What is Withholding Pass-Through Tax?
The Withholding Pass-Through Entity Tax is effective for pass-through entities that have Arkansas- sourced income with nonresident members (Ark. Code Ann.§26-51-919). It requires pass-through entities to withhold Arkansas income tax at the highest applicable tax rate (3.9% for 2024) on the share of income distributed to each nonresident member, unless specific exceptions apply. The withholding requirement applies to S corporations, general or limited partnerships, limited liability partnerships, limited liability companies, or trusts which are not taxed as corporations for federal or Arkansas income tax purposes. All pass-through entities must file an annual return (Form AR941PT) by the fifteenth day of the fourth month following the end of the entity’s tax year.
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