Arkansas tax payment plan with the DFA
A payment plan agreement is the name Arkansas gives this option. Approval means the state files a Certificate of Indebtedness and that document serves as its tax lien. The DFA Office of Collections arranges this case by case.
- Interest
- 10% each year
- Paying nothing
- 1% every month
- Cap on penalties
- 35%
- A plan includes a lien
- Yes, filing it is required by law
An Arkansas plan includes a lien
Many states hold off on filing liens while you pay. Arkansas takes the opposite approach. The DFA offers in compromise page says that once a payment plan agreement is approved, the agency files a Certificate of Indebtedness. State law requires this tax lien.
That page also lists the other terms. Plans are never granted automatically. How a request is reviewed depends on the facts of that particular case. During the installment period, interest keeps growing. If you break any term, the agreement ends and other collection steps begin.
How do I set up a payment plan through the DFA?
These plans are handled by the Office of Collections. A plan for this year’s balance cannot begin until the April 15 due date is past, the DFA individual income tax FAQ explains. There are several practical steps that help:
- Before you request a plan for this year’s tax, wait for your bill to arrive or for the April due date.
- Meanwhile, pay as much as you are able to. The Arkansas Taxpayer Access Point (ATAP) takes bank payments with no processing fee once you create a free account.
- DFA reviews every fact before it agrees, so gather pay stubs along with bills and bank statements.
The way Arkansas bills you over time
The DFA billing procedures sheet shows the order of the notices. First, you receive a Notice of Proposed Assessment. If a balance remains after 70 days, a Final Assessment and Demand for Payment follows. Fifteen days after that second notice, the internal collections section gets an unpaid account.
You keep more choices when you ask for a plan ahead of that hand-off. If you think the bill is wrong, that sheet says to write to DFA and attach copies of records that support a correction.
Interest and penalties for Arkansas tax that stays unpaid
The penalties and interest sheet sets the annual interest rate at 10%. The rate applies beginning on the original due date and ending when you pay the tax. Paying late adds 1% a month and filing late adds 5% a month. Added together, penalties cannot exceed 35%. Interest and penalty are generally not waived, the sheet also says.
What happens if you do nothing?
Under the state’s Taxpayer Bill of Rights, a Certificate of Indebtedness carries the same weight as a circuit court judgment. Once it is filed, DFA can garnish wages or bank accounts. DFA may cancel state tax permits or registrations or it can issue a writ of execution, a court order for seizing property. The sheriff’s fees and the court costs are added to what you owe.
If even a plan is out of reach
An offer in compromise lets you settle a debt by paying less than the whole balance. Under the Arkansas settlement rules, you must be insolvent. That is, either debts come due that you cannot pay or what you owe is greater than everything you own. The DFA program page says the debt has to be final, with every required return on file. Whether to approve is up to the department.
If you owe the IRS as well, the two plans never merge. Every plan has its own agreement, monthly payment and rules. Pick amounts you can pay under each one.
Nearby states
Do you owe money to both DFA and the IRS?
In Arkansas, do you owe the IRS at the same time you owe the state? A free call with a licensed tax pro can help you request a DFA plan and set up your federal plan.
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