Arkansas Sales Tax Payment Plan & Resolution
Checklist
Understanding Sales Tax Payment Issues
Sales tax debt occurs when sales tax owed to Arkansas has not been paid by the required deadline, or when a payment arrangement is needed to resolve an outstanding balance. This might involve unpaid returns from one or more reporting periods, or it might represent a cumulative balance that has grown over time.
The Arkansas Department of Finance and Administration issues payment demands and offers payment plan options as part of standard collection procedures. When a sales tax return is filed, or an audit determines that sales tax is owed and the payment is not received by the due date, the state begins collection activity.
Payment arrangements allow taxpayers to resolve debts over time rather than through immediate enforcement. State law establishes clear procedures for handling outstanding sales tax obligations.
Consequences of Ignoring Payment Obligations
Ignoring sales tax debt or a payment plan request results in escalated collection activity by the
Arkansas DFA. Additional notices, penalties, and interest on the unpaid balance may be issued, and collection methods such as tax liens, levies on bank accounts, or wage garnishment may be pursued.
Arkansas Code Section 26-18-1001 authorizes the Arkansas Department of Finance and
Administration to close businesses that accumulate three delinquencies in reporting or remitting sales tax within any consecutive twenty-four-month period. As time passes with the debt remaining unpaid, the total amount owed becomes larger due to the addition of interest at ten percent per annum and penalties.
Collection actions become more difficult to resolve as time passes. Business operations may be suspended if sales tax obligations remain unaddressed, and tax liens may be filed against business or personal assets.
What a Notice Does Not Mean
Receiving a sales tax notice does not mean your business license has been automatically suspended, though Arkansas Code Section 26-18-1005 grants the Arkansas DFA authority to suspend or revoke business licenses for non-compliance. Criminal charges are not automatically filed, though sales tax evasion can result in criminal penalties if there is evidence of intentional fraud.
An Arkansas sales tax payment plan offer does not mean you are required to accept it. Ignoring the offer may result in other collection actions by the state.
Initial Response Steps
Follow these steps when you receive a notice
1. Contact the Arkansas Department of Finance and Administration Sales and Use Tax
Section at 501-682-7104 to discuss your notice and account status.
2. Provide your account number and the notice number if you have it.
3. Ask for a current account balance and clarification of what tax periods are included.
4. Request information about whether a payment plan is available and what the terms would be.
5. Ask for details in writing or request that information be mailed to you.
Review the monthly or periodic payment amount, the number of payments, and the total timeframe before making any commitments.
Gathering Documentation and Verifying Information
Locate the notice or letter from the Arkansas DFA and write down the notice date, account number, tax period covered, and the tax due amount listed. Collect any sales tax returns you filed during the period in question and gather records of any payments made to the state during that time.
Review the tax period and amount shown on the notice against your own records. Check whether the notice matches a tax debt you recognize or a period you remember, and look for any payments you made that may not have been posted to your account yet.
Filing Missing Returns
Arkansas sales tax debt that includes a period for which you did not file a return requires immediate action. Contact the Arkansas Department of Finance and Administration to request a blank return form or access the online filing system through the Arkansas Taxpayer Access
Point.
Gather sales records for the missing period and calculate the tax due. File the return with payment, or note the amount you will include in the payment plan.
Understanding Penalties and Interest
Arkansas imposes a failure-to-file penalty of five percent of the tax owed for each month or part of a month that a return remains late, up to a maximum of thirty-five percent. Arkansas Code
Section 26-18-208 establishes that for failure to pay sales tax when due, the penalty is five percent per month up to a maximum of thirty-five percent.
Only the higher penalty is assessed if both penalties apply to the same period. Interest accrues at ten percent per annum from the original due date until full payment occurs, as established by
Arkansas Code Section 26-18-301 under Arkansas tax laws.
Requesting Payment Arrangements
For Arkansas sales tax debt resolution through installment agreements, contact the Collections
Office at 501-682-5000 or toll-free 1-800-292-9829 to inquire about qualifications for an
Arkansas DFA payment arrangement. Payment plans are evaluated on a case-by-case basis and require review of all facts surrounding the tax liability.
Arkansas DFA payment arrangement terms can extend up to sixty months, depending on the amount owed and your ability to pay. All required tax returns must be filed before a payment plan can be established, and interest continues to accrue on the outstanding tax liability during the installment period.
Taxpayers seeking debt relief may also inquire about an offer in compromise if they qualify based on financial hardship and insolvency as defined by Arkansas tax laws. An offer in compromise allows financially distressed taxpayers to resolve overwhelming tax liabilities by paying a reasonable amount in compromise, though approval is not automatic and requires meeting specific criteria.
Relief options should be discussed with the Collections Office to determine which approach best fits your situation.
Executing and Maintaining Your Payment Plan
Once a payment plan is agreed upon, confirm the start date of the first payment and set up a system to remind yourself of each payment due date. Make payments on time and through the method specified in the agreement, keeping records of every payment made, including confirmation numbers or receipts.
Monitor your account by keeping the payment plan agreement in a safe, accessible location.
Contact the Arkansas Department of Finance and Administration if you receive additional notices while the plan is active or if you are unable to make a scheduled payment to avoid defaulting on your agreement.
Common Errors to Avoid
Avoid these mistakes when addressing Arkansas sales tax debt
- Missing payment plan deadlines risks escalated collection action if a response deadline
is stated on a notice.
- Ignoring letters or notices from the Arkansas DFA does not resolve the issue and results
in additional action.
- Partial payments made without an approved payment plan may not satisfy the tax
liability.
- Required information must be provided when the state requests documentation or
clarification to avoid delays in resolution efforts.
- Payments should be confirmed as posted to your account to prevent missed payments
on a plan.
- Receipts, confirmation numbers, and records of payments must be kept to prove
payment if disputes arise.
Taxpayers who default on payment plans may face immediate collection through tax liens or other enforcement methods.
Completing Your Payment Obligation
After you make the final payment on the Arkansas DFA payment arrangement, request written confirmation that the tax liability has been satisfied. Check your account online or by phone to verify that the balance is zero, and keep documentation that the debt was paid in full to prevent future collection attempts or filing of additional tax liens.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
We help with
- State enforcement actions and notices
- Payroll tax debt review and resolution
- Penalty and interest reduction options
- Payment plans and compliance solutions
- Representation before state tax agencies
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