Arkansas Payroll Tax Payment Plan Options Checklist

Arkansas Payroll Tax Payment Plan Options Checklist

Understanding Unpaid Withholding Tax Obligations

Withholding tax in Arkansas refers to the state income tax that employers deduct from employee paychecks and remit to the Arkansas Department of Finance and Administration. When an employer fails to pay withheld amounts on time, the business becomes responsible for the unpaid balance, plus penalties and interest, creating a significant tax debt.

Why the State Issues Collection Notices

Arkansas requires employers to withhold state income tax from wages and deposit it with the state according to a regular schedule determined by the tax year and filer classification.

Employers classified as monthly filers must remit payroll taxes by the 15th day of the month following the reporting period.

Annual filers must remit by January 31 following the close of the tax year. When payments are missed, the Arkansas Department of Finance and Administration issues notices to inform the employer of the tax debt and initiate collection procedures under Arkansas Tax Law.

Consequences of Ignoring Unpaid Withholding Taxes

Unpaid employment taxes trigger escalating collection efforts when left unaddressed, and the tax debt continues to grow through added penalties and interest charges. The state may pursue additional notices, apply penalties, and assess interest charges that compound the tax liability over time.

Collection actions can include wage garnishments, bank levies, or liens against business assets to satisfy the outstanding tax debt. Arkansas Tax Law imposes a 5% per-month penalty on unpaid tax liability, with a maximum penalty of 35% of the original tax debt.

Criminal Penalties Under Arkansas Law

Arkansas Code establishes criminal penalties for employers who willfully fail to furnish required withholding tax returns to the Arkansas Department of Finance and Administration or to employees as documented on Form W-2. An employer convicted of this misdemeanor faces fines of twenty-five to two hundred fifty dollars, imprisonment of ten to ninety days, or both.

Steps to Address Unpaid Arkansas Withholding Tax

Gather Required Documentation

Collect recent withholding tax notices from the Arkansas Department of Finance and

Administration showing your Employer Identification Number and Arkansas tax account number.

Gather payroll records and copies of filed tax returns for the periods in question to provide accurate information when contacting the state about your income tax withholdings.

Verify the Balance Due

Review official notices from the Arkansas Department of Finance and Administration to confirm the exact tax liability due, including assessed penalties and interest on the unpaid payroll tax.

Contact the Collections Office directly at 501-682-5000 or toll-free at 1-800-292-9829 to request an official account statement and verify all income tax withheld amounts.

Contact the Collections Office

Reach out to the Collections Office to discuss your situation and explore payment arrangements to resolve unpaid employment taxes. Contact the office by phone at 501-682-5000 or toll-free at

1-800-292-9829.

Email is also available at Collections.Research@dfa.arkansas.gov, or visit the official website at www.dfa.arkansas.gov. When contacting the state, provide your Employer Identification Number, business tax account number, and a brief explanation of your current financial circumstances.

Request an Arkansas DFA Installment Agreement

Inquire whether the Arkansas Department of Finance and Administration offers installment payment arrangements for unpaid state withholding tax and accumulated obligations. Payment plans may extend up to 60 months, depending on the total tax liability owed and your business's financial circumstances. Ask about monthly payment amounts, plan duration, whether interest and penalties continue to accrue on the remaining tax debt during the plan, any setup fees or administrative charges, and consequences if a payment is missed.

Obtain Written Confirmation

Request written documentation of any payment arrangement that outlines the agreed-upon payment amount, payment due dates, and the payment method accepted for remitting payroll

taxes. The agreement should specify the total number of payments, the end date of the plan, and the consequences for late or missed payments.

Establish Payment Procedures

Online payment through the Arkansas Taxpayer Access Point at www.atap.arkansas.gov allows you to make payments and file required tax returns electronically. Electronic funds withdrawal from a business bank account and check payments mailed to the address specified in your agreement are also accepted by the state. Set up calendar reminders for each payment due date and communicate the schedule to your accountant or bookkeeper who maintains payroll records.

Maintain Current Tax Compliance

Continue withholding and paying current state withholding tax and employment taxes on time while working on a payment plan for past-due amounts to prevent additional tax debt. Failure to file current tax returns and pay current income tax withheld while on an Arkansas DFA installment agreement may result in the state canceling the arrangement or pursuing additional collection action.

Document All Communication

Keep records of the date and time of phone calls, the name of the state representative you spoke with, and a summary of what was discussed regarding your tax debt and payment options. Retain copies of all written correspondence sent to or received from the Arkansas

Department of Finance and Administration, filed tax returns, Form W-2 documents, and all payment confirmations showing reduction of your tax liability.

Monitor Your Account Status

Periodically check your account through the Arkansas Taxpayer Access Point to verify that payments are being properly credited and that the balance is decreasing as expected under your payment plan.

Contact the Collections Office directly if you have questions about your account status, need to confirm that payments have been received and applied to your outstanding payroll tax balance, or require copies of previously filed income tax return documents.

Common Errors to Avoid

Do not ignore correspondence from the Arkansas Department of Finance and Administration regarding your tax debt, as delays worsen penalties and increase total tax liability. Missing payment plan payments requires immediate contact with the Collections Office to explain your situation and prevent default on the arrangement.

Failing to pay current income tax and file required tax returns while on a payment plan creates new tax debt that compounds existing liabilities and may void your agreement. Relying on verbal promises without obtaining written documentation of payment arrangements makes enforcement difficult and does not protect against disputes over payroll tax obligations or Form

W-2 reporting requirements.

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.