220: PTE Underpayment of Estimated Tax by Corporations & Pass-Through Entities (2025)

Who files this form

Most taxpayers do not have to file Form 220/PTE. The department will calculate any penalty due and bill the taxpayer.

You must file the form with your tax return if any Part A box applies, even if no penalty is due:

• You use the annualized income installment method.
• You use the adjusted seasonal installment method. This method is not available to partnerships or S corporations that made the PTE election.
• You file Form 120 or 120A and are a “large corporation” calculating the first required installment using the prior taxable year’s tax liability.
• You file Form 120S as an S corporation subject to tax at the federal level and calculate the required annual payment using the sum of 90% of the current year’s liability attributable to built-in gains or certain capital gains income, plus 100% of the prior year’s liability attributable to excess net passive income.

When it's due

For tax year 2025, Part B, line 7 lists estimated tax installment due dates as the 15th day of the 4th, 6th, 9th, and 12th months of the taxable year.

PTEs are directed to see the instructions for their installment dates. Those instructions were not provided.

The form says to file Form 220/PTE with your tax return when required, but it does not print a separate filing deadline for this form.

What you'll need

Have the following information available to complete the form:

• Your name as shown on the tax return and your Employer Identification Number (EIN).
• Your applicable 2025 Arizona return: Form 99T, 120, 120A, 120S, or Form 165 for a partnership making the PTE election.
• For Forms 99T, 120, and 120A, the tax shown on the 2024 return for line 6b.
• Estimated tax amounts paid or credited for each period, and payment dates for the penalty calculation.
• If using Schedule A, taxable income for the required periods and applicable tax credit, credit recapture, and claim of right adjustment amounts.
• If using the adjusted seasonal method, taxable income for the listed periods in taxable years beginning in 2022, 2023, 2024, and 2025.

How to file

If any Part A box applies, check the applicable boxes and include Form 220/PTE with your tax return. Partnerships and S corporations that made the PTE election should also check the PTE election box.

If you are not required to file Form 220/PTE, you may still use it to calculate the penalty. Enter the penalty on your return’s estimated tax underpayment penalty line, but do not check the box on that line or include Form 220/PTE with the return.

The supplied form does not provide a mailing address or e-filing directions.

Common mistakes

• Skipping the form because no penalty is due. If any Part A box applies, you must file it with your return anyway.
• Attaching the form when it is only used for an optional calculation. If filing is not required, the form says not to include it or check the penalty-line box on your return.
• Using the adjusted seasonal method without meeting its condition. The caution says to use it only if the base period percentage for any six consecutive months is at least 70%. It is not available to partnerships or S corporations making the PTE election.
• Completing Part B across rows instead of by column. Complete lines 10 through 16 of each column before moving to the next column.

Questions people ask

Can the department calculate the penalty for me?

Yes. In most cases, you do not have to file Form 220/PTE, and the department will calculate any penalty due and bill you. Part A lists the exceptions that require filing.

Can a partnership or S corporation making the PTE election use the annualized income method?

Yes. The form says the annualized income installment method is available to these taxpayers. The adjusted seasonal installment method is not.

Is there a limit on the calculated penalty?

Part C, line 36 uses the smaller of 10% of the underpayment on Part B, line 15 or the penalty calculated on Part C, line 35, for each column. Line 37 adds those amounts.

Does the form provide every percentage rate needed for the penalty calculation?

No. It prints a 7% rate on lines 20, 22, and 24. Later calculation lines show an asterisk, with the note “Percentage rate to be announced.”

Official sources

• https://azdor.gov/forms