1. (a) The withholding tax requirements of Arkansas Code § 26-51-919 are not applicable to the share of income of a business entity for a taxable year that is distributed to a nonresident member if the:

   1. (1) Members of the business entity elect to be taxed as an affected business entity under the Elective Pass-Through Entity Tax Act, Arkansas Code § 26-65-101 et seq.; and
   2. (2) Election to be taxed as an affected business entity is made on or before the time for filing a return under this part.
2. (b) The requirement to withhold income tax from the share of income of the business entity that is distributed to a nonresident member shall continue to apply for any taxable year for which the members of the business entity do not elect to be subject to the pass-through entity tax.
3. (c) The provisions of this section do not affect the obligation of the business entity to withhold income tax on the payment of wages.

Codification Notes: This section as promulgated prior to codification into the Code of Arkansas Rules provided as follows: "Authority. Ark. Code Ann § 26-18-301; Ark. Code Ann. § 26-51-919(e); Ark. Code Ann. § 26-65-103; Ark. Code Ann. § 26-65-105."