Registration Requirements in Arkansas
S corporations need to file an annual franchise tax with the Arkansas Secretary of State. General partnerships are not required to file official registration with the Secretary of State. LLPs, LPs, and LLLPs must file annual reports with the Arkansas Secretary of State. All annual franchise tax and annual reports are due by May 1st. Annual franchise tax forms and annual reports can be found at the following link.
S-Corporation Income Tax
Arkansas is unusual among the states in that it does not automatically recognize the federal S-election. Instead, in addition to the federal form, you must file state Form AR1103, and include copy of the federal form. Individual S corporation shareholders will owe tax on his or her share of the company’s income. S Corporations are required to file form AR1100S - Subchapter S Corporation Income Tax Return.
LLC/Partnership Income Tax
Not required to pay income tax to Arkansas, but LLCs are subject to the states Franchise Tax. Partnerships must file annual reports as noted below. Partners will owe tax on his or her share of the company’s income. Both are required to file form AR1050 - Partnership Tax Return. Single member LLCs do not need to file a partnership as they are considered disregarded entities.
Corporate Franchise Tax/Annual Reports
Arkansas’ corporation franchise tax applies to the most common types of stock corporations as well as LLCs.
Franchise tax is 0.3% of the value of the corporation’s outstanding stock, with a minimum franchise tax of $150.
Limited Partnerships/Limited Liability Partnerships/Limited Liability Limited Partnerships must file annual reports.
The Corporate Franchise Tax and Annual Reports are both filed with the Arkansas Secretary of State.
Qualified “Nonresident Partners” for both S corporations and partnerships may elect to have the business report and pay a “composite income tax” on behalf of the taxpayer. The rate for composite income tax is 6.9%. This composite tax is then reported on AR1000CR - Individual Income Tax Composite Return.
Individual Income Tax
Arkansas has a selective conformity with the Internal Revenue Code and adopts only certain IRC provisions, certain provisions as of a specific date, or makes certain material changes to key IRC provisions.
Unlike most other states, Arkansas does not base its personal income tax computation on the federal income tax calculation. Instead, it has its own provisions for the determination of gross income, adjustments, and deductions.
Arkansas' standard deduction is:
$4,400 for married filing joint
$2,200 for all other filing statuses
You do have the option of using a state defined itemized deduction.
Personal exemptions against the personal income tax are not granted. Instead, personal tax credits are available.
Arkansas does not conform to the Internal Revenue Code (IRC) section 199A, also known as the QBI deduction.
Individual Income Tax rates in Arkansas vary from 0.9% to 6.9%, depending on income and filing status. Individual Income Tax is reported on form AR1000F.
Arkansas tax tables can be found on the AR1000F instructions. The instructions can be found at the following link.
CARES Act Guidance
Arkansas does not provide guidance on the issue.
Returns are due on April 15th for calendar year filers. For fiscal year filers, the due date is on or before the 15th day of the 4th month following the end of the fiscal year.
Taxpayers who can reasonably expect to owe more than $1,000 are required to make estimated payments during the tax year.
For composite estimated payments, use form AT1000CRES found below.
For individual income estimated payments, use form AR1000ES found below.
Estimated payments are due dates are on or before April 15th, June 15th, September 15th, and January 15th for calendar filers. For fiscal year filers, payments are due on the 15th day of the 4th, 6th, 9th month of the fiscal year with the last payment due on the 15th day of the first month of the following fiscal year.
Filing an Extension
If a federal request has been requested, you can receive the same extension on your Arkansas return. This applies to both business and individual returns.
For S Corporations, a 5% penalty shall apply for each month the payment and return is filed past the due date, not to exceed 35%. Underestimated payment will receive a 10% penalty. Non-filers will receive a $50 penalty. Payments not made via EFT are subject to a 5% penalty. Partial payments are subject to 10% of the amount or $20, whichever is greater. Failure to comply will result in a $50 penalty.
For individual income tax, a 1% penalty per month for failure to pay and 5% per month for failure to file will apply, up to a maximum of 35%. 10% interest per year will additionally be assessed on additional tax due from the original due date. Taxpayers requesting an extension to file will not receive an extension to pay. Underestimated tax penalties may also apply.
If your business was formed or is located in another state, but generates income in Arkansas, it may be subject to Arkansas taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.
Arkansas Department of Finance and Administration:
Arkansas Secretary of State: