Arkansas state tax unemployment insurance

The payment of state unemployment insurance was introduced in 1935 to help provide economic security for the unemployed worker who had become unemployed through no fault of his own. Each state has its own laws, and operates its own program.

An Arkansas state unemployment account (SUTA) is required of any entity meeting the definition of an employer. As described by Arkansas Division of Workforce Services Law, the definition of an employer includes, but is not limited to, a sole proprietorship, partnership, corporation, associations, trust, estate, and receiver or trustee in bankruptcy. The entity must have in employment one (1) or more individuals for some portion of ten (10) or more days in a calendar year, whether or not the days are consecutive.

Exempt Services

All employees are considered covered under the Arkansas unemployment insurance law, unless their service is specifically excluded in the Arkansas Division of Workforce Services Law. Some examples of the most common types of services exempt from payment of unemployment insurance taxes are:

• Services performed by a minor child (under the age of twenty-one years of age), the spouse, or the parents of a business operating as a sole proprietorship.
• Service performed as an insurance or real estate agent, if payment is made solely by commission.
• Service performed in the employ of a church or an association of churches.
• Service performed in the area of domestic services (household help or in-home caregivers) are exempt from payment of unemployment insurance if the payments for all services of all domestic help total under one thousand dollars each calendar quarter. If payments to domestic employees meet or exceed one thousand dollars in any calendar quarter of a year, the employer is liable for payment of unemployment insurance for all wages paid in the entire calendar year and following calendar year, as well.
• Services performed in agricultural employment are exempt if the total of all wages paid for agricultural services is less than twenty thousand dollars ($20,000) in a calendar quarter and if the employer does not employ ten (10) or more workers in twenty (20) calendar weeks of the year. These weeks do not have to be consecutive. If all the agricultural wages an employer pays meet or exceed twenty thousand dollars ($20,000) in a calendar quarter, or if total employment is ten (10) or more workers in twenty (20) calendar weeks, the employer is liable for payment of state unemployment tax for the entire calendar year and the following calendar year.

Other exempt services are identified in the Arkansas Division of Workforce Services Law; however, if the service is not specifically exempt, it is covered by state unemployment insurance.

Wages

The term “wages” is defined as all remuneration paid for personal services including salaries (this includes corporation officers salaries), commissions, bonuses, fees, fringe benefits, sick pay made directly to employee or dependents, deferred compensation and tips reported to an employer by his employees.

Rates

Arkansas unemployment insurance tax rates currently range from 0.1% to a maximum rate of 5.0%, plus the stabilization rate in effect for the current year. The upper range indicates that more payments in unemployment insurance have been made from an employer’s account than tax has been paid in for unemployment insurance. Act 1191 provides that beginning January 1, 2014, and thereafter, after two (2) consecutive years of being assessed additional contributions of four percent (4.0%), the additional contribution assessment shall increase to six percent (6.0%) for a basic rate of 12.0%. Furthermore, after two (2) consecutive years of being assessed an additional contribution of six percent (6.0%), the additional contribution assessment shall increase to eight percent (8.0%) for a basic rate of 14.0%.

The unemployment insurance tax is computed on the wages paid to each employee on a calendar quarter basis. The current taxable wage base that Arkansas employers are required by law to pay unemployment insurance tax on is seven thousand dollars ($7,000) per employee per calendar year. In the calendar year 2023, a new employer just beginning a business in the state of Arkansas is assigned a new employer rate of 3.1% and will remain at that rate until three (3) full years of benefit-risk have been established. When an employer acquires an ongoing business location that was required to pay unemployment insurance taxes in Arkansas, that employer’s rate may be transferred to the employer acquiring the business. When an entire business is acquired and its operation is continued, the tax rate from the previous owner will be assigned to the new owner.

Payment of Benefits

Unemployment insurance benefits are paid to individuals who have become unemployed and have been determined to be eligible for payment of benefits under the Arkansas Division of Workforce Services laws. A claimant’s unemployment insurance weekly benefit amount is determined by the wages that the individual has earned in approximately the last eighteen (18) months preceding the filing of the unemployment insurance claim.

Each tax-rated employer’s account is then charged according to its percentage share of the total wages paid to the worker in the base period. The base period is defined as the first four of the last five completed calendar quarters prior to the filing of an unemployment insurance claim.

Employers are notified immediately by mail when a claim is filed if they are the last employer and quarterly if they are the base period employer.

Workers filing claims for unemployment insurance benefits must first be determined eligible for receipt of these benefits before any payments are made. Once their eligibility is determined, they must continue to meet certain criteria, some of which are:

Any earnings, holiday pay, vacation pay, military drill pay, or self-employment must be reported for the week in which benefits are requested.

• Claimant must be able and available to work during each day of the week.
• Claimant must not refuse a referral to or an offer of suitable work.
• Claimant must make the required job contacts each week.