Arkansas Payroll Tax Nonpayment Emergency Checklist

Arkansas Payroll Tax Nonpayment Emergency

Checklist

Introduction

Arkansas withholding tax nonpayment occurs when an employer fails to remit withheld income taxes, unemployment insurance contributions, or employer payroll taxes to the Arkansas

Department of Finance and Administration by the required due date. This situation differs from filing payroll tax returns because even when forms arrive on time, the actual payment of taxes owed may be missed or delayed.

Payroll taxes represent funds held in trust and rank among the most closely monitored obligations in the Natural State tax system. Ignoring payroll tax debt can lead to escalating penalties, interest charges, wage garnishment notices, and, in certain circumstances, a criminal referral.

What This Issue Means

Arkansas withholding tax nonpayment means an employer has not sent the required dollar amount of withheld or employer-paid payroll taxes to the Arkansas Department of Finance and

Administration by the deadline. Monthly filers must file Form AR941M with remittance for

Arkansas tax withheld by the 15th day following the reporting period.

Once a payment becomes late, the system records the debt and begins calculating interest at ten percent per annum and penalties on the unpaid amount from the original due date. Common reasons include cash flow difficulties, administrative errors, payment processing system glitches, or misunderstandings of payment deadlines.

Why the State Issued This or Requires This

Arkansas requires employers to submit payroll tax payments on set schedules because the amounts withheld from employees' wages are not considered employer funds. To ensure proper state withholding tax compliance, the Department of Finance and Administration uses automated tracking systems that monitor deposits to state tax accounts and issue initial collection notices whenever a payment is missed, regardless of whether the nonpayment was intentional or accidental.

What Happens If This Is Ignored

Ignoring Arkansas DFA payroll tax debt typically results in demand notices requiring payment within specified timeframes. Penalties at 5% per month and interest at 10% per annum continue to accrue on the unpaid balance. Monthly penalties can increase by an additional 5% up to a maximum of 35% of the tax.

After initial notices go unanswered, the Arkansas Department of Finance and Administration may pursue collection actions, including wage garnishment, liens against property, or referral to the state offset program. Arkansas Code Section 26-18-306 allows the state to collect assessed taxes by levy or court proceeding within ten years after the assessment date. Criminal investigation coordination with law enforcement may occur when nonpayment appears willful and substantial.

What This Does NOT Mean

Arkansas DFA payroll tax debt does not automatically trigger criminal charges against the employer. A business license revocation does not occur automatically upon nonpayment.

Immediate seizure of all personal assets does not occur without following specific legal procedures. Receiving a nonpayment notice does not mean the state has frozen all business bank accounts or eliminated payment options.

Checklist: What to Do After Receiving This or Identifying

This Issue

1. Locate all notices from the Arkansas Department of Finance and Administration regarding withholding tax or payroll tax obligations. Check email accounts, postal mail, and online Arkansas Taxpayer Access Point accounts for documentation.

2. Verify the exact balance stated in the most recent notice against your own payroll withholding records. Document any discrepancies between the state calculation and your records with specific reasons for differences.

3. Determine why the Arkansas employer tax payment plan was missed by reviewing payment history. Check whether deposits were attempted but failed, deadlines were

miscalculated, or payments were never initiated.

4. Gather confirmation documents from your bank or payment processor showing any partial payments made after the original nonpayment occurred.

5. Contact the Withholding Tax Branch at 501-682-7290 or withholding@dfa.arkansas.gov to confirm current balances, applicable interest and penalties, and available payment arrangements.

6. Request official written documentation itemizing the current balance, calculated penalties and interest, payment deadlines, and all available resolution options.

7. Inquire about payment plans or installment agreements for payroll tax debt. Arkansas charges ten percent annual interest on back taxes that continues to accrue during active payment plans.

8. Prepare full payment using correct methods and addresses if funds allow immediate resolution. Submit applications for payment arrangements with required supporting documentation if installment plans become necessary.

9. Obtain confirmation numbers or receipts showing payment dates and amounts the agency received.

10. Document all communications, including dates, times, contact persons, and a summary of discussions, for future reference.

11. Follow all conditions required by approved payment arrangements, including filing future payroll withholding returns on time and making timely Arkansas withholding tax payments in accordance with agreed schedules.

12. Monitor account status regularly by requesting current statements to verify payments apply correctly.

What Happens After This Is Completed

After contacting the agency and submitting payment or applications, the agency acknowledges receipt and processes the information in accordance with established procedures. Full payment receipt typically closes accounts and stops collection activity.

Approved payment arrangements require monitoring compliance with agreed schedules and terms. The agency may hold collection actions while payments continue or may resume enforcement when terms go unmet.

Common Mistakes to Avoid

Missing stated deadlines in demand notices escalates cases to more aggressive collection methods. Never assume Arkansas DFA payroll tax debt resolves without action, because interest and penalties continue to accrue at 10% per annum, and the total amounts owed increase over time.

Always obtain written confirmation that the agency has received payments, including the dates and amounts applied to the accounts. Submit complete applications with all requested supporting documentation, as incomplete submissions are subject to denial or delay.

Avoid making sporadic partial payments without approved arrangements, as random amounts confuse tracking systems and may not be properly credited. Understanding tax regulations helps employers meet all future filing and payment deadlines when arrangements include conditions, because missing future obligations terminate agreements and reinstate full collection activity.

Frequently Asked Questions

Does Arkansas withholding tax nonpayment automatically result in liens?

Liens are not filed immediately after nonpayment. The agency issues demand notices before filing liens after the demand period passes without payment.

Can employers get payment plans for Arkansas DFA payroll tax debt?

The agency offers payment arrangements in many cases, which are evaluated on a case-by-case basis. Contact the Collections section directly to learn whether payment plans apply to specific situations.

Will paying the debt stop wage garnishment?

Payment of full balances typically stops further collection actions. Contact the agency to confirm that garnishment releases occur once payment clears.

Will being behind on payroll taxes affect business licenses?

Public guidance does not explicitly address whether nonpayment of the Arkansas withholding tax triggers automatic license suspension or revocation. Ask the agency about specific relationships between tax debt and business licensing.

Facing State Tax Enforcement Action?

If you’ve received a notice related to sales tax or payroll tax enforcement, and aren’t sure how to respond, our team can help you understand your options and next steps.