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Arkansas sales tax notices

Got a letter from the Arkansas Department of Finance and Administration (DFA)? Find it below to see what it means, why businesses usually receive it, and what to do next.

Sources checked

Tax authority

Arkansas Department of Finance and Administration (DFA) (opens in a new tab)

Disagree with a notice?

According to DFA's Taxpayer Bill of Rights, you can contest a Notice of Proposed Assessment by filing a written petition with the Arkansas Tax Appeals Commission within 90 days of the date DFA issues it. You can also go to circuit court after a Notice of Final Assessment or a Commission decision: file within 180 days if you do not pay, or pay within one year and then file within one year of payment. A jeopardy assessment must be petitioned within 5 days of receipt.

Deadline: 90 days from the date the proposed assessment is issued (Tax Appeals Commission petition)

Source: Arkansas Department of Finance and Administration (DFA) (opens in a new tab)

Assessment

A proposed or final determination of tax owed, sometimes estimated when returns were never filed.

Assessment

Notice of Proposed Assessment

A notice that DFA has found additional tax due after examining your books and records. If your records are inadequate, the amount may be an estimated assessment based on the best information available.

Why you got it

  • An audit or examination found more tax due
  • A monthly sales tax return was not filed or not paid
  • Records were not kept well enough to determine the tax

What to do

  1. Check the periods and amounts against your records and filed returns. If the assessment is an estimate because returns were missing, file those returns and ask DFA whether it will adjust the assessment
  2. Pay the tax you agree you owe, or ask DFA about a payment plan
  3. If the late filing or payment had reasonable cause, call the Sales and Use Tax Office at (501) 682-7104 to ask how to request a penalty waiver
  4. If you disagree with the assessment, file a written petition with the Tax Appeals Commission within 90 days of the issue date (online at ig.arkansas.gov/tax-appeals-commission or by mail)

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: 90 days from the date the Department issues the proposed assessment

Source: Taxpayer Bill of Rights – Arkansas Department of Finance and Administration (opens in a new tab)

Assessment

Notice of Final Assessment

A certified-mail notice issued when a proposed sales tax assessment was not protested in time. If it is not paid within 30 days of receipt, DFA can file a certificate of indebtedness (a judgment) and start collection.

Why you got it

  • No timely protest of a Notice of Proposed Assessment

What to do

  1. Within 30 days of receipt, pay the assessment or contact DFA about payment options, to avoid a certificate of indebtedness
  2. If the late filing or payment had reasonable cause, call the Sales and Use Tax Office at (501) 682-7104 to ask how to request a penalty waiver. Do not let this delay the 30-day deadline
  3. If you dispute the assessment, consider circuit court options within the deadlines in the Taxpayer Bill of Rights

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: 30 days from receipt to pay

Source: 26 CAR § 30-1214. Administrative and judicial remedies - Code of Arkansas Rules (opens in a new tab)

Assessment

Jeopardy assessment

An immediate assessment DFA can issue when it believes collection is at risk. Examples: you plan to leave the state or close the business without providing for the tax, or the liability exceeds your bond.

Why you got it

  • Plans to discontinue the business without providing for state taxes
  • Moving or hiding property, or leaving the state
  • Tax liability exceeds the bond on file

What to do

  1. Act at once; the petition window is very short
  2. File a petition with the Tax Appeals Commission within 5 days of receipt
  3. Gather records that show the tax actually owed, and contact DFA about paying or securing the amount

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: 5 days from receipt of the jeopardy assessment

Source: Taxpayer Bill of Rights – Arkansas Department of Finance and Administration (opens in a new tab)

Collections

Enforcement on unpaid balances, such as liens, levies, warrants, or referral to a collection agency.

Collections

Notice of Business Closure

A notice, usually delivered in person, that the business will be closed because sales (gross receipts) tax is unpaid for three or more months within 24 months. Earlier, a proposed assessment and a final notice are sent for each unpaid month.

Why you got it

  • Failure to pay (or file and pay) a third month's sales tax within 24 consecutive months
  • Default on a business closure payment plan

What to do

  1. Within 5 days of receiving it, pay in full, enter a payment plan accepted by DFA, or request a hearing
  2. Contact the Sales and Use Tax Section at (501) 682-7104 right away
  3. Once the account is secured, if the late filing or payment had reasonable cause, call the Sales and Use Tax Office at (501) 682-7104 to ask how to request a penalty waiver

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: 5 days from the day the notice is received

Source: 26 CAR § 30-1222. Business closure - Code of Arkansas Rules (opens in a new tab)

Collections

Certificate of Indebtedness (state tax lien)

A filing with the county circuit clerk that has the effect of a court judgment and becomes a lien on your real and personal property in that county. After filing, DFA may use writs of execution, garnishment and cancellation of state tax permits.

Why you got it

  • A final assessment was not paid

What to do

  1. Contact DFA about the balance and payment options before garnishment or permit cancellation
  2. Pay the balance or set up a payment arrangement; court costs or sheriff's fees are added to the tax, interest and penalties
  3. If the penalties had reasonable cause, ask DFA whether a written penalty waiver request can still be considered

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Taxpayer Bill of Rights – Arkansas Department of Finance and Administration (opens in a new tab)

Ask for penalty relief

Penalties on a Arkansas notice aren't always final. You can ask for them to be waived. Follow the steps below, including anything the state requires you to file or pay before it reviews the request.

Penalty waiver for reasonable cause

  1. File any missing sales tax returns and pay the tax due, for example through ATAP
  2. If the late filing or payment had reasonable cause, call the Sales and Use Tax Office at (501) 682-7104 to ask how to request a penalty waiver. Have a written explanation and supporting documents ready
  3. DFA does not publish a sales tax waiver form, so call the Sales and Use Tax Section at (501) 682-7104 to confirm where to send the request

What qualifies: Reasonable cause and not willful neglect (26 CAR § 30-1218, for the failure-to-file, failure-to-pay and $50 per-return penalties)

Source: 26 CAR § 30-1218. Penalties - Code of Arkansas Rules (opens in a new tab)

Before you respond

  • Check the date on the notice. Response windows usually run from that date, not the day you open it.
  • Match the account number and filing period to your own records before paying or disputing.
  • If returns are missing, filing the actual returns usually replaces an estimated bill. Confirm how on the notice or with the authority.
  • Ask about penalty relief before paying penalties, and check what must be paid with the request. See how
  • Keep a copy of the notice and everything you send back.

This page is general information, not tax or legal advice. Notice names and procedures change, so always follow the instructions on your notice and the official sources linked above.

Need the rates, nexus thresholds and filing rules? Read the Arkansas sales tax guide.

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