Proposed assessment
In short
The Department's determination that additional tax is due. It becomes final forty-five days after receipt, not after mailing — and some adjustments are not proposed assessments at all.
In full
A proposed assessment is the Department's notice of its determination of a deficiency. A.R.S. § 42-1108(B) provides that the deficiency, plus penalties and interest, is final forty-five days after the date of receipt of the notice unless an appeal is taken.
Receipt, not mailing, starts the clock for transaction privilege tax. The statute sets the individual income tax period at ninety days after the date of mailing, which shows the distinction is deliberate.
Once the assessment is final, subsection (D) requires the Department to mail a notice and demand, and the amount is due and payable ten days after the date of that notice.
A separate category is easy to mistake for a proposed assessment and carries none of the same rights. Under subsection (F), tax in excess of what the return disclosed that is due to a nonaudit adjustment is not a deficiency assessment, and the taxpayer may not protest or appeal it as one.
Subsection (G) lists nine such adjustments. Several are the kind of thing a contractor does routinely: an entry inconsistent with a schedule filed with the return, an omission of information required to substantiate an entry, and a deduction or credit that is not authorized by statute for the taxable period.
That last one reaches a retired deduction code claimed for a period after it expired, which is why the code's availability window matters as much as the code.
| # | Adjustment |
|---|---|
| 1 | A mathematical error shown on the return |
| 2 | Failure to properly compute the tax liability from the taxable income reported |
| 3 | Incorrect use or selection from tax tables or schedules, where apparent from other information on the return |
| 4 | An entry inconsistent with a schedule, form, statement, list or other document filed with the return |
| 5 | An omission of information required on the return to substantiate an entry |
| 6 | A deduction or credit exceeding a statutory monetary, percentage, ratio or fractional limit where the items appear on the return, including claiming one not authorized by statute for the taxable period |
| 7 | Missing or incorrect taxpayer identification numbers for claiming exemptions or credits |
| 8 | A credit or deduction requiring preapproval that was not preapproved, or that exceeds the preapproved amount |
| 9 | A carryforward outside the statutory period, or inconsistent with prior year returns |
A.R.S. § 42-1108(B), (D), (F), (G); ADOR TPT Audit