Why do I owe Arkansas income tax when I didn't file?

The IRS and State of Arkansas share information. If you file a federal tax return with an Arkansas address then the State of Arkansas will look for an Arkansas tax return. If you haven't filed then they take the federal income information and prepare you an Arkansas income tax return. You won't be given credit for Arkansas taxes paid since the federal income information doesn't include this. Pretty harsh result especially if you have some Arkansas income tax paid in. I represent residents of Texarkana Arkansas who think since they are border city exempt they don't have to file an Arkansas Income Tax return. You must file an Arkansas Income Tax return to claim the border city exemption if not you will be getting a bill from the Arkansas Department of Finance and Administration. If you are a resident of Arkansas and find yourself in this situation you need to file an original return. Prompt action to correct this is a good idea because the State of Arkansas will file tax liens for small amounts at the county courthouse. This impacts your credit rating. They will proceed with collection efforts which in Arkansas can include being served by a member of the County Sheriff's department in an effort to collect the tax.


Robby