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Arizona sales tax notices

Got a letter from the Arizona Department of Revenue (ADOR)? Find it below to see what it means, why businesses usually receive it, and what to do next.

Sources checked

Tax authority

Arizona Department of Revenue (ADOR) (opens in a new tab)

Official notice guide (opens in a new tab)

Disagree with a notice?

If you disagree with transaction privilege tax (TPT) audit findings, file a written protest (appeal) using the form sent with the Notice of Proposed Assessment. State why the tax, interest or penalties are wrong, and pay any unprotested amounts when you file. You can ask for an informal conference, or a formal hearing before an Administrative Law Judge of the Office of Administrative Hearings.

Deadline: 45 days from the receipt date of the Notice of Proposed Assessment

Source: Arizona Department of Revenue (ADOR) (opens in a new tab)

Balance due

A bill for tax, penalty, or interest the authority says is unpaid.

Balance due

Tax Correction Notice (TCN)

A letter saying ADOR corrected a TPT return you filed. The reason code on the letter, such as an accounting credit, city builder credit or deduction error, points to the fix.

Why you got it

  • An accounting credit was claimed for an ineligible business code
  • Deductions in Schedule A did not match the transaction detail deductions
  • Another calculation or reporting error on the return

What to do

  1. Find the reason code on the letter and compare the correction with your return, using ADOR's notice resource page
  2. If the original return was right but incomplete, file an amended return in AZTaxes.gov rather than paying
  3. If the correction is right, pay the tax by the due date on the letter
  4. If a penalty was added and you had reasonable cause, you can request abatement with Arizona Form 290 once your returns are filed and the tax is paid. Interest is not abated

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: By the due date shown on the correspondence

Source: TPT Notices and Correspondence Resource Center | Arizona Department of Revenue (opens in a new tab)

Balance due

Tax billing notice

A demand for payment that starts the collection process. It is sent when a return had an error, was filed late, or did not pay the full tax owed.

Why you got it

  • An error on a return
  • A late-filed return
  • Tax on a return was not paid in full

What to do

  1. Check the bill against your returns and payment records. If it is wrong, write to ADOR with an explanation and supporting documents
  2. File any missing returns and pay the tax at AZTaxes.gov, or contact Collections about an installment arrangement if you cannot pay in full
  3. For late filing or payment penalties, consider sending Arizona Form 290 to the Penalty Review Unit explaining your reasonable cause. ADOR reviews it only once returns are filed and non-audit tax is paid, and it does not abate interest

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Pub 2, Collections Process (Arizona Department of Revenue) (opens in a new tab)

Assessment

A proposed or final determination of tax owed, sometimes estimated when returns were never filed.

Assessment

Notice of Proposed Assessment

Issued under A.R.S. 42-1108 after a TPT audit. It shows the additional tax, penalties and interest, and it follows the draft audit assessment presented at the closing conference.

Why you got it

  • An audit found additional TPT or use tax due
  • You did not respond to the Draft Audit Assessment by its response date

What to do

  1. Review the audit schedules and check each adjustment against your records
  2. If you disagree with any tax, interest or penalty, file the written protest form sent with the notice within 45 days, explaining why, and pay any amounts you are not protesting
  3. Audit-assessed penalties cannot be abated with Form 290. If you had reasonable cause, raise it with the audit unit named on the notice or in your protest
  4. If you agree, pay within 45 days to avoid a lien. If you cannot pay in full, contact ADOR about an installment arrangement

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: 45 days from receipt of the notice; after that the deficiency becomes final

Source: TPT Audit | Arizona Department of Revenue (opens in a new tab)

Audit

A request for records or notice that the authority is examining your returns.

Audit

Notice of Intent to Audit

The letter that officially starts a transaction privilege (sales) and use tax audit. It names the assigned auditor, who will contact you to schedule an opening interview. It usually comes with an appointment confirmation letter.

