When unexpected financial setbacks make it difficult to keep up with tax payments, Arkansas offers a way to regain control: the Arkansas tax payment plan. Administered by the Arkansas Department of Finance and Administration, this program allows qualified taxpayers to pay off state tax liability in installments over time rather than all at once. By entering into a formal payment plan agreement, individuals and businesses can avoid severe enforcement actions like bank levies, wage garnishments, and tax liens while working toward compliance.
This guide provides a clear overview of how to qualify for, apply for, and manage a payment plan through the state’s revenue division, including comparisons to the Internal Revenue Service process. Whether filing a paper tax return, submitting individual income tax returns electronically, or seeking tax relief for back taxes, this resource explains every step using verified state information. If you’re facing an outstanding liability, now is the time to act—and this guide will help you do it right.
Overview of the Arkansas Department of Finance and Administration (DFA)
The Arkansas Department of Finance and Administration (DFA) is the lead agency managing state revenues and tax enforcement. Its revenue division ensures that individuals and businesses meet their filing obligations, submit required tax payments, and promptly resolve any state tax liability. Whether a taxpayer is seeking assistance through a payment plan or facing enforcement actions due to an outstanding liability, the DFA serves as the primary point of contact for resolution and compliance.
Core Responsibilities
- Tax administration duties: The DFA administers various taxes, including individual income tax, corporate income tax, sales and use tax, and franchise tax, ensuring that each is filed and paid accurately.
- Processing tax returns: The agency processes individual income tax returns and maintains detailed account records for taxpayers across the state.
- Audit and compliance checks: The DFA verifies that individuals and businesses follow applicable tax laws through regular audits and system checks.
- Debt enforcement actions: The DFA initiates collections for back taxes, applying penalties and additional interest when necessary to recover unpaid tax liability.
- Taxpayer assistance resources: To promote voluntary compliance, the DFA offers forms, guidance, and even free help through its online portals and public service offices.
Collection and Enforcement Tools
- Tax liens and judgments: The DFA may file Certificates of Indebtedness—public records that function as tax liens—against taxpayers who fail to pay their debts or enter into a payment plan agreement.
- Wage and bank levies: It can garnish wages and issue levies against a bank account to collect unpaid taxes.
- Business permit sanctions: The agency can suspend or revoke business licenses or registrations until tax debts are resolved.
- Ongoing penalty accrual: Interest at a statutory rate and escalating penalties may continue to accumulate on unpaid income tax balances.
- Alternative resolution programs: The DFA supports solutions like the installment agreement and the compromise program for taxpayers who seek to resolve debts through formal negotiation or offer a compromise.
While the DFA enforces compliance through strong legal authority, it offers multiple payment options to help taxpayers meet their obligations without enduring unnecessary hardship. The sooner a taxpayer communicates with the Department of Finance, the more options they will have to avoid severe consequences and regain financial stability.
Individual Taxpayer Payment Plans
For individual taxpayers in Arkansas who are unable to pay their tax liability in full, the Department of Finance and Administration (DFA) offers the option to request a payment plan. These structured plans allow for gradual repayment of back taxes and associated penalties, helping individuals avoid aggressive collection actions such as tax liens, levies, and garnishments. To be eligible, taxpayers must meet specific requirements and submit necessary documentation.
Eligibility Requirements
To qualify for a payment plan agreement, individual taxpayers must first demonstrate that they are both compliant and financially unable to pay their taxes in full at once.
- Filed tax returns: All required individual income tax returns must be filed before a payment plan will be considered by the DFA.
- Proof of financial hardship: Applicants must show they are unable to pay their outstanding liability in a lump sum. This is typically done by submitting IRS Form 433-A or 433-F.
- Ongoing compliance: Taxpayers must agree to remain current with all future tax payments, estimated income payments (if applicable), and filing obligations during the duration of the installment period.
Special Provisions for Debts Under $2,000
Taxpayers with lower balances may qualify for an expedited process that avoids formal liens under Act 160 of 2013.
