Filing the obsolete AR1103. Preparers and DIY owners still find AR1103 on DFA's website (the archived form pages go back to 2009) and either mail it in — where it does nothing — or, far worse, assume Arkansas S status is not effective until AR1103 is approved and therefore file an AR1100 as a C corporation. Since tax years beginning 1/1/2018, ACA 26-51-409(b) makes federal S status automatic AND mandatory in Arkansas. The second, more expensive trap: forgetting the May 1 franchise tax report. It is a Secretary of State filing (not DFA), it is due on a different date from the income tax return, no extension exists, and non-filing leads to revocation of the corporate charter.
Recognized automaticallyPTET available
S-corp election in Arkansas
In short
No Arkansas income tax at the entity level, but the Arkansas franchise tax (Secretary of State) still applies every year regardless of S status.
Does Arkansas recognize the federal S election?
Arkansas AUTOMATICALLY recognizes the federal S election — this is the single most commonly-wrong fact about Arkansas. Ark. Code Ann. 26-51-409(b) provides that an election made under Subchapter S for federal income tax purposes "is deemed to have been made for Arkansas income tax purposes." DFA's own Sub-S instruction booklet states the AR1103 requirement applied only "For tax years beginning before January 1, 2018"; for tax years beginning on or after January 1, 2018 "a Federal Subchapter S corporation must also file as an Arkansas S corporation; taxpayers are no longer allowed to file as a C corporation if filing as a Federal S corporation." So do NOT tell an Arkansas client to file AR1103 — it is legacy and only appears on DFA's site as archived pre-2018 forms. Arkansas S status is now mandatory, not elective: you cannot keep C-corp treatment in Arkansas while being an S corp federally.
Tax the entity still owes
Arkansas Annual Corporation Franchise Tax Report 2026 (covering year ending 12/31/2025), filed with the Secretary of State's Business & Commercial Services Division, not DFA. Corporations WITH authorized capital stock: Arkansas-apportioned issued and outstanding capital stock x.003 (0.3%), with the form stating "MINIMUM TAX DUE $150 - IF LESS THAN $150 PAY $150." Corporations WITHOUT authorized stock pay $300. LLCs pay a flat $150. Due on or before May 1, 2026; penalty and interest accrue after that date and no extension is available. Arkansas income tax rates for context (relevant to the PTET): SB1 of the 2026 First Extraordinary Session reduced the top individual rate to 3.7% effective for tax year 2026 and later, and reduces the top corporation rate to 4.1% for 2027.
Registering for payroll
Two separate agencies. (1) Income tax withholding: register with the Arkansas Department of Finance and Administration using Form AR-1R Combined Business Tax Registration or online through ATAP (atap.arkansas.gov); then file Form AR941M (withholding deposits) and Form AR3MAR (annual reconciliation). (2) Unemployment insurance/SUTA: register with the Arkansas Division of Workforce Services (ADWS) using Form DWS-ARK-201 or online at dws.arkansas.gov to obtain a UI tax account number. Note: a >2% S-corp shareholder-employee is still a W-2 employee for both accounts.
Annual filings
Form AR1100S (Subchapter S Corporation Income Tax Return) — due on or before the 15th day of the 4th month following the close of the tax year; April 15 for calendar-year filers (NOT March 15). AR K-1 to each shareholder. Form AR1155 Request for Extension (180 days from the original Arkansas due date, or 60 days beyond the automatic federal extension due date); Act 629 of 2021 also allows one month past the federal extended due date where a federal extension was requested. Arkansas Annual Franchise Tax Report to the Secretary of State — due May 1 each year. AR941M withholding deposits plus AR3MAR annual reconciliation. Form AR1100PET instead of AR1100S if the PET election is in effect.
Pass-through entity tax
Yes. Elective Pass-Through Entity Tax Act, Act 362 of 2021, codified at Ark. Code Title 26, Chapter 65. Registration/election on Form AR362 (AR362-E to register, AR362-R to revoke) or through ATAP; the return is Form AR1100PET. Per DFA: "The Pass-through Entity Tax (PET) election must be made by the extended due date of the income tax return but may be made at any time prior by registering for the tax on combined registration forms or by completing Form AR362, or by registering for the tax in ATAP." Critical mechanical point: "Sub-S Corporations that elect the PET tax should not file Form AR1100S" — they file AR1100PET instead. RATE FOR 2026: the SB1 fiscal impact statement (2026 First Extraordinary Session) lists "Pass Through Entity Tax Reduction to 3.7%" alongside the individual rate cut, so the 2026 PET rate is 3.7%, retroactive to January 1, 2026. No SALT-cap sunset in the Arkansas statute. RATE STRUCTURE: the Arkansas Pass-Through Entity Tax has TWO rates — an ordinary-income rate and a reduced capital-gains rate set at half the ordinary rate. DFA published 3.9% on income and 1.95% on capital gains for tax years beginning in 2024. Confirm the current year figures against the DFA Sub-S booklet before relying on them, and do not apply the ordinary rate to capital gains.
The mistake owners make most often in Arkansas
Filing your federal Form 2553
Businesses operating in Arkansas send Form 2553 to the IRS Ogden service center — fax 855-214-7520. Full address and filing checklist for Arkansas.
Frequently asked questions
Does Arkansas require a separate S-corporation election?
No. Arkansas does not require a separate state election. Arkansas AUTOMATICALLY recognizes the federal S election — this is the single most commonly-wrong fact about Arkansas. Ark. Code Ann.
What tax does an S corporation pay in Arkansas?
No Arkansas income tax at the entity level, but the Arkansas franchise tax (Secretary of State) still applies every year regardless of S status.
Where do I file Form 2553 from Arkansas?
With the IRS Ogden service center. Fax 855-214-7520, or mail to Department of the Treasury, Internal Revenue Service, Ogden, UT 84201.
What is the most common S-corp mistake in Arkansas?
Filing the obsolete AR1103. Preparers and DIY owners still find AR1103 on DFA's website (the archived form pages go back to 2009) and either mail it in — where it does nothing — or, far worse, assume Arkansas S status is not effective until AR1103 is approved and therefore file an AR1100 as a C corporation. Since tax years beginning 1/1/2018, ACA 26-51-409(b) makes federal S status automatic AND mandatory in Arkansas. The second, more expensive trap: forgetting the May 1 franchise tax report. It is a Secretary of State filing (not DFA), it is due on a different date from the income tax return, no extension exists, and non-filing leads to revocation of the corporate charter.
Compare with other states: California, Colorado, Connecticut, Delaware, District of Columbia, Florida.
Sources
- https://www.dfa.arkansas.gov/wp-content/uploads/SubS_Corp_IncomeTaxInst_2024.pdf
- https://www.dfa.arkansas.gov/office/taxes/income-tax-administration/small-business-corporate-sub-s/
- https://www.sos.arkansas.gov/uploads/bcs/Corp1_FT_2026.pdf
- https://arkleg.state.ar.us/Home/FTPDocument?path=%2FAssembly%2F2025%2F2026S1%2FFiscal+Impacts%2FSB1-DFA1.pdf
File your Form 2553 correctly
Scorply completes your federal election and includes a Arkansas guide in your packet, so you know exactly what else you owe here.
Start my Form 2553Researched from official Arkansas sources and verified July 30, 2026. State tax rules change. This is general information, not tax advice — confirm with the state or a CPA before you rely on it.