Arizona Contractor Taxpayer Bond

Arizona Contractor Taxpayer Bond

Under the determination of the Arizona Department of Revenue (AZDOR), applicable licensed contractors and dealers of manufactured housing (mobile homes) may be required to acquire the custom Taxpayer Bond for Contractor, otherwise known as the Contractor Taxpayer Bond. 

Jet Insurance Company provides the Contractor Taxpayer Bond, ensuring the AZDOR that the contractor or dealer will comply with all conditions pertaining to state tax laws; paying all transaction privilege taxes in full and on time, for example. The surety bond also acts as a financial guarantee to the AZDOR, covering fees and penalties for tax violations if the taxpayer fails to comply with such laws.

APPLY FOR CONTRACTOR TAXPAYER BOND

At Jet, our team writes the Contractor Taxpayer Bond directly, which allows us to eliminate the middleman and offer you affordable bond prices!

What Is the Bond Limit and Cost of the Arizona Contractor Taxpayer Bond?

The Department of Revenue determines the required bond limit by looking at the type of work the contractor or dealer performs. For example, general residential contractors will only require a $2,000 bond limit, while bigger specialty projects such as the construction of highways will require a $17,000 bond limit.

Unlike other companies, our bond rates are never influenced by broker or commission fees. Jet’s bond prices are based on a percentage of the bond limit and the personal credit of the applicant. Below is an example of Jet’s preferred pricing tier for each of the bond limits.

Bond LimitCost
$2,000$100
$7,000$105
$17,000$255
$22,000$330
$102,000$1,530
Arizona Contractor Taxpayer Bond Pricing

By cutting out middlemen agents and their carriers, the Jet team is able to get your bond on file with the AZDOR quickly and without charging additional fees.

The chart below lists the different types of construction work performed and the associated AZDOR determined bond limits.

Type of Contractor Work PerformedRequired Bond Limit
General contractors of residential buildings (no single-family housing); operative builders; plumbing, air conditioning, and heating; painting, paper hanging, decorating; electrical, masonry/other stonework; plastering, drywall, acoustical, and insulation work; terrazzo, tile, marble, and mosaic work; carpentry; floor laying/floor work; roofing and sheet metal work; concrete work, water well drilling, structural steel erection; glass and glazing work; excavating and foundation work; wrecking and demolition work; building equipment installation and erection; special trade contractors; mobile homes manufacturers $2,000
General contractors of single-family housing, water, sewer, pipeline, communication, and power-line construction $7,000
General contractors of industrial building and warehouses; of non-residential buildings; and highways and street construction except elevated highways $17,000
Heavy construction not elsewhere classified (dams, golf courses, land drainage, etc.) $22,000
Bridges, tunnels, and elevated highway construction $102,000
Arizona Contractor Taxpayer Bond Limits

Why Is the Contractor Taxpayer Bond Required By the Arizona Department of Revenue?

The Arizona Department of Revenue requires certain licensed contractors and mobile home dealers to obtain a surety bond if they meet qualifications that have been deemed risky by the Department. The main qualification being that the licensee has a negligent history of paying taxes in full and on time in the State of Arizona. The Contractor Taxpayer Bond’s purpose is to ensure that the licensee will pay all transaction privilege taxes and any other obligations due. If they fail to do so, the bond will act as a financial guarantee for the AZDOR to cover taxes due and any applicable fees. 

Who Is Required to Obtain the Contractor Taxpayer Bond?

Applicants that meet one of the qualifications listed below will be required by the AZDOR to acquire the Arizona Contractor Taxpayer Bond.

Licensed contractors can apply for an exemption of the bond requirement if they believe they meet the appropriate conditions. Submission of the Transaction Privilege Tax License Application for Bond Emption to the AZDOR will be required.

How Does the Bond Application Process Work With Jet?

The Jet team has worked hard to perfect our online bond application process. The Contractor Taxpayer Bond application is simple and will ask for general information such as the applicant's contractor license classification, transaction privilege tax license number, and social security number. A soft credit check is completed to get you a competitive approved rate in just minutes. Once payment has been made, Jet will send you a receipt, file the bond for you with the AZDOR, and send you a copy for your personal records.

APPLY FOR CONTRACTOR TAXPAYER BOND

How Is the Contractor Taxpayer Bond Filed in Arizona?

