2021 Franchise Tax Payments Going Back to Secretary of State

New guidance on the Arkansas Department of Finance and Administration (DFA) franchise tax website says that the window to make franchise tax payments through the DFA system will close early in the morning on March 12 and that payments can be made via the Secretary of State's system beginning March 15. Taxpayers who have not yet paid may wish to wait and pay via the Secretary of State's system.

As we covered last fall, Arkansas franchise tax administration had been migrating from the Secretary of State to DFA, as one of the administrative changes in 2019 tax reform legislation. The idea is that there will be efficiencies of scale and more effective enforcement if all the state taxes are administered together by DFA.

In practice, DFA taking over franchise tax administration meant migrating franchise tax onto DFA's Arkansas Taxpayer Access Point (ATAP) electronic tax records and filing system. ATAP required substantially more information about a taxpayer and its owners than the Secretary of State has required historically, which had resulted in some taxpayer concerns. Other implementation concerns may have arisen as well.

The website notice reads: "Effective March 15, 2021 at 8:00 am, ALL Franchise taxes will be paid to Secretary of State. NOTE: Franchise Tax filing/payment through ATAP will no longer be available beginning March 12th, 2021 at 3:00 am."

At this time there is limited information about the shift. We may update this post with additional information if it becomes available.

Update 3/10/2021: SB525 was filed today. It would keep franchise tax administration with the Secretary of State permanently. 

 

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