1. (a) Each affected business entity filing a pass-through entity tax return shall be required to make a required annual payment of the tax due for the taxable year.

2. (b) The required annual payment shall be made in four (4) estimated installments on or before the following dates:

   1. (1) First payment by the fifteenth day of the fourth month of the taxable year;
   2. (2) Second payment by the fifteenth day of the sixth month of the taxable year;
   3. (3) Third payment by the fifteenth day of the ninth month of the taxable year; and
   4. (4) Fourth payment by the fifteenth day of the first month of the next succeeding taxable year.
3. (c) Each estimated installment of pass-through entity tax shall be twenty-five percent (25%) of the required annual payment.

4. (d) The required annual payment shall be the lesser of:

   1. (1) Ninety percent (90%) of the pass-through entity tax due for the taxable year; or
   2. (2) If the affected business entity filed a return for the preceding taxable year, one hundred percent (100%) of the amount of tax due as reported on the preceding year’s return.

5. (e)

   1. (1) If an affected business entity establishes that its annualized income installment is less than the required annual payment in a manner satisfactory to the Secretary of the Department of Finance and Administration, the required installment payment under this section is the annualized income installment.

   2. (2) However, an affected business entity shall recapture a reduction in a required installment payment by increasing:

      1. (A) The amount of the next required installment payment by the amount of the reduction; and
      2. (B) Subsequent required installment payments to the extent the reduction was not previously recaptured under this subsection.

   3. (3) The annualized income installment is the difference between:

      1. (A) The product of:

6. (i) The tax imposed under Arkansas Code § 26-65-101 et seq., for the taxable year that would be due if income subject to the tax imposed under Arkansas Code § 26-65-101 et seq., for the months in the taxable year ending before the due date of the installment were annualized; and

   1. (ii) The following percentage:
7. (a) (a) For the first required installment payment, twenty-two and five-tenths percent (22.5%);

8. (b) (b) For the second required installment payment, forty-five percent (45%);

   1. (c) (c) For the third required installment payment, sixty-seven and five-tenths percent (67.5%); and

      1. (d) (d) For the fourth required installment payment, ninety percent (90%); and
      2. (B) The aggregate amount of any prior required installments for the taxable year.
9. (f) The secretary will impose penalties and interest upon an affected business entity that makes an underpayment of its required annual payment.
10. (g) The amount of underpayment is the amount by which the required installment exceeds the amount, if any, of the installment paid on or before the due date of the installment.

11. (h) A payment of estimated tax under this section shall be credited against unpaid or underpaid required installments in the order in which the installments are required to be paid.

    1. (i) Payment of the estimated tax under the Elective Pass-Through Entity Tax Act, Arkansas Code § 26-65-101 et seq., or any required installment of estimated tax is a payment on account of the tax imposed under the Elective Pass-Through Entity Tax Act.

Codification Notes: This section as promulgated prior to codification into the Code of Arkansas Rules provided as follows: "Authority. Ark. Code Ann. § 26-65-105; Ark. Code Ann. § 26-65-107."