ARKANSAS 2019 Sub-Chapter S Corporation Income Tax Instructions Due Date: On or before the 15th day of the 4th month following the close of the tax year, for calendar year filers the due date is April 15th. Simple Reasons to e-file! Filing Confirmation Provided Arkansas Makes Complex Returns Easy e file File Federal & State Forms Together Secure Mailing Address: Physical Address: State of Arkansas Corporation Income Tax Corporation Income Tax Section 1816 W 7th St, Room 2250 P.O. Box 919 Ledbetter Building Little Rock, Arkansas 72203-0919 Little Rock, AR 72201-1030 Page 1 TAX HELP AND FORMS Internet ATAP You can access the Department of Finance and Administration’s Arkansas Taxpayer Access Point (ATAP) allows taxpayers or website at www.dfa.arkansas.gov. their representatives to log on to a secure site and manage their account online. Get current and prior year forms and instructions Access latest income tax info and archived news Access ATAP at www.atap.arkansas.gov to: Get e-file information Make Tax Payments You can e-mail questions to: Make Estimated Tax Payments [email protected] Make name and address changes View account letters (Registration is not required to make payments or to check refund status.) Phone General Information ................................................. (501) 682-4775 Mail Representatives are available to assist callers at the number above during normal business hours (Monday through Friday Corporation Income Tax Section from 8:00 a.m. to 4:30 p.m.) with: P. O. Box 919 Little Rock, AR 72203-0919 Taxpayer Assistance Notices Received Forms Amended Returns Be sure to apply sufficient postage or your return will not be Audit and Examination Payment Information delivered by the U.S. Postal Service. Other useful phone numbers: Business Incentive Credits ............. (501) 682-7106 Withholding Tax .............................. (501) 682-7290 Collections ...................................... (501) 682-5000 Revenue Legal Counsel ................. (501) 682-7030 Walk-In Individual Income Tax ..................... (501) 682-1100 Sales and Use Tax .......................... (501) 682-7104 Representatives are available to assist walk-in taxpayers Problem Resolution and ................. (501) 682-7751 with corporate income tax questions, but are not available to Tax Information Office (Offers In Compromise) prepare your return. Internal Revenue Service ............... (800) 829-1040 Social Security Administration ........ (800) 772-1213 No appointment is necessary, but plan to arrive before 4:00 p.m. to allow sufficient time for assistance. The Corporate Income Tax Office is located at: 1816 W. 7th Street, Room 2250 Ledbetter Building, Litte Rock, Arkansas 72201 Forms Office hours are Monday through Friday from 8:00 a.m. to To obtain a booklet or forms you may: 4:30 p.m. 1. Access our website at: https://www.dfa.arkansas.gov/income-tax/corporation/corporation-forms/ 2. Call: (501) 682-4775 Page 2 CONTENTS Tax Help and Forms ............................................................................................................2 What’s New ......................................................................................................................4-6 Important Reminders for 2019 ...........................................................................................7-8 Instructions: Subchapter S Corporation Election and Instructions ..................................................9-10 Filing as a Subchaper S Corporation .........................................................................11-12 Specific Line Instructions, AR1100S Return .............................................................13-17 Financial Institutions ..........................................................................................................18 Business Incentive Tax Credits .....................................................................................19-24 Page 3 WHAT’S NEW for 2019 NOTE: The following is a brief description of each Act and is not intended to replace a careful reading of the Act in it’s entirety. The Arkansas Legislature enacted numerous changes to the Arkansas Tax Code in 2019. However, many of those changes are not effective until future tax years. Act 108 of 2019 provides that a for-profit corporation may convert to a non-profit corporation and sets out the requirements that must be met for such a conversion. Taxpayers are reminded that a conversion under Act 108 of 2019 does not automatically exempt a corporation from Arkansas corporation income tax. In order to be exempt from Arkansas income tax, Form AR1023 must be completed and submitted to the Arkansas Corporation Income Tax Section at PO Box 919, Little Rock, AR 72203-0919 and taxpayers must receive a written approval for that exemption request. Act 201 of 2019 creates Arkansas Code Annotated 26-51-406 which adopts Internal Revenue Code Section 1400Z-2 as in effect on January 1, 2018 for tax years beginning on or after January 1, 2018 regarding Opportunity Zones. To claim an exemption for capital gains as a result of the sale of property located in an Opportunity Zone for Arkansas income tax purposes, the property must be located in an Opportunity Zone located in Arkansas. Gains are deferred until the Opportunity Zone property is sold or exchanged or until December 31, 2026, whichever occurs first. Deferral of capital gains for Opportunity Zone property located in other states are taxable in Arkansas in the year property is exchanged for Opportunity Zone property in other states. Act 203 of 2019 creates Arkansas Code Annotated 26-51-1101 (2)(C) which allows an income tax credit equal to 33% of a cash donation that is used by a qualified educational institution in Arkansas that is used to purchase new machinery and equipment in connection with a qualified education or research program. Taxpayers must submit an application to the Arkansas Economic Development Commission on forms prescribed by the Commission and if approved have itemized receipts documenting the amount of the cash donation and the purchase costs of the new machinery and equipment. The credit may offset 100% of the tax remaining after all other credits and any unused credits may be carried forward for nine tax years. Act 203 of 2019 is in effect on July 24, 2019 and after. Act 213 of 2019 amends Arkansas Code Annotated 26-51-509 to strike the word “youth” to reflect amendments in 2017 that removed age restrictions for the hiring of an apprentice to qualify for the apprentice credit. Act 327 of 2019 amends numerous provisions of the Consolidated Incentive Act found in Arkansas Code Annotated 15-4-2703 through 15-4-2712 to amend definitions, change provisions concerning the percentage of sales that must be derived from outside of Arkansas, average salaries of employees, qualifying industries, requirements of the tier system for credits awarded based on tiers, repayment of incentives provisions, total payroll threshold requirements, investment requirements, transfer provisions and numerous other provisions of the various tax incentive programs. Please see the Business Incentive Tax Credits section of this booklet for more details. Act 470 of 2019 amends Arkansas Code Annotated 26-51-2204(d) concerning the Arkansas Historic Rehabilitation income tax credit to reduce the minimum qualified rehabilitation expenses for non-income producing properties from $25,000 to $5,000 for tax years beginning on or after January 1, 2019. The credit is equal to 25% of qualifying expenses and may offset 100% of income after all credits are applied. Unused credits may be carried forward up to five tax years. Act 537 of 2019 amends Arkansas Code Annotated 15-4-3305(g) to clarify that an equity investment incentive credit may be sold only 1 time at any time before the credit is exhausted or expires. Page 4 Act 670 of 2019 repeals Arkansas Code Annotated 26-51-514 concerning the cigarette receptacle tax credit. Act 760 of 2019 amends Arkansas Code Annotated 26-51-306(h) and 26-51-701(a)(3)(C) to allow for the ten-year collection period to be tolled until 180 days after the termination of a bankruptcy case for a taxpayer for tax years beginning on or after January 1, 2020. Act 819 of 2019 amends various Arkansas Codes concerning the Arkansas Franchise Tax and transfers administration of the Franchise Tax from the Arkansas Secretary of State to the Department of Finance and Administration effective May 1, 2021. The franchise tax will remain under the authority of the Secretary of State until the Department of Finance and Administration assumes administration of the franchise tax. Act 822 of 2019 amends Arkansas Code Annotated 26-5-101, Article IV, 26-51-709 through 26-51-718 and 26-51-1401 through 26-51-1405 to provide for a single sales factor to apportion income from both within and without Arkansas for tax years beginning on or after January 1, 2021. Act 822 also amends Arkansas Code Annotated 26-51-205 to reduce the maximum corporation income tax rate to 6.2% for taxable income that exceeds $100,000 for tax years beginning on or after January 1, 2021, and for tax years beginning on or after January 1, 2022 the maximum income tax rate shall be 5.9% for income exceeding $25,000. Act 822 amends Arkansas Code Annotated 26-51-427 to allow net operating losses occurring in tax years beginning on or after January 1, 2020 to be carried forward 8 tax years and net operating losses occurring in tax years beginning on or after January 1, 2021 to carry