How to File the Arkansas AR-20 Partnership Income Tax Return

The Arkansas partnership income tax return is filed on Form AR1050 with the Department of Finance and Administration (DFA). It is due March 15 for calendar-year filers, mirrors your federal Form 1065, and can be submitted electronically through Modernized e-File or mailed to the Partnership Income Tax Section at P.O. Box 919, Little Rock, AR 72201.¹² The partnership itself generally pays no Arkansas income tax; income flows through to the partners, who report their shares on their own returns.

Who Has to File

Arkansas Code § 26-51-802 requires a partnership to be classified and taxed for state purposes the same way it is classified federally.³ General partnerships, limited partnerships, limited liability partnerships, and LLCs that elect partnership classification on their federal return all file AR1050 if they have Arkansas-source income. The return must state the entity’s gross income and allowable deductions, along with the names, addresses, and distributive shares of every person entitled to share in the net income.

The filing obligation applies even if the partnership has no net profit and owes nothing at the entity level. The return is the mechanism the state uses to track each partner’s share of Arkansas income, so it is required regardless of whether tax is due.

What to Gather Before You Start

A completed federal Form 1065 and all federal schedules. You will transcribe many figures directly, and the federal return must be attached to the state filing or sent separately to the Partnership Income Tax Section.¹
The entity’s federal Employer Identification Number.
Full name, address, Social Security number or TIN, and profit and loss percentage for each partner during the reporting period.
Supporting calculations for any Arkansas adjustments to federal figures. Depreciation is the most common area of divergence.
Apportionment figures if the partnership operates in more than one state: Arkansas sales and total sales everywhere, plus property and payroll where required.
Certificates and schedules for any state tax credits you plan to claim, such as the Advantage Arkansas income tax credit.

You can download the current form and instructions from the DFA’s Partnership/LLC page or request paper copies by calling the Partnership Income Tax Section at (501) 682-4775.²

Filling Out the Return

Start with the identifying information: entity name, FEIN, address, accounting method, and the tax year covered. Most partnerships use the calendar year ending December 31. Fiscal-year filers enter their year-end date.

The income and deduction section tracks federal Form 1065 closely. Enter gross receipts, cost of goods sold, ordinary income from trade or business activities, rental income, farm income, and other income on the matching state lines. Each line has a Federal column and an Arkansas column. For partnerships operating only in Arkansas the two columns usually match, and you attach Form AR-KREC to reconcile any differences between the federal and state amounts.¹

Deductions follow the same pattern: salaries and wages, guaranteed payments to partners, rent, taxes, interest, depreciation, and other business expenses. Where Arkansas law differs from federal treatment, attach Schedule AR1100REC to reconcile. Multistate filers subject to apportionment attach Schedule AR1100ADJ instead of AR-KREC to itemize adjustments to apportionable income.¹

The return must be signed under oath by one of the partners.³

Schedules and Attachments You Must Include

Missing attachments are a common reason returns get flagged. Along with AR1050 itself, send:

An Arkansas Schedule K-1 (AR K-1) for every partner, reporting that partner’s share of income, deductions, and credits. Partners need these to prepare their own state returns.¹
Schedule A, Parts I and II, for multistate filers. Most use the single sales factor formula, dividing Arkansas sales by total sales everywhere to calculate the apportionment percentage.⁴
Schedule B, which reports additional information about the partnership and its partners.
The complete federal Form 1065 with supporting schedules (Schedule D, Form 4797, Form 8825, Form 4562, and any others that apply).¹
Form AR-KREC (single-state partnerships) or Schedule AR1100ADJ (multistate filers) to reconcile federal-to-state figures.

Apportionment for Multistate Partnerships

Partnerships with income from both inside and outside Arkansas apportion business income using a single sales factor. Divide total Arkansas sales by total sales everywhere, then multiply that percentage by apportionable business income. The result is the portion allocated to Arkansas.⁴

Construction companies and pipelines are exceptions and use a double-weighted sales factor method that also includes property and payroll. Nonbusiness income, such as investment income unrelated to operations, is allocated rather than apportioned, typically to the state where the underlying asset is located. If the standard formula does not fairly represent the partnership’s Arkansas activity, the entity can petition the Secretary of the DFA for an alternative method, such as separate accounting or additional factors.³

Nonresident Partner Withholding

If any partner is a nonresident, Arkansas Code § 26-51-919 requires the partnership to withhold Arkansas income tax on that partner’s share of Arkansas-source income at the highest applicable individual rate. For the 2024 tax year, that rate was 3.9%.⁵

Report the withholding on Form AR941PT, due by the fifteenth day of the fourth month after the entity’s tax year ends (April 15 for calendar-year filers). Failing to withhold can shift the tax liability to the partnership itself.