Why you got it

  • Your business was selected for a TPT and use tax audit

What to do

  1. Contact the auditor to confirm the opening interview time
  2. Gather sales, exemption certificate and purchase records for the audit period, in Excel or PDF if possible
  3. List any non-program city licenses held in the last six years and return that form to the auditor
  4. If an accountant or advisor will handle the audit, file Arizona Form 285 so ADOR can work with them

Source: TPT Audit | Arizona Department of Revenue (opens in a new tab)

Registration

Changes to your permit or account: required registration, filing-frequency changes, revocation, or closure.

Registration

Late TPT license renewal bill

Every TPT license must be renewed each year by January 1. If you do not renew, ADOR renews the license anyway and bills the unpaid renewal fee plus a late-renewal penalty set at 50% of the city renewal fee.

Why you got it

  • The TPT license was not renewed or canceled by the renewal deadline

What to do

  1. If the business is still operating, renew the TPT license right away in AZTaxes.gov, then pay the renewal fee plus the late-renewal penalty under Pay, then Pay Outstanding Liabilities
  2. If you believe the charge is incorrect, such as because you renewed on time or the license was already closed, call ADOR to dispute it
  3. If the business has closed, cancel the TPT license in AZTaxes.gov or file a Business Account Update form, and keep your mailing address current so renewal notices reach you

Source: Renewing a TPT License | Arizona Department of Revenue (opens in a new tab)

Collections

Enforcement on unpaid balances, such as liens, levies, warrants, or referral to a collection agency.

Collections

Notice of Tax Lien / Notice of Levy

Enforced collection steps ADOR can take if you do not pay a tax bill or make arrangements. A Notice of Tax Lien gives public notice of the state's claim on your property. A Notice of Levy takes property, wages or bank deposits.

Why you got it

  • A tax bill was not paid or answered
  • An audit assessment was not paid or protested on time
  • An installment arrangement was not kept

What to do

  1. Contact Collections right away to pay the balance or set up an installment arrangement
  2. After a lien is paid, expect a Release of Tax Lien; paying with certified funds speeds up the release
  3. Ask about an offer in compromise if you cannot pay the full amount
  4. Once returns are filed and non-audit tax is paid, you can still ask for non-audit penalties to be abated with Arizona Form 290

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Pub 2, Collections Process (Arizona Department of Revenue) (opens in a new tab)

Ask for penalty relief

Penalties on a Arizona notice aren't always final. You can ask for them to be waived. Follow the steps below, including anything the state requires you to file or pay before it reviews the request.

Request for Penalty Abatement

Arizona Form 290
  1. File all delinquent returns and pay the non-audit tax owed first; ADOR returns requests from accounts that are not in compliance
  2. Complete Arizona Form 290, listing each period and penalty amount, and explain the reasonable cause for filing or paying late
  3. Attach supporting documents, have an authorized person sign, and send it to the Penalty Review Unit by fax, mail, email or drop-off
  4. For penalties from an audit, contact the audit unit named on the assessment instead of using Form 290

What qualifies: Reasonable cause: you exercised ordinary business care and prudence but still could not file, provide information or pay on time

Interest: Interest is not considered for abatement (nor are TPT licensing fees or audit-assessed penalties)

Source: Penalty Abatement | Arizona Department of Revenue (opens in a new tab)

Before you respond

  • Check the date on the notice. Response windows usually run from that date, not the day you open it.
  • Match the account number and filing period to your own records before paying or disputing.
  • If returns are missing, filing the actual returns usually replaces an estimated bill. Confirm how on the notice or with the authority.
  • Ask about penalty relief before paying penalties, and check what must be paid with the request. See how
  • Keep a copy of the notice and everything you send back.

This page is general information, not tax or legal advice. Notice names and procedures change, so always follow the instructions on your notice and the official sources linked above.

Need the rates, nexus thresholds and filing rules? Read the Arizona sales tax guide.

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