§ 26-51-202
LexisNexis Practice Insights
1. Implementing FIN 48: Attributional and Economic Nexus
2. Implementing FIN 48: Solicitation Activity in Arkansas
3. Arkansas Taxation of Nonresidents
4. Implementing FIN 48: Overview of Sales and Support Activities in Nexus Analysis
5. Third Party Gift Card Sales Can Contribute to Nexus
26-51-202. Nonresidents.
(a) A tax is imposed and shall be assessed, levied, collected, and paid annually at the rates specified in 26-51-201 upon and with respect to the entire net income as defined in this chapter, except as provided in this section, from all property owned and from every business, trade, or occupation carried on in this state by individuals, corporations, partnerships, trusts, or estates not residents of the State of Arkansas.
(b) (1) Each nonresident as defined in 26-51-102 shall file income tax returns with the State of Arkansas and pay the tax without distinction, or incident to the laws of the nonresident's resident state.
(2) It is the specific intention of the General Assembly that the tax shall be collected from property owned and from the conduct of every business, trade, or occupation, whether or not the individuals, corporations, partnerships, trusts, or estates are qualified to do business in the State of Arkansas and whether or not such business, trade, or occupation shall be conducted in interstate commerce.
(c) However, the payment of the tax shall be based upon net income properly allocated as net income arising from the ownership of property and the conduct of a business, trade, or occupation in the State of Arkansas.
(d) Additionally, no income tax shall be due the State of Arkansas from a nonresident beneficiary on income received from a trust or estate being administered by a resident trustee or personal representative except on income derived by the trust or estate from:
(1) Lands situated in this state, including gains from any sale of the lands situated in this state;
(2) Any interest in land situated in this state, including, without limitation, chattels real, including gains from any sale of an interest in land situated in this state;
(3) Tangible personal property located in Arkansas, including gains from any sale of the tangible personal property located in Arkansas; and
(4) Unincorporated businesses domiciled in Arkansas.
(e) (1) No income tax shall be due the State of Arkansas from a nonresident partner with respect to that partner's distributive share of dividends, interest, or gains and losses from qualifying investment securities owned by an investment partnership, whether or not the partnership has a usual place of business located in this state.
(2) As used in this subsection:
(A) "Investment partnership" means a partnership that meets both of the following requirements:
(i) No less than ninety percent (90%) of the value of the partnership's total assets consists of qualifying investment securities and office space and equipment reasonably necessary to carry on its activities as an investment partnership; and
(ii) No less than ninety percent (90%) of its gross income consists of interest, dividends, and gains from the sale or exchange of qualifying investment securities; and
(B) (i) "Qualifying investment securities" includes all of the following:
(a) Common stock, including preferred or debt securities convertible into common stock, and preferred stock;
(b) Bonds, debentures, and other debt securities;
(c) Deposits and any other obligations of banks and other financial institutions;
(d) Stock and bond index securities, futures contracts, options on securities, and other similar financial securities and instruments; and
(e) Other similar or related financial or investment contracts, instruments, or securities.
(ii) Qualifying investment securities shall not include an interest in a partnership unless that partnership is itself an investment partnership.
(3) (A) The provisions of subdivision (e)(1) of this section shall not apply to income derived from investment activity that is interrelated with any trade or business activity of the nonresident or an entity in which the nonresident owns an interest in this state, whose primary activities are separate and distinct from the acts of acquiring, managing, or disposing of qualified investment securities, or if those securities were acquired with working capital of a trade or business activity conducted in this state in which the nonresident owns an interest.
(B) Likewise, the provisions of subdivision (e)(1) of this section shall not apply to corporate partners of an investment partnership except as provided by regulations adopted by the Director of the Department of Finance and Administration.