As an alternative, the partnership can file a composite return on Form AR1000CR, which bundles all nonresident partners’ Arkansas income into a single filing and payment. This simplifies compliance when the partnership has many out-of-state members, and the DFA publishes separate composite instructions, estimated tax vouchers, and an extension form for that process.⁶

The Elective Pass-Through Entity Tax

Arkansas also offers an elective entity-level tax that lets the partnership pay state income tax directly, which can give partners a workaround for the federal $10,000 cap on state and local tax deductions. The election is made annually on Form AR362 and requires approval from members holding more than 50% of the voting rights. The tax rate equals the top marginal individual income tax rate under Arkansas Code § 26-51-201(a), with net capital gains taxed at half that rate.⁷

Entities that make the election file Form AR1100PET and pay the tax by the fifteenth day of the fourth month of the taxable year. If the entity-level tax covers all of a nonresident member’s Arkansas-source income, that member does not need to file an individual Arkansas return. The election can be revoked by filing an amended AR362 before the extended due date, again with consent from members holding more than 50% of the voting rights, and each member must receive a copy of the election once filed.⁷

Deadline and Extensions

Calendar-year partnerships file by March 15. Fiscal-year filers have until the fifteenth day of the third month after the tax year ends. If the date falls on a weekend or holiday, it shifts to the next business day.

If you need more time, file Form AR1055-PE before the original due date. Calendar-year filers get an extension to October 15; fiscal-year filers get 180 days from their original due date.⁸ If you already filed a federal extension for Form 1065, you do not need to file a separate Arkansas extension; the federal extension automatically extends the state deadline.⁹

An extension gives you more time to file, not more time to pay. Any tax owed, such as pass-through entity tax or nonresident withholding, is still due by the original deadline.

How to Submit the Return

Arkansas accepts partnership returns electronically through Modernized e-File (MeF).¹⁰ Most tax preparation software that handles federal Form 1065 e-filing also supports AR1050. The Arkansas Taxpayer Access Point (ATAP) portal handles account management, payment processing, and filing.¹¹ Federal returns and required schedules can be attached electronically or mailed separately to the Partnership Income Tax Section.

For paper filing, send the completed return and all attachments to:

Partnership Income Tax Section
P.O. Box 919
Little Rock, AR 72201²

Late Filing Penalties

Arkansas Code § 26-18-208 sets a late-filing penalty of 5% of the unpaid tax for the first month the return is late, plus an additional 5% for each additional month, up to a maximum of 35%. The penalty applies unless the taxpayer can show reasonable cause for the delay.¹²

Because AR1050 is primarily an information return and most partnerships owe no entity-level tax, the percentage-based penalty may not produce a large dollar amount on its own. Late filing is not consequence-free, though. If the partnership has nonresident withholding obligations or has elected the pass-through entity tax, the amounts due on those items trigger the penalty calculation. Late or missing AR K-1s also cause problems downstream, because partners cannot complete their own Arkansas returns without them. Filing on time, even if some figures are estimated, is almost always better than filing late.

1
Arkansas Department of Finance and Administration. 2025 Arkansas Partnership Income Tax Instructions
2
Arkansas Department of Finance and Administration. Partnership/LLC
3
Justia. Arkansas Code 26-51-802 – Partnership Returns
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Arkansas Department of Finance and Administration. Arkansas Partnership Income Tax Instructions
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Arkansas Department of Finance and Administration. Withholding Pass-Through Tax
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Arkansas Department of Finance and Administration. Composite Filing
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Justia. Arkansas Code 26-65-103 – Pass-Through Entity Tax
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Arkansas Department of Finance and Administration. State of Arkansas Request for Extension of Time for Filing Partnership Tax Returns AR1055-PE
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Arkansas Department of Finance and Administration. Instructions for Form AR1055-PE Extension of Time to File
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Arkansas Department of Finance and Administration. Arkansas eFile
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Arkansas.gov. Arkansas Taxpayer Access Point (ATAP)
12
Justia. Arkansas Code 26-18-208 – Additional Penalties and Tax