Unemployment Insurance Tax (FUTA/SUTA): Arkansas

Federal law and guidance on this subject should be reviewed together with this section.

Authors: E. B. Chiles, IV, Cameron C. McCree and Amber Davis-Tanner, Quattlebaum, Grooms, Tull & Burrow PLLC

Summary

• In Arkansas, the existence of an employment relationship is determined using the IRS's 20-Factor Test. For state unemployment insurance (SUI) purposes, taxable wages include all compensation an employer pays to a covered employee, excluding certain types of payments. See IRS 20-Factor Test; SUI Taxable Wages.
• Employers are assigned a SUI tax rate by the Arkansas Department of Workforce Services (DWS) based on the level of their UI experience. Arkansas determines employers' experience rates using the reserve ratio method. See Contribution Rates and Experience Rating.
• Similar to the federal SUTA Dumping Prevention Act, Arkansas employers are prohibited from transferring, purchasing or trading a business to attempt to pay a lower unemployment insurance tax rate. Penalties are imposed for violations. See SUTA Dumping.
• All employers must submit a quarterly wage report and payment of SUI tax on the last day of the month following the end of each calendar quarter. Certain employers must file and pay electronically or on magnetic media. Penalties are imposed for violations. See Quarterly Reporting Requirements.
• An employer's account will not be relieved of charges for overpayments resulting from the employer's failure to properly respond to requests for information about benefit claims. See Benefit Overpayments.
• Certain nonprofit employers have the option of reimbursing the Unemployment Compensation Fund in lieu of making SUI tax contributions. See Payments in Lieu of Taxes by Nonprofits.
• Employers must keep certain records for at least five years. See Recordkeeping Requirements.