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
- In Arkansas, the existence of an employment relationship is determined using the ABC Test. Under the test, there is an employment relationship unless the employer can show the presence of three elements. For state unemployment insurance (SUI) purposes, taxable wages include all compensation an employer pays to a covered employee, excluding certain types of payments. See ABC 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.