The place to find business sales tax information

— as well as solutions, services and jobs!

Arkansas Waivers of Statute of Limitations: No, Thank You - Unless…

author photo of B.J. Pritchett

Generally, when the state of Arkansas initiates an audit, before the audit even starts - tax auditors will often push the taxpayer to sign a waiver of statute of limitations. Such a waiver allows the auditor to in effect stop the statute of limitations clock. The auditor will then select a future date for the audit period, which will allow the auditor plenty of time to complete their listing of exceptions.

If a taxpayer signs the waiver, the interest clock starts to tick – and interest (if owed) starts to accumulate. Arkansas’ interest is imposed using the Julian calendar at an interest rate of 10% per annum. (The first month of the first year is already at 30%.) Signing a waiver to extend the period for which an assessment can be issued only increases the potential interest the taxpayer may need to pay upon completion of the audit.

As previously discussed in my “Arkansas Statute of Limitations - and How It's Unique” post - the statute of limitations in Arkansas is 3 years unless the taxpayer tax is understated by 25% or more in the first three years, then the state of Arkansas can extend the audit to six years. The tax auditor, however, can only assess tax in the months in years 4, 5 and 6 that are understated by 25% or more. The tax auditor will assess every month in the first three years if understated at all.

The only reason to sign a waiver in Arkansas is when it is in the taxpayer’s best interest. For example, if the records are not on site or available for review, signing a waiver may provide a taxpayer additional time to locate and/or deliver records to the facility. Otherwise, my advice is to simply say “no, thank you”.

After the auditor has finished their listing of potential exceptions, now would be the time to request a waiver of statute of limitations and ONLY extend the period of time 30 to 60 days. This time can be used by the taxpayer to review the listing and remove any items due to data input or math errors, exemptions claimed, non-taxable transactions or services and other potential errors listed.

The key is to be in control of the audit process and not allow the auditor to drive the audit. Only sign waivers when it is in the taxpayer’s best interest, not because the auditor has requested it.

So remember “no, thank-you” - simple but important words for Arkansas taxpayers.

Is your business facing an Arkansas audit? If so, please feel free to contact me with any questions or concerns.

About the Author: B.J. Pritchett, CMI, is the owner of Pritchett Sales & Use Tax Consulting and the Arkansas Sales and Use Tax School based in Hot Springs National Park, Arkansas. Learn more about her by visiting her author bio page.

Comments or questions may be submitted by using the on-page "Comment" feature, subject to disclaimer at bottom of page. Additional contact options (and Consultation Requests) are also available on B.J.'s associated Firm Profile page.

Other recent “Arkansas (AR)” posts by B.J. Pritchett, CMI:

NOTE: All blog content, comments, and participation subject to disclaimer at bottom of page.


Submit a comment or question - only your first name will appear


Access to any portion of is contingent upon your acceptance of our Terms of Use. This Web Site and content provided by STS Publishing, LLC and its third party content providers, including, but not limited to information, documents, forms, comments, advice and opinions, is for informational purposes only, and is not a substitute for professional advice, nor does the use of this Web Site constitute a professional-client relationship. The Web-Site also includes advertisements, directory listings, job postings and links to third party web sites, all of which are provided for your convenience only and in no way constitute a referral, endorsement, or warranty by of any product or service provided by such third parties. All content is provided “as is” with no guarantee regarding accuracy, suitability, or timeliness. Your reliance on any content accessed on or through the Web Site, or on any product or service provider is strictly at your own risk.