Arizona IRS Tax Attorney

AZ Tax Landscape

Arizona taxes individual income at a flat 2.5% rate, the lowest flat income tax in the country, and it collects a transaction privilege tax on businesses in place of a conventional sales tax. The Arizona Department of Revenue (ADOR) administers both and conducts its own audits and collections independently of the IRS. Arizona starts its return from federal adjusted gross income, so an IRS adjustment flows into a state assessment, but a low state rate means the federal side is where nearly all of the money and risk sits. Federal exposure follows Arizona's population and economy. The state's large retiree community generates IRA, pension, and required-minimum-distribution issues, Social Security taxation questions, and the underreporter notices that follow multiple 1099-R forms; part-year residents and winter residents from other states raise multi-state allocation questions. Arizona is a leading destination for people leaving California, and the California Franchise Tax Board audits former residents who keep California income, property, or family ties. The Phoenix metro's semiconductor, technology, and financial-services growth produces equity-compensation and contractor-classification cases, while Scottsdale's short-term-rental and hospitality economy and the Tucson region's university, military, and defense-contractor base produce rental-income, tip-reporting, and 1099 matching examinations. Real-estate investors across the Valley face scrutiny of Section 1031 exchanges, passive-loss limits, and depreciation recapture, and the state's construction, landscaping, restaurant, and staffing businesses are frequent targets for payroll-tax delinquency and the Trust Fund Recovery Penalty, which the IRS assesses personally against owners. The IRS Phoenix field office at 4041 N. Central Ave. handles examination and collection for the state, with Tucson served by a local office as well. Segal, Cohen & Landis represents Arizona clients before the IRS, IRS Appeals, and the U.S. Tax Court from Beverly Hills, and for Arizona's many ex-Californians defends the FTB residency audits the firm handles every day at home.