Jet makes it simple and can file the bond for you! The original signed and sealed Contractor Taxpayer Bond is required to be filed with the Arizona Department of Revenue. The amount of time that the bond must remain on file with the AZDOR will depend on criteria related to the bondholder. See below:

For contractors or dealers who are new transaction privilege tax license applicants, the bond must remain on file for a minimum of two years. The Department will not require the licensee to maintain the bond beyond that timeline if they have paid all taxes accordingly within those two years. 

For contractors who have contracts of over $50,000, the bond must remain on file until all taxes have been paid out for that specific construction project (which could be beyond the two-year term requirement).

Once you have submitted your bond application and completed payment, Jet will file the original signed and sealed surety bond with the AZDOR and send you a copy. Jet also gives you the option to have the original bond sent to you directly if you'd like to file the bond yourself. The bond and any additional paperwork should be mailed to the address below.

Arizona Department of Revenue
P.O. Box 29032
Phoenix, AZ 85038-9032

For those initially applying for an Arizona transaction privilege tax license, the application is required to be submitted as a hard copy to the AZDOR mailing address above. Once pre-approved, the AZDOR will issue you a TPT license number. This unique number is required to be listed on your Contractor Taxpayer Bond form, so this step must be completed before the bond application process with Jet may be completed (the filing of the bond will complete the approval process of your TPT license). If you are already licensed, but unsure what your TPT license number is, contact the AZDOR at 602-255-3381.

Can the Contractor Taxpayer Bond Be Cancelled in Arizona?

Once your bond has fulfilled the AZDOR’s two-year activation term and/or payment of all tax requirements, Jet can cancel your bond immediately! The bond is continuous, so you will need to request a cancellation in writing. Upon receiving your cancellation request (via email is fine), Jet will send the AZDOR a written cancellation notice. Liability of the bond will be released by the Department within 30 days of receiving the bond termination notice.

Does the Contractor Taxpayer Bond Need to Be Renewed?

Jet makes renewals easy! Our team will send you a bond renewal invoice prior to the expiration date. No additional paperwork or fees will be requested, just provide the renewal payment and Jet will take care of the rest.

According to the Arizona Department of Revenue, contractors and dealers who have paid all taxes on time will not be obligated to renew the bond beyond the required two-year timeline. If the Department finds that the contractor or dealer has failed to pay all taxes within that two year period, they will require the licensee to renew their bond for an additional two-year term.

How May a Claim on the Arizona Contractor Taxpayer Bond Arise?

Contractors and dealers of manufactured homes are expected to follow all rules of their transaction privilege tax license and tax laws pursuant to Arizona Revised Statutes Title 42-Taxation. Failure to do so may lead the AZDOR to levy large fees, revoke the TPT license, and/or pursue a bond claim.

The key prohibited act that could facilitate a bond claim is as follows: Failure of the licensed contractor or dealer to pay all Arizona taxes and any other obligations due to the AZDOR, on time and in full.

If the Department finds that the licensee has committed a tax deficiency, they will send notice to the contractor/dealer and an order to attend a scheduled hearing held by the AZDOR within ten days time (the hearing can be avoided simply by paying the amount due in the deficiency notification). The hearing will take place to discuss and determine the amount of taxes and fees to be paid by the contractor or dealer, as well as hear why the violations occurred. 

It is in the best interest of the licensee to resolve this violation and immediately pay what is due before a claim on their bond is pursued. If the contractor or dealer is unable or unwilling to make payment, the AZDOR may file a claim on their Contractor Taxpayer Bond.

What Happens if I Get a Bond Claim?

Immediately contact the Jet team upon receipt of the AZDOR claim notification. Jet will proceed with a review and investigation of the claim details, (such as the hearing held by AZDOR) and any other supporting documentation regarding the claim. 

For claims that are found to be valid, Jet will make payment up to the full bond limit. The bondholder is ultimately responsible for their actions and must reimburse Jet for the paid out claim. Failure to do so will result in future difficulties obtaining surety bonds, including license bonds that are required of all Arizona contractors.

Are There Other Bonds That a Contractor Needs? 

Yes! The State of Arizona requires residents looking to perform construction work to be officially licensed with the Arizona Registrar of Contractors. Such a license will only be granted once the applicant secures one of the Arizona Contractor License Bonds.

How May a Claim on the Arizona Contractor Taxpayer Bond Arise?

Arizona Contractor Taxpayer Bond Form