Arizona Sales Tax Nonpayment Risk Checklist

escalating collection methods, including liens, levies, and enforcement actions. Ignoring these notices can increase the debt through penalties and interest, and it can affect your ability to renew business licenses, obtain credit, or keep operating legally in Arizona.

What This Issue Means

Sales tax nonpayment means you owe the state of Arizona money for taxes that were required to be collected and submitted to ADOR. This tax liability typically arises when a business files a sales tax return but does not send the payment due, or when a return is not filed at all and sales tax remains unpaid.

Why the State Issued This or Requires This

ADOR identifies unpaid sales tax through several routine processes. When a sales tax return is filed, ADOR’s system flags accounts with missing or incomplete payments.

If no return is filed, the state may issue notices based on third-party reporting, bank deposits, or other revenue indicators. The state issues notices and collection actions because sales tax is considered a debt owed to Arizona, and failure to pay triggers enforcement procedures outlined in the Arizona Revised Statutes.

What Happens If This Is Ignored

If unpaid sales tax is not addressed, ADOR typically escalates collection efforts in stages.

Should notices go unanswered, ADOR may file a tax lien against your business or personal assets, making it publicly recorded that you owe the state money.

ADOR may also levy business income, bank accounts, or other assets to satisfy the debt.

Additionally, failure to pay can result in the denial or non-renewal of your Arizona business license, which prevents you from operating legally in the state.

What This Does NOT Mean

Receiving a sales tax nonpayment notice does not mean you are facing criminal prosecution at this stage. It also does not mean the debt is negotiated or forgiven; the amount owed remains your responsibility unless the state explicitly approves a payment plan or adjustment.

Checklist: What to Do After Receiving This or Identifying

This Issue

Follow these steps if you have received a sales tax nonpayment notice or believe you owe unpaid sales tax to Arizona.

• Step 1: Locate and review all notices and documents

Find any notices from ADOR related to unpaid amounts and gather copies of tax returns you filed or should have filed. Make copies of everything for your records.

• Step 2: Determine precisely what is owed

Contact ADOR to request a current balance statement showing all unpaid amounts. Ask

ADOR to confirm whether the amount includes penalties, interest, and the original tax, and write down the account number or case reference number provided by ADOR.

• Step 3: Verify the accuracy of the amount

Review your business records to confirm whether sales tax was actually collected for the unpaid periods. If you believe the amount is incorrect, prepare documentation showing your position.

• Step 4: Respond to any deadlines stated in the notice

Review the notice carefully for any deadline to respond, request a hearing, or make a payment. Do not ignore or discard any notice, even if you disagree with the amount.

• Step 5: Contact ADOR directly

Call the ADOR telephone number listed on the notice you received, or call the main

ADOR line: (602) 255-3381. Explain that you have received a non-payment notice and want to understand your options.

• Step 6: Ask about available payment and relief options

Ask whether ADOR offers a payment plan if you cannot pay in full and whether penalty abatement is possible if circumstances warrant it. Inquire about any required tax forms needed to formalize your request.

• Step 7: Get information about the process in writing

Request that ADOR send you written information about any option you are considering.

Do not rely on verbal promises; ensure all agreements are documented.

• Step 8: Document your communication

Keep notes of every conversation: date, time, person’s name, and what was discussed.

Save copies of every email, letter, or form you send to ADOR.

• Step 9: If you dispute the amount or the debt

Gather all evidence supporting your position and request a formal dispute process or hearing if the notice provides this option. Keep a copy of everything you submit to

ADOR.

• Step 10: If you intend to make a payment

Confirm with ADOR the exact payable amount and the payment address. Keep a receipt or confirmation of every payment you make.

• Step 11: Follow up on any option you selected

If you requested a payment plan, follow the agreed schedule exactly. Maintain contact with ADOR until the matter is fully resolved.

• Step 12: Monitor for follow-up notices or actions

Continue to check your mail for any additional notices from ADOR. If you do not hear back from ADOR, contact them to confirm your request was received.

What Happens After This Is Completed

After you respond to a sales tax nonpayment issue, ADOR typically processes your submission within a stated timeframe. If you selected a payment plan, ADOR usually sends written confirmation of the agreement and the payment schedule.

Should you have filed a dispute, ADOR may request additional information, schedule a hearing, or issue a written determination. During this time, the account remains open, and ADOR may continue collection efforts if payments are missed or deadlines are not met.

Common Mistakes to Avoid

Many taxpayers delay responding to ADOR notices, hoping the issue resolves itself, but ignoring notices or deadlines only adds penalties and interest and triggers escalated enforcement. Always verify the current mailing address and payment instructions with ADOR before sending money, as payments sent to the wrong address may not be applied to your account.

Without written records, you have no proof of what was discussed or agreed upon with ADOR representatives. Sales tax nonpayment does not go away due to the passage of time, a business closure, or a lack of contact with the state. If you enter into a payment plan, missing even one payment may result in its cancellation and the resumption of immediate collection action.

Frequently Asked Questions

How much time do I have to respond to a non-payment notice?

The notice you receive will state a deadline for response. If the notice does not clearly state a deadline, contact ADOR immediately to ask about it.

Can I negotiate the amount I owe?

According to Arizona state guidance, the sales tax amount owed is based on the actual tax due.

However, penalties may be eligible for abatement in some cases.

What if my business is closed, but I still owe sales tax?

Closing your business does not eliminate sales tax debt. Contact ADOR to address the outstanding debt, even if the company is no longer operating.

Can I set up a payment plan?

ADOR typically offers payment plans for unpaid tax debt. Contact the state directly to ask about plan options, eligibility requirements, and terms.

How long can ADOR collect this debt?

Under Arizona Revised Statutes, collection actions are subject to specific timeframes that may vary based on the type of action. Contact ADOR to ask about the applicable timeframe for your particular debt.

Closing

Sales tax nonpayment is a serious matter that requires a direct response, but it is manageable when addressed promptly through official channels. The key is to understand what the state claims you owe, verify its accuracy, and engage with ADOR about your options. Ignoring notices or delaying contact only adds costs through interest and penalties and triggers escalated enforcement. The consequences of failure to pay are governed by Arizona Revised Statutes and can include liens, levies, and other collection actions that increase your tax liability substantially.

Facing State Tax Enforcement Action?

If you’ve received a notice related to sales tax or payroll tax enforcement, and aren’t sure how to respond, our team can help you understand your options and next steps.

We help with

• State enforcement notices and responses
• Sales tax audits, assessments, and collections
• Payroll & trust fund tax enforcement issues
• Penalty and interest reduction options
• Payment plans and state tax relief eligibility
• Representation before state tax agencies

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