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Bill Summary · HB 1904

Summary of House Bill 1904

Bill Number: HB 1904
Title: To Amend the Penalties Imposed for Failure to Comply with the Arkansas Tax Procedure Act
Status: Died in House Committee at Sine Die adjournment
Introduced: March 31, 2025
Sponsors: Representative Lundstrum and Senator Petty

Purpose and Intent

House Bill 1904 aimed to amend the penalties associated with failing to comply with the Arkansas Tax Procedure Act. The primary intent was to reduce the financial burden on taxpayers who fail to file or pay their taxes on time by significantly lowering the maximum penalties imposed.

Key Provisions

  • Reduction of Penalties: The bill proposed to lower the maximum aggregate penalty for failure to file or pay taxes from 35% to 10%.
  • Penalty Structure:
    • For failure to file any return:
    • Current law imposes a 5% penalty on the amount due for the first month, increasing by 5% each subsequent month until a maximum of 35% is reached.
    • Under HB 1904, this maximum would be capped at 10%.
    • For failure to pay taxes:
    • Similar to filing penalties, the bill would reduce the maximum penalty from 35% to 10%.
    • For individual income tax, the penalty would increase by 1% per month instead of 5%, also capping at 10%.

Impact

  • Taxpayer Benefits: Taxpayers who fail to file or pay their taxes on time would benefit from a significant reduction in penalties, making compliance less financially burdensome.
  • Fiscal Impact: The bill was projected to result in a $11.9 million reduction in General Revenue for the fiscal year 2026.
  • Implementation Costs: The Arkansas Integrated Revenue System (AIRS) would require an estimated $22,000 for programming updates to accommodate the new penalty structure, with no ongoing maintenance costs anticipated.

Procedural Aspects

  • Implementation Timeline: Adequate time was provided for the implementation of the new penalty rates, which included necessary updates to tax processing software and staff training.
  • Legislative Actions:
    • The bill was filed on March 31, 2025.
    • It was read and referred to the Committee on Revenue & Taxation on April 1, 2025.
    • The bill ultimately died in committee on May 5, 2025, at Sine Die adjournment.

Conclusion

HB 1904 sought to alleviate the financial penalties imposed on taxpayers for non-compliance with tax filing and payment deadlines. While the bill did not advance past committee, its provisions highlighted a legislative effort to reform tax penalties in Arkansas.

Compiled from official sources — confirm details with the bill’s official record.

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