When Is Arkansas Franchise Tax Due?

The Arkansas Franchise Tax is an annual obligation for businesses registered or authorized to operate in the state. This tax is levied for the privilege of doing business or maintaining corporate existence within Arkansas. It helps ensure that entities remain in good standing with the state, which is important for continued operations without disruption.

Understanding the Arkansas Franchise Tax

The Arkansas Franchise Tax is a “privilege tax” imposed on business entities for the opportunity to operate within the state. This tax applies to domestic and foreign corporations, limited liability companies (LLCs), banks, and insurance companies registered in Arkansas. While the term “franchise” might suggest a connection to franchise businesses, it refers to the corporate franchise or privilege of doing business in the state.

The tax calculation varies by entity type. LLCs pay a flat annual fee of $150. Corporations with stock are assessed based on their total outstanding capital stock, with a minimum payment of $150 or 0.3% of the outstanding capital stock, whichever is greater.
Corporations without stock pay a flat annual tax of $300. Banks have a specific calculation based on their property in Arkansas, subject to a minimum tax of $150. The franchise tax report also fulfills the annual report requirement for many entities, consolidating the filing process.

Annual Due Dates and Filing Requirements

The annual due date for the Arkansas Franchise Tax is May 1st for most entities. This includes corporations, limited liability companies (LLCs), banks, and insurance companies. Businesses can submit filings as early as January 1st each year.

Certain entities have different annual filing deadlines. Limited Liability Partnerships (LLPs) must submit reports by April 1st. Nonprofit corporations, while exempt from the tax, must file an annual report by August 1st. Limited Partnerships (LPs) and Limited Liability Limited Partnerships (LLLPs) also file an annual report by May 1st, though they do not pay a franchise tax.

For newly formed businesses, Arkansas does not require an initial franchise tax report to be filed in the year of formation. The obligation to file and pay the annual franchise tax begins the year after the entity was officially formed or authorized to do business in the state. Arkansas does not grant extensions for filing the Franchise Tax Report.

Submitting Your Filing and Payment

Businesses can submit their Arkansas Franchise Tax filings and payments online, by mail, or in person. The Arkansas Secretary of State’s website serves as the primary portal for these submissions. For online filing, businesses need to provide their Arkansas file number and federal tax identification number. An online processing fee of approximately $5 may apply.

If opting for mail or in-person submission, forms can be downloaded from the Secretary of State’s website. Completed forms should be accompanied by payment, usually a check or money order made payable to the Arkansas Secretary of State.

Consequences of Late Filing

Failing to file or pay the Arkansas Franchise Tax by the due date can result in penalties and administrative actions. A late fee of $25 is assessed for LLCs and corporations. Interest accrues at 10% per year on the total amount due, including tax and penalties. The total penalty, including accumulated interest, is capped at twice the original tax owed.

Beyond financial penalties, continued non-compliance can lead to administrative repercussions. The state may forfeit a business’s corporate charter or certificate of authority. This can result in the loss of the legal right to transact business in Arkansas, which includes the inability to initiate or defend against lawsuits in state courts.
The Secretary of State may administratively dissolve a domestic entity or revoke a foreign entity’s authority. Non-payment can also lead to the loss of name protection, making the business’s name available for use by other entities. Franchise taxes continue to accrue even for businesses whose authority has been revoked, until the entity is formally dissolved, withdrawn, or merged. Businesses with past due franchise taxes are prohibited from filing any other documents with the Secretary of State.