As of 2018, corporations doing business in Arkansas and desiring to be taxed as an S Corporation no longer need to file a separate election with the Arkansas Department of Finance and Administration. 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 doing business in Arkansas 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 corporate clients with making S-elections.
If you are interested in forming an S corporation in Arkansas, please contact any one of our attorneys to schedule a consultation.