The bill amends the penalties associated with non-compliance under the Arkansas Tax Procedure Act. Specifically, it revises the penalty structure for taxpayers who fail to file returns or pay taxes on time. The previous maximum penalty of thirty-five percent (35%) for late filing or payment is reduced to ten percent (10%) in the aggregate. This change applies to both general state tax returns and individual income tax returns, with penalties set at five percent (5%) for the first month of failure and an additional five percent (5%) for each subsequent month, while individual income tax returns incur a one percent (1%) penalty for the same duration.

Additionally, the bill stipulates that if a penalty is assessed under one section, no penalty will be assessed under the other for the same tax period. However, for individual income tax returns, the penalties from both sections can be combined, but still capped at the new ten percent (10%) maximum. This legislative change aims to provide a more lenient penalty structure for taxpayers, encouraging compliance while reducing the financial burden of penalties for late submissions.

Statutes affected:
HB 1904: 26-18-208(1)