006.09.1 R4-19-4-1602. Workers' Compensation Premium Tax
AR ADC 006.09.1 R4-19-4-1602Arkansas Administrative Code
Ark. Admin. Code 006.09.1 R4-19-4-1602
006.09.1 R4-19-4-1602. Workers' Compensation Premium Tax
The Workers' Compensation Premium Tax was established to provide funding for the Workers' Compensation Commission. Such tax is required to be paid by all insurance carriers, self insurers and public employers not obtaining Workers' Compensation Insurance from an insurance carrier. On or before March 1st of each year the Workers' Compensation Commission shall certify the rate of taxation, not to exceed 3%, for the preceding year to the Insurance Commissioner. The Insurance Commissioner shall notify the Insurance Department-Public Employee Claims Division of the rate of the tax. (ACA § 11-9-306 (a-d), ACA § 11-9-306 (e) (3)) Also refer to ACA§ 11-9-303 for limit on tax.
The tax calculation is based upon the following formula:
Salaries for Calendar Year | x | Statewide Average Compensation Rate as promulgated by the | x | Tax Rate |
National Council on Compensation | ||||
$100 | ||||
Insurance (NCC) |
The salaries within the formula are all taxable wages and salaries for the employees of the public entity including any non-cash taxable wage such as clothing and housing allowances. The NCCI Average Compensation rate is determined from the published rate in effect on January 1 of the year the tax is based (i.e., calendar year 2003 salaries and January 1, 2003) NCCI Average Compensation rate will be the basis for the 2003 taxes collected. (ACA § 11-9-305 (a)(2)(B))
After the “Computation of the Worker's Compensation Premium Tax” Form, at http://www.awcc.state.ar.us/premium_tax/schedule_wc.pdf, is received from the Insurance Department-Public Employees Claims Division, the agency or institution shall prepare a warrant(s), check(s) or fund transfer as specified by the Insurance Department-Public Employees' Claims Division for remittance. Payments must be made in accordance with salary appropriations received.
The tax filing must be completed on the form received from the Insurance Department-Public Employees Claims Division according to the instructions provided. The form, including certifying signature with all warrants and/or checks, shall be submitted to the Insurance Department-Public Employee Claims Division, 1200 West Third Street, Suite 201, Little Rock, AR 72201-1904. The tax payment is due to the Insurance Department-Public Employees Claims Division annually on or before April 1st. Any questions regarding payment shall be addressed to the Insurance Department-Public Employee Claims Division. (ACA § 11-9-306(f)
PLEASE NOTE: Workers Compensation Premium Tax is based on the gross payroll and is considered an employment cost as a “Matching” payment. It is paid from Commitment Item 03 using AASIS GL account number 5010010000.
An agency or institution's failure to pay the tax may result in decertification of the public employer from participation in the State Workers' Compensation Program which would require that agency or institution obtain workers' compensation coverage for its employees from the private insurance market for one full year. (ACA § 11-9-305(b))
The Insurance Department-Public Employees Claims Division allocates the tax and remits the payments to the Workers' Compensation Commission on or before April 1st of each year. (ACA § 11-9-306 (e) (3))
Year-End Reporting
Because the Workers' Compensation Premium Tax is paid on a calendar year basis and the State has a fiscal year, which differs from a calendar year, an estimate of the amount of premium tax to be paid for the period from January through June shall be recorded while completing fiscal year-end adjusting entries. The estimated tax due is calculated by the Workers' Compensation Commission-Administrative Services. The amount of each agency's estimate shall be communicated to the respective agency by the Workers' Compensation Commission-Administrative Services on or before July 20th.
As with all year-end accrual entries, the accrual entry should be entered with a FBS1 Enter Accrual/Deferral Document Transaction with a reversal date the first day of the following fiscal year (07/01/20XX). Although the previous year's accrual entry to record the estimated premium tax should have been reversed the current year, the account should be reviewed to determine this occurred. If the previous year's entry has not been reversed, the previous year entry should be reversed in the current period. The current year estimate should be recorded in non-budget relevant accounts in period 13 in funds that correspond to salary appropriations (See additional information and instructions in R2-19-4-506). The amounts recorded for each fund shall also be detailed on the Intergovernmental Transactions (Igt's) - Receivables/Payables Form in the Year-End Disclosure Package. The journal entry should use the following accounts:
DR | 5010001100 | NBR - Personal Service - Payroll |
CR | 2110004100 | Inter-agency Due to Other Agency |
To record accrued workers compensation premium tax accrual.
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 006.09.1 R4-19-4-1602, AR ADC 006.09.1 R4-19-4-1602
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