Ark. Code Ann. § 26-51-709 (2026)

For the tax year beginning January 1, 2021, all business income shall be apportioned to this state by multiplying the income by a fraction, the numerator of which is the total sales of the taxpayer in this state during the tax period and the denominator of which is the total sales of the taxpayer everywhere during the tax period.

History. Acts 1961, No. 413, § 9; A.S.A. 1947, § 84-2063; Acts 1995, No. 682, § 2; 2019, No. 822, § 7.

A.C.R.C. Notes. The 1995 amendment to this section was a deviation from the official version of the Uniform Division of Income for Tax Purposes Act drafted by the National Conference of Commissioners on Uniform State Laws. The 1995 amendment inserted “double” and changed “three” to “four”.

Acts 2019, No. 822, § 1, provided: “Legislative findings and intent.

“(a) The General Assembly finds that:

“(1) The Arkansas Tax Reform and Relief Legislative Task Force was charged with:

“(A) Examining and identifying areas of potential tax reform within the tax laws; and

“(B) Recommending legislation to the General Assembly to:

“(i) Modernize and simplify the Arkansas tax code;

“(ii) Make Arkansas's tax laws competitive with tax laws in other states;

“(iii) Create jobs; and

“(iv) Ensure fairness to all taxpayers;

“(2) The state's income tax laws should be amended to modernize and simplify the tax code, increase Arkansas's competitiveness, create jobs, and ensure fairness to all taxpayers;

“(3) The inability to effectively collect any Arkansas sales or use tax from remote sellers who deliver tangible personal property, other property subject to Arkansas sales and use tax, or services directly into the state is seriously eroding the sales and use tax base of this state, causing revenue losses and imminent harm to the state through the loss of critical funding for state and local services;

“(4) The harm from the loss of revenue is especially serious in Arkansas because sales and use tax revenue is essential in funding state and local services;

“(5) Despite the fact that a use tax is owed on tangible personal property, certain other property, or services delivered for use in this state, many remote sellers actively market sales as tax-free or as transactions not subject to sales and use tax;

“(6) The structural advantages of remote sellers, including the absence of point-of-sale tax collection and the general growth of online retail, make clear that further erosion of this state's sales and use tax base is likely to occur in the near future;

“(7) Remote sellers that make a substantial number of deliveries into Arkansas or collect large gross revenues from Arkansas benefit extensively from this state's market, economy, and infrastructure;

“(8) In contrast with the increasing harm caused to the state by the exemption of remote sellers from sales and use tax collection duties, the costs of such collection have decreased because advanced computing and software options have made it neither difficult nor burdensome for remote sellers to collect and remit sales and use taxes associated with sales of goods and services to residents of this state;

“(9) The United States Supreme Court recently upheld the ability of states to compel out-of-state sellers with no physical presence in the state to collect state sales and use taxes; and

“(10) Any savings realized by the state through tax reforms should be dedicated to reducing the tax burden for Arkansas taxpayers.

“(b) It is the intent of the General Assembly to:

“(1) Reform Arkansas tax laws to modernize and simplify the tax code, increase the state's competitiveness, create jobs, and ensure fairness to all taxpayers;

“(2) Offset any revenue savings realized through tax reform with corresponding changes to reduce the tax burden for Arkansas taxpayers;

“(3) Gradually reduce the tax burden on Arkansas taxpayers in a fiscally responsible manner; and

“(4) Act on the recommendation of the Arkansas Tax Reform and Relief Legislative Task Force to repeal the throwback rule for business income when the state's budget would allow for that change to be enacted in a fiscally responsible manner.”

Publisher's Notes. For text of section effective until January 1, 2021, see the preceding version.

Amendments. The 2019 amendment added “For the tax year beginning January 1, 2021”, substituted “total sales of the taxpayer in this state during the tax period” for “property factor plus the payroll factor plus double the sales factor”, and substituted “the total sales of the taxpayer everywhere during the tax period” for “four”.

Effective Dates. Acts 2019, No. 822, § 27(b): “Sections 2-4 and 6-16 of this act are effective for tax years beginning on or after January 1, 2021.”