Arkansas Unfiled Payroll Tax Returns Checklist

Arkansas Unfiled Payroll Tax Returns Checklist

Introduction

Unfiled payroll tax returns represent one of the most serious compliance issues an Arkansas employer can face. Payroll taxes include amounts withheld from employee wages plus employer contributions—funds that belong to the state and federal government, not the business.

When payroll tax returns are not filed on time, the Arkansas Department of Finance and

Administration initiates collection and enforcement procedures that can escalate quickly.

Understanding what unfiled payroll taxes mean and what happens next is essential for protecting your business, employees, and personal finances.

What This Issue Means

An unfiled payroll tax return occurs when an Arkansas employer fails to submit required monthly or annual withholding tax forms to the state on their scheduled due date. When a return remains unfiled, the state has no official record of the taxes owed, amounts withheld, or whether payment was made.

Why the State Issued This or Requires This

Arkansas law requires employers to file withholding tax returns and remit withheld employee taxes in accordance with established filing schedules. When the Department of Finance and

Administration identifies a missing return after a due date has passed, it generates an unfiled return notice to alert the employer.

These notices often stem from situations such as a business stopping payroll filings without formally notifying the state, an abrupt business closure, or cash-flow challenges that disrupt regular tax reporting. By issuing these notices, the state aims to recover unpaid withholding taxes and maintain compliance with Arkansas employment tax requirements.

What Happens If This Is Ignored

Failure to resolve unfiled payroll tax returns can trigger escalating enforcement actions by

Arkansas tax authorities. The Arkansas Department of Finance and Administration may estimate payroll amounts to assess tax liability, apply penalties and interest, and record a state

tax lien against both business and personal assets. Additional collection measures may include wage garnishment, bank levies, or suspension of required business licenses. In many cases, these actions begin within months of the initial Arkansas DFA payroll tax notice.

What This Does NOT Mean

An unfiled payroll tax return notice does not automatically mean criminal charges have been filed or that the state has seized business assets. The notice does not indicate that a payment plan or settlement is impossible.

Checklist: What to Do After Receiving This or Identifying

This Issue

• Step 1: Locate and review the unfiled return notice

Read the entire notice carefully and note the specific tax periods, amounts owed, and deadline for response. Check for any attachments or supporting documents included with the notice.

• Step 2: Gather payroll and accounting records

Collect payroll registers, wage reports, and tax withholding records for the periods in question. Locate bank statements showing tax payments, if any were made. Retrieve monthly or annual payroll summaries or accounting software reports. Identify the exact payroll periods covered by unfiled returns.

• Step 3: Determine why returns were not filed

Review whether returns were prepared but not submitted to the state. Identify any changes in accounting personnel or systems that may have caused the lapse.

• Step 4: Reconstruct missing return information

Compile total wages paid to each employee for each period covered by the notice.

Calculate federal withholdings, state withholdings, and employer taxes owed. Document any payments made directly to the state or federal government. Organize this information by tax period in chronological order for submission.

• Step 5: Contact the Arkansas Department of Finance and Administration

Call the Withholding Tax Section at the Arkansas Department of Finance and

Administration using the number provided in the notice. Explain the situation and request guidance on filing procedures for late returns.

• Step 6: Obtain the correct forms and filing instructions

Request current Arkansas withholding tax return forms from the department. Confirm whether returns should be filed electronically through the Arkansas Taxpayer Access

Point or by mail. Verify filing deadlines and payment deadlines for your specific case.

Ask for any worksheet or summary forms needed to complete the filing.

• Step 7: Prepare and file the unfiled returns

Complete all missing Arkansas withholding tax returns with accurate information from your records. Include necessary supporting schedules or attachments as specified by the state.

• Step 8: Submit returns with a cover letter

File all unfiled returns together with a single submission to the state. Include a dated cover letter explaining the filing delay and circumstances. Reference the original notice number or the DFA case reference in your letter. Keep copies of everything submitted for your records.

• Step 9: Calculate and remit any unpaid taxes and penalties

Determine total tax owed based on filed returns and state calculations. Arrange payment by check, money order, or electronic payment through the Arkansas Taxpayer Access

Point.

• Step 10: Request written confirmation of filing and payment

Ask the department to confirm receipt of all filed returns. Obtain written acknowledgment that returns have been processed and posted to your account.

• Step 11: Establish a system to prevent future unfiled returns

Set calendar reminders for all future Arkansas withholding tax due dates based on your filing schedule. Verify that payroll is processed and tracked correctly for each period.

Confirm your filing schedule—monthly or annual—as required by the state.

Designate a responsible person to oversee tax filing compliance going forward.

• Step 12: Monitor the tax account for follow-up notices

Check your mail regularly for additional correspondence from the state. Contact the state if unexpected notices arrive after you have filed and paid.

What Happens After This Is Completed

After unfiled payroll tax returns are filed and payment is submitted, the state processes the returns and updates the employer's tax account. Once processed, the state will issue a receipt or confirmation showing that returns have been accepted and posted to the account.

Common Mistakes to Avoid

• Missing the response deadline in the original notice can trigger enforcement actions

even if you intend to file the returns later.

• Filing incomplete or inaccurate returns delays processing and creates additional

compliance problems for your account.

• Paying only part of the balance owed may not satisfy the notice requirements if penalties

and interest are included.

• Failing to respond to follow-up notices or requests from the state can result in escalated

collection activity.

• Filing returns without first contacting the department may result in the rejection of

incorrectly filed returns.

• Failing to keep copies of filed returns and receipts prevents you from resolving future

disputes about account status.

• Not updating Arkansas withholding tax compliance procedures after resolution allows the

same problem to recur in future periods.

Frequently Asked Questions

Can Arkansas payroll tax returns be filed after the notice is received?

Yes, Arkansas generally permits unfiled withholding tax returns to be filed, even if significantly overdue. However, penalties and interest will apply to unpaid balances.

Will filing unfiled returns eliminate the penalties already assessed?

Filing unfiled returns does not automatically eliminate penalties already assessed by the state.

Some employers explore penalty relief through separate requests, but this is a distinct process from filing the returns.

What if the business no longer exists or has closed?

Even if the business has closed, unfiled Arkansas withholding tax returns may still need to be filed to resolve the account. Contact the state for specific instructions.

Can payroll returns be amended if errors are discovered later?

Yes, amended returns can be filed to correct errors on previously filed returns.

Is there a statute of limitations on unfiled payroll tax returns?

Arkansas Code provides that when a return is not filed, the state may assess the tax at any time without limitation. For specific information about your situation, contact the department directly.

What if the business cannot afford to pay the full balance immediately?

The department may accept payment arrangements or installment agreements for large balances. Contact the Withholding Tax Section to discuss options.

Will an unfiled return notice affect the business’s ability to operate?

An unfiled return notice does not,

by itself

, automatically suspend licenses or close the

business. Responding promptly to the notice helps prevent escalation.

Who is responsible for filing payroll returns if ownership or management changes?

The current owner or responsible party is legally responsible for ensuring compliance, even if a previous owner failed to file. The department holds the current entity accountable for addressing unfiled returns.

Can an accountant or payroll service file unfiled returns on my behalf?

Yes, accountants, payroll providers, or tax professionals can file returns on behalf of the business.

Closing

Unfiled payroll tax returns represent a significant compliance issue that requires prompt action.

Responding to an Arkansas DFA payroll tax notice by gathering records, contacting the state, and filing the returns creates a path forward.

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.