Transaction Privilege Tax Bond Bond - Tohono O'odham Nation in Arizona

Brief Summary

A prime contractor working on the Tohono O'odham Nation has two choices at licensing: post a tax payment bond or pay the entire transaction privilege tax on the job up front. The bond lets you pay the tax monthly as the contract is billed, so the cash stays on the project instead of going to the Treasurer before work starts.

Section 4.A of the Tohono O'odham Nation Transaction Privilege Tax Ordinance (Title 22, Chapter 2) requires every prime contractor to apply to the Treasurer for a privilege license before starting work on the job site, with a $5 fee and a tax payment bond for all privilege taxes the ordinance imposes. The bond equals the amount of those taxes and is payable to the Tohono O'odham Nation. Per the Treasurer's checklist, a contractor without a bond must pay the entire tax liability at the time of application.

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How to Apply for a Transaction Privilege Tax Bond Bond:

• Estimate the privilege tax on the contract: 5% of the 65% of gross proceeds left after the 35% labor deduction.
• Confirm the bond amount and any required form with the Office of the Treasurer.
• Complete the TPT license application, including Part C ownership information.
• Gather a signed and dated W-9, your Arizona ROC license, a certificate of insurance and your list of subcontractors.
• Have the surety issue the tax payment bond payable to the Tohono O'odham Nation.
• Submit the packet with the $5 application fee and mail the original bond to the Office of the Treasurer, P.O. Box 837, Sells, AZ 85634.

Detailed Information About the Arizona Transaction Privilege Tax Bond Bond:

Who posts this bond

The bond is a prime contractor requirement. Subcontractors still need their own TPT license, but the Treasurer's checklist states that subcontractors are not required to pay the tax, because the ordinance places the tax on the prime contractor and its surety for the whole job. The Treasurer may waive the bond for a contractor owned or operated by the Nation, or one organized or operating under the Nation's laws.

How the amount is figured

Section 4.A(1) sets the bond equal to the privilege taxes imposed by the ordinance. For prime contracting, Section 5.A levies 5% on gross proceeds, with 35% of gross income excluded in lieu of labor. The Treasurer's checklist works the example out: $1,000 of gross sales, less the 35% deduction, leaves $650 taxable, which produces $32.50 of tax. Apply the same math to your contract value to estimate the bond, then confirm the figure with the Office of the Treasurer. Contracts with the Nation, its departments or the Districts are exempt from the tax under the May 22, 2018 amendments.

Bond or prepay

The Treasurer's checklist gives prime contractors two paths. Attach a bond and file contracting tax reports and payments monthly, or skip the bond and pay the entire tax liability with the application. Monthly returns are due by the first day of the second month after the tax accrues and become delinquent five days later. If taxes go unpaid, the Nation can demand payment from the bond at any time after they come due and can sue on it in the Tohono O'odham Judicial Court or any other court of competent jurisdiction.

License term

A prime contractor license lasts for the term of the contract, including modifications. A new project for the same company needs a new license. Original surety bonds go by mail to the Tohono O'odham Nation, Office of the Treasurer, P.O. Box 837, Sells, AZ 85634. Call (520) 383-1800 ext. 2456 to confirm the bond amount and form before the bond is issued.

Eligibility and Requirements for a Arizona Transaction Privilege Tax Bond Bond:

• Bond amount equal to the privilege taxes imposed on the job under the TPT Ordinance.
• Tohono O'odham Nation named as obligee, with surety satisfactory to the Treasurer.
• Bond in place before work begins on the job site.
• Arizona Registrar of Contractors license and certificate of insurance.
• A new license, and a bond, for each separate project.

Arizona Transaction Privilege Tax Bond Bond FAQs:

Official and Additional Resources for the Arizona Transaction Privilege Tax Bond Bond: