Starting in 2021, the Arkansas Department of Finance and Administration (DFA) will begin collecting and processing franchise taxes.
The DFA will begin accepting franchise taxes on Jan. 1, 2021, per Act 819 of the 2019 legislative session. Previously, the Arkansas Secretary of State’s office oversaw franchise taxes.
“We appreciate the ongoing support and assistance from the Secretary of State’s Office throughout the transition of Franchise Tax to DFA,” DFA Secretary Larry Walther said in a statement. “We look forward to serving Arkansas companies in this new capacity.”
Every year, approximately 150,000 companies pay franchise taxes in the state with collections totaling $28 million in 2019. Any company that conducts business in Arkansas, including banks, legal reserve mutual insurance companies, insurance companies with authorized capital stock, limited liability companies, non-stock corporations or stock corporations, is required to pay franchise taxes.
Despite the franchise tax change, the Secretary of State’s office will remain the primary contact for registering and beginning a business in Arkansas and the contact point concerning businesses’ organizational structures.
Businesses with established franchise tax accounts will be notified of the change via mail and will receive a hard copy of a franchise tax return.