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Arizona Taxpayer Bond for Contractors

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Arizona Taxpayer Bond for Contractors

The Arizona Registrar of Contractors requires contractors with transaction privilege tax licenses and contractors who have contracts for construction projects exceeding $50,000 to post an Arizona taxpayer bond.

What are the different types of contractor tax bonds?

  • Type 1 bond amounts are for contractors of residential buildings that are not single-family based.
    This includes plumbing, air conditioning, heating, and other special trade contractors.
  • Type 2 bond amounts are for single-family residential housing, water, sewer, pipeline, communication, and power-line construction contractors.
  • Type 3 bond amounts are for industrial contractors who engage in non-residential building, roadway and highway construction. Type 3 Arizona contractor bonds exclude elevated highways.
  • Type 4 bond amounts are for non-residential heavy construction contractors. Examples of heavy construction are dams, golf courses, and land drainage.
  • Type 5 bond amounts are for bridge, tunnel and elevated highway construction contractors.

How much will my contractor tax bond cost in Arizona?

The cost of your contractor taxpayer bond could be as little as $100 and is based on your bond amount. The bond amount varies depending on the type of work being performed by the contractor. Factors to determine your bond amount include the gross value of the contract, the value of the land included in the contract, and the overall volume of work.

Bond Type
$2,000Taxpayer Bond for ContractorsGeneral contractors of residential buildings, other than single family housing
$7,000Taxpayer Bond for ContractorsGeneral contractors of single family housing, water, sewer, pipeline, communication and power-line construction
$17,000Taxpayer Bond for ContractorsGeneral contractors of industrial building and warehouses; of non-residential buildings; and highways and street construction except elevated highways
$22,000Taxpayer Bond for ContractorsHeavy construction not elsewhere classified (e.g. dams, golf courses, land drainage, etc.); bridge, tunnel and elevated highway construction
$1,000-$200,000Prime Contractor Bond

Why do Arizona contractors need a taxpayer bond?

The Arizona taxpayer bond for contractor ensures that the principal (contractor) will pay all transaction privilege taxes, penalties, and other obligations. If the principal fails to make the appropriate payments, the surety will compensate the state for any financial losses. These bonds are not required of all contractors in the state. The state might require a contractor to post this bond if the department experienced collection problems while a new license applicant was engaged in business under a prior license or if a new license applicant had a previous license revoked.

Need a surety bond for a construction project?

Payment bonds and performance bonds are often required for specific construction projects. No matter the state, SuretyBonds.com can get you the bond you need for your next job.

Who needs a contractor tax bond?

Contractors must post a taxpayer bond if they are required to be licensed with the Registrar of Contractors or as dealers of manufactured housing (mobile homes). Specifically, prime contractors must post a bond if they have been in business for less than 12 months entering into a contract of $50,000 or more.

What to know about Arizona contractor tax bonds

The contractor’s industry classification and transaction privilege tax license number is required on the bond form. If the taxpayer maintains good standing for two years, they may request to have the bond requirement waived by the Arizona Department of Revenue. Arizona contractor tax bonds are continuous until canceled, and the surety company must provide written notice of the bond’s cancellation to the Registrar at least 30 days in advance only after the two-year term has passed.

Additional Resources

Arizona Registrar of Contractors

Arizona Department of Revenue Taxpayer Bond for Contractor form

Arizona Revised Statutes Title 42 - Taxation

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