- Debt limit requirement: The total individual income tax debt must be under $2,000 to qualify for this exception.
- Short installment period: The agreement must not exceed 12 months.
- Electronic payments only: All payments must be made electronically using the Arkansas Taxpayer Access Point (ATAP) system or another approved method.
- Lien discretion: The DFA may choose not to file a tax lien if it determines doing so is not in the state’s best interest.
Payment Terms and Interest
Payment plans are flexible, but they still involve interest, penalties, and administrative costs that increase over time.
- Plan length: Most plans range from 6 to 60 months, with shorter terms preferred by the DFA whenever possible.
- Interest charges: A 10% additional interest rate accrues annually on any unpaid state tax liability.
- Penalty structure: Failure-to-file penalties accrue at 5% per month (capped at 35%), while failure-to-pay fees accrue at 1% per month (also capped at 35%).
Application Process
Applying for a payment plan is relatively straightforward, but attention to detail is crucial to avoid delays or rejections.
- Online application preferred: The fastest method is to apply via the ATAP portal at atap.arkansas.gov, where taxpayers can register and request a plan.
- Phone applications: Taxpayers may also call 501-682-5000 or 1-800-292-9829 to apply directly with a DFA representative.
- Written requests: Alternatively, individuals may submit a written proposal that includes the requested payment terms and justification for financial hardship.
Required Documentation
Taxpayers should prepare a complete financial profile when applying for a plan.
- Financial disclosure forms: Use IRS Form 433-A or 433-F to disclose income, expenses, assets, and debts.
- Income and banking records: Include recent pay stubs, bank account statements (last 3 months), and documentation of essential monthly expenses.
- Debt and asset verification: Provide statements for mortgages, car loans, retirement accounts, or other financial obligations.
- Compliance proof: Ensure that any pending e-file or paper tax return submissions are completed prior to applying.
Business Taxpayer Payment Plans
Businesses operating in Arkansas—whether sole proprietorships or corporations—are also eligible to apply for a payment plan agreement through the Arkansas Department of Finance and Administration. These plans allow businesses to manage outstanding liability while continuing operations and avoiding severe enforcement actions such as liens or license cancellations.
However, business tax payment plans often require more detailed financial disclosure, carry stricter terms, and usually involve the filing of a tax lien. The DFA considers business compliance history, ability to pay, and filing status before approving any installment arrangement.
Eligible Business Types
The DFA accepts applications for business payment plans from a wide range of legal entities, including the following:
- Sole proprietorships
- General partnerships and limited partnerships
- Limited liability partnerships (LLPs)
- Single-member and multi-member LLCs
- S corporations and C corporations
To be eligible, the business must be current on all required filing obligations and must not have any unfiled income tax or excise tax returns at the time of application.
Tax Types Covered
Business payment plans may apply to several categories of state tax liability, depending on the type of business and industry.
- Sales and use tax: Taxes collected from customers during transactions.
- Withholding tax: Taxes withheld from employee wages.
- Corporate income tax: Taxes owed by corporations on net profits.
- Franchise tax: An annual tax on business entities registered with the Arkansas Secretary of State.
- Special excise taxes: Industry-specific taxes, such as those on alcohol, tobacco, or motor fuel.
The DFA prioritizes the collection of trust fund taxes, such as sales tax and withholding tax, since these are collected on behalf of the state.
Additional Business Requirements
Businesses are typically held to stricter standards than individuals when applying for a payment plan.
- Detailed financial disclosures: Businesses must submit IRS Form 433-B, which includes comprehensive financial data.
- Electronic filing and payments: Most business applicants are required to submit returns and make payments through the Arkansas Taxpayer Access Point (ATAP) or another approved platform.
- Tax lien filings: Unlike some individual plans, most business payment agreements require the DFA to file a Certificate of Indebtedness, establishing a public tax lien.
- Verification of compliance: The DFA conducts thorough reviews of the business’s payment history, outstanding returns, and ability to stay current during the installment agreement.
