using reasonable and prudent business practices: for any tax type. The taxpayer has the responsibility to be knowledgeable of the laws under which they 1. Mathematical errors operate. A mathematical error on a timely filed tax return. 2. Delegation of duties 2. Unexpected illness or unavoidable absence Businesses should exercise caution when delegating Individual returns responsibilities to insure job assignments are carried a. Delay caused by serious illness of the taxpayer, through and controls are in place to assure the or member of the taxpayer’s immediate family. timely filing and payment of taxes. It is not “Immediate Family” is defined as a spouse, Arizona Department of Revenue Pub 700 Revised June 2015 |
Enlarge image | PENALTY ABATEMENT reasonable cause for an owner/taxpayer to place The department does not accept penalty abatement responsibility with a third party such as their requests or render decisions by telephone. Fax requests employee, accountant, or attorney, and claim they are accepted. The fax number is (602) 771-9912. were unaware the third party failed to file or pay the Appeals taxes in a timely manner. In accordance with Arizona Revised Statute § 42-1251, 3. Financial Difficulties the taxpayer in the case of individual income taxes the Financial difficulties have no effect on the has 90 days from the date the denial notice was mailed in taxpayer’s ability to file returns in a timely fashion. which to appeal. For all other tax types, the taxpayer has Who May Request Abatement of Penalties? 45 days from date notice is received, to appeal. Any taxpayer who files either a personal income or If you fail to file a formal appeal with the department by business tax return and is assessed a penalty. the 45 or 90 day deadline, the abatement decision becomes final. However you can reinstate your appeal When May I File a Request for Abatement? rights by filing a claim for refund. A written request for abatement of penalty can be submitted upon receipt of a department notice of To file a claim for refund, the total liability must be paid penalty assessment. in full including tax, penalties and interest. This claim for refund must be filed within six months of payment How May I File a Request for Abatement? or four years from the due date of the original return or All requests for abatement of penalties must be in the date you actually filed the original return, whichever writing and signed. You may also request abatement is later. Each claim shall provide your name, tax using Arizona Form 290 which is located on the identification number, the amount of refund requested, Department’s website. Include a contact name, the specific tax period(s) involved and specific grounds telephone number, tax identification number of the on which the claim is founded. Claims for refunds are account (for example the business license number, to be mailed to the appropriate Audit unit of the employer identification number or social security department. Refunds are subject to offset of existing tax number), the specific period(s) and the specific penalties liability pursuant to Arizona Revised Statute § 42-1122. for those periods that you want considered for Hearings abatement. You must include an explanation as to why Request for hearing can be submitted in your appeal. those tax returns and/or payments were late or You may request to have an informal conference at our underpaid. Clear and concise information will allow for office location or by telephone. The unit’s auditor and/ a prompt reply by the department. Copies of any or their supervisor and you and/or your representative documentation that supports your request should be will participate in the conference. You will use this included with the request. opportunity to present any information or Where Should an Abatement Request be Filed? documentation which you believe supports your A request for abatement of audit assessed penalties abatement request and to discuss any remaining should be directed to the appropriate audit unit. questions you may have. If a satisfactory resolution is not achieved, you may request a formal hearing. Generally, an audit assessment notification will The formal hearing is conducted by an impartial hearing provide the auditor name and contact information. officer. Formal hearings on transaction privilege tax For non-audit penalties, requests for abatement will be conducted by the Office of Administrative should be mailed to: Hearings, an independent state agency. Hearings for all Arizona Department of Revenue other tax types will be held at the Department of Penalty Review Unit Revenue Hearing Office. Formal hearing requests are 1600 W Monroe, Division Code 9 forwarded to the appropriate hearing office for Phoenix AZ 85007 scheduling. The hearing office will notify you in writing and provide you with the date and time of the What Happens Once a Request for Abatement is hearing. Received? In the Penalty Review Unit, the request will be Contact Information reviewed on a first come, first serve basis. Requests General questions regarding penalty abatement, for non- will be reviewed independently to determine if audit periods, can be obtained by calling (602) 716- reasonable cause exists. Upon completion of the review 7802. For audit assessed penalties, contact the auditor a determination letter will be mailed to the taxpayer or identified on the audit assessment notification. the taxpayer’s authorized representative. NOTE: If a third party is assisting a taxpayer, a current Arizona Department of Revenue Pub 700 Revised June 2015 |
Enlarge image | PENALTY ABATEMENT Power of Attorney must be filed with the Arizona Department of Revenue. Arizona Form 285, General Disclosure/Representation Authorization Form, is available on our website. For Additional Information, call: *Transaction Privilege Tax* Phoenix ............................................... (602) 255-2060 Toll free from area codes 520 & 928 ... (800) 843-7196 *Income Tax* Phoenix ............................................... (602) 255-3381 Toll free from area codes 520 & 928 ... (800) 352-4090 For Related Tax Information: Internet Address ................................. www.azdor.gov Or Write to: Arizona Department of Revenue Audit Division 1600 W Monroe, Division Code 9 Phoenix AZ 85007 This publication is available in an alternative format upon request. Arizona Department of Revenue Pub 700 Revised June 2015 |