The 2017 Regular Session of the Arkansas Legislature enacted 2017 Ark. HB 1563 (Act 434), which amended Ark. Code Ann. §26-51-409 pertaining to Arkansas’ adoption of Subchapter S of the Internal Revenue Code, 26 U.S.C. § 1361 et seq. The revised Ark. Code Ann. §26-51-409 provides that for Arkansas income tax purposes, a corporation shall be treated as a Subchapter S corporation if the corporation has elected Subchapter S treatment for federal income tax purposes for the same tax year. The statute becomes effective for a corporation’s 2018 tax year and thereafter.
Previously, Arkansas was one of only a few states that required S-corporations to file a separate S-election with its taxing authority, the Arkansas Department of Finance & Administration (Form AR1103). For practitioners, the amendment is a welcome change as it eliminates the need for duplicate filings when assisting clients with making S elections.