Everything employers need to know about paying Arkansas unemployment insurance taxes.
If your small company employs people in Arkansas, you must pay the Arkansas unemployment insurance (UI) levy. The UI tax pays for unemployment insurance programs for qualifying workers. In Arkansas, the state unemployment insurance levy is simply one of numerous taxes that companies must pay. Other major employer taxes not mentioned here include the federal unemployment insurance tax, as well as state and federal withholding taxes.
Varied states have different UI tax policies and rates. Here are the fundamental guidelines for Arkansas’s UI tax.
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Become a member of the Department of Workforce Services.
Your Arkansas small company, as an employer liable to UI tax, must open an Arkansas UI tax account with the Arkansas Department of Workforce Services (DWS). You must register with DWS no later than the last day of the second month after your company hires its first employee. When you register with DWS, they will determine if your company is subject to UI taxes. (Most firms with workers will be held responsible.)
DWS allows you to open an account either online or on paper. You will be assigned a DWS account number after you have enrolled. Use the Arkansas DWS Online Unemployment Insurance Employer Services page to register online. Use DWS-ARK-201, Report To Determine Liability Under The Department of Workforce Services Law, to register on paper. Blank forms may be downloaded from the DWS website’s UI Employer Forms area. There is no cost to register your company with DWS.
You will need a federal employer identification number to set up your Arkansas UI tax account and acquire your DWS account number (EIN). You may get an EIN by visiting irs.gov. In most cases, if you apply online, you will obtain your EIN very instantly.
Unemployment Insurance Tax Liability Regulations
As an Arkansas for-profit employer, you are typically required to pay state unemployment taxes if you fulfill one of the following conditions:
You hire one or more employees for ten or more days in a calendar year, or you buy the company or a portion of the business of an employer liable to unemployment taxes.
These requirements are comparable to, but distinct from, the standards for federal UI tax obligation under the Federal Unemployment Tax Act (FUTA). Furthermore, additional laws apply to agricultural (farm) workers, domestic (in-home) workers, and employees of certain (but not all) non-profit organizations, which are not included here.
One piece of good news is that state UI tax payments are often deductible from FUTA taxes.
Wage Structure and Tax Rates
Each employee’s salaries are subject to UI tax up to a certain yearly limit. In recent years, Arkansas’ taxable salary base has remained steady at $12,000 per year. However, the quantity is always subject to change.
Arkansas’ UI tax rate consists of a basic rate and possibly extra taxes. An advanced interest tax, an extended benefit tax, and a stability tax are among the extra taxes. The assessment of these extra taxes is determined by factors such as the state’s UI trust fund balance, the size of the state’s taxable payrolls, and whether the state pays interest on money borrowed from the federal government. In recent years, the stability tax, which may vary from 0.1% to 0.8%, has been applied.
The state UI tax rate for new employers, like the taxable salary base, may alter from year to year. However, in recent years, the basic rate for new employers has been 2.9% (before any possible extra taxes). For the first three years, new employers typically pay the new employer rate. Based on a “experience rating,” established employers are liable to a lower or higher rate than new firms. This includes, among other things, whether your company has ever had workers file claims for state unemployment benefits.
Submit UI Tax Reports and Payments Quarterly
UI tax reports and payments are required in Arkansas on the last day of the month after the end of each calendar quarter. To put it another way:
Wages Earned During
The calendar quarter comes to a close.
Report Due Date
January, February, and March
March 31
April 30
April, May, and June
June 30
July 31
July, August, and September
30th of September
31st of October
October, November, and December
31st of December
31st of January
You have the option of filing your reports and payments online or on paper. Use DWS’s Online Unemployment Insurance Employer Services page to file online. Electronic Funds Transfer is used for online payments (EFT). Use Form DWS-ARK-209B, Employer’s Quarterly Contribution and Wage Report, to file on paper. Blank forms may be downloaded from the DWS website’s UI Employer Forms area. You may also use magnetic media to store your files (CD or DVD).
Wage reports must be filed quarterly, whether or not wages were paid during the quarter. If you do not file, you will face a penalty.
Make a Public Notice (Poster)
You must display a notification (poster) about state unemployment claims in a visible location for all workers. The poster gives basic information on when and how to make an unemployment benefit claim. From the UI Employer Forms part of the DWS website, you may obtain a notification that satisfies all legal requirements (Form DWS-ARK-237, Employer Workplace Poster).
Employees should not be misclassified as independent contractors.
Employers that hire independent contractors rather than employees are exempt from the UI tax. It is critical, however, that you should not misclassify an employee as an independent contractor. If you misclassify an employee, you may face penalties or fines.
Using Payroll Service Providers
You may decide that it is easier to delegate payroll obligations, including UI taxes, to an outside payroll agency. If this is the case, bear in mind that your company, or even you personally, may be held directly liable for errors made by an outside payroll firm.