Application Process
Business owners should contact the DFA as soon as a tax liability becomes unmanageable. The application process typically includes several steps:
- Initial consultation: Call 501-682-5000 or 1-800-292-9829 to speak with a collections representative.
- Documentation preparation: Gather financial records, complete Form 433-B, and prepare a realistic proposal for monthly tax payments.
- Financial submission: Submit supporting documentation, including the following:
- 6 months of bank account statements for business accounts
- Profit and loss statements
- Balance sheets and asset listings
- Accounts receivable aging reports (if applicable)
- Review and negotiation: The DFA reviews the application to assess feasibility and may request additional documentation or clarification.
- Approval and agreement: If approved, the business receives written terms detailing the payment amount, installment period, and any required compliance terms.
Arkansas offers a structured path for businesses seeking to resolve back taxes, but the process is more intensive than for individuals. Working proactively with the DFA and preparing accurate documentation can increase your chances of approval and help avoid severe disruptions to business operations.
Managing Penalties and Interest
Even with an approved Arkansas tax payment plan, penalties and interest continue to accrue until the outstanding liability is paid in full. Taxpayers must know how these charges are calculated and how to reduce the total repayment cost.
The Arkansas Department of Finance outlines its interest and penalty policies in DFA Subject 7028. These fees can add a significant amount to your total tax liability—especially if you enter into a long-term installment agreement.
Penalty and Interest Breakdown
- Interest Rate
A flat 10% annual interest is applied to unpaid taxes from the original due date until the balance is paid in full. This applies to both individuals and businesses and continues regardless of whether a payment plan is in place.
- Failure-to-File Penalty
If a taxpayer fails to file their required tax return on time, a penalty of 5% per month is assessed. This penalty can grow to a maximum of 35% of the unpaid balance.
- Failure-to-Pay Penalty
If you fail to pay the full tax due by the deadline, we add a separate penalty of 1% per month. This penalty also caps 35% of the unpaid tax.
- Combined Penalty Limit
While both penalties can apply at the same time, the total combined penalties will not exceed 35% of the original tax due.
- Additional Interest on Penalties
In addition to accruing on the base tax, interest also applies to unpaid penalties, further increasing the total liability.
Why Early Payoff Matters
While a payment plan agreement gives flexibility, the longer the installment period, the more you’ll pay in additional interest and penalties. Taxpayers who have the means to pay off their back taxes sooner—either through a lump sum or larger monthly payments—can significantly reduce the total amount owed. This step is especially important if you are expecting a tax refund, which may be withheld and applied toward your balance.
Default and Enforcement Actions
While entering into an installment agreement can prevent aggressive collection actions, failing to meet the terms of your Arkansas tax payment plan has serious consequences. A default occurs when a taxpayer misses one or more scheduled payments, fails to file new individual income tax returns, or otherwise violates the conditions of the payment plan agreement. Once defaulted, the remaining balance becomes immediately due, and the Arkansas Department of Finance and Administration may resume full enforcement efforts.
What Triggers a Default
- Missed payments: Failing to make one or more scheduled tax payments on time.
- New compliance failures: Not filing a required tax return or falling behind on newly incurred income tax.
- Invalid payment methods: Repeated declined bank account withdrawals or reversed electronic payments.
- False or incomplete information: False or incomplete information: Submit inaccurate or incomplete financial documentation during the application process.
Consequences of Default
According to Arkansas Code § 26-18-807, defaulting on a payment plan gives the state full legal authority to collect the unpaid liability through enforcement mechanisms, often without further notice.
- Immediate full balance due: The total tax liability, including any remaining principal, penalties, and interest, becomes payable immediately.
- Renewed enforcement actions: The DFA may:
- Refile or enforce a Certificate of Indebtedness (tax lien)
- Issue wage garnishments
- Levy your bank account
- Seize personal or business property
- Business penalties: If applicable, the DFA may revoke business licenses or tax permits.
- Negative credit impact: Public liens may appear on your credit report, reducing access to financing or business credit.
Reinstatement Opportunities
The DFA may consider reinstating a defaulted payment plan agreement under specific conditions, especially if the taxpayer takes immediate corrective action.
- Catch-up payments: Any missed payments must be made up in full.
- Explanation of default: You must demonstrate that the default was due to circumstances beyond your control (e.g., job loss, medical emergency).
- Ongoing compliance ability: You must show that you can stay current moving forward.
Contacting the DFA immediately at 501-682-5000 is essential if you believe you are at risk of default—or if you’ve already missed a payment.
Defaulting on a state tax liability doesn’t necessarily mean the end of relief options, but it does increase the severity of potential consequences. Communication and swift action are critical to avoid escalating enforcement and protect your financial stability.
Arkansas vs. IRS Payment Plans
Many taxpayers face tax debts at both the state and federal levels. While the Arkansas tax payment plan shares some similarities with IRS installment programs, there are important differences in eligibility, procedures, and enforcement. Understanding these distinctions helps individuals make informed decisions—especially when coordinating both plans at once.
Key Differences: Arkansas vs. IRS
Eligibility Threshold
- Arkansas DFA:
No official limit. Special rules apply for debts under $2,000. - IRS:
Streamlined application process available for debts under $50,000.
Application Process
- Arkansas DFA:
Must contact DFA directly or apply via the Arkansas Taxpayer Access Point (ATAP). - IRS:
You can apply online using IRS Form 9465 or through the IRS website.
Payment Duration
- Arkansas DFA:
Generally ranges from 6 to 60 months. For low-balance plans, the duration may be capped at 12 months. - IRS:
Streamlined agreements may extend up to 72 months.
Lien Policies
- Arkansas DFA:
Tax liens (Certificates of Indebtedness) are often filed as part of the plan. - IRS:
Liens are typically not filed unless the debt exceeds $10,000.
Interest Rate
- Arkansas DFA:
A fixed 10% annual interest rate applies to unpaid state tax balances. - IRS:
Interest is variable, typically ranging from 3% to 7% on unpaid federal balances.
Penalty Structure
- Arkansas DFA:
Includes a 5% monthly penalty for failure to file, plus 1% per month for failure to pay—capped at a total of 35%. - IRS:
Penalties are structured similarly but calculated differently.
Submission Forms
- Arkansas DFA:
Requires IRS Form 433-A/F for individuals and 433-B for businesses, submitted to DFA. - IRS:
Uses the same forms, typically for evaluating offers in compromise or financial hardship.
Online Portal
- Arkansas DFA:
The Arkansas Taxpayer Access Point (ATAP) is used for managing payment plans and checking account status. - IRS:
The IRS Online Payment Agreement tool is available for setup and ongoing account management.
Tips for Managing Both Plans
If you owe money to both the Arkansas Department and the federal government, careful coordination can help you avoid complications.
- Apply separately: There is no joint application process. Handle your interactions with the Internal Revenue Service and the Arkansas Department of Finance and Administration separately.
- Use consistent documentation: Use the same income, expense, and filing data when completing IRS Forms 433-A, 433-B, or 433-F to ensure alignment.
- Prioritize enforcement risk: If one agency is pursuing more aggressive collection actions (e.g., bank account levy), address that agency first.
- Monitor both plans: Log into the ATAP portal and the IRS site to ensure you stay compliant with both agreements.
- Avoid new debt: Staying current with your tax year filings and avoiding additional tax liability is critical for maintaining both plans in good standing.
Successfully managing multiple payment options can be complex, but with careful organization and clear communication, taxpayers can stay in compliance and avoid escalation from either agency.
Compliance and Best Practices
Once a payment plan agreement is in place, maintaining compliance is critical. A single missed payment or neglected filing obligation can lead to a default, potentially leading to enforcement actions such as wage garnishments or tax liens. Fortunately, there are proactive steps that taxpayers can take to ensure they remain in good standing throughout the installment period and avoid unnecessary penalties or additional interest.
Key Best Practices for Staying Compliant
- Set up automatic payments: Use the Arkansas Taxpayer Access Point (ATAP) portal to schedule recurring withdrawals from your bank account, helping you avoid missed due dates.
- Stay current on new obligations: In addition to paying off your back taxes, you must also file all new individual income tax returns and pay any new taxes on time during the tax year.
- Track your account activity: Regularly log into your ATAP account to confirm that payments are posting correctly and to review updated balances or notices.
- Maintain updated contact information: Make sure the Arkansas Department of Finance has your current mailing address, email, and phone number to avoid missing important notices.
- Use consistent income reporting: When completing forms for the compromise program, the offer in compromise, or a revised plan, ensure that the income, expenses, and asset data you report are accurate and consistent with prior submissions.
- Avoid new debt accruals: Taking on new debts—especially tax-related ones—during an active payment plan can increase the risk of default and limit eligibility for penalty abatement or revised terms.
- Seek help when needed: If you anticipate financial hardship or cannot make a scheduled payment, contact the DFA immediately. The agency may offer free help or work with you to modify the terms of your installment agreement.
Following these practices helps you stay compliant and improves your standing if you later apply for a tax clearance certificate, refinancing, or even a future tax refund. The goal isn’t just to repay your tax liability—it’s to restore long-term financial stability under the support of the finance and administration framework that governs Arkansas taxation.
Frequently Asked Questions (FAQs)
Below are answers to common questions about the Arkansas tax payment plan, covering modifications, enforcement, early payoff, credit reporting, and more.
Can I renegotiate my Arkansas tax payment plan if my financial situation changes?
Yes, you can request a renegotiation of your payment plan agreement if there are significant changes to your financial situation. The Arkansas Department of Finance and Administration permits modifications to installment terms under Arkansas Code § 26-18-807. You must contact the DFA and submit updated financial documentation—such as IRS Form 433-A or 433-F, proof of income changes, and a revised monthly proposal. Approval is not guaranteed, but timely communication increases your chances of success.
Does the DFA run credit checks or report payment plans to credit bureaus?
The DFA does not conduct credit checks as part of the payment plan application. Instead, it relies on financial disclosures provided by the taxpayer. However, if a tax lien (certificate of indebtedness) is filed, it becomes a public record and may be picked up by credit reporting agencies, potentially impacting your credit score.
Will a payment plan stop ongoing collection actions?
Once your installment agreement is approved and you remain in excellent standing, the DFA will typically suspend active collection efforts such as bank account levies, wage garnishments, and property seizures. However, any tax liens already filed will remain in effect until the full tax liability is paid.
Can I pay off my Arkansas tax payment plan early?
Indeed, we encourage early payoff. There are no penalties for doing so, and it can significantly reduce the total amount owed by minimizing interest and penalties. After requesting a payoff amount from the DFA, you can make a lump sum payment online via ATAP, by phone, or through an approved third-party vendor.
What happens to my payment plan if I move out of Arkansas?
Relocating out of state does not cancel your Arkansas tax payment plan. Your obligations to the Arkansas Department of Finance and Administration remain in full effect, regardless of where you live.
Here's what you need to know:
- You must continue making all scheduled payments.
Moving does not relieve you of the responsibility to make timely tax payments under your existing payment plan agreement. Missed payments may result in default and renewed enforcement actions, even if you are living outside Arkansas.
- The DFA will still enforce the terms of your agreement.
If your plan defaults, the DFA retains full authority to pursue collection efforts—such as wage garnishments or bank account levies. Living in another state does not shield you from these consequences.
- You are still required to file Arkansas tax returns.
Suppose you are subject to Arkansas income tax. In that case, you must continue to file any applicable individual income tax returns, including your final or part-year resident tax returns, depending on your filing status after relocation.
- You can manage your account remotely through ATAP.
The Arkansas Taxpayer Access Point (ATAP) portal offers full remote access to your account, allowing you to submit filings, view balances, and make payments securely from anywhere in the U.S.
- You should notify the DFA of your new address.
Inform the DFA of any address changes immediately to ensure you receive all updates and official notices. This procedure helps prevent communication delays that could threaten your payment plan.
