Arkansas Taxing Information
The Arkansas Department of Finance and Administration (DFA) is responsible for the collection of taxes.
If you have received a Notice of Proposed Assessment for taxes, penalties and/or interest due, you may file a protest and request a hearing within 60 days of the notice, to contest the tax, penalty or interest. The Office of Hearings & Appeals handles controversies and is an impartial third party between DFA and the taxpayer.
If you do not pay the entire amount due for your taxes, you will be sent three notices: Notice of Tax Adjustment, Notice of Proposed Assessment and Final Assessment and Demand for Payment. If you do not pay within ten days of the date of the final notice, your account will be transferred to the internal Collections Section. Penalties and interest will be charged from the original due date of the tax return.
Once your account has been sent to the Collections Section, you will receive a follow-up notice from collections. If you do not pay the tax along with any penalties and interest, a tax lien will be filed. The Director of the Department of Finance and Administration may pursue enforced collection actions. These may include but are not limited to issuance of a writ of execution, garnishment, and cancellation of any state tax permits or registrations.
Once a judgment has been obtained against a liability or, a Writ of Garnishment may be issued. It is a method of collecting a liability once a judgment has been issued against a taxpayer and requires an employer to withhold wages to satisfy your tax liability.
Priority One: Stopping Aggressive Enforced Collections
The Offer in Compromise program may allow a taxpayer to resolve their tax liabilities by paying a reasonable amount in settlement. By code, the taxpayer must meet certain financial criteria where expenses and liabilities exceed their assets and must have an established tax liability where other administrative and judicial resolutions are not available. The Revenue Division will evaluate the details of each case and determine if the offer will be accepted.
If you cannot pay your tax liability in full, you may request a payment plan that allows you to pay the off liability, including penalties and interest, over a period of time. Payment plans are not automatically granted and will be reviewed on a case-by-case basis, taking into consideration the taxpayer’s financial situation along with the circumstances surrounding the tax liability. As required by code, DFA will file a tax lien to secure the interest of the state. The taxpayer must abide by all terms of the agreement, otherwise, it will be declared in default and other collection measures will be pursued. To be compliant, the taxpayer must stay up to date on all filing and payments for other tax liabilities.
Penalties and Interest
If you do not pay the entire amount of tax you owe by the due date, you will be assessed penalties and interest from the original due date of the tax. Interest is charged at a rate of 10% per year.
If you are late filing your tax return, you will be charged a Failure to File Penalty of 5% of the tax owed, up to a maximum of 35%.
If you have filed your return on time, but fail to pay the entire amount due, you will be assessed a Failure to Pay Penalty of 1% per month, up to a maximum of 35%.
Any court costs or Sheriff’s fees related to the DFA attempts to collect delinquent taxes shall be added to the tax liability, interest and penalties.
Representation & Power of Attorney
According to the Arkansas tax code, you may authorize an individual to represent you before the Department of Administration and Finance. This can be done in writing by filing State of Arkansas Power of Attorney form or with federal Form 2848.
State Tax Lien
The Collections Section may file a Certificate of Inliabilityedness, or state tax lien, against any real and personal property of a taxpayer who has a liability with the State of Arkansas. After filing a Certificate of Inliabilityedness, further collection actions may be taken to enforce payment of the liability. The taxpayer will be held responsible for any fees or court costs associated with the filing of tax liens. A tax lien has the same force and effect as the entry of a judgment made by Circuit Court. Once a Certificate of Inliabilityedness has been entered DFA may take further collection actions including a Writ of Execution, garnishment of wages or bank accounts, or cancellation of State tax permits.