Taxpayer Bond for Contractor Bond - Statewide in Arizona

Brief Summary

This bond is owed to the Arizona Department of Revenue, not the Registrar of Contractors. It guarantees the transaction privilege tax a new or out of state contractor will owe, and the amount depends on the kind of contracting you do, from $2,000 to $22,000.

Arizona's Taxpayer Bond for Contractors guarantees payment of transaction privilege tax. Under A.R.S. 42-5006, the Department of Revenue requires it from ROC licensed contractors whose principal place of business is outside Arizona or who have conducted business in Arizona for less than one year, and ADOR says it generally requires it from contractors with a history of TPT noncompliance as well. The amount runs from $2,000 to $22,000 depending on the type of contracting. The bond is filed on Form 74-4023 in favor of the State of Arizona and the Arizona Department of Revenue and must be kept for at least two years.

We can help with all Arizona bonds!

How to Apply for a Taxpayer Bond for Contractor Bond:

• Check whether you must post: principal place of business outside Arizona, less than one year in business in Arizona, or a history of TPT noncompliance.
• Find your amount on ADOR's table by type of contracting: $2,000, $7,000, $17,000 or $22,000.
• Have your transaction privilege tax license number or JT-1 application ready.
• Have the surety complete Form 74-4023 with principal, surety and notary signatures.
• Send the bond to the Arizona Department of Revenue, 1600 W Monroe, Phoenix AZ 85007, or contact taxpayerbond@azdor.gov.
• Keep the bond in force for at least two years, then request release in writing.

Detailed Information About the Arizona Taxpayer Bond for Contractor Bond:

A tax bond, separate from your license bond

Arizona contractors post a license bond with the Registrar of Contractors. This is a different bond, filed with the Arizona Department of Revenue, and it secures the transaction privilege tax the contractor will owe. Form 74-4023 names the State of Arizona and the Arizona Department of Revenue as obligees and is conditioned on the contractor complying with Title 42, including payment of all transaction privilege taxes and penalties.

Who has to post it

A.R.S. 42-5006 applies to taxpayers licensed under Title 32, Chapter 10, which covers ROC licensed contractors, when either of these is true:

• The principal place of business is outside Arizona
• The business has operated in Arizona for less than one year

ADOR says it also generally requires a bond from contractors with a history of TPT noncompliance. ADOR treats a principal place of business as a facility in Arizona with at least one full time employee during the preceding 12 months.

How much

The statute sets a $2,000 minimum and calls for an amount that will cover the transaction privilege tax reasonably expected over 150 days, with classes in $5,000 increments. ADOR publishes the amounts under rule R15-5-601(B):

• $2,000: general contractors of residential buildings other than single family, operative builders, and most specialty trades including plumbing, heating and air conditioning, electrical, masonry, carpentry, roofing, concrete, excavation and demolition
• $7,000: general contractors of single family housing, and water, sewer, pipeline, communication and powerline construction
• $17,000: general contractors of industrial buildings, warehouses and nonresidential buildings, and highway and street construction other than elevated highways
• $22,000: heavy construction, bridges, tunnels and elevated highways

Exemptions

A licensee is exempt if, for at least two years immediately before the application, it made timely payment of all transaction privilege taxes. The ADOR director may also exempt a licensee if the bond is not needed to secure payment or the licensee had good cause for a late or short payment. ADOR's Form 10205 is the Bond Exemption Application.

Duration, security and release

The bond must be maintained for at least two years. Form 74-4023 is continuous, and the surety may end it after two years with written notice that takes effect 30 days after ADOR receives it. Publication 539 also accepts cash, a cashier's check or money order, a certificate of deposit or U.S. Treasury bonds. To get security back, the contractor asks ADOR for a refund in writing.

Project bonds on contracts of $50,000 or more

A.R.S. 42-5007 is a separate requirement for a contractor without a principal place of business in Arizona who signs a prime contract of $50,000 or more here. That contractor posts security equal to the expected contract receipts multiplied by the applicable tax rates, and a city, town or county will not issue a building permit until ADOR certifies the requirement is met. ADOR's Annual Bond Exemption list covers contractors who meet its criteria for these projects.

Eligibility and Requirements for a Arizona Taxpayer Bond for Contractor Bond:

• Form 74-4023, Taxpayer Bond for Contractors.
• Obligees: State of Arizona and Arizona Department of Revenue.
• Amount of at least $2,000, set by contracting type under rule R15-5-601(B).
• Held at least two years.
• Cash, cashier's check, money order, certificate of deposit or U.S. Treasury bonds accepted in place of a surety bond.
• Separate from the ROC contractor license bond.

Arizona Taxpayer Bond for Contractor Bond FAQs:

Official and Additional Resources for the Arizona Taxpayer Bond for Contractor Bond: